What Would Deserve a Raise Within the Deming Management Context?

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 MountaineeringDr. 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.

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2 Responses

  1. Mark Graban says:

    Instead of employees asking for a raise, would a Deming company work to ensure that people are being paid a market wage or possibly a wage that’s above the market… thereby making sure nobody is grumbling about their pay or compensation, allowing them to focus on quality and continual improvement?

    A Deming company wouldn’t focus on individual incentives… that much seems clear. What about broad profit sharing? That would drive short-term thinking even if it were asking people to look at the entire company’s performance instead of suboptimizing a department or business unit?

    Or just straight salary?

  2. John Hunter says:

    >> Instead of employees asking for a raise, would a Deming company work to ensure that people are being paid a market wage or possibly a wage that’s above the market… thereby making sure nobody is grumbling about their pay or compensation, allowing them to focus on quality and continual improvement? < < Yes, the pay system should pay people the right salary. It shouldn't be based on how well people negotiate for their salary. Employees shouldn't have to fight for what they deserve. But if the system isn't where it should be yet then the explanations noted above for why a raise is deserved would make sense. Ideally, the pay system would take those into account without the employee having to raise them but things are not always how they should be. >> A Deming company wouldn’t focus on individual incentives… that much seems clear. What about broad profit sharing? That would drive short-term thinking even if it were asking people to look at the entire company’s performance instead of suboptimizing a department or business unit?
    Or just straight salary?
    < < I have always like broad profit sharing (and giving small amounts of stock to all employees where sensible). Support for this used to be shared by a fairly small portion of the Deming community in seems to me. I think it has increased, though may still be a minority view. As you say there is a risk it leads to a focus on short term results. There are good things about profit sharing. One, from an economic point of view it allows the company to have a part of wages as a marginal cost. In bad years you are less tempted to cut jobs, which I think is valuable. Of course, this isn't a pure good, employees have to understand they may be paid less next year, if the company suffers. I also like that the employees become more focused on the business. Granted it is likely to result in more short term focus, which isn't as good. But, ideally, it is done with some continuing education about the profitability of the business and such things. Also there should be discussion about the risks and potential opportunities seen for the business and what the company is doing (investing in the future, which may result in a lower profit sharing this year but should pay off in the long term and make jobs more secure). I think profit sharing can lead to an increased sense of the employees as one of the stakeholders, along with customers, shareholders, suppliers etc…. Employees are too often seen as just a cost paid to accomplish a task, if we can swap the current employees for someone cheaper, fine. That isn’t consistent with a Deming management style.

    It is a bit tricky to get it right. You have to understand some of the risks and design the pay system to mitigate problems and make as much of opportunities as possible.

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