Retaining employees for the long term within the framework of change management processes is a challenging management task. In change management processes, a fundamental distinction must be made between incremental change management and radical change management.
While incremental change happens continuously and is integrated into everyday work, radical change represents a strategic realignment of the company, which is predominantly associated with staff reductions and is intended to change the corporate culture. This is particularly true in the case of turnarounds, where cost-cutting programs play a crucial role in ensuring the long-term survival of the company.
Employees are more willing to go along with incremental change, also known as continuous improvement, than with radical change, as these could also be affected by staff reductions. This stirs up fears among employees and therefore often leads to high turnover. Therefore, it is important for management to actively involve employees in the changes to empower them to act as change agents so that they can actively shape the change. To do this, it is crucial to identify the key personnel that a company cannot do without. The management and key personnel are given the task of actively accompanying the company's employees on the journey of change so that the company can grow sustainably again from a lower level after the strategic realignment so that the remaining employees have a prosperous future.
Open communication and excellent transparency on the part of the management, which should also act as a unit, help to bring the employees along on the change journey in a targeted manner. However, experience has shown that 50% of all change management projects in the industry fail and 20% are implemented inadequately due to two crucial reasons, namely power struggles within management and resistance from employees. For this reason, it is imperative that a company's management team select a leadership coalition of similarly rational members who also have sufficient empathy to successfully manage the change management process, which must be done together with employees and should not be directed against them.
The guiding coalition should develop a common strategic vision and practice a participative way of working involving everyone, since the goal of transformation is to change the thinking of employees, and transformation can only be brought about together with employees.
Tables of contents
1 Introduction
2 Theory
2.1 Employee Retention Management
2.2 Change management approaches to restructuring
2.3 Corporate culture and Change Management
2.4 Theories to guide action for restructuring (Radical Change)
2.4.1 Lewins 3-phase model
2.4.2 Kotter’s 8-step model
2.4.3 Krüger’s five-phase model
2.4.4 Schmidt-Tanger’s six-phase model of change
2.5 Lean Six Sigma as a system of continuous improvement (Incremental Change)
2.5.1 Six Sigma
2.5.2 Lean
2.6 Composition of teams in change processes
2.6.1 Belbin team roles
2.6.2 Five colors model of Caluwé and Vermaak
2.6.3 Creativity theory by Walt Disney
2.6.4 Team composition by diversity
2.6.5 Team composition in the generation mix
2.6.6 Team composition according to the DISG model
2.6.7 Team composition according to the eight Insights types
2.6.8 Team composition according to Myers Briggs' character types
2.7 Team phases of team development
2.8 Leadership
2.8.1 Definition of leadership
2.8.2 Competencies of a leader
2.8.3 Management and its distinction from leadership
2.8.4 Leadership styles
2.9 Organization and its different forms
2.9.1 Functional organizational logistics
2.9.2 The Business Unit segmentation
2.9.3 Project organization
2.9.4 Process organization
2.9.5 Matrix organization
2.9.6 The secondary organization
2.10 Innovation
2.10.1 Definition of the term innovation
2.10.2 Pull- and Push-Innovations
2.11 Sustainability and sustainable corporate governance
2.12 Resistance
3 Practical implementation of change management
3.1 Improvement plan
3.2 Investigations for the preparation of the improvement plan
3.3 Selection of the adequate change management models
3.4 Stakeholder analysis
3.5 Presentation of the improvement plan
3.6 Announcement of the improvement plan to the works council and the workforce
3.7 Communication towards the stakeholders
3.8 Negotiations between the management coalition and the works council
3.9 Negotiations with the employees
3.10 Employee Retention Program
3.10.1 Safety, health, environment
3.10.2 Leadership style
3.10.3 Leadership style
3.10.4 Further education pact
3.10.5 Work processes
3.10.6 Flexibilization of working time
3.10.7 Social programs to promote team spirit
4 Conclusion
Literature list
Index of subjects
Abstract
Retaining employees in the long term within the framework of change management processes is a challenging management task. In change management processes, a fundamental distinction must be made between incremental change management and radical change management. While incremental change happens continuously and is integrated into the daily work routine, radical change represents a strategic realignment of the company, which is predominantly associated with staff reductions and is intended to change the corporate culture. This is particularly true in the case of reorganizations, where cost-cutting programs play a decisive role in ensuring the long-term survival of the company. Employees are more willing to go along with incremental change, which is also referred to as continuous improvement, than with radical change, since they could also be affected by staff reductions. This stirs up fears among employees and therefore often leads to high fluctuation. Therefore, it is important that the management actively involves the employees in the changes in order to enable them to act as change agents so that they can actively shape the change. To do this, it is crucial to identify the key personnel that a company cannot do without. The management and the key personnel are given the task to actively accompany the employees of the company on the journey of change, so that the company can grow again sustainably from a lower level after the strategic realignment, so that the remaining employees have a prosperous future. Open communication and very good transparency on the part of the management, which should also act as a unit, help to bring the employees along on the journey of change in a targeted manner. However, experience shows that 50% of all change management projects in the industry fail and 20% are implemented inadequately due to two key reasons: power struggles within management and employee resistance. For this reason, it is imperative that a company's management team select a leadership coalition of similarly rational members who also have sufficient empathy to successfully manage the change management process, which must be done together with the employees and not against them. The leadership coalition should develop a common strategic vision and practice a participative way of working, involving everyone with transfer of responsibility and sharing of knowledge, since the goal of transformation is to change the thinking of the employees, and transformation can only be brought about together with the employees. In this phase, the guiding coalition will have to take a lot of time to guide the employees through the phases of change in a targeted manner, so that the changes achieved can be anchored together in the company culture.1 In this process, it is quite common to involve external specialists in the context of interim management, who support the management team with their experience gained in other companies. Moreover, they bring a neutral perspective to the company, free of emotions and personal relationships with company employees, which can be beneficial for a successful change management process.2
In the event of a staff reduction, it is also very important to find socially acceptable solutions for the departing employees within the framework of sustainability, as the company hereby sends a positive signal to the remaining employees that the company cares about their former colleagues. At the same time, it is essential to develop the remaining employees in order to strengthen their intrinsic motivation, which is crucial for the sustainable growth of the company after its strategic realignment. An Employee Retention Management is therefore indispensable in every company in order to bind the employees desired by the company to the company in the long term.
Using the example of a medium-sized company, Chapter 3 of this book shows how the practical implementation of a change management project can be successful, based on the premise of retaining the remaining employees in the company in the long term.
Foreword
The author has written this book in order to share his more than 40 years of international experience with the readers and to pass on to them the knowledge he has gained for their professional practice.
In his professional career, he has traveled to nearly 70 countries around the world and lived and worked on every continent for almost 12 years.
In the positions of Managing Director, Business Director Far East, Head of Region Europe, Key Account Manager Americas, Key Account Manager Europe, Country Head in various countries, Chief Operating Officer, Global Director Controlling, Global Director Supply Chain, HR Manager, Interim Manager and Business Coach, change management has always accompanied him, either in the form of continuous improvement (Kaizen) or in the context of restructuring companies (radical change).
Together with selected teams, the author has built up, further developed, transformed and restructured companies and organizations and, within the framework of a turnaround, sustainably repositioned them for future market requirements (People, Planet, Profit).
During this time, he got to know a wide variety of people from different cultural backgrounds, worked closely with them and actively accompanied them on the path of change. Due to the fact that the author is fluent in several languages, he always had a very easy access to other people and cultures, which allowed him to dive into the souls of the people and thus build trust with them.
In doing so, he has come to the realization that processes and procedures can be very different depending on the industry, but people all over the world are very similar in every respect, character, attitude, ways of doing things, beliefs, emotions, needs, etc., which is what Paul Mc Cartney and Stevie Wonder described in their song Ebony and Ivory from the year 1982 very appropriately in a text passage:
>>We all know that people are the same wherever you go.>>
List of abbreviations
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List of figures
Figure: 1: Concept of the five competitive forces
Figure: 2 : Plan-Do-Check-Act Cycle
Figure 3: Appoaches to Change Management
Figure 4: Strategies for approaching the change process
Figure 5: Motivational approach: Mc Gregor's XY theory
Figure 6: Overall picture of a person
Figure 7: Development of population figures by world region
Figure 8: Development of population figures by top 10 countries
Figure 9: Population pyramid of Germany
Figure 10: Classification of personnel retention in human resources management
Figure 11: Five-factor model of personality Big 5
Figure 12: Levels of employee retention
Figure 13: Great Place to Work Modell
Figure 14: Motivators and hygiene factors according to Herzberg
Figure 15: Quality criteria for retention management measures
Figure 16: The three perspectives of success measurement
Figure 17: Human Capital Balance Sheet
Figure 18: Change 1st and 2nd order
Figure 19: Objekte und Formen des Wandels
Figure 20: Fields of action of change management
Figure 21: Four rooms of change
Figure 22: Th three levels of culture
Figure 23: Mc-Kinsey-7S-Model
Figure 24: Advantages and disadvantages of a stong company culture
Figure 25: Lewin’s 3-phase model
Figure 26: Kotter’s 8 steps model
Figure 27: Krüger’s 5-phase model
Figure 28: Schmidt-Tanger’s 6-phase model
Figure 29: Lean Six Sigma – Two methods with optimal synergy
Figure 30: Preventive and relative quality methods
Figure 31: Measurement and implementation of customer requirements
Figure 32: Factors influencing quality
Figure 33: Six Sigma Characteristics
Figure 34: Terms used to measure Six Sigma levels
Figure 35: Six Sigma Methods
Figure 36: Six Sigma DMAIC-Methods
Figure 37: Overview Six Sigma DMAIC Define Phase
Figure 38: Overview Six Sigma DMAIC Measure Phase
Figure 39: Overview Six Sigma DMAIC Analysis Phase
Figure 40: Overview Six Sigma DMAIC Improve Phase
Figure 41: Overview Six Sigma DMAIC Control Phase
Figure 42: Six Sigma Rolls
Figure 43: SIPOC
Figure 44: Process steps of the FMEA,
Figure 45: FMEA
Figure 46: CTS-Tree
Figure 47: Comparison of the production processes
Figure 48: Lean Manufacturing- / TPS-House
Figure 49: Toyotas 4 P Pyramide
Figure 50: The Delta-Audit
Figure 51: Projekt Plan
Figure 52: Key Performance Indicators (KPI’s) in Production
Figure 53: Generic versus Problem-Oriented Approach to Lean 106 in the Enterprise
Figure 54: Steps of revitalizing lean in the enterprise
Figure 55: Assignment of metrics to lean tools
Figure 56: Employee productivity
Figure 57: Inventory turnover rate
Figure 58: Production lead time
Figure 59: Accident rate
Figure 60: Overall Equipment Effectiveness (OEE)
Figure 61: Error frequency
Figure 62: Process capability indices
Figure 63: Lean Rolls
Figure 64: Process leveling / production smoothing medium Heijunka board
Figure 65: Value based mapping
Figure 66: Kaizen / CIP
Figure 67: Waste: Tools and Solutions
Figure 68: 8D Report
Figure 69: The 5S Steps
Figure 70: Red Tag
Figure 71: Visual Management
Figure 72: Systematic creation of work standards
Figure 73: Kanban
Figure 74: Kanban control loop
Figure 75: Setup time optimization
Figure 76: TPM to maximize effective production time
Figure 77: Histogram with absolute and relative frequency density
Figure 78: Flow chart
Figure 79: Scatter plot
Figure 80: Ishikawa diagram
Figure 81: 5-Why Method
Figure 82: A3 report on problem solving
Figure 83: Pareto analyis
Figure 84: Quality control chart
Figure 85: Error collection card
Figure 86: Process capability as a goal of process control
Figure 87: Success factors of a quality circle
Figure 88: Belbin team roles
Figure 89: Five colors model
Figure 90: Disney creativity strategy
Figure 91: Systematics of the diversity dimension
Figure 92: Basic approaches to diversity management
Figure 93: Generation mix
Figure 94: Generation comparison at the beginning of 2021
Figure 95: Generation comparison at the beginning of 2030
Figure 96: DISG model
Figure 97: Features of the DIGS model
Figure 98: The eight Insights types
Figure 99: The characteristics of the eight Insights types
Figure 100: Brief description of the 16 personality types from the MBTI
Figure 101: Differences of the sixteen personality types from the MBTI by categories
Figure 102: Model of team development
Figure 103: Eisenhower decision matrix
Figure 104: Five success factors for leadership success
Figure 105: Traditional vs. new competencies
Figure 106: Competence model
Figure 107: Five perspectives on management and leadership
Figure 108: Main differences between management and leadership
Figure 109: Management and leadership tasks
Figure 110: Transformational leadership
Figure 111: Tasks of transactional leadership
Figure 112: The main differences of leadership styles
Figure 113: Guiding principles of leadership
Figure 114: Organizational model according to decision premises
Figure 115: Functional organizational design
Figure 116: Business Unit segmentatio
Figure 117: Project organization
Figure 118: Process organization
Figure 119: Matrix organization
Figure 120: Staff Product Management
Figure 121: Line Product Management
Figure 122: Matrix Produkt Management
Figure 123: Coordinational Commitee
Figure 124: Open Innovation Modell
Figure 125: Closed Innovation Modell
Figure 126: Sustainable developement in the county model
Figure 127: 17 Sustainable development goals
Figure 128: Ranking of the most sustainable companies in Germany
Figure 129: Sustainable corporate governance
Figure 130: Certification circle within the framework of quality management
Figure 131: General symptoms of resistance
Figure 132: Iceberg model
Figure 133: Bottom-Up stratey
Figure 134: Bipolar strategy
Figure 135: Balance sheet
Figure 136: Financial ratios for determining the liquidity of an enterprise
Figure 137: Factoring
Figure 138: Balance sheet of the medium-sized company
Figure 139: Income statement according to cost items of a medim-sized Company in the chemical industry
Figure 140: Procurement process
Figure 141: Sustainability in purchasing
Figure 142: SWOT analysis compared to the competition
Figure 143: CM 1 Analysis matrix for products
Figure 144: The 4 P's of the marketing mix
Figure 145: Boston Consulting Group Growth Share Matrix
Figure 146: Product / Market Expansion Network
Figure 147: Incoterms 2020
Figure 148: Brown Paper / White Paper Technique
Figure 149: Age structure analysis according to age groups
Figure 150: Education level of the employees
Figure 151: Timeline of sustainable restructuring
Figure 152: Stakeholder analysis
Figure 153: Positive self-management model
Figure 154: Influence of positive leadership
Figure 155: Positive leadership according to the PERMA model
Figure 156: Characteristics of Resonant Leadership and Emotional Intelligence
Figure 157: Maslow's pyramid of needs
Figure 158: Comparison of change management forms
List of tables
Table 1: Works Council: Number and Exempt Members
Table 2: Global economy in comparison of the top 15 countries
Table 3: Gender Gap Pay in the European Union in 2020
Table 4: Financial ratios for determining the liquidity of the medium-sized enterprise
Table 5: Personnel cost ratio by selected sectors or industries
Table 6: Returns on sales of medium-sized companies in Germany in 2021
Table 7: EU SME thresholds since 01.01.2005
Table 8: Product analysis according to DB 1 Margin
Table 9: Average age of the population in the main industrialized and emerging countries
Table 10: Competence matrix of employees in production
Table 11: Notice periods for employer
1 Introduction
More than 2,500 years ago, the Greek philosopher Heraclitus made the statement that nothing is as constant as change. This statement is confirmed by Werner Seidenschwarz, since for him the only constant of change lies in the process.3
Although, according to Heraclitus, on the one hand nothing is as constant as change, on the other hand man is a creature of habit. This means that man uses well-worn systems because they are familiar to him as routine. He often does not think about his actions at all, but simply reels off his program as he is used to it and holds on to the tried and tested, because it is comfortable for him. Consequently, it is difficult for people to change themselves or to make changes to systems, so that they often offer resistance and reveal rejection in the event that a change is imminent, especially if they are directly affected by it. This concerns both the social, private and professional sphere.
