Response to a question on the Deming Institute LinkedIn group: let’s say Dr. Deming wanted to sit down with his boss to negotiate a compensation increase. What grounds would he use to justify the request?
I believe he would explain how the value he brought to the system was worth a raise.
For example, a likely scenarios might be that I learned and applied new skills (say learning the awesome Ruby programing language) and have used that skill to provide more value to the company (than, for example, when I had to use a less awesome language).
I believe Dr. Deming also would approve of the practice (as Peter Scholtes and Kelly Allan discuss) of market rates (as a basis for pay that can then be adjusted for certain other things). As Mike Stoecklein, put it in The Case Against Performance Appraisals And Pay For Performance [broken link removed]
the market rate for each job (how much to pay to replace you) + accumulation of skills (can do more than others, a different job) + seniority (connections, street smart) this is the main determinant in Japanese companies + prosperity of the company (gain sharing, distribution).
So providing evidence that in the market my skill as for example an software development program manager have been rewarded with increases in pay and I should therefore also get that increased pay also would be a reasonable argument for increased pay.
An increase in the scope of work would also be a reasonable argument for increased pay. If I have taken on a additional role in the company to coach others in their efforts to mistake proof processes and apply the PDSA cycle if doing so was beyond the scope of responsibility that was used to set my pay I believe that would also be a reasonable justification for an increase in pay.
If pay had been held down in the past due to financial conditions at the company and now financial performance had improved that may also justify increasing pay though that idea would likely be something management should do across the board. But perhaps they need a bit of prodding to remind them that such an idea has merit now.
Those are some examples of sensible arguments for a pay increase that are consistent with the Deming’s ideas.
Unfortunately many organization have not embraced Deming’s ideas fully. If your organization really still has difficulty focusing on systems improvement then I think showing evidence of your history of improvements to the system overall could justify a pay raise.
Really the management system should be improved so that continual system improvement is the norm for everyone. But in many cases this is not close to reality yet. In such cases I would consider someone’s history of helping move the organization toward where we should be, but are not yet, as a reasonable argument for why they deserved a pay increase. This area gets a bit more touchy and the risk of management making errors in judgement about what is worthy of a raise and what isn’t. But I would support such an idea. It seems to me that is a justified opinion, within the Deming management context, but others might argue with that and I am not as confident Dr. Deming would agree (though my guess is he would agree) as I am with the other ideas presented above.
Related: What to Do When Individual Performance is Exceptional (outside normal variation) – Employee Involvement at Western Mountaineering – Dr. Deming Called for the Elimination of The Annual Performance Appraisal
I also agree with the comment made in response to my suggestions by Josh Eastburn, who asked the question in the first place:
What I was thinking originally was that the individual might make the same mistake that management does in appraising value by looking at superficial figures, so I’d like to note that you didn’t mention justifying an increase using anything “results”-based, for instance that I greatly exceeded “my numbers” this quarter.