Zytec Corporation's dedication to the late Dr. W. Edwards Deming's quality principles has produced 28 percent revenue growth during the 1991 recession, and won the Zytec team the Malcolm Baldrige National Quality Award and a 1992 Best Plants award, among others.
In the "14 points" that form the crux of Deming's management philosophy, point 1 is "Create constancy of purpose toward improvement of product and service...." Constancy of purpose is essential, says Ron Schmidt, chairman, president, and CEO of Zytec, to gaining the commitment of employees.
Schmidt says that to foster trust, managers must be up front and honest in their communications with employees at all times, but especially when business conditions sour.
Zytec's quality and productivity achievements highlight the success of the management approach. By 1992, Zytec's on-time delivery performance for all of its products had improved 22 percent from 1990 levels to 99.4 percent. Productivity had improved 75 percent between 1987 and 1992.
Adopting Deming's views on compensation policies and performance reviews was not easy for Zytec. Deming maintained that the variance in performance among the large majority of employees within any one job classification is too small to accurately determine rewards. So, at Zytec, every employee within a specific job classification receives the same pay, and there are no individual bonuses paid out at the end of the year.
In January 1992, Zytec even eliminated individual performance incentives for its sales force.
In line with Deming's beliefs, Zytec also axed traditional performance reviews, replacing them with a meeting between supervisor and employee. Discussions focus on goal-setting and development.