Thus, when new situations arise, his behavior is often not purposeful, because he moves in a wrong direction. Only when he finds himself in a dead-end situation or is confronted with crises, so that no further way out is in sight for him, he will have to leave the comfort zone and make efforts to tread a new path, i.e. the path of change, which should lead him to the goal. Examples of social crises in the 21st century include the Covid-19 pandemic and the war between Russia and Ukraine. Calls and restrictions from governments in the global context caused the majority of people to abruptly change their habits. In the case of the Covid-19 pandemic, medical or FFP2 masks were worn, minimum distances were observed, contact restrictions were implemented, hands were disinfected, vaccination campaigns were held, etc., to protect themselves and others from infections that in the worst case could have meant death. At workplaces, contact restrictions were observed, partitions made of plexiglas were set up and, wherever possible, employees were sent home to carry out their work from the home office. Meetings of an internal nature, but also externally with customers, which always took place physically before the Covid-19 pandemic, were suddenly held via video conferencing, and business trips were only made when absolutely necessary. All of these measures changed business life to such an extent that companies and their employees first had to get used to them, until they suddenly found working from the home office or even hybrid working to be pleasant, because this way work could be combined with family, which contributed significantly to the work-life balance. In the context of advancing digitalization, a new working method suddenly entered business life, the so-called New Work. Companies suddenly noticed that these measures also saved them enormous costs, as they suddenly no longer needed office space, which they either gave up or sublet. Video conferencing, which replaces face-to-face meetings, also significantly reduced travel costs. The war between Russia and Ukraine, which led to an energy crisis with exorbitant price increases and galloping inflation, awakened people's willingness to make massive energy savings and also to consider renewable energies (e.g. solar energy, wind power, geothermal energy, green hydrogen, wood) and to decisively change their consumption behavior. Instead of heating as usual in winter at higher temperatures between 23 and 24 °C, the heaters were turned down to 20 °C and normal light bulbs were replaced by energy-saving LED lights. People were also willing to cut back on clothing, vacations, leisure activities, restaurant visits, entertainment, weekly household purchases and health care. Even the beloved automobile was used less, so people switched more to public transportation, which led to a more positive carbon footprint.4 5
However, people prefer to take action voluntarily rather than to be dictated to by governments in the social sphere or by the strict orders of management in the professional sphere. A dictate on the part of the governments leads therefore of the frequent inevitably to protest actions coupled with riots or a drop in employee performance and increased sick leave in the companies, as they are demotivated by restrictions.
The Coaching, which means on voluntary basis assistance to the self-help, can be with forthcoming changes therefore of large assistance. The coach can show the coachee alternatives and a change of perspective or carry out reframing with him, whereby the goal is consciously placed in a different framework. These measures can be very helpful for the coachee to find the right path for him through self-knowledge and to follow it successively.6
Business enterprises, on the other hand, do not operate alone in the market, but have competitors who ideally want to be ahead of them in the market. In this context, a competitive dynamic arises which they have to undergo permanently in order to have a competitive advantage over the competition in the short term, but in the long term in order to survive. For this reason, business enterprises are constantly exposed to change and permanent change.
These competitive dynamics can be clearly illustrated by Porter's concept, in which new providers, suppliers, customers and substitute products meet the competitors of the industry.7
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Figure 1: Concept of the five competitive forces,
Own representation based on Porter, M.E. (2014), p. 25.
When it comes to change, a fundamental distinction is made between incremental change and radical change. Incremental change in an organization stands for the continuous improvement of a process, which is absolutely necessary in order to be able to survive on the market in the future in the fast-moving era of globalization. The Japanese Kaizen (=improving what is good) or the German answer of the Continuous Improvement Process (KPV) can be mentioned as methods here. The continuous improvement process leads through four phases of waste elimination. These phases are known as the PDCA cycle (Plan-Do-Check-Act) by William Edwards Deming, who is considered a pioneer of quality management. Deming's findings, which went largely unheeded in the USA, fell on fertile ground in Japan in the 1950s and were consequently incorporated into the Toyota Production System (TPS) by the Japanese car manufacturer Toyota. As a result, the American market was overrun with cars and consumer goods by Japanese competitors from the early 1980s. The Toyota brand and vehicles from other Japanese car manufacturers such as Honda, Mitsubishi, etc., then began their triumphant march across Europe on the basis of their success in the USA, in order to establish themselves as global brand manufacturers, which they have also succeeded in doing impressively.
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Figure 2: Plan-Do-Check-Act Cycle, Own representation based on Koska, S. (2013), p. 15.
The principle of kaizen or continuous improvement is the harmonization of work content by eliminating non-value-added work content, which can best be achieved by standardizing processes. The standardization serves in particular the process leveling and the avoidance of waste. If standardization is carried out systematically at all workplaces, quality can be measurably increased, since decision-making autonomous manufacturing cells contribute to the stability of processes. Standards facilitate fast and targeted action. Standards are therefore an important prerequisite for continuous improvement, because standardization is the best, safest and simplest way to do something.8
Radical change leads companies to develop a new vision with their employees, so that everyone approaches new processes together with great motivation. Radical change looks at cross-functional processes and involves a profound change that is an almost indisputable necessity.9
This means that change management follows two different approaches, which are shown in the following figure.
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Abbildung 3: Approaches to change management, Own representation Kurwan, M. (2023)
Both incremental change, which takes the form of continuous improvement, and radical change affect employees.
It is therefore essential to turn those affected into participants, namely in the form of empowering employees to shape the change. This measure also contributes to employee retention, as management gives them the confidence to contribute their ideas and thus decisively shape the process of change..10
It is therefore very important that the right strategy is always chosen in the context of change, as experience shows that the fluctuation rate is around 1/3 of the workforce, especially in the case of radical change. 1/3 of the employees are still undecided about a change of this kind, while only 1/3 have a positive attitude towards a change management process and therefore support it.11
The following strategies can be used for this purpose:
- Top-down strategy
- Bottom-up strategy
- Bipolar strategy (both directions)
- Multiple nucleus strategie
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Figure 4: Strategies for approaching the change process, Own representation based on Vahs, D. (2020), p. 368.
The top-down strategy for change processes starts at the top and is carried down through the organization. In this way, management can set an example of changes that the entire organization must follow and also support. In practice, this is often the case, since management has control in its hands and then also actively supports all actions. The major disadvantage here, however, is that employees feel restricted in their radius of action and often have the impression that they are not sufficiently involved, so that resistance at the lowest levels of the hierarchy is the result.
The bottom-up strategy takes a grassroots approach to addressing the needs of employees. Those affected, who are actively involved in processes and have a very good understanding of them, are involved at the operational level and are very well placed to judge which changes are necessary and appropriate. Since the bottom-up strategy requires the approval of management as a basic prerequisite, it is not often applied in many companies.
The bipolar strategy (both directions) has a very high participatory character, since it is implemented simultaneously from both the bottom and the top. Since all hierarchical levels are appropriately involved in the change processes, this inevitably leads to an increase in acceptance. The bipolar strategy is often used when there is a threat of resistance from middle management, but it can also lead to blockages or misunderstandings if there are different expectations between the lower and upper levels.
In the case of the multiple nucleus strategy, the changes in an organization are applied directly to different levels. This strategy is applicable e.g. in network organizations, which do not contain a decided hierarchy structure. Since the changes are initiated in parallel on different levels, an organizing hand is needed, which must coordinate very well, otherwise chaos is pre-programmed.12
If employees are involved in processes by management, which contributes in particular to employee motivation, especially in change processes, this leads to strong employee retention. This is illustrated in the figure below according to McGregor's XY theory.
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Figure 5: Motivational approach: Mc Gregor's XY theory, Own representation based on Schulte-Zurhausen, M. (1995), p. 19.
In Theory Y, McGregor describes an image of man that corresponds to the ideal image in which the working person values recognition and strives for self-fulfillment, so that he is considered motivated when these criteria are met. Theory X, on the other hand, embodies the human image of Taylorism, which is designed only to satisfy material needs, so that employees cannot be motivated. However, in order to implement sustainable change in a modern industrial society, it is the task of management to ensure that employees can strive for the satisfaction of their ideal and social needs, and that they are thus also enabled to achieve both their personal goals and the organizational goals, which makes a decisive contribution to employee loyalty to the company.13 It is important to remember that managers should practice a style of leadership that is characterized by appreciation and recognition. Employees should be valued for who they are and recognized for the work they do for the company every day. Even if performance is not up to par, it is important that managers raise the issue with employees so that they can improve their performance to meet the goals set, but in a way that neither the employee nor the manager loses face, as this damages the relationship of trust immensely and leads to employee demotivation. The loss of face is deeply rooted in people, so that the social behavior of people is significantly affected by it. Loss of face is unworthy of people in general, but is particularly pronounced in Asia, especially in China. Therefore, it is always important to enhance the position of the person to give it face.14
It is also of great importance that management gets an overall picture of a person through the joint assessment of IQ, EQ and personality. IQ, as cognitive intelligence, is a fixed parameter that has been fixed since the birth of a human being. Only a traumatic event such as a brain injury can cause a change in the negative sense, while people do not increase in intelligence through additional learning or the receipt of information. Personality, which is innate and, like IQ, remains stable throughout life, is the final piece of the puzzle in acquiring EQ, i.e. emotional intelligence. Personality as a result of preferences describes the inclination to extroversion or introversion. Thus, emotional intelligence represents the only variable component in the overall picture of a person. Together, personality, IQ and EQ determine how people think and act, although they possess different qualities. Thus, EQ is the basis for a person's critical abilities, which is what makes a person perform. EQ, which is responsible for 58% of workplace performance, is the strongest driver of personal excellence and leadership. People who constantly develop their EQ perform at their best in the workplace and therefore earn more money than people with a lower EQ.
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Figure 6: Overall picture of a person, Own represenation based on Bradberry,T. (2016), p. 23.
Anyone who wants to be successful today must learn to make the most of their emotional intelligence in order to achieve the best results with a healthy mix of intellect and emotion. Therefore, it is eminently important that the management recognizes the top performers among the employees who are characterized by their high emotional intelligence, develops them further and binds them to the company in the long term.15
2 Theory
2.1 Employee Retention Management
The word retention has its roots in the Latin word retentio, which literally means restraint. Based on this fact, human resources management speaks of personnel retention, which is synonymous with employee retention. The definition of employee retention or retention management refers to all adequate measures that appear suitable for retaining the employer's desired employees in the company over the long term.16 The success of a company is essentially influenced by qualified employees and their r etention to the company. On the other hand, especially in times of crisis, such as a radical change in the company, cost reduction through staff cuts, combined with an increase in the innovation and performance of the company, for which the retention of the strategically most important and best employees is essential.17
As a rule, from the entrepreneur's point of view, these are predominantly key employees, who in practice account for an average of 14% of a company's total workforce.18 Key employees or key persons are defined as core positions held by relevant persons who either:
- have a medium to large influence on the success of the organization
- are very relevant for other reasons or
- include many employees in direct reporting line or influence them indirectly (by forming opinions) or
- have a relevant significance for the organization's image in the public eye
Key people are important specialists or experts, executives as well as temporary project managers from the various areas and at the different levels of an organization. Key people are the majority of managers in an organization, but also outstanding specialists with an explicit responsibility.19 Key personnel act as change agents in radical change in the 5th stage of Kotter's 8-stage model, as they are empowered with their employees to shape the change.20 From the point of view of the employees of a company in which there is a works council and the employees usually belong to a trade union, the works council, as the legal representative of the workforce, will always try to retain as many employees as possible (including low performers) in the company during radical change, since the number of members of the new works council to be elected is calculated on the basis of the size of the company according to German labor law. Thus, the works council not only defends the employees in the company during radical change, but also acts in its own interest. In principle, there are always more works council members when there are also more eligible voters in a company.
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Table 1: Works Council: Number and Exempt Members in the Federal Republic of Germany, Own representation Kurwan, M. (2022).
In German companies with more than 9,000 employees, the number of members of the works council increases by 2 members for each additional 3,000 employees or part thereof.
According to BetrVG § 38, a works council member is released from work if there are 200 or more employees in the company, and the release increases with the number of employees. For up to 10,000 employees, at least 12 works council members must be released from work.21
If the company has more than 10,000 employees, one additional works council member must be released from work for every 2,000 employees or part thereof, although partial releases are also permissible.
Works council elections are held every four years. As a rule, works council members are de facto protected against dismissal during the election period and a transitional period of a further year. All employees are entitled to vote in accordance with § 7 Paragraph 1 of the BetrVG, all employees who belong to the company and have reached the age of 18 are entitled to vote. Not entitled to vote are the managing director and board members (employer), executive employees, genuine self-employed persons, employees under 18 years of age, 1-Euro jobbers and employees in partial retirement during the passive phase (release phase).22
Industrialized countries such as Germany face the following key problems in today's world:
- Demographic change and shortage of skilled workers
- The transition to a knowledge-based society and changes in working conditions
- Change in the relationship between employee and company
- Decrease in employee loyalty
- Younger employees change employers more frequently than older employees
- Shrinking population by the end of the 21st century
While the population in industrialized countries such as Germany will age and shrink by the end of the 21st century, the world population will continue to grow from about 8 billion people now to about 10.4 billion by 2100, according to United Nations (UN) projections. A rapid population growth to 9.7 billion people is expected by 2050, due to a doubling of the population in the global south, where more than half of the newborn people will come from only 8 countries, respectively India, Egypt, Ethiopia, Nigeria, Pakistan, Tanzania, Congo, Philippines. Thus, in these countries, the average age is relatively young compared to the rest of the world.
