QUANTIFYING THE BENEFITS OF QUALITY

EmployeeTraining and Incentives

In 2016, ASQ and APQC partnered to conduct a survey that would provide a comprehensive look
at intercontinental quality and continuous improvement methodologies and to explore
organizational practices used for quality governance, management, and measurement.

Training provides a common language and helps employees understand the impact that defects
or other setbacks like delays will have on the end customer; ultimately resulting in a unified
focus on the customer and increased financial benefits. Hence this article will look closely at the
relationship between employee training and incentives and the financial benefits of quality.

TRAINING EMPLOYEES AND FINANCIAL VALUE

Training programs help develop competencies, ensure employees understand their role in
creating quality for the customer, and establish a quality-focused culture. Hence respondents
were asked to indicate if they had a formal quality-related training program. Though the
majority of organizations do not have a formal training program, more organizations (43
percent) are investing in a training program than they were in 2013 (32 percent).

Though it can be argued there is intrinsic financial value in offering quality training, there are
still unanswered questions such as: who should receive the training and what training should we
provide?

Who Should Get Training?

The majority of respondent organizations (56 percent) offer (either through direct training or
compensation for external training) quality management training for staff involved in quality
actives. Almost half of the respondent organizations (44 percent) also offer quality-related
training to all employees; likely driven by the need to embed a quality-focused culture within
the organization.

To understand where organizations should focus their training resources—in regards to ROI—
we ran analysis against the employees offered training and the organizations’ financial benefits
of quality (Figure 1).

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 Employees Trained and Financial Benefits of Quality

Figure 1

Though the conventional wisdom would be to increase quality training to all employees to
develop a shared perspective and bolster a culture of quality the analysis indicates a drop-off in
financial benefits for organizations that offer quality training to all employees. Instead the
largest increase in financial benefits comes from providing training for quality-related staff and
those that specifically request training.

What Training Topics Matter?

The majority of organizations focus their training on quality fundamentals, auditing, ISO, quality
management principals, and quality tools. However few organizations include training on more
customer-value concepts such as the customer experience, Net Promoter Score (NPS), and Lean.
To understand what training supports increased financial benefits from quality we ran analysis
against the type of training provided and the organizations’ financial benefits of quality (Figure
2).

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 Gap Analysis: Employee Training Topics and Impact on Financial Benefits

Figure 2

What we found was that almost all of the types of training discussed in the survey correlated to
improved financial benefits. However organizations that provided training on customer-value
related concepts like NPS, Lean, Six Sigma, and the customer experience were more likely to
reap higher financial benefits. This makes sense given the relationship between customer value
and financial benefits discussed in Quantifying the Benefits of Quality: How You Use it Matters.
Organizations that use quality as a competitive differentiator—f or the benefit of the customer
and enhance brand image—reap higher financial benefits.

ROLE OF INCENTIVES
Similar to training, incentives help reinforce preferred behaviors—such as a quality focus. To
understand the role that incentives play in quality respondents were asked, “What incentives, if
any, do you use to encourage employees to meet critical quality targets?”

Given that most organizations do not include quality measure-based goals in their variable
performance compensation it makes sense that financial and variable compensation are not
readily used incentives. Instead organizations use informal recognition by management to
encourage employees to meet quality targets. Though immediate recognition can help create
buy-in on a person-by-person basis, using formal recognition and tying quality goals into

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 performance can help generate a wide-spread cultural change faster. However we wanted to
see if specific incentives also had a direct financial impact (Figure 3).

Incentives and Financial Benefits of Quality

Figure 3

What we found was that all types of incentives increase the financial benefits of quality.
However informal manager recognition—followed by honorary awards—has the greatest
impact on financial benefits. This does not mean organizations should not still consider financial
incentives such as tying quality measures to performance goals. As noted earlier awards and
informal recognition are excellent tools for engagement and ongoing motivation, but financial
measures tend to increase cultural changes in the long run.

CONCLUSION
Best-in-class organizations use training to drive a commitment to quality and help employees
understand their role in quality—including their impact on the end customer and driving value.
However, organizations need to consider the purpose of their quality efforts before making
decisions on incentives, the types of training, and even which employees to target for training. If
the organization’s goals are to create a widespread culture of quality then casting a wide net for
measures tied to quality and training all employees on the fundamentals of quality and impact
on the customer could reap the most benefits. However if the organization is specifically
leveraging quality to provide customer value—and potential price premiums—then it should

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 consider incorporating training aimed at the customer experience and related concepts such as
Lean and NPS.

ABOUT APQC
APQC helps organizations work smarter, faster, and with greater confidence. It is the world’s
foremost authority in benchmarking, best practices, process and performance improvement,
and knowledge management. APQC’s unique structure as a member-based nonprofit makes it a
differentiator in the marketplace. APQC partners with more than 500 member organizations
worldwide in all industries. With more than 40 years of experience, APQC remains the world’s
leader in transforming organizations. Visit us at www.apqc.org, and learn how you can make
best practices your practices.

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