SUGGESTIONS REGARDING QUALITY AND THE REWARD SYSTEM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87M00539R002404050030-1
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 10
• Document Creation Date: December 22, 2016
• Document Release Date: September 4, 2009
• Sequence Number: 30
• Publication Date: February 22, 1985
• Content Type: MEMO

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AOMI MST ATfVL-IN 1 ER A' USE ONLY
Executive Registry
2 2 FEB 1985
SUBJECT: Suggestions Regarding Quality and
The Reward System
Thank you for your suggestions regarding quality and the
reward system. Your dedication to the concept of top quality
work and excellence in general is in keeping with the finest
traditions of our Agency.
As I understand your suggestion about the reward system, you
believe that employees need to be told early, clearly, and often
what the Agency's mission and their place in it is, and what is
expected from them, how they should accomplish their tasks, and
what should and should not be done if we are to do our work
well. You indicate -- and rightfully so -- that preventing
ourselves and others from making costly errors should be
considered a valuable positive contribution and rewarded as such.
I agree with the thrust of your argument. You are in
effect, calling for more and better communications about our
mission, goals, objectives, and the pitfalls to be avoided in
pursuing them.
Your suggestion concerning quality science is harder to deal
with on an Agency level. The articles you forwarded pertain to,
the manufacturing process in which tangible widgets of one kind
or another are turned out in greater or lesser numbers at lower
or higher degrees of perfection. Returns, scrap, cost per item,
and customer share of the market are all quantifiable and easily
identified factors of the equation in the business examples dealt
with in the articles. Assembly line production problems,
however, are the exception rather than the rule in the Agency,
although a high degree of concern with quality is certainly one
of our principal driving forces.
In a sense, the excellence initiative taken by the Director
is our own form of the quality program you advocate. The
contributions of all employees in our own search of excellence --
as exemplified by your having taken the time and effort to
outline your suggestions for us -- are, in the long run, what
will bring continued improvement in our product. To borrow a
phrase from your paper, I believe each of us should be his or her
own quality guru and share the thoughts and ideas that will help
us accomplish our mission effectively. I appreciate the fact
that you have done so.
A11 ~r'I'~ i Ali r /0~
.V#NLIMA[USArat
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~i,r.??~iAry
478
6 February 1985
To Director of Central Intelligence
STAT From
Subject
Reference
Attachments
STAT
DDS&T/OTS
Suggestions
room 212 South Bldg.
DCI memo of 28 November 1984
A) above reference
B) article from Industry Week
C) article from Quality Progress
In response to your memo (referenced above), I submit two
suggestions regarding quality and the reward system.
The intent is to make our man-hours more effective, to improve
timeliness and productivity by improving quality.
Thank you for asking my opinion and leading our pursuit of excellence.
-ids
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THE REWARD SYSTEM
This is the basic reason why things work right as well as why
things don't work right.
We are rewarded for quantity, quality and timeliness within our
own narrow purview. However, we are not rewarded for serving
extra consideration outside our narrow purview. In other words,
people appreciate it when someone pulls the fat out of the fire
(it smokes and smells). But people don't notice when someone
prevents fat in the fire in the first place.
Modern organizations suffer from neglect of long-term considerations.
The system rewards quick-fix at the expense of long-term solution.
You know the negative effect this has on U.S. business and industry.
Putting out fires at a construction site does not expand GNP.
Preventing fires at the construction site allows GNP to grow.
Therefore, I suggest that we add one more item to the reward
system -- prevention. In other words, I suggest that all AWPs
direct, and that all PARs access the extra consideration of
making it easy for our co-workers to do things right- the first
time, but hard to err.
For example, managers and workers alike should be motivated to:
1. write or illustrate procedures and post them where appropriate,
2. collect and propagate practical information from both
internal and external sources,
3. execute formal indoctrination and on-the-job training
beginning on the first day of one's new assignment, not months or
years later, e.g., video tapes of the organizational. mission at
each level from Director down to the respective Branch, practical
technical guidance, lessons from history (flaps), etc. In other
words, paraphrasing Steven Jobs of Apple Computers, "Excellent
people share a common objective, a common value system. Their
leader should articulate that commonality." Why not tell everyone?