By 2050, a baby will be born in the world every 0.4 seconds.
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Figure 7: Development of population figures by world region, Own representation based on Reichart, A. (2022), p.19.
While the global birth rate is 2.3 children per woman, the birth rate in the countries mentioned above is 4.5 children. For the reasons mentioned above, there will be a regional shift in the world population by 2050. In terms of individual countries, India will replace China as the most populous country in the world, while Nigeria will move from position 6 to position 4. Countries such as Ethiopia and the D.R. Congo, which were in positions 12 and 16, respectively, in 2020, will move into the top 10 countries in terms of world population, in positions 9 and 10, respectively. While all of the TOP 10 countries will experience population growth, which will be relatively moderate in the U.S. and Brazil, China's population will shrink by 6.7% by 2050 due to the 1 child per family policy imposed on families by the central government in Beijing, which took place between 1975 and 2015. The birth rate dropped from 4.9 to 1.6 children per woman during this period, which also led to an aging of Chinese society.23
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Figure 8: Development of population figures by top 10 countries, Own representation based on Reichart, A. (2022), p. 18.
Since the maintenance of a status quo of a country is 2.1 children per woman on a global level, but the birth rate worldwide per woman is 2.3 children and in countries of the global south 4.5 children per woman are born, it becomes obvious that in the industrialized countries fewer and fewer children are born per woman. This also means that there are many disparities to be bridged between different regions and countries.24
Looking at the population pyramid of Germany, which by the way is almost congruent with the trend of comparable industrialized countries in the Western world, it becomes obvious that the population will continue to age in the coming years, which represents a challenge for companies to manage the aging workforce. Germany's birth rate is projected at 1.55 children per woman in 2060, with life expectancy at birth in 2600 at 88.1 years for girls and 84.4 years for boys.
This image has been removed due to copyright issues.
Figure 9: Population pyramid of Germany, Source: Destatis [25]
In contrast, life expectancy at birth in 2020 was 83.6 years for girls and 78.9 years for men, so that life expectancy at birth in 2060 will increase by 4.5 years for girls and 5.5 years for boys compared to 2020..26
Along with the population growth from 2022 to 2050, the economic growth in the individual regions and countries will also change, so that a reorganization of the world economy will arise, which can also be called the age of the Asians. According to this, China will replace the USA as the number 1 economic power in the first half of the 21st century and India will have taken 2nd place by 2050, leaving only 3rd place for the USA. Indonesia will improve from 15th place in 2022 to 4th place in 2050, with Brazil and Russia taking 5th and 6th place, respectively, and Mexico moving up to 7th place. Japan, as the third strongest economic power in 2022, will only occupy 8th place in 2055. The only European countries that will remain in the top 10 in 2050 are Germany in 9th place and the United Kingdom in 10th place, which also means that, with the exception of Russia, Europe will only play a minor role in the world economic order in 2050 due to its fossil fuel reserves.
This reorganization of the world economy is very well illustrated in the following table.27 28
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Table 2: Global economy in comparison of the top 15 countries: Year 2050 to Year 2022, Own representation Kurwan, M. (2022).
As already mentioned, the population of the western industrialized nations will continue to shrink and age, which means for Germany that the population will decline from approx. 84 million in 2022 to approx. 74.4 million in 2060. The population by age group will then be as follows:29
- 75 years and older: 18 %
- 65 until 74 years: 13 %
- 20 until 64 years: 51 %
- 0 until 19 years: 18 %
This also means that there will be fewer and fewer skilled workers in the German labor market in the future, as the number of people in the working age group of 20 to 66 years will decrease from 51.8 million people in 2018 to 40 - 46 million in 2060, with immigration to Germany of skilled workers playing a major role. In the past, immigration to Germany has been a good way to provide relief here, with net immigration in 1990 - 2018 at 311,000 people per year, although this would need to be at 500,000 people per year to offset the population decline. The trend of immigration, especially of skilled workers, will have to continue, although in the future immigrants from Europe will decrease due to the aging population and those from Asia and Africa to Germany will increase.30
For all the above reasons, it is important to introduce a structured talent management program embedded in a company's personnel policy in order to take this change into account in good time. In the future, it will therefore be increasingly difficult to acquire qualified specialists, so that the personnel market will develop even more strongly in the direction of an applicant market, which means a war for talents for the personnel departments of a company. As a result, human resources policy will become a central management task in which it will be necessary to find qualified specialists and managers in a timely manner and to bind them to the company in the long term, so that no loss of knowledge will occur in the company in the future as part of a dedicated knowledge transfer. The transformation to a knowledge society is already in full swing and working conditions will change. Employment relationships will lose their original character, because lifelong employment relationships will be the exception rather than the rule in the future. The self-confidence of employees is characterized more by the contribution of competencies to a company, in the form of permanent employees, freelancers, interim staff or project managers. Digitizatio n is rapidly making its way into everyday working life, with the result that paper in the office is constantly becoming obsolete. Employees also want more freedom to make decisions (agility) and will also prefer to perform their services for the company partly from the home office (hybrid working). The relationship between companies and employees is already undergoing a transformation, so that companies depend more on the best employees than vice versa. From the company side, employees are therefore already seen as a value-added and investment factor, which means a departure from the pure cost factor. Employees are thus regarded as a key factor or even as the company's most important capital. Since highly qualified executives and specialists are aware of this fact, they are already flirting with a change of company at better conditions. Even if they are laid off, they will not remain unemployed for long, as they are in demand on the labor market. Therefore, it will be important that these executives and s pecialists are optimally looked afte r by the company as human capital in order to bind them to the company in the medium and long term within the framework of company identification, as they also ensure the long-term success of the company. The loyalty of employees to the company will decrease even further in the future, as they are constantly surfing social networks such as LinkedIn or Xing to find out about their chances on the job market. A concluded employment contract does contain conditions to be met on paper, but should a more lucrative offer be available, it will be considered worthless, so the employment contract will be terminated. Employees who are strongly committed to a company are less likely to switch to another company than those who are less committed. The oath of eternal loyalty to the company is a thing of the past, as employees want to test their market value and thus retain their mobility. Individual self-realization, the acceptance of a new challenge, emancipation and the willingness to take a risk are causing the loyalty oath to melt away. In addition, today more than ever there is the flattery of another employer to change fronts at better conditions. For the above reasons, employee retention strategies are fundamental to sustainable business success.31 A revolution is taking place in the labor market, with power being redistributed between bosses and employees. For several years now, the employee has been giving notice more often than the manager, so the turnover rate will consequently continue to increase. Employees are looking more for a new orientation, so that employee resignations have increased from 20.1% in 1996 to 26.9% in 2020, while resignations on the part of employers have remained almost constant (25.1% in 1996 and 26.9% in 2020).32
Employee retention can be seen as a means of safeguarding the company's existence, because only those who can retain their employees better than the competition can survive in the future, as this contributes to the company's competitive strengt h. Thus, employee retention represents a strategically extremely important success factor. It is important to demonstrate superiority over competitors in the labor market and sales markets through employee retention. An employee's commitment to the company depends on the employee's organizational commitment, the extent to which he or she feels personally attached to the company, or how he or she views his or her affiliation with an organization. An employment contract between a company and an employee includes mutual expectations, but moreover, the employee expects appreciation and recognition from the employer and transparency in the employer's actions so that the employee can understand them, in return for which he or she will contribute his or her loyalty and work performance. The company expects the employee to perform, to be loyal and to remain with the company. For these reasons, the employer shapes both the working conditions and the framework conditions of a cultural nature. The foundation for a sustainable long-term commitment of employees to the company is laid in personnel marketin g and in the recruitment process. Personnel marketing deals externally with personnel recruitment and internally with employee retention. It is very important as a company to lay the foundation for retention, which begins with the employee's first impression of the company. If an employee does not feel properly looked after and supported during his integration period in the company, he will acknowledge this with his premature termination, which is cost-intensive for a company.
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Figure 10 : Classification of personnel retention in human resources management, Own representation based on Liebhart (2009), p. 18.
If an employee is made redundant, it sends an important signal to the remaining employees how to deal with the employee leaving the company, so that support during the exit process is very relevant.33
Therefore, the human resources department and the superiors o f each company play a decisive role in recruiting personnel to ensure that the right employee is selected, that he or she is deployed in the company in a targeted manner in line with his or her skills, and that he or she is also successfully integrated into an existing team in which he or she can develop freely. On one hand he should bring an added value for the company and on the other hand he should feel comfortable in the company, so that he can be bound to the company.
It is also advisable to involve the works council at an early stage in the recruitment process in companies with a works council, as the works council is required by German labor law to be involved in personnel decisions and matters in accordance with Section 95 of the Works Council Constitution Act (BetrVG) and Section 99 of the Works Council Constitution Act (BetrVG). First of all, the works council will insist on filling vacant positions internally in order to protect and defend existing employment relationships in the company, so that the hiring procedure according to the company agreement concluded by the management together with the works council must be followed.34
To be on the safe side and make sure that the right employees are hired, it is therefore advisable to choose the trimodal approach in the recruitment process.
The trimodal approach is a combination of the biographical method, the simulation method and the construct- or trait-oriented method of personnel selection. While the biographical interview uses data from the past (references), the interviewers use the situational interview in the simulation procedure to test the applicants' behavior in an imagined work situation that is described as realistically as possible. In addition, the interviewers choose the questionnaire procedure for self-assessment Big 5 in the trait-oriented procedure in order to round off the picture for the team composition. The following criteria play an important role in this questionnaire procedure:
- Neuroticism
- Extraversion
- Openness to experience
- Agreeableness
- Conscientiousness
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Figure 11: Five-factor model of personality Big 5, Own representation based on Faulland (2007), p. 112.
People with high openness have ideas, are curious and are more willing to support chang e, whereas people with low openness are too pragmatic, focus on one thing and are difficult to assess. People with high conscientiousness are very reliable, well organized and usually very efficient, whereas people with low conscientiousness are more frivolous and spontaneous and are characterized by less discipline. Extroverts are full of energy, are talkative, seek attention, come out of their shell and have a higher life and work satisfaction, while introverts are more reserved and often think about themselves. Agreeable people are c ompassionate, cooperate willingly, trust others, are helpfu l, and have low tendencies to deviant behavior (e.g., sabotage, tardiness), whereas people with lower levels of agreeableness tend to be distrustful, more interested in themselves, and have a higher tendency to deviant behavior.
Neurotic people often experience unpleasant emotions such as anger and frustration, are more often depressed, worry a lot, have negative life and job satisfaction, and experience more stress than emotionally stable people. People with the opposite characteristics are emotionally stable, are more positive in their emotions, have fewer mood swings and are generally less anxious.35
In principle, a distinction is made in employee retention between the following four bin-dation levels, which are shown in the figure below:
- Rational
- Habitual
- Normative
- Emotional
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Figure 12: Levels of employee retention, Own representation based on Wolf (2020), p. 57.
Employees who are calculatively bound to the company rationally weigh the costs and benefits or advantages and disadvantages of working for their current employer and compare them with alternatives. Strengths and weaknesses offered by their employer are taken into account and compared with individual expectations.
Employees who are rationally bound to the company think in a benefit-oriented way and let their goals and interests flow into their considerations. When considering them, a wide variety of motives such as salary, recognition, job security, self-fulfillment, agility, etc. can be the deciding factor in whether they want to stay with the company or decide to leave it. Different retention measures, such as a high level of personal responsibility, an above-average salary, and freedom in work design, can be conducive to the interests and needs of the employee.
Employees who have a high level of normative commitment enter into a moral obligation with the employer, either because of a sense of duty or because they work in a family business as a family member.
Managers may also establish a high normative commitment with their employees.
Employees with habitual employee commitment have more of a tendency to stick to what they are used to. This creates rituals, such as a joint lunch on a defined day, a joint walk through the Christmas market on St. Nicholas Day, a family party in the summer, a company outing or the daily tour of the company at a fixed time. Highly habituated employees have a very low tendency to fluctuate.
The affective bond between employees and a company is based on emotions such as gratitude or pride. When employees find fulfillment in their job and it seems meaningful to them, the emotional bond is strengthened.
This emotional bond can be intensified through friendly relationships with their work colleagues. If employees feel emotionally connected to their employer and can identify with the company's values, they are less likely to work to rule. They are more likely to show commitment, which leads to them developing their own initiative and working to achieve the company's goals. As a rule, employees with a high level of emotional commitment exhibit low absenteeism. However, health factors such as chronic illnesses can also lead to high absenteeism among these employees. Emotionally attached employees have lower turnover intentions, so that the length of stay in the company tends to be high. Measures for emotional employee retention can take place, for example, at the level of team cohesion, team building, the working atmosphere and the corporate culture.36
Instruments of employee retention, which occupy the top positions in various studies, are:
- Sufficient opportunities for advancement, further training and development opportunities
- Distinct corporate culture (image, reputation, working atmosphere)
- Good understanding of leadership by superiors
- Appreciation in the workplace
- Monetary compensation
- Work-Life Balance
The instruments described above make a significant contribution to employee retention.
If one compares the first three instruments of employee retention in an international comparison among Western countries, it is striking that there are very great similarities. While the company pension plan and thus retirement security play a very important role for employees in German companies, instruments such as basic compensation, work-life balance and stress levels are more important in other Western countries than in German companies.
In the Federal Republic of Germany, good opportunities for advancement, further training and development enjoy a very high priority, which are embedded in personnel development. If an employee's skills are developed in a targeted manner, whether through in-company training or external measures, he or she not only increases his or her personal added value, but also increases the added value for the company (human capital). In order to achieve this, a capability analysis of the employees in the company is recommended, in which the strengths and weaknesses of the employees can be analyzed and elicited, so that targeted work can be done on the further development of the employees. Transparency and communication are fundamental to this. Employee discussions between supervisors and employees create trust by transparently discussing the next steps in a dedicated target agreement, the success of which is then evaluated at regular intervals (on a half-yearly or annual basis). Coaching conversations with an independent consultant offer an alternative to employee interviews, as personal matters can be discussed on a confidential basis, which can be brought into resonance with the professional aspects. It is often the case that the coachee's horizon is broadened by the coach through the identification of alternative courses of action, which decisively advance the coachee's professional career, as realistic goals are developed on the basis of an assessment of the current situation. Succession planning is of crucial importance for a company so that employees can be specifically prepared to fill key positions. This so-called talent management provides the company with competitive advantages, which in the medium to long term leads to a reduction in the fluctuation rate and external staffing rates and thus decisively reduces costs.
