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Dr. W. Edwards Deming and Profound Knowledge – Part 4

Dr. W. Edwards Deming and Profound Knowledge – Part 4
Theory of Psychology – January 2007

In this issue:

 This is the fourth and final part in a special four-part series on the teachings of Dr. W. Edwards Deming. Dr. Deming spent years developing a theory for helping companies move forward into the twenty-first century. And it still applies today. Are you struggling with your quality improvement efforts? Look through these four bodies of profound knowledge. You will find the reason for your problems.

Understanding Dr. Deming begins with understanding his “system of profound knowledge.” This system is composed of four bodies of knowledge:

  • Knowledge of a system
  • Knowledge of variation
  • Theory of knowledge
  • Knowledge of psychology

To understand the system of profound knowledge, you must understand what a system is and what the “aim” of a system is. You must also understand variation and realize that the true benefit of this understanding comes in how you lead people. You must understand the theory of knowledge, and finally you must understand motivation and psychology. You must know something about each area because they are interrelated.

Part 1 of this series covered the first part of profound knowledge: knowledge of a system. Part 2 examined variation while Part 3 examined the theory of knowledge. These three parts are on our website. This fourth part covers the knowledge of psychology. You can learn more about Dr. Deming by visiting


photo of Dr. W. Edwards Deming The fourth part of profound knowledge deals with psychology. This may be the part of the system of profound knowledge that is lacking in most organizations today. This is what some refer to as the human or people side of quality. Unfortunately, the answer for many organizations is to form teams and assume that they have the people side of quality. Their seminars are based on working together as a team, how to lead a team meeting, and how to plan a team meeting.

Teamwork is important in the quality process. It is important that employees understand the roles of team leaders and team members, the stages of team growth, and the importance of agendas and minutes. It is also critical that there exist a methodology to manage the formation of teams and ensure their success. However, motivation is much more than putting people on teams. This part of profound knowledge goes much beyond teams.

Unfortunately, six sigma essentially ignores the people side of quality as they train their black belt in the tools to improve processes. Much process improvement is blocked because people don’t understand what motivates and drives others.

What motivates people? Answer – different things. As a manager, one must understand that people are different. The manager “must be aware of these differences and use them for optimization of everybody’s abilities and inclination.” To do this, a manager must understand motivation and psychology.

(Note: permission to use the Media Gallery photo of Dr. Deming granted by Diana Deming Cahill of the W. Edwards Deming Institute.)


Maslow's heirarchy of needs What is the theory of knowledge for motivation? Over the years, motivational theory has included the input of people like Frederick Taylor, George Mayo, Douglas McGregor, Abraham Maslow, Frederick Herzberg and Peter Drucker. Each has added something new to our knowledge of motivation. The work of Maslow and Herzberg is reviewed below in relationship to the system of profound knowledge.

In 1962 Abraham Maslow developed a hierarchy of needs which is shown in the figure above. Amazingly, this work is still valid today. This sequence of needs outlines the basic forces that motivate all of us. The hierarchy of needs represents stages people go through, often several times a day. The first stage is physiological needs – food, sleep, and clothing. If these needs are not satisfied, you cannot go to the next level. If you are worried about where your next meal will come from or where you will sleep tonight, you cannot achieve the higher levels.

If these needs are taken care of, we progress to the next level which deals with safety and security. We want to feel safe and secure, both physically and psychologically. There are many reasons that we may feel unsafe or insecure. These include working in an unsafe or unhealthy environment, fear of losing our job, fear of being dressed down by the boss, or fear of a poor rating on our annual performance review. This is point 8 of Dr. Deming’s 14 points: Drive out fear so everyone can work effectively for the company. It also includes point 12: Remove barriers that rob the hourly worker of his right to pride of workmanship. The same holds for management.

If the needs of the first two levels are met, we progress to the next level. This level involves belonging and social acceptance. Everyone wants to feel part of something – a team, an organization, a church, etc. If this occurs, we move to the fourth level which is self-esteem. At this level we can begin to build our self-worth and improve our confidence. Once achieving this, we can move to the last level which is self-fulfillment and creativity. We all have special talents and unique skills.