Why wait for a flap? Therefore, I recommend that new people
receive immediate formal indoctrination and formal O-J-T
regarding what we are paid for and what +--,.,,a --
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4. etc. (add your favorite prevention techniques here),
A)
B)
C)
Why bother with adding prevention to the reward system? Don't
people render these extra considerations naturally? No, because
if we don't see it, hear it, smell it or feel it occasionally, we
don't bother, particularly if we don't gain anything for the
extra trouble. Look at where we would be today in areas of public
health, transportation safety, fire codes, etc. if people were
not paid to work on prevention in these areas. Notice how the
quality of life has improved through prevention. Look at
countries that don't bother with these things.
Prevention does occur naturally in some small way through the
efforts of a minority. Therefore, with the intent of multiplying
excellence, those individual fortuitous acts of prevention, I
suggest that everyone's AWP and PAR have acts of prevention added
to them -- ways of helping co-workers and enhancing the rest
of the organization to do it right the first time.
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QUALITY
Attachments B and C are two articles that illustrate how CEOs are
using quality science to strengthen their organization for
business competition. I have highlighted and turned to the last
pages for your convenience. Two points are:
1. trouble is caused by the system, not by the people working
within that system,
2. the CEO at Signetics has identified what his organization
stands for in terms of quality, and he propagates that ethic.
That's what's going on in business and industry. The quality
sciences also serve DOD and other large government organizations.
Do you find any way we can benefit by an organization-wide
quality policy? Working at the grass roots level of the quality
business, I have to consume resources on classical cases, e.g.,
myopia, narrow purviews, disregard for the original purpose (the
mission), the push for short-term fixes at the expense of long-
term gains, why bother?, etc. Thus, I have learned the futility
of working without total commitment of the entire managerial
hierarchy. As references B and C explain, verbal support is not
sufficient.
Our Branch Chiefs and Division Chiefs are very capable leaders,
using traditional tools (PERT, MBO, stick & carrot, etc.). But
they are merely laborers in the vineyard, lacking instruments of
organization-wide quality policy and a finely tuned reward system.
I admire and respect your leadership in the pursuit of excellence
that you broadcast several months ago. I regret that I was not
alert to your call for suggestions at that time. Had I been,
here's what I would have recommended:
Select your quality guru and attend his quality college. Then,
appoint your VP for quality, send your managerial hierarchy to
that same school and implement that gurus quality process.
I could recommend the big names in the profession (Deming, Juran,
Crosby, Feiganbaum and Shainin), but these people probably would
not want to work with the encumbrances of government.
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If you are unfamiliar with quality science, you ask -- What's
all this stuff about quality and gurus?
From a business/industrial perspective, quality is the science of
variability, dedicated to helping operators of repetitive
processes (banking, manufacturing, insurance, transportation,
etc.) keep up with the competition. After an organization finds
out how to operate a process successfully, the quality scientists
can recommend statistical techniques to repeat that operation
successfully, many times again at lowest cost (by minimizing
scrap and rework), as well as provide a stable basis for further
improvement (pursue excellence).
,But, these scientific things come with a price -- long term
managerial commitment, organization-wide. One cannct expect the
manufacturing division to get with the quality process when the
marketing and support divisions refuse to come aboard. The short
term focus of the modern American reward system discourages
quick adoption of new things by prudent managers. Thus, the
learning experience shared by the CEO of Signetics (Attachment C)
emphasizes managerial commitment.
Therefore, I suggest that you talk to the above highly regarded
individuals and ask them to recommend a consultant who can advise
us on getting our processes into statistical control. Why? So we
can see scientifically where they are satisfactory, where they
can be improved, and where they excel.
I don't know how much of our business is amenable to modern
quality techniques; but I'm confident that there are reputable
consultants who do know. I emphasize reputable, because the use
of statistics demands credibility. As you know, figsres lie and
liars figure.
These consultants are told everywhere they go, "Oh, we're
special. That quality stuff don't apply to us." Then the
consultants demonstrate that the so-called unique and special
activities are composed of a series of repetitive processes,
amenable to statistical techniques.