The involvement of employees in the development of visions, strategies and goals and the regular comparison of achievements within regular meetings not only gives employees positive feedback, but also enables participation and t ransparency, which also leads to an increase in the intrinsic motivation of employees. The corporate culture is the soul of a company, so employees want to make sure what image the company has on the market before they join the company with its values and standards. It is advisable for a company to carry out targeted employer branding to explain to applicants why it is advisable to work for this company. Real Unique Selling Propositions can be of great advantage here, as they clearly position the company and set it apart from the competition.
The company management has a decisive influence on the commitment of the employees, which is exemplified by their behavior, the modeling of values and the assumption of social responsibility on the part of the company management, so that the latter demands corresponding performance and adequate behavior via the managers as an extended arm. Communication is of decisive importance for corporate culture, as it enables employees to identify with the norms and values of the company and to harmonize these with their own ideas, which is a prerequisite for emotional commitment.
The perception of the values of the company, their fields of action and the realization of the values in the fields of action form the basis for the effectiveness and e fficiency of a retention management. Employee management has a decisive influence on employee retention, because a manager must take enough time for employees, approach them, respond to them and communicate openly with them. Visiting employees at their workplace, talking to them and giving them honest feedback contributes to employee appreciation, which increases employee retention.
An open-door policy on the part of supervisors is of enormous benefit in creating trust for employees' concerns and learning from them what motivates them. An employee-centric management and organizational culture helps to ensure that employees are performing to their potential, thereby increasing company profits and enhancing competitiveness in the marketplace. Employee retention is decisively promoted by recognition, appreciation, confirmation, freedom to make decisions at the workplace and scope for development.
A workplace should be configured by a supervisor in such a way that it has adequate work equipment and appropriate technical equipment. Nowadays, ergonomics at the workplace plays a decisive role in ensuring that employees feel comfortable in their work. Freedom to make decisions at the workplace, recognition, a company suggestion scheme in which beneficial ideas are rewarded, teamwork among colleagues, company outings, family celebrations on the factory premises, Christmas parties, etc. enhance both the formal and the informal working atmosphere in a way that contributes decisively to employee loyalty. The degree of satisfaction and identification with the company is increased by conveying to employees that their assessment and opinion is relevant for the company. Employees should work independently and set their own goals, since freedom of decision is important to a certain extent, although constant control by superiors is viewed negatively.
If employees perceive retention measures, such as appreciation, recognition, fairness, etc., at the workplace, employee retention measures become effective when they are designed and implemented. Through communication, the values that are the foundation of the company's actions become visible.
The dimensions that matter in the workplace are depicted in the Great Place to Work model, in which the factors credibility, respect, fairness, pride and team orientation play a decisive role.
Credibility, respect and fairness create trust among employees, which is fundamental to increase intrinsic motivation.
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Figure 13: Great Place to Work Model, Own representation based on Liebhart (2009), p. 64.
If employees are dissatisfied, their departure can no longer be prevented by offering them more money. Nevertheless, employees want to be paid appropriately for the services they provide, since neither a positive working environment nor good development opportunities compensate for this fact. An attractive compensation package could thus consist of a fixed base salary, a variable portion (performance-related), a team bonus, a company car, a pension plan, capital-forming benefits, stock options or even a working time account (time for money).
Retaining employees through a targeted work-life balance has become increasingly important since Generation X in order to create a balance between professional and private life. This can take the form of partial home office solutions, sabbaticals, lifetime working time accounts, overtime arrangements, part-time solutions, flexitime accounts, company kindergartens, e-bikes, etc.
Cell phones as well as communication in the form of Skype, Zoom, MS Teams, etc. contribute to the flexibilization of work.
Health specific activities such as massages at the workplace, gym, fruit baskets, healthy eating courses, free drinks, talks after returning from sick leave for short and long term sick people, and ergonomic workplaces are an expression of appreciation for employees.
Working time that is granted in the form of trust and that is independent of location and time increases the self-responsibility of the employees, because at the end of the day only the result and not the physical presence should count.37
The two-factor theory of job satisfaction according to Herzberg can therefore be chosen as a motivation-theoretical approach. According to Herzberg, the work content determines motivation predominantly by itself. In this theory, job satisfaction and dissatisfaction are presented as two dimensions that are independent of each other. Herzberg found in a study influencing factors on the continuum job satisfaction - no satisfaction and the continuum no dissatisfaction - satisfaction. For this he chose the terms:
- Hygiene factors (dissatisfiers)
- Motivators (satisfiers)
Hygiene factors that stem from the job context prevent dissatisfaction. However, since employees take them for granted, they do not represent satisfaction either.
Motivators are predominantly determined by the design of work content (job con-tent). The motivators are exclusively responsible for job satisfaction and therefore form the levers to make employees feel positive.
Since remuneration only has a short-term effect on satisfaction, but is extrinsic and its uplifting effect soon fizzles out again, it is counted among the hygiene factors. According to Herzberg, only work-related measures lead to job satisfaction, such as confirmation and r ecognition of performance by superiors, challenging work content, growth, promotion and appreciation.38
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Figure 14: Motivators and hygiene factors according to Herzberg, Own representation based on Schulte-Zurhausen, M. (1995), p. 20.
The best way to measure employee retention to give a scaled score of 0-100% to the one million dollar question of whether the employee would recommend their company as an employer to a good friend.
Thus, 100% is the top score, i.e., applies to a very strong degree, and 0% is the lowest score, which is equivalent to, applies only to a small degree. Employees who give top scores are therefore very strongly committed to the company, which cannot be said of employees with low scores.39 In order to retain key employees, the focus of the retention strategies should be directly on strengthening retention. Three retention strategies are available here:
- Networking strategy
- Resistence strategy
- Return strategy
In the networking strategy, key employees are to be networked more closely with the company, which leads to an increase in external exit barriers. If the key employee is more closely networked with the current company, he or she will have to accept higher losses if he or she moves to another company. The networking strategy offers various options that can be applied either individually or in combination:
- Emotional networking
- Financial networking
- Temporal networking
- Family networking
- Contractual commitment
Emotional networking involves the targeted promotion of social ties and personal relationships among key employees in the company, e.g., measures relating to joint activities, the implementation of leadership training for supervisors and key employees, and the implementation of contact networks via the Internet. A high level of participation by key personnel here is evidence of a stronger emotional network, which leads to a higher level of commitment. The emotional, normative and calculative comittment is thus increased.
Monetary aspects play a major role in financial networking, which can be expressed in the form of a company pension plan, company loans, discounts on purchases for company credit cards and an above-average salary for the position.
In terms of time networking, a key employee can be tied to the company in the long term through supportive measures within the framework of company training, part-time training such as master craftsman school, distance learning, bachelor's degree, MBA, doctorate, etc., as well as through the use of a company pension scheme, project work, training cards and an above-average salary for the position.
Assignments abroad, project work, training-on-the-job programs, job rotation with subsequent promotion prospects also contribute to time networking, whereby companies can support all the above measures in terms of money and time through information and contacts.
In the context of family networking, key employees can be tied more closely to the company through company kindergartens, jobs for life partners (full- or part-time), internships for employees' children or the simple form of parents occasionally bringing their children to the office to play or paint.
As part of the contractual commitment, employees are tied to the company through repayment obligations for further training. Stay-on bonuses can also be decisive for employees, paid out when key employees are still in the company at a certain point in time, e.g. after signing a settlement of interests and social plan with the works council as part of a necessary restructuring of the company in radical change.
In these forms of different types of networking, the right dosage is fundamental.
In the resistance strategy, the approach is to immunize key employees against competition in order to prevent the development of attempts to leave. The following measures are suitable for this purpose:
- Vaccination of the key forces / employees
- Strengthening the internal defenses
- Strengthening the external defenses
- Increase resistant key forces / employees
The best way to vaccinate key employees is through limited contact with external competitors, e.g. cross-mentoring, association activities and project work of a cross-company nature. Contact with former key employees who had left the company to join the competition can very often lead them to report that the grass is not necessarily greener in another company. This leads to thoughts of leaving being put into perspective quite quickly.
The best way to strengthen internal defenses is to increase job satisfaction. Measures such as active motivation promotion, leadership training, supervisor training and integration training when joining the company as part of the corporate identity are of decisive advantage here.
Strengthening external defenses can be achieved, for example, by filling positions from within the company's own ranks, not disclosing the mobile phone number and the number for direct dialing in the company, centrally routing telephone calls via the reception area, filtering e-mails and selecting locations with as little regional competition as possible.
The best way to increase the number of resistant key employees is through peer pressure or the so-called snowball effect, which keeps the key employees in the company. To this end, it is important to motivate as many key employees as possible to the extent that they exert a positive influence on other key employees. Supporting measures include mentoring programs in a systematic form, internal training, and the inclusion of the commitment criteria in annual discussions between supervisors and employees. However, credibility must be maintained in order to give these measures the necessary serious character.
The return strategy always offers key employees who have done very well and left the company for various reasons the opportunity to return to the company in question. This takes place in three phases:
- Exit
- Care taking
- Recovery
When a key employee leaves the company, all employees are officially informed of his or her resignation as part of a dedicated communication process. The company thus lays the foundation for a possible return by discussing the key employee's reasons for leaving the company at eye level during exit talks.
The support begins approximately five months after the employee leaves the company in the context of the contact meeting, i.e. before the end of the probationary period in the new company, in which the experience in the new company is explored. If there is a certain amount of frustration, the key employee can be brought back without losing face, for example, by taking over a key position in another department, since he or she can bring any experience from the current employee with him or her. In the context of the reclamation, the return of the former key employee is signaled if necessary, that the willingness exists to enable a return to the company. To achieve this, it is essential to support the former key employee with appreciation and sincere efforts. If this return strategy is successful, the returned key employees are ambassadors for the company because they return with conviction and identify more strongly than ever with the company. This in turn is an advantage for the existing key employees, giving them a motivational boost within the framework of a strengthened corporate identity.
From a cost perspective, rehiring former key employees is the most favorable alternative, as both recruitment and induction costs are eliminated. In addition, they are already familiar with the company and know the processes within the company. As former key employees returning to the company meet their old colleagues again, this contributes to the communication of a healthy team spirit.
The quality criteria for the retention management measures are shown in the following graphic:
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Figure 15: Quality criteria for retention management measures, Own representation based on Wucknitz (2008), p.91.
The following measures are suitable for increasing market impact:
- External personnel marketing
- Internal communication
- Employer Branding
All these measures serve to position the company internally and externally among key employees as an attractive employer.
External personnel marketing is an integral part of personnel recruitment with measures such as contact events, image advertising, cooperations, personnel advertising, sponsoring, dissertations, doctoral theses, internships, project work, research work, etc. The target image of the company is defined in the marketing strategy, how to strategically position itself as a company with the right USP's against competitors.
In internal communication, the company presents its achievements to both internal employees and external interested parties by openly talking about the good deeds, so that achievements are actively presented. These can be social benefits, employer competitions, market successes, support programs for employees, acquisition of company shares in the form of stock at preferential prices, etc. The company's own key employees thus become ambassadors for the company. The company's own key employees become ambassadors for the company in a positive sense, which strengthens the emotional bond.
Employer branding is the external positioning as an employer, so that the entire company is aligned with the contents of the employer brand, e.g. sustainable chemistry from renewable raw materials, Responsible Care, etc.
The primary goal of employee retention management measures is to increase the satisfaction of key employees. This can be achieved through the following measures:
- Flow amplification
- Leading with goals
- Strengthening of leadership competence
- Empowerment
- Competence management
- Human resources development
- Project work
- Ideas management
- Feedback
- Team development
- Fair remuneration
- Company car
- Job bike
- Company cell phone
- Lap top for more flexible work
- Streamlining administration
- Clear orientation of the company
- Guding principle
- Informal networks
- Appropriate work equipment
- Work-Life Balance
- Health management
- Systematic integration
- Employee participation
- Bonus programs (e.g. company affiliation, EHS award)
- Relationship management
- cooperations
- Open communication
- Transparency
An employee retention management program is not only nice to have, but planning, monitoring and controlling form the basis for success. The best way to monitor success is through retention management controlling, which looks at the retention management process from the three perspectives shown in the figure below.
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Figure 16: The three perspectives of success measurement, Own representation based on Wucknitz, U.D., (2008), p.118.
This accompanies the entire Employee Retention Management process in its three steps:
- Identification and analysis of key personnel
- Identification and analysis of key personnel
- Planning and implementation of measures40
In order to retain employees, it will be very important from the employer's side to rethink future work, namely in the sense that prevention programs against burnout and depression should be introduced. In 2021, mental illnesses, such as depression or burnout, became the main factor of illnesses at the workplace in Germany with 29%. For the first time, these replaced musculoskeletal disorders (28.3%) from the top position. The medical costs of mental illnesses amounted to 44.4 billion euros per year, with the costs of mental suffering accounting for approximately five percent of the gross national product of the Federal Republic of Germany. Therefore, employers will have to improve the framework conditions, as growth can only be possible if the mental health of employees is taken into account. While large corporations have the necessary capacity for mental health departments, professional associations in SMEs should provide more targeted information to employees. Workshops on mindfulness, relaxation exercises or information on the right life balance can be of great help to employees in this regard. Employee surveys can also identify potential stresses that need to be minimized. Industrial psychologists have been observing for some time that the world of work is changing radically. Physical work is being displaced by knowledge work, with time pressure and scope constantly increasing. Digitization is advancing to increase productivity. Information and data volumes are pelting people non-stop. Constant accessibility, even after hours, means additional pressure for those in the workforce. Mental health is becoming increasingly important in the ever-changing world of work. The shortage of skilled workers and the ever-increasing openness of job seekers gives them greater power for this reason, which is also supported by increased self-esteem.41
If one considers employees as human capital on the basis of the findings listed, the following balance can therefore be drawn on the basis of the employee retention measures shown:
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Figure 17: Human Capital Balance Sheet, Own representation Kurwan, M. (2022).
2.2 Change management approaches to restructuring
Corporate change can be planned or unplanned, and the change can be of varying degrees.
When speaking of change management, we speak of 2 forms of change.
The 1st order change is the gradual change or also incremental, evolutive or adaptive change.
The 2nd order change is the radical change or also the radical, revolutionary or transformative change.