Maslow’s hierarchy of needs has been supported by brain research over the past two decades. The brain is really a triune brain. One part of the brain, called the stem or reptilian brain, takes care of three things: physical needs, survival, and sex. It ensures that the species continues. The second part of the brain is called the limbic system. This part of the brain takes care of emotions. The third part of the brain is called the neocortex or the cerebrum. This is where purpose, creativity, and logic – the things we want to believe we are paying attention to – occur. The triune brain – physical, safety, sex, then emotions, then logic and creativity – follows Maslow’s hierarchy of needs. It is in the brain – we don’t have a choice.

The role of a manager is to determine how to keep employees in this upper level and how to make the best use of their talents and skills. This means that the employees must have their physical needs met, feel safe and secure, and have a sense of belonging to the organization. Only then can employees begin to develop self-esteem and their creative potential. After all, quality improvement will occur only when employees are at these higher levels. Self-fulfillment, creativity, and self-worth are the strong internal motivators that give people pleasure.


What Motivates You?

Assuming that a manager understands this hierarchy of needs, how does he motivate employees? Offer them more money? A bonus if they reach their objectives? Fredrick Herzberg did research on what motivates people. Basically, he was trying to answer the question “Will money make you happy?”

What Herzberg discovered was that there are hygiene factors – money, benefits, safety, protection – that must be met to keep employees from being dissatisfied. Meeting these hygiene factors does not mean that the employees are satisfied – they are just not dissatisfied. They will put in eight hours of work and go home. However, they are not motivated to be creative, offer suggestions for improvement, etc.

The hygiene factors include the following:

  • Company policies and procedures
  • Supervision
  • Working conditions
  • Salary
  • Interpersonal relationships
  • Status
  • Security

Herzberg discovered that the people who were satisfied and happy on the job talked about self- esteem, contributing to the organization, being recognized for their jobs, meeting challenges, etc. He called these items motivators. These are the pleasurable motivators that increase performance. They include both internal and external motivators. Many of the external motivators, such as praise and recognition, can help build pride over time. In addition, these types of motivators are free. Management should focus its attention on these motivators. Yes, the hygiene factors need to be there, but that will not bring what Dr. Deming described as “joy on the job.”

The motivating factors include:

  • Achievement
  • Responsibility
  • Recognition
  • Growth
  • Interesting Work
  • Advancement

Pay and Performance

does your pay impact your performance Money is always an issue with employees. We always want more. However, as long as we have sufficient money to meet our physical and security needs, money is not really a motivator. Of course, we work to provide for our families and for our future. However, few people think about the issue of money every day as a reason for doing work. I don’t hear that “I’ve got to do this today because I get paid a week from Friday.”

But many people think that money is a motivator – that we can get people to do what we want if we can figure how to pay them. This logic is flawed for three major reasons. The three misconceptions that people still seem to have are:

  1. People are motivated by money.
  2. We can use an incentive system to effectively motivate someone to do the job we want them to.
  3. There is a fair way of determining how much someone gets paid based on the work done by the individual or by the team.

Each of these is addressed below.

1. People Are Motivated by Money

Let’s start with “people are motivated by money.” This simply is not the case. There are tons and tons of data and surveys that show what motivates people most are the intangible things — interesting work, being creative, challenging work, etc. You can see it in the work done by Herzberg, Maslow and even the brain material. Yet, we tend to forget all this information when it comes to discussing pay systems.

Of course people are interested in money. They want to be paid fairly for the work they do, but that is not what motivates them. Seldom do people change jobs for increases in pay. People normally change due to the lack of things on the job that make it challenging and rewarding. Dr. Deming said it over and over — money is not a motivator, it will not bring “joy on the job.”

Of course, the less money we make, the more concerned we are about money. We need to be able to buy the things we need to survive. So, one could assume that the “lower” a person is in the organization, the more concern about money he or she will have. Again, however, this is not the primary source of motivation for the vast majority of the people.

