six sigma and efqm model - a comparison.pdf

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ES438 – Quality Systems

Assignment

Six Sigma and EFQM Model: A comparison

Alessandro Melgaço Barbosa Filho - 1327649

Professor Graeme Knowles

Coventry, 12 March 2014



1

Introduction

The aim of this work is to compare the Six Sigma business approach to the EFQM Excellence

Model.

On the first two sections - EFQM Excellence Model and Six Sigma respectively - an overview

of each model is presented. Those information are from specialized literature and does not have the

objective to cover application of the methods. This extra information will be presented as needed

during the development of this work.

On the next sections the areas where Six Sigma contributes, does not contribute and those

where it conflicts with the practice of the EFQM Excellence Model will be discussed.

At the end a recommendation for additions and modifications for the Six Sigma approach is

presented in order to develop and excellent organization according to the EFQM Excellence Model.



2

Contents

Introduction ............................................................................................................................................ 1

EFQM Excellence Model [1] .................................................................................................................... 2

Six Sigma [2] ............................................................................................................................................ 5

Areas Where Six Sigma contributes to EFQM Excellence Model............................................................ 8

Areas where Six Sigma does not contribute to EFQM Excellence Model ............................................. 10

Conflicts between Six Sigma and EFQM Excellence Model .................................................................. 10

Recommendations ................................................................................................................................ 11

Conclusion ............................................................................................................................................. 12

References ............................................................................................................................................ 13

Table of Figures

Figure 1 - EFQM Excellence Model Diagram [1] ..................................................................................... 3

Figure 2 - Six Sigma level of performance for a stable process. ............................................................. 5

Figure 3 – Conversion of published defect rates to Sigma ranges [3]. ................................................... 6

Figure 4 - Cost of quality as a percent of revenue for organizations at specified sigma level [3]. ......... 6

Figure 5 - Six Sigma's leadership hierarchy ............................................................................................. 8

Number of words: 2556

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https://d.docs.live.net/0baf02e083bb4bfe/Quality%20Systems%20Assignment.docx#_Toc382402964



3

EFQM Excellence Model [1]

The EFQM Excellence Model created by the European Foundation for Quality Management is

a framework that helps to assess the progress of an organization towards excellence. It is based on

nine criteria and is best explained following the diagram below:

Figure 1 - EFQM Excellence Model Diagram [1]

The criteria under Enablers refer to how the organization undertakes key activities. In a

perspective of the RADAR logic, Approach, Deployment, Assessment and Review are used when

assessing them. On the other hand the criteria under Results are concerned to the results being

achieved and in a perspective of the RADAR logic the element Results is used to assess.

The arrow on the bottom shows that innovation and learning improve enablers and therefore

improve results as well.

Leadership: Excellent Leader are the ones who develop and facilitate mission and vision

achievement, who develop systems and organisational values for success, who retain constancy and

purpose during periods of change and do all of this by his actions an behaviour, inspiring others to

follow.



4

Policy and Strategy: Excellent Organisations bases its mission and vision on the stakeholder’s

present and future needs and expectations. They should also develop, review and update it using data

from research, learning, measurements and external activities.

People: Excellent Organizations releases the full potential of their human resources. Those

resources have to be planed, managed and improved; competences and knowledge must be

identified, developed and kept. People must be empowered, involved, have and opening for dialogue

and also recognised, rewarded and cared for.

Partnerships and resources: In excellent organisations external partnerships, finances,

buildings, equipment, materials, technology, information and knowledge must be managed.

Process: Excellent Organizations systematically designs, manages and improves its processes

to satisfy customers and other stakeholders. Products and Services are developed and delivered and

customer relationships are managed and enhanced.

Customers, People, Society and Key Performance Results: Excellent Organizations measure

and achieve outstanding results in regard to their customers, people, society and key elements of their

policy and strategy.



5

Six Sigma [2]

Sigma is the Greek letter used in statistics to represent standard deviation. A sigma level like

Six Sigma is used to describe how well a process meets the customer’s requirements.

Figure 2 illustrates the standard deviation for a stable process.

Figure 2 - Six Sigma level of performance for a stable process.

Achieving six sigma would mean coincide with +6σ value. A normal distribution gives you a

value of two times in a billion opportunities but for historical reasons a shift of 1.5 sigma was

introduced in the process and became a standard in industry. With this shift the value is now

equivalent to 4.5 standard deviations which means that the Six Sigma process accepts 3.4 defects per

million opportunities (DPMO).

A broad range of organizations, processes and business sectors have successfully applied

these concepts. As soon as a process can experience defects or errors related to quality, cost of the

service or product or timeliness the Six Sigma techniques can be methodically applied to reduce it and

consequently improve customer satisfaction.

Figure 3 is used to convert any know process directly into a sigma level. Most companies work

between the three to four sigma levels based on their defect rates.



6

Figure 3 – Conversion of published defect rates to Sigma ranges [3].

Companies working bellow three sigma cannot be profitable for long, therefore only

monopolies and government agencies operates at these levels. This is clear when the cost of quality

is analysed, Figure 4 shows those levels based on the percentage of the sales destined to error

correction, in other words money spent on non-value-added activities.