1st order change is characterized by incremental adaptation of an organization to changing requirements. In this case, neither the existing frame of reference nor the prevailing interpretation scheme is changed. In this case, there is also talk of continuous improvement, of a quantitative and evolutionary nature, within the framework of a growth or other change strategy of the company. These changes affect individual areas or organizational units of the company. Thus, there is no fundamental or drastic transformation of the company's values, behavioral norms, strategic orientation, structures and processes. Continuous improvements accompany us constantly, so that they seem rational and also logical to most people. For this reason, employees are not particularly fearful of 1st order change processes.
2nd order change, on the other hand, deals with a profound change in the way an entire organization works. Consequently, the frame of reference is changed. It is a fundamental and complex change of a qualitative nature. This change, which affects the entire organization of a company at all levels, happens from one
This change, which affects the entire organization of a company at all levels, happens at once, so that it is revolutionary and discontinuous. The fear of those affected is correspondingly high, because this is a break with the past and its habits.
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Figure 18: Change 1st and 2nd order, Own representation based on Vahs and Wieland (2013), p. 3.
Betrachtet man den Wandel nach Formen, wird grundsätzlich nach vier Formen unterschieden:
- Restructuring
- Reorientation
- Revitaliizing
- Remodeling
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Figure 19: Objects and forms of change, Own representation based on Vahs and Wieland (2013), p. 4.
Restructuring is also often referred to as reorganization. It deals with the existing structures, processes, resources and systems of the company. Restructuring measures include cost reduction, personnel reduction, flattening of hierarchies and adaptation of processes, personnel reduction, flattening of hierarchies and adaptation of processes. These are relatively easy to carry out, so that their effect is rather short-term, which does not exactly speak for a sustainable improvement of the success position or success potentials.
Reorientation, on the other hand, represents a strategic reorientation with which the company is confronted. It is more profound because, for example, business areas are redeveloped or restructured as part of a portfolio adjustment.
Preparatory measures to cooperate with another company also fall into this category.
The goal of revitalization, on the other hand, is to effect fundamental changes. These concern the behavior of the members of an organization and their abilities, whether of existing or newly acquired nature. Here, for example, there is the change of a centralistic management style, which allows more delegation of responsibility, competences or tasks. Measures of revitalization create the basis for the revival of a company, e.g. after an existential crisis. It can also be the preparation of fundamentally changing framework conditions.
Remodeling represents the most profound change of the forms shown, as it deals with the collective values, attitudes and beliefs of the organization's members, which are shared by all. Remodeling consequently targets the heart of the corporate culture, so this process is not only difficult, but also requires a lot of time. An example of this would be the transformation of a state-owned enterprise into a free enterprise (Deutsche Bahn, Deutsche Post), which creates flexibly operating units from a civil servant apparatus. In this case, sustainable change is only achieved when the majority of employees have internalized the new values and actually live by them.
Change management deals with all areas of a company's activities and therefore addresses the following points:
- Corporate strategy
- Organization
- Technology
- Corporate culture42
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Figure 20: Fields of action of change management, Own representation based on Vahs and Wieland (2013), p. 7.
In the event of a crisis, be it a crisis of a strategic nature, a crisis in results or a liquidity crisis that could lead to the insolvency of the company, financial restructuring, operational restructuring, strategic restructuring and integrated business planning should be mentioned as approaches in change management.
Financial restructuring focuses on securing a company's equity and maintaining its current liquidity. In the short term, over-indebtedness and insolvency must be counteracted by targeted measures. Strategic and operational measures, such as investments in rationalization projects and restructuring expenses for redundancy plans as part of a workforce reduction program, will initially have a negative impact on liquidity and equity. It is therefore very important that sufficient funds are available for these financing measures so that the equity base is not too badly affected.
If this is not the case, an injection of equity must take place or financing contributions from stakeholders for the restructuring measures must be fixed. To increase equity, which improves the balance sheet structure (higher equity ratio), a cash capital increase with fresh money from investors, a non-cash capital increase by converting part of the receivables into equity and a declaration of withdrawal by the parent company on loans granted would be suitable. The injection of fresh money offers the advantage of improving the company's liquidity. When examining equity, securing equity and securing liquidity are very important. When safeguarding equity, it is important to check the over-indebtedness that could give rise to a possible reason for insolvency, the equity ratio in benchmark terms compared with the competition after the planned restructuring measures, and also whether more than half of the equity will be lost as a result of the planned measures in accordance with Section 92 of the German Stock Corporation Act (AktG) (valid reason for insolvency). In general, a distinction must be made in the case of the planned measures as to whether equity is improved under commercial law or only an improvement in the over-indebtedness status is achieved. Under commercial law, this can be achieved by reducing the capital and then increasing it, or by converting borrowed capital into convertible profit participation rights that have an equity character (debt-equity swap). If an increase in equity takes place in over-indebtedness status, these are subordination agreements concluded with creditors for all types of liabilities. They may also be subordinated loans that have an equity-replacing character. Securing liquidity initially involves recording the financial status, which must be determined by creditor and company. The generation of liquidity through the reduction of working capital and divestments are already included here. If this is not sufficient, further financing contributions must be established as a mandatory prerequisite for restructuring, whereby shareholders, credit insurers or banks can contribute to the financing. Banks often support restructuring concepts by adjusting credit lines, interest deferrals or standstill agreements. Credit insurers must also be involved at an early stage to ensure coverage of projects, production and goods, in order to avoid advance payment from suppliers, as this can have a significant impact on liquidity and can mean the end of the road for many companies that are struggling financially. Banks and creditors have to be introduced to the concept of restructuring and its implementation in time, that only a joint approach can be successful.
Operational restructuring pursues the main goal of securing profitability and liquidity, which begins with determining the need to improve earnings and liquidity. Benchmarks are of great help here. With this starting point, only profitability targets for the entire company, which are then broken down again to company units, can be planned. To determine an overall need for improvement, industry-standard returns on sales and minimum returns on capital are consulted. The company's need for improvement in terms of earnings and liquidity determined in this way must be reconciled at the lower levels and presented in a de-tailed manner so that the figures can be filed with the rough measures. The improved measures have here the main focus on a cost degression with expenditure for personnel, material costs and other costs. The reduction in personnel costs can be achieved, for example, by reducing voluntary social benefits and the provision of unpaid overtime. The main approach to cost degression is to increase efficiency with fewer personnel throughout the value chain, which leads to a leaner organization. This also leads to higher sales per employee, which is an important criterion for continuous improvement and an incentive for potential investors to invest in the company. Material costs can be reduced by negotiating new prices or renegotiating existing contracts with suppliers. Transportation costs must also be renegotiated with carriers as part of the procurement of goods. Other areas such as IT maintenance, legal fees, insurance premiums, travel allowances, meal allowances for non-existent canteens, insurance premiums and other allowances need to be investigated. To get money into the cash register, business must be boosted in the short term, which can be achieved from the sales side through price increases, special sales activities or focusing on the most important customers. Reducing overhead costs also contributes to profitability. From the financial side, receivables can be increasingly collected (possibly also facto-ring) and inventories reduced, as these initially increase liquidity but also reduce inventory costs. Very often, a portfolio adjustment also takes place, so that profitable investments are sold. In addition, assets not required for operations are sold. Demonstrating short-term success will be very important here. As part of controlling, the full-year effect of the measures introduced should be forecast and a comparison made between the extrapolated actual year and the status quo before restructuring. While operational restructuring ensures short-term survival, strategic restructuring is responsible for long-term viability. This is a vision of how the company should be positioned in the future. This includes a completely new design of the company, also with regard to its positioning. Companies that position themselves under the aspect of sustainability will stand out from other companies in the future. A strategic restructuring from the sales side could be to specialize more strongly and to enter more lucrative markets with higher returns and to largely say goodbye to the commodity area, which is rather characterized by margin erosion. From a production perspective, cost leadership as part of a utilization strategy could be the starting point. From the perspective of innovation, an innovation index to be determined could represent a target figure for conquering new markets with new products or for profitably replacing products that are in the saturation phase of existing markets before their downturn comes. In the context of personnel, the strategic motto could be to push further training measures for existing personnel in the context of an increase in competence or to replace unqualified personnel with qualified personnel in the case of new appointments. For both measures, the targeted transfer of knowledge within the framework of the demographic factor must be taken into consideration. In the context of organizational development, a strategic direction of travel could be to choose the agile management approach, which places the customer and people in general in the foreground (Mc Gregor's Theory Y).
In integrated business planning, all the effects of restructuring of a financial, operational and strategic nature are combined so that there is transparency regarding the equity and debt situation. This also provides the basis for effective controlling as part of a target/actual comparison. Essential elements of a business plan are the profit and loss statement, balance sheet, liquidity planning, personnel planning key figures, and KPIs regarding return on capital employed (ROCE), capital and productivity (EVA). Nowadays, a business plan also includes compliance (aspects of working legally) and the assessment of opportunities and risks. Soft facts, such as cooperation with employees and their representative organizations (works council and trade union), health management and the aspect of safety, health and the environment round off the business plan, since behind all activities there are people who must be deployed in a targeted and meaningful manner, which contributes decisively to employee loyalty. The business plan is also very important for the stakeholders, as they want to see the further development of the company. For the banks, restructuring decisions are investment decisions, which often require new loans or waivers. The cash flows expected to be generated by a restructuring are crucial for the banks, as they decide whether a company is worthy of restructuring. The ability to restructure results from the development of the external framework conditions (e.g. sales market, price development, procurement market, competition), the existence of the internal potential for success (e.g. management, competence, cost structure, product range), the existence of the security and resources for restructuring (e.g. current assets, fixed assets, financial resources, risks) and the time spectrum for achieving the restructuring (e.g. liquidity requirement, earnings requirement, crisis situations). In general, it can be said that the worthiness of a turnaround depends on the ratio of the values to be achieved and the additional effort required.43
However, corporate change always has to do with employees, who have to go along with the change, because people, as creatures of habit, tend to view change with a critical eye. It is also evident in more mobile and wealthy societies in the western world, such as in the Western world, such as in the Federal Republic of Germany, that most people are deeply rooted in their communities and families and therefore perceive change as a loss. Their moral obligations and ties to other people are not indiscriminate, but have a corresponding hierarchy.44
It has even been statistically proven that about one third of the people in Europe are structurally conservative, because for them change is associated with fear. This must be taken very seriously by managers, since this third demands more leadership instead of actively participating in change. Leaders thus have a means of transforming resistance into value preservation.45
Against changes, patterns from childhood, which result in protective strategies, such as flight, attack, striving for control, adaptation, etc., are chosen in order to best deal with the situation emotionally, so that beliefs are developed that need to be overcome. Negative beliefs (back in the armchair of comfort) should be transformed into positive ones, i.e. to move. This can be done e.g. by presentations in the group, group discussions, workshops and single coachings, in which the target state is set in a new frame (Reframing), in order to take away employees on the one hand the fears and to motivate them on the other hand to go the way of the change. The movement has to do with a change, so that in change processes of any kind basically the four rooms of the change must be gone through in chronological order.
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Figure 21: Four rooms of change, Own representation based on Anlehnung an Hickert, C. (2020), p. 25.
The first room is the comfort zone in the room of contentment, where everyone likes to find themselves because it is very comfortable there. People prefer not to leave the room of contentment, unless it is because of coercion, because of a failed situation, or because of a conflict. By moving to the second room, there is a lot of resistance in the room of denial, so anything unpleasant is very sour to you per se. People think that there are no problems for them, so they want to return to the room of contentment. Unfortunately, since there is no going back because the door is closed, people find themselves in a one-way street where resistance or repression is simply futile. Since denying reality is no longer possible, the situation is characterized by frustration and fear, so that people suddenly find themselves in the room of chaos and confusion, respectively the third room. Great insecurity occurs, so that self-confidence and self-assurance dwindle. Nothing is stable anymore, the tried and true is no longer tangible and something new is yet to be seen. People in this room are exposed to uncertainty and disorientation. People have the impression that nothing will change per se. But they also gain more and more the impression that going back is simply impossible. By looking into the future, people consequently deal with the veritable process of change. Fears are suppressed and feelings come to the fore. There is a sudden willingness to look at history and imprinting and to consider what catapulted us into the chaos room. Confusion is displaced by a new consciousness, which is characterized by moving forward on the path of hope, so that a way out of the room of confusion and chaos reveals itself. There is an absolute necessity to go through the rooms of change.
Only by passing through the room of denial and the room of confusion and chaos, the willingness to look reality in the eye is increased. Many people find themselves in a pressure situation, which forms the basis to move. Old convictions are softened, so that the pain threshold is reached. Previously unknown patterns and unconscious beliefs come to the surface in this space. Many people have nothing left to lose in this room, so ideally they don't want to enter this room at all, but they can't escape its experience in order to experience more depth, meaning, freedom and fulfillment through a change, which is achieved in the fourth room, the room of renewal is achieved.46
2.3 Corporate culture and Change Management
The corporate culture is a central factor for the economic success of a company, which can be achieved if it is employee-oriented. For this reason, corporate culture is also very often referred to as the DNA of a company. The factors of job satisfaction and pride in one's own company are very decisive for employees, so that they bring about an increase in performance via their intrinsic motivation in order to contribute significantly to the economic success of the company. If this is achieved, employees are more likely to remain with the company, thus achieving good employee retention. Defining corporate culture in general terms is very difficult in this context and is therefore examined from various angles in order to be able to explain it. Siegfried Schmidt divides concepts of corporate culture according to five schools of thought in scientific theory:
- Functionalist concepts
- Symbolic concepts
- Cultural anthropological concepts
- Structural functionalist concepts
- Self-organization concepts
In the functionalist concept, a corporate culture usually has several functions that are developed and maintained by the company management. These can be, for example, internal integration or the adaptation of the company to its environment. Thus the enterprise culture is one of the most important topics of the management. Due to the fact that corporate culture has to do with the social control of the members of the organization, corporate culture encompasses the living space as it is lived by the members of the organization. In this context, structures are very important, which are examined when analyzing changes in the company.
In the symbolic concept, the corporate culture represents a collective and emergent phenomenon, which has grown evolutionarily, organizes itself and has formed itself quasi by itself and has not been decided by anyone. In this sense, corporate culture is characterized by symbolic communication (e.g. company celebrations, company outings, pictures, stories, rites, etc.). The understanding of symbols, meanings and interpretations is fundamental here.
In the cultural anthropological concept, corporate culture forms a cognitive map. Corporate culture is unique in its appearance, which has developed in a company. Since corporate culture is shaped by people, it can also be controlled and changed by them, be it employees or managers. Culture maintains a system and controls the behavior of employees.