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So, you ask, what could one of these guys do for us?
After studying our business, they would recommend:
A) compiling certain records,
B) using that data to plot the flow of our processes in a
statistical manner (so we can see their condition, whether
they are in or out of statistical control),
C) suggesting managerial action for those processes not in
statistical control (e.g., reward, retraining,
reassignment, etc. of responsible personnel),
D) suggesting managerial action for those processes already in
statistical control:
a) exercise prevention -- use recommended action to
prevent those processes from falling out of control,
b) pursue excellence -- use the stability of that
process as a base to launch improvement.
But statistical techniques don't accomplish anything alone.
They require long term managerial commitment working within a
responsive system. Success depends on management and the
environment (the system we work in). The consultants can advise
us but not bring it off. It has to happen on fertile ground.
Look at the turn-around in the quality of Japanese goods during
the past twenty years.
In summary, I suggest that you commit our organization to the
quality effort -- select your quality guru, go to his quality
college, appoint a high level executive as Director of Quality
(someone with the quality attitude who can get things done),
send all of the managerial hierarchy to quality college, and then
periodically remind us about our quality commitment.
Why bother? Competition. Keeping ahead of KGB, UPI, DIA, CBS,
etc., necessitates quality goods and quality services. These
things are not luxuries. They cost less because they come from a
more productive process (minimal scrap and rework) where 100%
inspection is not necessary because the output of such a process
is predictable (in statistical control). In other words --
things were done right the first time.
In conclusion, I suggest that you include quality science in our
pursuit of excellence.
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ADMiN'lb'AA%&1. It.' L14AP+LIf(LV %J"-
Central Intelligence Agency
MEMORANDUM FOR ALL EMPLOYEES
SUBJECT: Creative Problem solving
1. The intelligence problems the Agency faces continue to grow in
number and complexity. Responding to these varied challenges puts a
premium on our ability to develop a continuing stream of innovative
solutions. 'We can use all the good ideas we can get, and it is crucial
that we be prepared to act quickly on the most promising. This means
that we do not subject occasional flashes of inspiration to bureaucratic
red tape and endless levels of review before they reach the appropriate
:decisionmaker. I have, therefore, established a top-level forum in the
Agency for reviewing and reacting to new ideas concerning ways to
accomplish our mission better. It consists of the Deputy Director of
Central Intelligence, the Executive Director, and myself. ?I invite each
of you with ideas for new or better ways to respond to critical
intelligence problems -- including improvements in the collection,
production, or dissemination of intelligence or to the .. way. we are
organized to do our job ---:to.-.send them directly to one of the three of
us. We will decide in short order on the merit and feasibility of such
proposals and, if appropriate, arrange to implement them rapidly.
2. CIA already participates in two other programs designed to take
maximum advantage of employee expertise and imagination. The Agency's
cash awards program, administered by the office of Personnel, recognizes
suggestions and special accomplishments that result in savings to the
Government. The Community-wide Production Enhancement Initiatives
program, managed by the Intelligence Producers Council, explores
potentially useful, but longer-term, initiative to improve the
intelligence production process. I hope that by supplementing these
formal programs with the informal one described above, we will be able to
initiate some innovative short-term projects providing immediate!
intelligence payoff.
3. I urge you to share your ideas with us on how the Agency may do
its job better. You are, after all, the ones who meet the challenges of
Agency business head on every day and are, therefore, the best source of
new concepts for solving pressing intelligence problems.
Willi t J. Casey
Director of Central Intelligence
ADMINI R Vtr'L I t? I USE ONLY
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the compelling evidence will be H. B. the study and its conclusions by vart
ous technical, quality-control, and
Fuller's investment in retraining ex-
ecutives and middle managers-to management personnel, he says. But
convince them that quality is part of the results have borne out the value of
~ ._.,?.,~:~~?~,,,.~
their job. "We've already scheduled statistical analysis. "The entire pro-
14 executives to attend Vi-day ses= gram, from start to finish, will bring
sions at the Quality College, followed the coating operation from being in a
by 30 middle managers who will.take,; { --i ??isr* relatively noncompetitive position
K=?' { into a very c:ompeti,tive position,"
in the full five=day sessions-: The
company budgeted $150,000 this year ; Mr Conway declares.