Figure 4 - Cost of quality as a percent of revenue for organizations at specified sigma level [3].

Among those non-value-added activities, the most common ones are reworking, management

approval, touch-ups, fine-tuning, next-day deliveries as compensation for delayed of failed process

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2 3 4 5 6 C

o s t o f q u a l i t y ( %

o f r e v e n u e )

Sigma Level



7

and fixing. Those costs often go unreported, considered as “the cost of doing business” or masked as

operation costs. It leads to higher costs and lower customer satisfaction then lost sales and

consequently lower revenues that can threaten the very existence of the company.

As a rule of a thumb an error that costs $1 to prevent, will cost $10 to detect in-house and

$100 if the customer is the one to detect it. Moving up on sigma levels is to move towards error

preventing, therefore the companies expenses with quality is expected to drop to between 1% and

2% of the sales revenue.

In a Six Sigma company all the waste money that a three sigma company have is reinvested in

the bottom line of the company, boosting the revenues and therefore making those percentages drop

even quicker.

Six Sigma tools are applied within the DMAIC performance improvement model that can be

briefly described as follows [4]:

D Define the goals of the improvement activities

M Measure the existing system

A Analyse the system to identify ways to achieve the desired goal

I Improve the system

C Control the new system



8

Areas Where Six Sigma contributes to EFQM Excellence Model

As shown on the review the first principle of EFQM is Leadership. In a Six Sigma context

leadership has a crucial role and is represented by the famous belts hierarchy [5, 6], this hierarchy is

shown on Figure 5.

Champion: Is the one responsible for the implementation of Six Sigma within the organization.

He is also responsible for the strategic planning and for aligning the company’s objectives with

Six Sigma development projects.

Master Black Belt: Chosen by Champions, they devote 100% of their time to Six Sigma. They

assist champions and guide Black Belts and Green Belts. Master Black Belts are specialists on

processes enhancement.

Black Belt: Have profound knowledge on the company’s processes as a whole and Six Sigma.

They are specialists on the use of statistics tools for processes enhancement. Their primary

focus is on project execution while Champions and Master Black Belts focus on identifying

them. They are also tutor of Green Belts and also devote all their time to Six Sigma.

Champion

Master BlackBelt

Black Belt

Green Belt

Yellow/ White Belt

Figure 5 - Six Sigma's leadership hierarchy



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Green Belt: They are the employees who have their job responsibilities but also take up Six

Sigma implementation. They support Black Belts to achieve the overall results.

Yellow/ White Belt: Know about Six Sigma, usually have been trained as corporate initiative

but are not expected to actively engage in quality improvement activities.

Leadership trainings is not a core ingredient on a Six Sigma curriculum, but studies using the

Multifactor Leadership Questionnaire Short Form-5X (MLQ) on leadership skills (Avolio and Bass,

2004) over more than 330 Black Belts showed that they are above average in all seven

transformational and transactional leadership components when compared with the normative group

of 1,755 leaders. The study also reviewed for a 150 Six Sigma professionals from the same organization

the MLQ improved as the Six Sigma hierarchy goes up. The explanation for this fact is that individuals

selected for those positions are already strong leaders and are also more confident in their leadership

skills [7].

In another words: Six Sigma leaders are excellent leaders!

Next item on the EFQM list is Policy and Strategy. An excellent company focus on stakeholder’s

needs and desire. The whole objective with Six Sigma is improve quality delivering better products

and services while making more profits. The means to do those improvements are through the use of

data, exactly as expected from an excellent company.

The majority of EFQM areas are broad and therefore have many specific requirements. In some

cases Six Sigma helps with some aspects within on area but conflicts or not contribute to other aspects,

this is the case of the EFQM people area.

As mentioned before Six Sigma companies focus highly on quality interests, inclusive when the

subject is personnel. Among the Six Sigma major players (Champion, Master Black Belt, Black Belts

and Green Belts) the effort to identify, develop and keep knowledge is very high, as much as their



10

recognition and reward [8]. On the Conflicts section will be discussed the personnel area for non-Six-

Sigma players.

Resources are usually very well managed on Six Sigma companies. High quality equipment and

materials are required to lower the DPMO at Six Sigma levels. IT is also on the core of Six Sigma policies

for information and knowledge management [9]. All this aims to achieve finance stability with large

revenues.

Processes are definitely the area where Six Sigma most contributes to the EFQM Excellence model.

Processes development and improvement in order to satisfy customers and stakeholders is what Six

Sigma is all about and it has been widely recognized as one (maybe the best) process improvement

model [10].

Six Sigma is all about results therefore is contributes largely on the EFQM Excellence Model

regarding to customers results and policy and strategy key elements results. A company that offers

ultra-high-quality products and services certainly brings excellent results regarding customer’s

satisfaction.

Areas where Six Sigma does not contribute to EFQM Excellence Model

Physical resources such as the building itself is not part of any Six Sigma concerns. Although

Six Sigma companies can have very well cared buildings it is not because of Six Sigma but is necessary

for an excellent company.