In the structural-functionalistic concept the thinking of the organization members is spoken of, which was programmed collectively. Information intake, memory, understanding and reasoning shape the behavior of organizational members.
In the self-organization concept, the corporate culture is a result of a dynamic network that has emerged from interactions. This collective learning process has grown historically and is referred to as a system, which expresses itself materially (e.g. strategy, technology, formal structures) and symbolically (e.g. value systems, memories).47 Organizational culture according to Schein's model can generally be divided into three levels:
- Artifacts: visible structures, processes
- Values: strategies, values, philosophies
- Underlying assumptions: unconscious views, thoughts, feelings
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Figure 22: The three levels of culture Own representation based on Schein, E. H. (2018), w.p.
The level of artifacts is the clearest level, as the observer recognizes it immediately because it reflects an impact on employee behavior and processes. This includes, for example, company buildings, office space, jargon, dress code, etc. However, pure observation is not enough, so in the 2nd level Selected beliefs and values may be able to extract explanations of the artifacts. These values should be internalized by learning processes, so that they are really actively lived according to the company philosophy and are not only mere confessions. In this context, the so-called road signs should be listed, which are maxims with commands and prohibitions that are more or less shared by the members of the organization, and unwritten behavioral guidelines. These values also include the unwritten behavioral guidelines within an organization. The level of chosen beliefs and values is controlled in the lower level of underlying assumptions, as these reflect the result of the historical learning effect of an organization, where successful beliefs and ways of acting have been internalized. Many members in the organization are no longer aware of these basic assumptions, so that contradictions between values and artifacts occur. As a result, a certain self-image emerges among employees. These taken-for-granted, unconscious beliefs, which are not consciously reflected upon, ultimately represent the values and thus the source of concrete action. These are difficult to change.48 The great danger of self-image is always that this is so deeply rooted among employees and can therefore easily turn into complacency.49 If, for example, the benefits are provided voluntarily by the employer and the employer does not permanently emphasize in writing that there is no entitlement to these benefits in the future, employees are very quick to argue that this is a company practice. A company practice is understood to be the regular repetition of certain behavior by the employer, from which the employee draws the conclusion that a benefit or service is to be granted to them on a permanent basis.50
When looking at organizational design according to the McKinsey 7 model, a business or organization is represented by seven core variables, all of which begin with S. This model forms a holistic and comprehensive view of the entire organization. It is a very valuable model for diagnosing and planning for interventions in culture change projects.
The core variables are called:
- Strategy
- Structure
- Systems
- Steady / Regular staff
- Style
- Special knowledge
- Self-conception s51
The three upper core variables structure, strategy and systems are referred to as hard factors, which are to be closely coordinated in order to optimize internal processes. However, since an organization is a social structure in which people work and interact on a daily basis, it is essential to consider and align the soft factors of core personnel, specialized knowledge, style and self-image to the same extent. The hard factors are therefore often overestimated in terms of their impact, because implementation projects or changes can only be implemented successfully if they are supported by people and are ultimately implemented.52
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Figure 23: Mc-Kinsey-7S-Model, Own representation based on Peters and Watermann (2003), p. 32.
If we look at the model according to Deal and Kennedy, four types of people are described:
- The tough-guy, macho culture
- The work hard / play hard culture
- The bet-your-company culture
- The process culture
The tough-guy, macho culture is very action-oriented. He takes high risks. This culture makes quick decisions and demands the same from its employees.
High fluctutation rates are the result among employees, the business orientation is short term and with internal competition that is very high.
The work hard / play hard culture is a culture of team players, which supports social aspects. This culture takes low business risk and gives quick feedback from the market if the decisions were right. It is often a culture in sales-oriented companies that focus on the customer (customer centricity).
The bet-your-company culture is a culture of very level-headed types, where a long-term orientation is crucial, with decisions of great dimension. These decisions are often made by top management, resulting in very high-value scientific breakthroughs and innovations. It often takes a long time to announce a win or loss.
The process culture represents a culture with low entrepreneurial risk in a stable environment that is considered predictable, with little feedback to employees when they have contributed to success. There is a hierarchical structure, characterized by many levels of management, so that the employees are only functionaries who lack the development to do the right things. Processes must always be optimized.53
In the Sackmann Model, Sackmann talks about a strong corporate culture having an impact on the financial success of the company and divides the
twelve dimensions of corporate culture into:
- Content dimensions
- Quality dimensions
Among the content dimensions, Sackmann includes the dimension of 1 – 9:
- Dimension 1: Clear and communicated identity
- Dimension 2: Consistent strategic goal orientation
- Dimension 3: Customer orientation
- Dimension 4: Ability to learn and adapt
- Dimension 5: Innovation
- Dimension 6: Utilization of employee potential
- Dimension 7: Culture-compliant and partnership-based management
- Dimension 8: Performance readiness, performance capability and perfor- mance orientation
- Dimension 9: Balanced stakeholder orientation
The quality dimensions represent the dimensions 10 – 12 dar:
- Dimension 10: Strategic fit
- Dimension 11: Multidimensional orientation
- Dimension 12: Consistency between normative claim and lived intention [54]
Companies with a strong corporate culture are generally more successful economically than companies with a weak corporate culture, so the advantages of a strong corporate culture clearly outweigh the disadvantages.
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Figure 24: Advantages and disadvanatages of a strong company culture, Own representation Kurwan, M. (2021).
In radical change management, the goal is to change the corporate culture, which is certainly not easy, since the underlying cultural assumptions of the individuals have become anchored in their minds over time. In addition, other factors that strongly influence the corporate culture also play an important role, such as the number and personalities of the employees, who carry a lot of knowledge and experience. The market with its products and services is essential, since one has to do it here with customers. The technology used and regulations of a bureaucratic nature, such as company agreements with the works council, also play a decisive role here. However, a corporate culture can still be changed or developed in a targeted manner if the appropriate instruments are used. These instruments, respectively Lewin's three-phase model, Kotter's eight-step model, Krüger's five-phase model and Schmidt-Tanger's six-phase model of change are explicitly explained in chapter 2.4.
2.4 Theories to guide action for restructuring (Radical Change)
2.4.1 Lewins 3-phase model
According to Lewin's 3-phase model, changes in social groups always occur in three phases. Phase 1 is the unfreezing phase, phase 2 is the change phase, and Lewin calls the third phase refreezing. Lewin's model assumes that there are forces in every organization that drive change, which he calls driving forces, and forces that prevent change. These are called restraining forces. These forces are normally of equal magnitude, so that an equilibrium is created. If a change is to be carried out, the driving forces are to be strengthened and the restraining forces are to be reduced, whereby the coworker is an important factor in the change process. Once these 3 phases have been completed, the change process is said to have been successful.
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Figure 25: Lewin’s 3-phase model, Own represenation on Lewin (2019), p. 325.
In phase 1 of the unfreezing process, the driving forces must be strengthened and the restraining forces reduced so that the old equilibrium can be left behind. For this reason, it is essential to convince employees that the need for change is indispensable and to overcome resistance to change. In phase 1, the goal is to generate readiness for the change.
In phase 2 of the change the actual changes are made, in which the new behaviors are also practiced. Due to the occurrence of uncertainties and the fact that employees have to expend additional energy for the change, the leivability curve (see Figure 3) initially drops, but then rises again to a higher level towards the end of the change process.
In phase 3 of stabilization, the goal is to successfully stabilize the changes achieved in the long term so that employees do not fall back into the old patterns, structures and behaviors after a certain period of time. Therefore, the company must monitor the new actual state and make further changes if necessary.55
2.4.2 Kotter’s 8-step model
Kotter's 8-step model is a further development of Lewin's 3-phase model. It provides managers with the right tools to successfully implement a change process. These stages must all be followed consistently one after the other in order to achieve a successful change process.
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Figure 26: Kotter’s 8-step model , Own representation based on Kotter (2012), p. 23.
In step 1, creating a sense of urgency, the awareness of the urgency of change must be of the urgency of change among managers and employees. In this stage, the markets and competitive realities must be examined. It also requires identification and discussion of crises, potential crises, or major opportunities in the future.
In the second step, building a guiding coalition, a leadership team must be established to lead the company through the change process and to implement it successfully. The guiding coalition must have sufficient clout. It is important to unite the key players in a coalition as a team and to ensure mutual trust. This guiding coalition must think alike and speak a common language in order not to be undermined by the employees.
In the 3rd step Develop Vision and Strategy, a vision of change and strategies and their implementation must be developed, as an overarching vision serves as traction for the company.
In the 4th step, Communicate Vision, it is extremely important to communicate the vision of the desired change on a broad basis, as it is necessary to convince the employees. In this communication of the vision, the management coalition assumes the role model function expected by the employees.
In step 5, empowering employees to shape change requires broad-based empowerment to convince employees. In this stage, it is important to remove obstacles and change the systems that undermine the vision of change. It is essential to encourage employees to take risks rather than traditional ideas, activities and actions.
In the 6th step Achieving Quick-Wins Quick-Wins it is fundamental to ensure short-term goals and successes. These should be visible and clear to everyone.
People who have made these successes possible should be shown appreciation and appreciation in the form of a reward, as successes should be celebrated.
In step 7, consolidate successes and initiate further changes, achieved goals and successes should be ensured, taking into account that profound changes take a long time. Consolidation of results brings further changes. The greater credibility among employees should be used to change all systems, structures and policies that do not work together and do not fit the transformation vision. Employees should be hired, promoted and developed to implement the vision of change. The process should reinvigorate change with new projects, issues and actors. The first four stages of the transformation process serve to thaw the hardened status quo (Lewin's unfreezing). Stages five through seven introduce many new practices (Lewin's Changing), with the eighth and final step grounding the changes in the corporate culture and helping to anchor them (Lewin's Refreezing).56
2.4.3 Krüger’s five-phase model
Krüger's five-phase model begins with phase 1 initialization and continues with phase 2 conceptualization, phase 3 mobilization, phase 4 implementation and phase 5 stabilization. This 5-phase model allows for the possibility of flexible adaptation and change measures to the respective situation, so that regressions can also be explained.
In phase 1 of the initialization the necessity of a change is determined. In this phase, both system and situation analyses are carried out so that the situation can be assessed and planned. In parallel, executives, consultants, etc. are activated as carriers of the change process.
In phase 2 of the conception, the goals of the change process are defined. The corresponding measures are identified and determined.
In phase 3 of mobilization, communication takes place with those affected. The communication has a special meaning, because thereby the acceptance of all involved ones is to be won, in order to prepare these then purposefully with the adequate measures for the aging conditions. This phase prepares the implementation.
In phase 4 of implementation, the planned changes are carried out. Any follow-up projects are also initiated, with each project subject to success monitoring, success evaluation and success correction.
In phase 5 of stabilization, the results of the change process are cemented and consolidated to ensure that the organization does not fall back into old patterns. The readiness for future changes should also be ensured.57
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Figure 27: Krüger’s 5-phase model, Own representation based on Krüger (2006), p. 67.
2.4.4 Schmidt-Tanger’s six-phase model of change
The Schmidt-Tanger phase model comprises 6 phases.
It reflects the typical behavior of employees during the phases of change. On the other hand, it gives management the opportunity to steer employees through these phases in order to achieve the desired changes together with them.
The six phases have a chronological sequence in which one's own competencies are subjectively assessed differently. It is important to know that change takes time.
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Figure 28: Schmidt-Tanger’s 6 phase model , Own representation based on Schmidt-Tanger (2012), w.p.
Phase 1 is characterized by the shock/surprise phase.
This occurs when the urgency and necessity of a change is addressed.
was addressed, which was neither expected nor desired at the time or in this form. This happens, for example, when restructuring is announced, companies are closed, changes are made through takeovers, outsourcing of areas, promotions, transfers, dismissals, etc.
Thus, confrontation occurs. For most employees, their own competence to influence the change is rated accordingly low. A few people have the tendency to increase their performance rapidly (now more than ever). However, as soon as the energy is exhausted, rigidity sets in, as it does with most other people. Individuals, teams and organizations feel paralyzed. Everything that is perceived at this moment becomes a problem stuck state, where the first goal should be to restore the mental, physical and physical ability to move.
The second phase is denial (This can't be true, they definitely don't mean me), which follows the phase of shock and denial. In this phase, people tell themselves that they are competent again and believe that the new state does not differ significantly from the old one or that the old state must be restored per se after a short time (They will see that they can pack up without us). Old beliefs, attitudes and values are activated here, as things are supposed to be the way people want them to be. In this phase it is very difficult to make changes in attitudes, because people usually do not ask for help. The necessity of one's own change is simply not accepted, so that a blocking attitude takes place.
In phase 3, the rational insight occurs that the rejectionist attitude does not bring the desired success and that change is unavoidable, if not necessary. However, there is still a lack of willingness to rethink one's own behavioral phases, because for the time being, the first superficial changes are perceived and short-term solutions are sought.
Phase 4 is characterized by emotional acceptance, in which the decisive turning point occurs at the lowest point. Only now do employees begin to accept the changes and not just understand them. Familiar behaviors are abandoned, so that the fundamental reorientation can now begin.
Phase 5 is characterized by trial and error and learning, with employees developing curiosity about the new and the actions associated with it. Successes and failures teach employees which behaviors are adequate.
In phase 6, the realization and integration occurs that the change can also bring about something good. Through the first successes, the own abilities are expanded and the actions are integrated into everyday life.58
In order not to jeopardize the change process at this point, it is important to be there for the employees and to take care of them. In the individual phases, it is essential to use the right behavior and words in order not to jeopardize the change process. The following procedure should be followed in the individual phases:
Phase 1:
In order to work successfully on this, it is important not to fall into lethargy, but to go directly to the improvements, since these are in the foreground. No insight is shown into the need for change, nor are com-promises or justifications allowed. The people see the situation as a catastrophe, so that opposing it creates even more resistance and gambles away credibility. In this case, empathy, the ability and willingness to show understanding is the right way to weather the initial storm, coupled with the necessary steadfastness. Simply letting the people talk, listening carefully and offering contact is an advantage here.
Phase 2:
In order to be able to make adjustments here at all, it is appropriate to place the facts in a new framework Reframing or as-if scenario, so that one plays through this with the people affected, what a change could mean for a division, for a department, for a team or for a person.
The focus here is initially placed on others. Targeted questions dissolve perceptual distortions in this phase.
Phase 3:
It is advisable to listen actively and ask several times whether the facts have been understood correctly, but do not make any concessions.
the facts correctly, but do not make any concessions.
Phase 4:
In this phase, noticing offers itself as a response.