There seems to be the belief that salespeople, in particular, are motivated by money. I do not agree with that conclusion. Money is not why a salesperson gets up in the morning to go to work. There are also data to support this. A poll, for example, done in 1991 (“Money Isn’t Everything” Sales and Marketing Management, May 1991) listed increased compensation as the last reason for salespeople changing jobs.

Money as a motivator? We know it is not true yet we want to set up systems based on that incorrect assumption. I think Dee Hock, the man who built Visa, said it very well:

“Money motivates neither the best people, nor the best in people. It can move the body and influence the mind, but it cannot touch the heart or move the spirit; that is reserved for belief, principle and morality. As Napoleon observed, “No amount of money will induce someone to lay down their life, but they will gladly do so for a bit of yellow ribbon.”

2. We Can Effectively Use an Incentive System to Motivate People to Do the Job We Want Them To

OK. So maybe money is not a big motivator. But can’t we design an incentive system to get people, particularly those who are lower in the organization, to do what we want them to? So, is it different with people who are “low” in the organization? What about a picker in the warehouse? Will he/she work harder if we put a “carrot” out there? The following appears to be what many people think:

Hmm, kind of makes sense, right? After all, they aren’t compensated like salespeople or managers, for example. They would like more money, pay off some of their bills. Plus, we can set up the system to get them to focus on what we want them to do — fewer errors, pick more lines. Pay them more, either individually or as a team, when they reach the goal. Let’s reward them when they do good work.

Sounds great, but the reasoning continues to be flawed by the underlying assumptions. Alfie Kohn is the author of a book called Punished by Rewards: The Trouble with Gold Stars, Incentive Plans, A’s, Praise and Other Bribes. Mr. Kohn takes a different viewpoint on the use of rewards in school, at home and at work. He believes that rewards and punishment are not opposites at all but are “two sides of the same coin.” Both are aimed at controlling behavior. As suggested above, there are five major reasons that rewards for the picker in the warehouse fail.

a. Rewards Punish

Can this be true? Unfortunately, yes. Rewards are aimed at controlling someone’s behavior. If you do this, I will give you something you like. While the reward may be pleasurable, people do not like to be controlled. In addition, we may not get all the reward we think we are due. In this case, the reward becomes a punishment. “Rewards feel punitive because they, too, amount to an effort to manipulate people’s behavior. Moreover, employees may find a bonus or other incentive deliberately withheld or withdrawn from them, or else they may simply fail to obtain it despite their best efforts.”

b. Rewards Rupture Relationships

Individual rewards, such as for individual pickers, will definitely rupture relationships that exist. It will foster competition, not cooperation. There is only one best — everyone else is a loser. A sure fire way to destroy teamwork is to make the people compete against each other for a bonus. In addition, it is likely to change the relationship between supervisor and associate. If the supervisor determines the bonus, the associate may not tell him/her certain things. Teamwork once again fails.

c. Rewards Ignore Reasons

To improve, we must know what causes problems. The use of rewards, even those tied to process improvement, tend to hinder the search for reasons for problems. In fact, this reward process allows management to ignore its true job of coaching and helping. The assumption is that if we pay them enough, the job will get done. Then we don’t have to lead them — simply offer the carrot.

d. Rewards Discourage Risk-Taking

People will do what it takes to get the reward, but only what it takes. Having a sliding scale does not change that. In addition, people will not take any risks that could affect the reward.

e. Rewards Undermine Interest

This is the biggest issue here. Intrinsic motivators are more powerful than extrinsic. However, “extrinsic motivators not only are less effective than intrinsic motivation, but actually reduce intrinsic motivation.” In other words, rewards, like incentives, can hurt the person’s motivation for doing the activity. The focus changes from the activity to the reward.

Dr. Deming contends that “one is born with intrinsic motivation, self-esteem, dignity, cooperation, curiosity, joy in learning.” This may or may not be true, but Dr. Deming correctly says that throughout life there are forces that prevent people from being intrinsically motivated, having self-esteem, etc. Dr. Deming lists some of these forces as being grades in school, merit system, incentive pay, numerical goals without numbers, and sub-optimization (see the first part of this series).