Regarding partnerships, Six Sigma will only care if this partnership is affecting its own quality.

Imagine for example a Call Centre “C” have adopted Six Sigma, another company “H” is C’s headset

supplier. It is Christmas season and C decided to hire twenty more employees to keep its one-minute-

or-less policy up to speed. H is expected to deliver those new headsets in 24 hours but fails to do it,

the result is a thousand delayed calls, a thousand errors. Be sure that this partnership will be taken



11

care of. An excellent company actively looks forward to improve the quality of its partnerships and

not only reacts when it causes problems.

Besides being highly results oriented, people results and society results are not concerns of

Six Sigma therefore it does not contribute directly to them. As stated before Six Sigma helps greatly

on the development of its key players but does not care directly about its other personnel.

Conflicts between Six Sigma and EFQM Excellence Model

Besides Six Sigma contributes to excellence on a company’s policies and strategy, it may also

narrow its view from the future. Six Sigma companies are extremely focused on quality and how to

please the stakeholders, all those processes embedded to Six Sigma difficult innovation and creativity

[11, 12].

As mentioned on the contribution section personnel in a Six Sigma company have a dual

comportment. It over-valorise their players and tends to forget the others. The only improvement

expected for the others is to give them Yellow Belt trainings so they can help (or at least do not make

a mess). The hierarchy system might also break communication channels which is not an excellent

company policy.



12

Recommendations

Business models are not marriages and therefore companies on the modern world should not

devote itself to only one.

Each model presents its own advantages and disadvantages and none of them are perfect.

The results obtained by a company utilizing a certain model might differ greatly from another company

using the same model, this is due to different contexts. No one should expect start their car in different

places, follow the same instructions and arrive in the same place.

The best way to achieve consistent results is combining different models and adapting them

to company’s specific context. That is how the majority of the models were born in first place.

If the choice is between Six Sigma and EFQM excellence model, choose both! They are

complementary and all the conflicts can be reasonably easily solved. The problem of high focus on

process reduce creativity and innovation can be solved stimulating it by bonus for example, letting

some strategic processes more flexible or even having a dedicated research and development

department. The problem of under-valorisation of personnel can be easily corrected only by focusing

more on them, a strong human resources department is perhaps a good option, along with a well

elaborated career plan.



13

Conclusion

Six Sigma and EFQM Excellence Model are very compatible and contributes effectively on the

development of one another.

EFQM is broader than Six Sigma and therefore needs some extra measures such as better

focus on partnership, society and personnel.

The few conflicts between the models can be reasonably easily fixed as suggested on the

Recommendations topic.

In conclusion both models can bring excellent results and Six Sigma is very valid way to achieve

excellence in most of the EFQM Excellence Model requirements.



14

References

[1] EFQM, Introducing Excellence. 2003: Brussels.[2] Keller, P.A., Six Sigma Demystified . 2nd ed. Demystified, ed. McGraw-Hill. 2011, New York:

McGraw-Hill.

[3] Keller, P.A., Six Sigma Deployment . 2001, Tucson: QA Publishing. LLC.

[4] Keller, P.A. and Pyzdek, T., The Six Sigma handbook: a complete guide for green belts, black

belts, and managers at all levels. 2009: McGraw-Hill Professional.

[5] Help, S.S. Six Sigma Certifications. 2009 05/03/2014]; Available from:

http://www.sixsigmahelp.com/six-sigma-certifications/.

[6] Souza, W. Six Sigma + CMMI = Mais Qualidade. 2009 04/03/2014]; Available from:

http://www.blogcmmi.com.br/alta-maturidade/six-sigma-cmmi-mais-qualidade .

[7] Loethen, L. Six Sigma and Leadership: There's a connection. 2008 06/03/2014]; Available

from: http://www.qualitydigest.com/inside/six-sigma-article/six-sigma-and-leadership.html. [8] Salary.com. Six Sigma Black Belt - U.S. National Averages. 2014 05/03/2014]; Available from:

http://www1.salary.com/Six-Sigma-Black-Belt-Salary.html.

[9] Barone, S., Lo Franco, E., Statistical and managerial techniques for six sigma methodology:

theory and application. 2012, Chichester, West Sussex: Wiley.

[10] Schonberger, R.J., Best Practices in Lean Six Sigma Process Improvement . 2008: Wiley.

[11] Betts, M. The downside of Six Sigma, ISO 9000, etc. 2005 04/03/2014]; Available from:

http://blogs.computerworld.com/node/1329 .

[12] Smart, A. Six Sigma Is Draining Employees’ Creativity . 2013 12/03/2014]; Available from:

http://switchandshift.com/six-sigma-is-draining-employees-creativity.

http://www.sixsigmahelp.com/six-sigma-certifications/


http://www.blogcmmi.com.br/alta-maturidade/six-sigma-cmmi-mais-qualidade


http://www.qualitydigest.com/inside/six-sigma-article/six-sigma-and-leadership.html



http://www1.salary.com/Six-Sigma-Black-Belt-Salary.html


http://blogs.computerworld.com/node/1329


http://switchandshift.com/six-sigma-is-draining-employees-creativity








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