Phase 5:
The recommended reaction here is to congratulate or encourage the person for actively trying out the changes and achieving initial success.
Phase 6:
In this phase, the reaction is to congratulate the participants on what they have achieved.
2.5 Lean Six Sigma as a system of continuous improvement (Incremental Change)
In every organization, customer satisfaction is the top priority. Customer satisfaction is also synonymous with profitability, since a customer will only acquire products from a supplier in the future if its needs are optimally satisfied.
While most companies in the 1980s believed that producing quality products was too costly, Motorola believed the opposite. Motorola realized that the higher the quality of a product, the lower the cost of production, so greater customer satisfaction resulted in greater profitability.
Due to the fact that today's competitive market does not tolerate mistakes, it is very important to introduce the concepts of Lean Six Sigma in companies. In Lean Six Sigma as a unified business strategy, real synergies take place between the two business strategies Lean and Six Sigma, where the focus is on improving the operating result on the one hand and on increasing customer satisfaction on the other.
The philosophy of Six Sigma refers to the statistical control process, the stochastic control in terms of probability and the engineering process control. The Six Sigma methodology uses statistical theory and therefore assumes that each process factor can be characterized in terms of a statistical distribution curve. The goal is to eliminate all defects from each process, product and transaction. Six Sigma is therefore a process that uses tools to generate virtually defect-free products and services. Six Sigma is applied to batch-to-batch processes, discrete and continuous applications. The goal of Six Sigma is to produce less than 3.4 defect shares per 1 million shares, i.e. to pursue zero-defect quality with vigor. Six Sigma thus corresponds to a quality of exactly 99.99966%, so that a very high process quality is achieved. Six Sigma therefore enables companies to gain significant market share in the global competitive market, with profitability being decisively increased when Six Sigma is applied by employees in every department of a company.
Lean is a business strategy within the framework of c ontinuous improvement that includes cost reduction in both production and service.
The Lean philosophy identifies and eliminates inefficiencies (wastes) such as non-value-added costs or unnecessary waiting times in the process caused by errors, overproduction and other processes, thereby enabling any organization to expand. Lean is associated with speed, efficiency and acceleration of the process.
For this reason, by integrating elements of the Lean enterprise methodology with Six Sigma, which does not provide tools to control and reduce cycle time, the feedback will be faster than planned.
Combining the two expressive business strategies of Lean and Six Sigma into the unified business strategy of Lean Six Sigma thus results in the reduction of process variation and a significant increase in operating profit. As all companies focus on a faster and higher return on invested capital to satisfy shareholders, the use of Lean principles in Six Sigma is critical .
Lean Six Sigma can therefore be defined as follows:
- Lean Six Sigma is a data-driven approach and methodology to analyze the root causes of manufacturing and business problems by eliminating defects (approaching six standard deviations between the mean and the next specification limit) and dramatically improving the product.
- Lean Six Sigma improves the business knowledge of employees in terms of achieving operational results, customer satisfaction and on-time delivery of a product or service to the customer. It is not just simple process improvement techniques, but a business strategy to drive projects to financial targets.
- financial goals.
- Lean Six Sigma combines design philosophies and techniques with Risk mitigation (Lean Six Sigma Tools: Measure, Analyze, Develop and Re view).
The prerequisites for achieving the set goals are good employee involvement, close cooperation between employees and suitable training measures to increase the competence of the entire organization.
While Lean Six Sigma was originally designed for manufacturing (production) only, it now covers a wide range of disciplines. This includes transportation, administration, medical services, and a variety of other operational organizations and processes that give an input and produce an output.
The following basic lean manufacturing techniques and principles are applied in Lean Six Sigma:
1. 5S
- Seiri = Sort
- Seiton =Set in order
- Seiso = Shine
- Seiketsu = Standardize
- Shitsuke = Sustain
The 5S method was developed by Toyota as part of the Toyota Production System (TPS) to improve the working environment of employees.
The first 3S are actions, with the last two S being sustainable and progressive.
2. Value stream mapping
- Is a method that represents the manufacturing route of a product from the production plant to the customer's door.
- Is a visual tool ein visuelles for identifying all steps in the manufacturing process with cost-effective results.
3. Kaizen
- Continuous improvement
4. Error security
5. Process analisy and implementation of robust engineering to build quality into an assembly or manufacturing process with cost-effective results.
6. reduction of cycle time
7. inventory reduction
8. setup time optimization
9. identification of waste and its complete elimination
Within Lean Six Sigma, Lean merges or is integrated with Six Sigma principles. The integration of both concepts will deliver faster results and lead to the best competitive position by consistently applying the tools that have the highest improvement effect on the results already achieved.
In summary, Lean to Six Sigma taxes in the following way:
1. eliminating the unproductive time that slows down a project.
2. maintaining customer satisfaction through fast delivery.
3. completing the project on time and possibly under budget
4. continuous improvement of profitability
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Figue 29: Lean Six Sigma - Two methods with optimal synergy, Own representation Kurwan, M. (2021)
Lean Six Sigma combines two methods with optimal synergy.59
2.5.1 Six Sigma
In addition to the statistical method, Six Sigma is a breakthrough strategy based on customer benefits. In a multi-stage chain of effects, improvements are achieved in internal processes, market performance and company results, with the focus on smart work.
This leads to an increase in customer satisfaction, profit maximization, increased competitiveness and job security within the company. Six Sigma functions as both a preventive and a reactive quality method.
As a preventive quality method, Design for Six Sigma (DFSS) enables the prevention of future quality problems to enable marketable and processable products and services that are nearly defect-free.
Six Sigma DMAIC serves as a reactive quality method to combat variations in existing quality problems in order to generate near defect-free processes. To fight symptoms of the reactive quality methods, which however only covers the problem, counts the Trouble Shooting = Immediate problem solution, so that this can occur again at a later time. The six-stage PLP = Problem Solving Process and the eight-stage Problem Solving Process (8D = eight disciplines) are characterized by a sustained fight against the cause, whereas the QVP = Quality Improvement Process pursues the transparent process chain with the focus on the customer.
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Abbildung 30: Preventive and reactive quality methods,
Own representation based on Töpfer, A. (2007), p. 45 ff.
Six Sigma, in contrast to the other quality methods, therefore covers the entire spectrum of quality methods.
It's what Six Sigma is fundamentally about:
- To carry out the stringent application of a systematic project management method
- To carry out the consistent use of the input data and the resulting statistical analyses
- Exercise a consistent measurement of the performance of a company with the aim of sustainable improvement
- The achievement of zero defect quality
Six Sigma states the goal of meeting the most essential customer requirements (Critical to Quality Characteristcs = CTQs) in all important processes, both from the customer's point of view and at the same time economically from the company's point of view.60
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Figure 31: Measurement and implementation of customer requirements, Own representation based on Töpfer, A. (2007), p 47.
Six Sigma is an evolution, i.e. continuous improvement, not a revolution. It is to be understood as a project-related improvement, which includes a clear distribution of roles with defined instruments:
- Customer as starting point
- Clear economic results
- Always process-oriented
- Top-down approach, i.e. strategy must be implemented on a project-by-project basis
- Management and executives must be actively involved
- Defined role allocation with training concepts
- Defined methodical approach, including toolbox
Six Sigma is primarily about achieving a reduction in variation in order to guarantee a stable process. Since the overlapping of the areas of design/development, material/parts and process/production for Six Sigma effects a high synergy potential arises, an additional security occurs. A Six Sigma based product development with direct influence on supplier parts, which is quality robust and production and assembly processes, which are less error prone, increases the overall product reliability. This results in a very high level of customer satisfaction, which consequently leads to an increase in the company's sales and profits.
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Figure 32: Factors influencing quality, Own representation based on Töpfer (2007), p 51.
Since Six Sigma imposes and consistently pursues a dedicated zero-defect quality strategy, it is essential to involve both the management level and the employee representatives, i.e. the works council.61
The involvement of the works council is of crucial importance due to the pending change in operations, as this automatically gives the works council a right of co-determination in accordance with Section 87 of the German Works Council Constitution Act (BetrVG) under German labor law.62
The targeted implementation of Six Sigma projects is carried out according to clear characteristics.
Abbildung in dieser Leseprobe nicht enthalten
Figure 33: Six Sigma Characteristics, Own representation based on Töpfer (2007), p. 52.
Apart from the process-related, organizational, instrumental and content-related requirements, the clear measurement of both the initial situation and the results achieved serves as the focus.
These factors are very important to enable transparent control. Therefore, it is also fundamental that the actors within Six Sigma have a very high qualification need. The associated qualification offensive extends over all levels, i.e. full-time quality officers, managers and employees.63
Measurements can take place according to different criteria, although PPM (Parts per Million) and DPMO ( Defects per Million Opportunities) are the two most important quantities. Whereas PPM indicates the defect rate, the actual defects that occurred after production and arithmetically determined, DPMO indicates the defect rate in the context of the defect opportunity, so that it refers to an arithmetically determined number of potential defects before the production of a product . The OFD, i.e. the failure mode of a unit, describes the possibility of defects occurring at different points. CTQs are quantifiable specifications that must be derived from the voice of the customer, so that CTQs represent the critical characteristics of a product related to quality.64
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Figure 34: Terms used to measure Six Sigma levels, Own representation based on Töpfer (2007), p 54.
For simple improvements, which do not have a great potential (falling fruit of an apple tree), and which can be handled with logic and intuition, mainly project management and quality management methods are used.
Six Sigma therefore focuses on the projects with great potential in the framework of a re-design of a process that corresponds to picking the sweet fruit of an apple tree or Six Sigma level 5 - 6, and a characterization and improvement of a process that harvests most of the fruit, i.e. Six Sigma level 4 - 5. The Six Sigma level 3 - 4, which corresponds to the low-hanging fruit of an apple tree, on the other hand, is approached with the seven QM tools / CIP without starting a Six Sigma project.65
Based on Deming's classic PDCA cycle (Plan, Do, Check, Act), all Six Sigma projects follow a standardized process.
The DMAIC cycle (Define, Measure, Analyze, Improve, Control), which is applied to existing projects, is a derivative of the PDCA cycle.
In Six Sigma projects for new products (DFSS), on the other hand, the DMADV cycle (Define, Measure, Analyse, Design, Verify) is applied.
This describes the methodical approach of designing a product from the market analysis to the production run in such a way that error-free production is possible from the very beginning. The main task of this method is to understand the customer's requirements and to methodically translate them into corresponding systems, functionalities and specifications.
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Figure 35: Six Sigma Methods, Own representation based on Toutenburg, H., (2009), p. 30.
The optimization of existing processes is carried out with Six Sigma DMAIC with the aim of identifying causes and influencing variables for process variations and deriving measures for stabilizing processes or controlling their effectiveness. Process variation is the biggest enemy of a company and causes the cost block of poor quality. Stable and capable processes know no problems and offer considerable savings potential.
DMAIC stands for Define, Measure, Analyze, Improve and Control. The DMAIC method is suitable for both production processes (operational processes) and transactional processes (development, administration, marketing, etc.). The difference lies in the repetition rate, which is very high for operational processes, whereas transactional processes are characterized by lower repetition rates and longer lead times.
For production processes, a lot of historical data is often available for process evaluation. The DMAIC method takes this into account by using statistical tools to optimize this method.
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Figure 36: The Six Sigma DMAIC Method, Own representation based on Toutenburg, H., (2009), p. 37.
Define Phase
The goals of the Define Phase are as follows:
- Initiating a Six Sigma project by identifying the project focus
- Description of the project focus (process) and the improvement target
- Presentation of the potential
- Implementation of the project control
In addition to the assignment by a client (process owner) and formulation of the project order, the necessary activities are divided into the following groups:
- Collection and evaluation of information on the problem and identification of success factors and responsible processes
- Collection and evaluation of information on project benefits
- Planning and review of the project progress
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Figure 37: Overview Six Sigma DMAIC Define Phase, Own representation based on Toutenburg, H., (2009), p. 69.
At the beginning of a Six Sigma project is the project description, i.e. that a problem exists. Reasons for carrying out a Six Sigma project can be customer complaints, excessive defect rates or increased costs for a product or service. Clients are process owners, managers or department heads in similar positions. It is important for the client to describe the scope of the project and formulate the objectives.
The client emphasizes the urgency and importance of the project, which is usually described in terms of savings to be achieved. The threshold for minimum savings to start a Six Sigma project is considered to be €100,000 in large corporations and €25,000 to €35,000 in mid-sized companies.
After the evaluation of the importance and urgency of a project by the client, the assignment of a Six Sigma project manager (Black Belt or Green Belt) takes place in the context of the project order, whereby the task and goals are communicated to the project team. The necessary project resources are also planned.
The determination of the critical success factors (CTS = Critical to Satisfaction) and their assignment to a process form the core of the problem to the process, because with stable processes all success factors are fulfilled at any time. The determination and assignment of the success factors to the responsible processes (POV = Process Output Variables) is an essential part of the Define phase.
The importance of a project increases with the potential for improvement.
In the Define phase, the costs of poor quality (COPQ) are determined and specified as potential for improvement.
Project planning and project control form the core of a Six Sigma project. The project control happens methodically on the execution of the Pha-se Exit Reviews, which are accomplished with the help of check lists, in order to make sure that all necessary activities were accomplished. Difficulties and delays in the project process are discussed in regular meetings with the client.
All Six Sigma DMAIC projects are recorded in the form of standard project documentation.
Measure Phase
The objectives of the Measure phase can be presented as follows:
- Objective evaluation of the success factors (POV) at process level and determination of the critical success factors (KPOV = Key Output Variables)
- List of possible influencing factors (PIV = Process Input Invariables)
- Implementation of the project control
The statistical evaluation of the success factors follows, whereby the success factors (KPOV) are described and evaluated by key figures at process level.
In the next step, the possible influencing factors (PIV = Process Input Invariables) are listed for the relevant process key figures and their risk is evaluated, whereby their statistical evaluation will be the subject of the analysis.
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Figure 38 : Overview Six Sigma DMAIC Measure Phase, Own reprensentation based on Toutenburg, H., (2009), p.122.
The aim of this activity is to describe the success factors using key figures. The success factors are assigned to the process steps and corresponding process-oriented key figures are determined that are directly related to the success factors. The objective evaluation of the success factors can then take place on the basis of these key figures.
If data are collected from a process, it must be ensured in the context of the evaluation of the measurement system suitability that the measured values correspond closely enough to reality. Therefore, a suitability study (MSA = measurement system analysis) is carried out on existing measurement systems (proof should be available so that the reliability of the data can be guaranteed.
