Monetary Loss due to NonConformances - Who is liable?

[Marla Diaz]

I would like to know how others handle non-conformances with monetary loss. Will the loss be shouldered by both the company and the erring staff? Or should the department manager be equally liable together with the erring staff...more so if investigation results show that the root cause was due to "NEGLIGENCE"?

Would appreciate your comments/inputs.

Thanks,
Marla

I would say that the comany is responsible for the entire cost, with the need to shore up their processes. Can we ever blame one person or department for a process that allows non-conforming product?

Please expand with more deatails as to the structure of your company and what the individual responsibilities.

My gut feeling is that you have an autocratic leadership that blames anyone other than themselves, while they are the ones to train and ensure that their expectations are met.

Am I Close?

[ariell3]

Marla,

We consider all non-conformances to result in some sort of monetary loss. The nature of the non-conformance determines how it is documented. The actual quality costs associated with the non-conformance are recorded in our cost of quality ledger and reported on a monthly basis. The company ultimately suffers whenever a non-conformance occurs, regardless of the origin.

I do not understand the liability issue regarding the department manager and erring staff. Does this mean that the actual employees cover the cost of the non-conformance out-of-pocket?

A good cost of quality system will help you focus on those non-conformances that have a high impact from a financial standpoint. The financial loss due to a non-conformance is usually something that is not easily recovered after the fact. Of course, a good corrective action that addresses the root cause is very important.

In my experience I have found that addressing a nonconformance as a team will generate more cooperation that trying to place blame. You seem to indicate that some sort of negligence was involved. My question would be what facts lead to this conclusion and how can repeat occurrences be avoided in the future? Perhaps employee training in responsibility and authority would be a good place to start.

Hope this helps.

Alex

[Marla Diaz]

Dear Mr. Dyer,

We are a domestic & international forwarder certified to ISO 9001. It has been our company's practice to shouder 50% of the expenses with the erring employee. But with the increase customer complaints (1st sem '02) which were plain "negligence" on the part of the employee, the company is considering to have managers and erring staff shoulder the expenses. The managers are supposed to be directly responsible for their staff's work/performance.

One example would be "mislabeling of shipment cartons" wherein shipment goes to Singapore instead of US. Root cause states "staff was unable to check and tally the docs upon cutting of AWB". Procedures/work instructions have been in place for 5 years now and refresher courses are being conducted.

Could really be negligence...specially if erring staff accepts that he did "forgot" to check?

Thanks!

[M Greenaway]

Maria

I find the attitude of your company totally wrong in blaming the staff for the problems. I think a wise old man said something like 94% of problems are caused by the system. He also said put a good man in a bad system and the system wins, no contests.

I strongly suggest you look at your system and stop blaming your employees.

[Marla Diaz]

Dear All,

Thanks a lot for your inputs. I hope you don't mind my sharing them to our management team on how you guys handle this issue.

When you say that we look at our system, I guess it also goes for the managers involved? This was one way of instilling discipline and responsibility to all employees in carrying out their functions.

I guess we'll just have to reconsider and check if it really can lessen NCs due to negligence or complacency of employees.

Regards,
Marla

[D.Scott]

check if it really can lessen NCs due to negligence or complacency of employees.

I guess if you had to pay for it, you would tend to be a little more careful. If it isn't effective in making people more responsible, I'll bet it sure controls the size of the workforce. Some of the people I know couldn't afford to work there - they would be paying more than they make.

I read an article one time along the same lines - It seems a company in China had some financial problems relating to poor quality. The article stated that to resolve the responsibility issue, the 12 (or so) quality managers were taken out and executed. The undisputed result was that these managers learned their lesson and will never make the same mistake. Problem solved. The article didn't mention if the families of the managers had to reimburse the company for the loss (not to mention the cost of the bullets).

Maybe we are being a bit too harsh on some of the practices in other parts of the world. Who knows, Marla may be on to something here.

Dave

[M Greenaway]

Marla

Spot on - the system is owned by management, it is their responsibility that it functions correctly.

Your processes should be robust enough such that negligence or complacency doesnt adversely affect the process.

If the root cause is truly complacency or neglegence you might look at the parts of your managment system that deals with hiring employees, training employees, and motivating employees.