Fortune 500 companies have the solution and it could help your business in 2007
What’s the secret for budget management that is used by many top fortune 500 companies? Does it apply to government and law enforcement?
Most governmental agencies are looking for more effective ways to stretch their department budget dollars. They want to work smart, not harder and need a way to identify what is really costing them time, money and labor hours. They recognize that a simple way to implement management strategies is exceptionally important and want their staff to not only understand their overall mission, but also carry out that mission in their everyday activities.
What the public wants to see with all governmental agencies is simply a return on their investment.
How do you proceed from the budget problems to the solution? What do you do if hiring more staff is not the answer?
One solution, called Six Sigma, is what has saved the city of Fort Wayne, Indiana more than $7 million over the past few years. Six Sigma technology is used by the Department of Homeland Security, U.S. Navy, Air Force, Marines and the Army. The top corporations using Six Sigma have, in the last ten years, reduced internal costs and increased profits by more than $100 billion.
Six Sigma is a process improvement methodology that identifies and eliminates defects, re-works, and redundancies in any process in your organization. It has been described, accurately so, as the most powerful management system ever devised. Six Sigma is applicable to any organization, any business, and will results in substantial internal savings.
Six Sigma was developed by the Motorola Company in the mid-1980’s in an effort to identify and reduce defects. General Electric, under Jack Welch, adopted the methodology, and both companies dramatically improved their processes, resulting in large-scale cost savings, and enhanced profitability.
Here’s an example of how Six Sigma works in a local police department. Assume the department handles 100,000 calls for service each year. Research estimates that between 50-70% of calls for service where officers are actually dispatched have little or no relationship to the police mission. As a consequence, the department requests additional staffing and resources every year at budget time. They need a far more effective policing strategy and by truly partnering with the community and asking for their help on these activities (for example, “Before you call 9-1-1, do this…..”), the change significantly impacts the police budget.
In terms of fiscal and personnel resources, let’s say that 50% of those calls are calls that don’t support your mission. That’s 50,000 calls for service. It’s unreasonable to eliminate all 50,000 of these, but if, over time, the department reduces these calls by half, or 25,000 calls for service, we’ve made progress.
Let’s calculate the impact of the Six Sigma change. Assume each call takes an hour. Now, the police department has freed up 25,000 personnel hours to deploy as they see fit on true mission-oriented activities, such as crime problems.
In terms of financial resources, the average salary and benefit package for a police officer is about $50.00 per hour. At 25,000 personnel hours times $50, the deparment has just saved itself $1,250,000.00 Imagine someone handing your department that kind of money and having the freedom to apply it to achieve far more substantial results. This example is one of literally dozens that if applied, would result in the department being able to reinvest 25-35% or more of its existing budget. Imagine the outcomes after applying the methodology to every department in a city or county.
Six Sigma has proven to be an extremely effective strategy for thousands of businesses and more companies are adopting it every year. It is here to stay.
About the Author
William E. Cooper, M.B.A., M.P.A. is a retired police chief and skillful in applying Six Sigma principles to various work settings. He has included these principles in his book, Leading Beyond Tradition (See www.LeadingBeyondTradition.com) For more information or to schedule a Six Sigma consultation, please email him directly at bipd1@comcast.net