for This educational effort. Prognosis. In 1961, -in his book,
Total Quality Control Engineering
H. B. Fuller is building its program
on the premise that management is Y r. & Management', Dr. Feigenbaum em-
responsible for 80% of the quality - phasized "making it right the, first
problems. "If management looks to time." Unfortunately, some Ameri
c
employees before cleaning up its own an businessmen have learned that
+" Jp.
house-or instead of cleaning up its lesson secondhand-from the
.:fit.- ~;~;~. =: =~...~ ,?. , _-, , ,,;-: ; .
own house-then employees will Japanese.
cynically wonder why the company is If we make it right the first time,'.'
only interested in the 20% of the s'a says S. John Cole, :vice president of
quality problem that is within [the =7 r quality. and development at Earnest
employees'] control," Mr. Odom says. Machine Products Co., Cleveland, "it
That's another way of saying that will be an important step in transfer-
most production problems are caused ring - ' -' - ~ [day-to-day] quality r-esponsibil
by the system, not bythe worker: And DR. J. M. JURAN-"The quality of ity to where it belongs-in the hands
it is why many quality-control ex- U. S.-mode products :.. has not deterio- of the worker. Once the [operational]
pens, including Dr. Deming, are wary rated. It simply has not improved as fast responsibility is. there, production
of the recent proliferation of quality in the U. S. as it has in Japan" workers must, also be given the au-
circles in the U. S. Dr. Deming sus- thority to interrupt production to cor
pects that quality circles are some- ings, as well has higher productivity, rect quality problems."..
times initiated as a substitute for an in one carbonless paper-coating oper- If this succeeds, Mr. Cole predicts
overall quality program. . - ation. Management was aware that the emergence of a new, expanded
Where do quality circles fit in? the amount of coating material being role for quality-control professionals
Raymond Wachniak, director of cor- - used was high, but it wasn't sure how in industry.
porate quality assurance at Firestone - to reduce it and still produce a consis- - "Breaking out of the compartment
Tire & Rubber Co., Akron, views tently high-quality product. The pur- that has grown uparound.the tra- ;.
ol...
them simply as one element of a chase of?a new $700,000 coating head ditional function of quality contr
company-wide program'. "Japan's -` was being considered as a possible so has become the big challenge for qual-
quality success," he points out, "was lutiort ity professionals, acknowledges Mr.
already 17 years old when quality cir But management decided to give -Maas, ASQC's president: .?; "'
cles came into being. statistics a try, beginning with the It is not a nc:wproblem, he admits..
By the numbers. And where do_ es testing of samples and plotting "run"._.- "Years-ago,-when I first joined ASQC, :..
St.:tiseical control come in? charts, which plot data chronologi- . my boss at-Lockheed gave me some
"it provides a road map that directs- tally to indicate trends and variation advice: 'The trouble with you guys is
the attention of management to what in magnitude. Also, through meetings that you only talk to each other,' he
ariations . said. 'You've got to start talking to'--.,
is wrong," explains William E. Con- . with the chemical supplier, variations'.-
way, chairman and president of in the viscosity of the coating mate- management-'. _:';'?
N::shua Corp., Nashua, N. H., which rial were minimized. And, rather than : "Now that'inahagement is ready to
brought in Dr. Deming to help set up make frequent quality-related ad- listen,'.' Mr.- Maas adds,-"our chal---__
a total quality-control program 'It justments to the equipment, it was --..=lenge is to-lea rn to talk to general ._
dce.sn't solve problems," Mr. Conway decided to let the coating operation management in terms they under
advises, "btu it identifies where the run without interruption. stand.".