With the collected data the process capability analysis (PFA) is created. The process capability analysis provides information on the dispersion (variation) and position (mean value) of a process. This information is used to evaluate the success factors relevant for the further course of the project (KPOV = Key Process Output Variables). By prioritizing the success factors (KPOV) and the exact assignment in the process, it can be derived that success factors with the largest scatter or average deviation are also responsible for the original problem (error image) and deserve further consideration in the project as KPOV.
An initial selection based on expert decisions reduces the high number of possible success factors.
Tools for plausibility checks and for evaluating the strength of the influence are used.
The evaluation of the potential process risk, from which a possible product risk results, is necessary in addition to the strength of the influence. At the end of the project, the risk assessment is repeated in order to show the most significant risk reduction possible.
Analyse Phase
The objectives of the analysis phase are the following:
- Assessment of the influencing factors (PIV)
- List of vital influencing factors (KPIV)
- Implementation of the project control
The procedure for conducting statistical evidence as follows:
- Measurable design of the influencing factors
- Implementation of the measurement system analysis
- Implementation of the graphical and statistical evidence
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Figure 39 : Overview Six Sigma DMAIC Analysis Phase, Own representation base on Toutenburg, H., (2009,) p. 210.
The data collection plan is used to evaluate the possible influencing factors (PIV from the measure phase) by means of figures, data and facts. It forms the central tool for monitoring data acquisition.
If data are collected from a process, it must be ensured as part of the evaluation of the measurement system suitability that the measured values correspond closely enough to reality to be able to make reliable statements. For this purpose, the measurement systems are checked for their suitability. Since the acquisition of new data is involved, the measurement system analysis is necessary at this point.
The graphical analysis and the evaluation of significance prioritizes the influencing factors (PIV) that have a relevant impact on the critical success factors.
The statistical analysis evaluates the strength of the interaction of the relevant influencing factors.
Improve Phase
The goals of the Improve phase are as follows:
- Determination of safe process settings of the KPIV (tolerances / barriers)
- Introduction and evaluation of the best solution concerning process stabilization
- Implementation of the project control
The procedure for creating the KPIV is based on the use of statistical design of experiments:
- Description of the best process scenario
- Derivation of safe barriers
- Description and selection of the implementation scenario
- Implementation and evaluation of a pilot
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Figure 40 : Overview Six Sigma DMAIC Improve Phase, Own representation based on Toutenburg, H., (2009), p. 278.
The best scenario describes the influencing factors in their settings, which lead to
stable results, whereby the findings of the analysis phase form the basis. The statistical design of experiments serves as a tool for calculating the best settings of influencing factors.
By calculating safe bounds, process specifications are determined that ensure a stable process. Once the best scenario has been selected, it is important to know how far from the best scenario it is possible to deviate without damaging the success factors and thus the product or service.
The description and selection of implementation scenarios is the main task of this step, so that the process change is established in a safe way.
An implementation plan is available as a work product.
The effectiveness of the solution is first tested in a pilot. Only when the process of the solution has been proven by the short-term study, the area-wide solution can be implemented. Process capability analyses and before-and-after comparisons are used to evaluate the solution.
Control Phase
The goals of the Control Phase are as follows:
- Integration of control instruments
- Solution evaluation
- Implementation of the project control
The procedure in the Control Phase is as follows:
- Preparation of the control plan
- Acquisition of the visual management
- Adaptation of the process documentation
- Improvement assessment
- Implementation of lessons learned / project closure
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Figure 41 : Overview Six Sigma DMAIC Control Phase, Own representation based on Toutenburg, H., (2009), p. 294.
By establishing a control plan that is publicly posted in the process, employees are informed of additional controls or changes to existing process controls and trained as necessary.
The control plan contains a list of all necessary controls in order to keep influencing variables stable.
By introducing visual management, the relevant procedures, structures and results are made visible to everyone, so that deviations are recognized more quickly and the information on how to do something correctly is made available at all times. An essential part of standardization is the common use of the best, safest and easiest way to fulfill the process steps.
The process documentation is adapted after the optimization of the process.
To assess the improvement/savings, before and after comparisons of the process performance and the representation of the process capabilities are consulted, which should show the improvements over a period of at least three months. The key objective of this demonstration is to show stable conditions after the solution has been implemented. By demonstrating the stable solution, the actual savings can also be derived and compared to the planned savings. By checking the transferability of the improvement to other processes, the project benefit can be additionally increased.66
Roles and Tasks in a Six Sigma Organization
The roles and tasks in a Six Sigma organization are of critical importance. The designation takes place in belt colors, i.e. in reference to Far Eastern martial arts. Belt colors represent a very high demand for discipline, precision and skill, which leads to a high level of expectation among all Six Sigma participants.
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Figure 42 : Six Sigma roles, Own representation base on Toutenburg; H., (2009), p. 22.
Management
Six Sigma projects are usually initiated by the management. From the management a champion / sponsor is needed to make Six Sigma projects successful, which is always the experience from various improvement projects. Without the absolute support of the top management the introduction of Six Sigma is unthinkable.
Six Sigma must be spread throughout the company as a vision by top manageme nt so that it becomes a living element at all levels. The management follows the success of a Six Sigma project by participating in steering committees and receiving the project reports in order to get an accurate picture. The monitoring of Six Sigma training within the company and the presentation of awards to project groups for their successful improvement projects are also important tasks of top management.
Across projects, management is responsible for selecting Black Belts and regularly reviewing progress in implementing Six Sigma projects.
The importance of communication on the part of the top management cannot be underestimated, because the top management should make itself strong for Six Sigma on all levels at the most different occasions and important meetings and speak offensively about its importance.
If the project has a manageable level of improvement, top management does not need to be involved, so the sponsor/ champion, who is in middle management, can take its place.
The Champion, who is located in the middle management level, takes over this task.
Quality Leader / Program Manager
In companies that have a large Six Sigma organization, there are staff positions in addition to management, one of which is the Quality Leader / Program Manager. From the Quality Leader, the management receives information and regular updates, so that the Quality Leader takes care of the internal Six Sigma communication. The Quality Leader also has the task of guaranteeing the re-staffing of the Quality Team and ensuring the further development of the methods, since the retention of the Master Black Belts and Black Belts in the Quality organization is limited for a period of 2-3 years.
Six Sigma Yellow Belt YB (Yellow Belt)
The Yellow Belt knows the DMAIC method in its mode of operation and process. He also knows the selected tools. The Yellow Belt can work in Six Sigma projects. While the Yellow Belt can accompany Six Sigma on the management level, he cannot carry out projects independently.
Six Sigma Green Belt GB (Green Belt)
The Green Belt knows the DMAIC method. He can carry out projects independently and is responsible for his projects. The Green Belt spends about 20% of his time on project work. In many companies, the Green Belt training is a necessary career requirement.
Six Sigma Black Belt BB (Black Belt)
The Black Belt can apply the DMAIC method to his own projects, even very complex ones. He uses 100% of his working time for Six Sigma projects. The Black Belt is responsible for the success of his project and supports the Green Belt in complex projects.
Six Sigma Master Black Belt MBB (Master Black Belt)
The Master Black Belt is fully familiar with the DMAIC method. He has many years of project experience. The Master Black Belt also trains other Belts. He is the highest authority in the company. He supports the Green Belt and Black Belt in project work and advises champions in the selection of projects.
Six Sigma Master Champion (Champion)
The Champion is responsible for the continuous application of Six Sig-ma in the company. He knows the problems and takes care of new projects. The champion removes obstacles and takes responsibility for the improvements made in his area.
Six Sigma Master Deployment Champion (Deployment Champion)
The Deployment Champion is responsible for the overall results. His goal is to fundamentally raise the Sigma level. His main tasks are the marketing of the method in the company and the coordination of the champions.
Six Sigma Controller
The controller checks the potential of a project. He evaluates the economic
benefits. The controller is expected to achieve savings at the end of a project.67
Applied tools in the Six Sigma DMAIC method
Most of the tools used in the Six Sigma DMAIC method originally come from lean manufacturing, such as quality metrics, Pareto analysis, process capability analysis, Ishikawa diagram, UW diagram, correlation, standardization and visual management.
Therefore, only the following tools will be discussed here:
- SIPOC
- FMEA
- CTS-Tree
- Measurement system analysis
SIPOC stands for Supplier, Input, Process, Output, Customer.
The objectives pursued by SIPOC are the following:
- Determination of the start and stop signals of the process that is in focus
- Determination of relevant process outputs and identification of their customers
- Ensure a common understanding of the process to be improved68
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Figure 43 : SIPOC, Own representation based on Meran, R. (2014), p. 38.
FMEA stands for Failure Mode and Effects Analysis. FMEA is an analytical method of reliability engineering that provides qualitative statements. The FMEA is often used in the automotive industry, aerospace industry, but also in other industries and often required by customers.
The objectives of FMEA are the following:
- Identification of potential causes and vulnerabilities
- Determination of priorities in the further analysis
- Risk assessment for a customer's process
- Derivation of risk reduction measures [69]
In FMEA, it is therefore important to avoid errors from the outset, as these lead to additional costs for the company, e.g. through rework, loss of value for scrapping and disposal, transport costs for replacements and returns, loss of sales through loss of image and trust among customers, and compensation for consequential damage. Therefore, it is important to follow the process steps of the FMEA exactly.
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Figure 44 : Process steps of the FMEA,
Own representation based on Gorecki, P. (2018), p. 86.
In the FMEA, possible product defects are evaluated according to their significance (B) or severity of the defect sequence from the customer's point of view, their probability of occurrence (A) of the cause and their probability of detection (E) of the cause or of the defect in the process before handover to the customer, each with a key figure that can rank from 1 -10, where 1 is the lowest and 10 the highest value. Here it is useful to use the risk priority number (RPN) to rank the agreement in the development process, which is calculated by multiplying the values of B x A x E. The RPN is used to rank the agreement in the development process.70
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Figure 45 : FMEA, Own representation Kurwan, M. (2023).
[...]
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2 Vgl. Uffmann, K. (2015), p. 6 ff.
3 Vgl. Seidenschwarz, W. (2012), p. 2.
4 Vgl. Mayer, K. (2022), p. 78 f.
5 It should be noted at this point that all information is presented exclusively in the masculine form in order to counteract any suspicion of discrimination.
6 Vgl. Kübler, F., Krauter, J. (2014), p. 12 ff.
7 Vgl. Porter, M.E. (2014), p.25.
8 Vgl. Kostka, C., Kostka, P. (2013), p.15.
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10 Vgl. Kotter, J.P. (2012), p. 22. ff.
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18 Vgl. Wucknitz, U.D., Heyse, V. (2008), p. 47.
19 Vgl. Wucknitz, U.D., Heyse, V. (2008), p. 10.
20 Vgl. Kotter, J.P. (2012), p. 22. ff.
21 Vgl. It should be metioned at this stage that all paragraphs being mentioned are subjet to German law
22 Vgl. Graf, M. (2018), w.p.
23 Vgl.Internet: https://www.bpb.de/kurz-knapp/hintergrund-aktuell/317830/vor-5-jahren-ende-der-ein-kind-politik-in- china/ (called on 22.01.2023).
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26 Vgl. Internet: https://de.statista.com/statistik/daten/studie/273406/umfrage/entwicklung-der-lebenserwartung-bei- geburt-in-deutschland-nach-geschlecht/ (called on 01.12.2022)
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28 Vgl. Internet: https://www.businessinsider.com/pwc-ranking-of-biggest-economies-ppp-2050-2017-2#27-south-africa-2570-trillion-6 (called on 05.12.2022)
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32 Vgl. Grautmann, S., Weber, H., Werning, L. (2022), p. 50 ff.
33 Vgl. Liebhart, C. (2009), p. 14 ff.
34 Vgl. o.V. (2011), p. 611.
35 Vgl. Schuler, H. (2014), p. 156 ff.
36 Vgl. Wolf, G. (2020), p. 57 ff.
37 Vgl. Liebhart, C. (2009), p. 49 ff.
38 Vgl. Schulte-Zurhausen, M. (1995), p. 20 f.
39 Vgl. Wolf, G. (2020), p. 57 ff.
40 Vgl. Wucknitz, U.D., Heyse, V. (2008), p. 68 f.
41 Vgl. Elflein, C. (2021), p. 55 ff.
42 Vgl. Vahs, D., Wieland, A. (2013), p. 3 ff.
43 Vgl. Bickhoff, N., et al. (2004), p. 24 ff.
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45 Vgl. Hurek, M. , Tuma, T. (2022), p.32.
46 Vgl. Hickert, C. , (2020), p. 16 ff.
47 Vgl. Vahs, D., Weiand, A. (2013), p. 61. f.
48 Schein, E.H., Schein, P. (2018), S. 16.ff.
49 Vgl. Kotter, J.P. (2008), S.4.
50 Vgl. Picker, C. (2011), o.S.
51 Vgl. Peters, T.J., Waterman, R.H. (2003), p. 32 ff.
52 Vgl. Raps, A. (2008), p. 52.
53 Vgl. Vahs, D., Weiand, A. (2013), p. 67. f.
54 Vgl. internet: https://www.dgfp.de/hr-wiki/Betriebsvergleich_Unternehmenskultur_-_Welche_kulturellen_Faktoren_beeinflussen_den_Unternehmenserfolg_.pdf (called on 26.04.2022).
55 Vgl. Vahs, D. (2019), p. 320 ff.
56 Vgl. Kotter, J.P. (2012), p. 22. ff.
57 Vgl. Krüger, W. (2006), p. 67 ff.
58 Vgl. Schmidt-Tanger, M. (2012), w.p.
59 Vgl. Taghizadegan, S. (2009), p.1 ff.
60 Vgl. Töpfer, A. (2007), p. 45 ff.
61 Vgl. Töpfer, A. (2007), p. 47 ff.
62 Vgl. o.V. (2011), p. 656.
63 Vgl. Töpfer, A. (2007), p. 51 f.
64 Vgl. Töpfer, A. (2007), p. 54 f.
65 Vgl. Töpfer, A. (2007), S. 74 ff.
66 Vgl. Töpfer, A. (2007), S. 80 ff.
67 Vgl. Toutenburg, H. , Knöfel, P. (2009), p. 22 ff.
68 Vgl. Meran, R., et al. (2014), p. 37 f.
69 Vgl. Meran, R., et al. (2014), p. 170.
70 Vgl. Gorecki, P., Pautsch, P. (2018), p. 85 f.
- Quote paper
- Prof. Dr. Michael Kurwan (Author), 2023, Employee Retention in Change Management Processes. Practical Experience, Munich, GRIN Verlag, https://www.grin.com/document/1348437
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