problems are and points .. toward a The experiment showed that the. ASQC's -first major ..effort to
solution. It provides data that allow amount of coating could be reduced encourage communication with top
mat: _:ers and workers to make deci- and yet keep product variations management was the formation of a
lions' based on facts, rather than on within an acceptable level. By reduc- National Advisory Council for Qual-
sp i ulacion-" ing the average amount of coating ity, a prestigious group of leaders rep-
Natshua is convinced that from 3.6 lb to 2.7 lb per 3,000 sq ft of . resenting business, labor, govern-
r.:.::;:.;_ znent-directed quality efforts paper, material costs have since been ment,. industry, and consumer inter-
x.,-ill achieve 90"% of the results, sliced by $900,000 a year. Meanwhile, ests. Its first project was a confer-.
whereas quality-circle-type programs the plant has avoided the expense of a ence, held this last April in Washing-
will yield only 10%. But the company new $700,000 coating head. And, fi- ton, for CEOs and other executives
does involve the employees. For . nally, because fewer quality-related whose career portfolios don't include
ex R;, le, it challenges them to prat- adjustments to the coating machinery a formal emphasis on quality. The
ti:_e "ilr,a~iueering"-lRm:Iginingwhat are now being made, the speed-and, conference sr:ressed the critical role
thins would he like "if everything hence, the capacity-of the equip that quality can play in increasing
went right," explains William J. rent has been boosted by 25":x. productivity.
Kelly, coordinator of the quality pro- It took seven months to conduct It's a start. And, in the long run, ef-
gr:un. the study and implement the correc- forts like this one may prove to be as
Triple benefit. At Nashua, statisti- rive actions, Mr. Conway points out. significant to the U. S. as Dr. Den-
t-cal all:11ys1S led to a nuljor cost say- "There was tremendous opposition to ing's 1950 visit was to Japan. n
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v In October 1982 %Ve aced a important decision. Our cor
porate quality program manager left our company to join
a company that was just starting up. Our profits were non-
existent. We debated whether to replace the program
manager, and decided it was important to the program and
a signal to the company that we meant what we said. We
appointed one of our senior product engineering managers
to the job.
In December 1982, the first issue of our corporate quali-
ty publication was produced. By then, over 20 bootleg-
but officially encouraged-.quality newsletters were being
published by various groups. All exempt employes had gone
through our two-day quality college-over 2,000 people by
the end of 1982.
In April 1983 we had our first QIT Recognition Day. We
gave out awards to key performers. The program was now
moving broadly across the company. There were many
spontaneous groups being formed, like ZD teams and a few
quality circles. Department slogans appeared. By September
of 1983 massive corrective-action programs had begun. All
employes signed a pledge to work toward zero defects. Each
QIT held a ZD day. A quality college for nonexempt
employes was started.
The program was now four years old. We still had open
issues. For example, some people still were not comfortable
with the cost of quality measurement, and we had dif-
ferences of opinion on the application of quality measures
in the administrative area. But the program had become part
of us.
In December 1983 we had an off-site staff meeting and,
like almost everybody else I know, we took a look at
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ourselves to light of Peers and Waterman s book, In Search .k
of Excellence 3 The b'ook' stresses the importance of having ;
a_superordinate goal. It was a quick and unanimous deci-
sion that quality was our superordinate goal. We selected
the phrase, "People Committed to Quality." And you can
change that phrase from the plural to the singular: "I am
committed to zero defects."
When people ask me what Signetics does, I say that we
make integrated circuits for our customers, with special em-
phasis on new products. They then say, "Yes, I know, but
what is important to you,.what.dio, you stand for?:' I then.
say, "What we stand for.is.'People Commited to Quality;'
and" that'starts with me:ive years after starting we
have really just laid the quality foundation. More hard work
lies ahead-and more opportunities.
References
1. Philip B. Crosby, Quality is Free, New York: McGraw-Hill,
1979.
2. Ibid.
3. Thomas J. Peters and Robert F. Waterman, Jr., In Search
of Excellence, New York: Harper & Row, 1982.
About the Author
Charles C. Harwood is President of Signetics Corp. He started
his career as a shift foreman for Corning Glass Works and by 1970
worked his way up to President of Signetics, then a subsidiary of
Corning Glass Works. Harwood remained as President after
Signetics was sold to U.S. Philips Corp.
Harwood completed his undergraduate work at Harvard Univer-
sity. He also received an MBA from Harvard.
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