3. There is a Fair Way of Determining How Much Someone Gets Paid Based on the Work Done by the Individual or the Team.

OK, so money is not a big motivator and it may be difficult to set up an incentive system that doesn’t ultimately demotivate people. But, let’s do it anyway. How can we design a system to pay people for the work done — either individually or as a team?

As Dr. Deming pointed out, you can’t design such a system. It is impossible to separate out the contribution of an individual or team to the process’s output from the contribution of the system. For example, let Z be the output we are interested in measuring and for which we reward a team. For example, it might be for the pickers in the warehouse. Let X be the contribution of the pickers to the process. Let Y be the contribution of the system to the process. By system, I mean the processes involved in picking, the type of supervision, the layout of the warehouse, etc. The equation for lines picked is then

X + Y = Z

Suppose Z is 1000 lines picked. The equation above cannot be solved for a unique value of X or Y. It is impossible to separate the two.

So people might say that is not a big deal. Just forget about the system’s input. Ever know somebody who did a poor job in one department, then was moved to another and became a great performer? Of course, we all do. The person was the same in this case. Why the difference? The system, of course. Maybe it was supervision. What does supervision add to the process?

So what do you do with pay? Intrinsic motivation is a far better motivator than rewards such as bonuses and incentives. The key is to make the work the motivator and try to keep the pay from being a demotivator. As you know, when you begin to mess with pay issues, you put people in lower Maslow.

Basically, the pay system should be fairly simple. Brian Joiner suggests a simple system in his book Fourth Generation Management. Pay a salary that is in line with the market for the job. You don’t want to be below the average, but not too far above it either. This is fair to people. They know you are paying them about what they could make elsewhere. They will not leave due to pay issues if this is the case.

Give the same percentage salary increase to all employees once a year. The increase is to keep people’s salaries in line with the market and is not related to how the company is doing.

When the company is doing well, share with the people. For people who have been with the company for a certain time frame, give them each a certain number of weeks of pay. Prorate it for people who have not been with the company long enough (for example, two years). There will be times when the company will not have money to share.

Some people may require some special adjustments to salary, but the above simple system is fair and people will sense that it is fair to everyone involved – one that takes into account that we are all part of the same system.



sample OSHA chart of recordable injuries



Top management and all other supervisors in an organization must be trained in ways to motivate employees. Many organizations do this training, but fail to include the knowledge of a system, an aim, theory, or variation in the training. Many managers, after training, attempt to apply their new knowledge without really knowing the damage they are doing.

For example, recognizing employees for the job they do is part of motivation. However, without knowing about variation, management can actually “tamper” with the system without knowing it. Safety is an important issue in manufacturing plants today. Suppose that one month there are no injuries in the plant. Is this a reason to recognize employee performance? Is this a reason to tell the employees what a good job they did? Most people would say yes. However, we must take into account the concept of variation.

Suppose we examined the number of injuries per month in a plant and looked at data for the past two years. We could construct a control chart based on this data. One possible control chart is given in the figure above.

The average number of injuries per month is a little over 2. The upper control limit 6.75. There is no lower control limit. The process is in control. This means that management can expect between 0 and 6 injuries per month with an average of about 2 per month. Thus, the month when there is 0 is just part of the system. Instead of reinforcing employees for improvement, management is simply reinforcing what the system produced.

Suppose this month there were no injuries and management reinforced the workforce for improvement. What do you think will be the number of injuries next month? The process is in control so it will probably be between 0 and 6. Suppose that the next month there are four injuries. What does management now think about recognition? It doesn’t work, of course. We reinforced last month for 0 injuries and now this month they have 4. So what does management do now? Give speeches about the importance of safety or warn people to do things in a safer manner. Next month’s result? It may be lower than 4 or it may not be. If it is lower, management thinks its pep talks or scoldings made a difference. In fact, the only difference is what the system is producing month to month. It is proper to recognize employees for keeping a process in control or finding and eliminating special causes of variation.

In Part 1 of this series, it was mentioned that all the policies of an organization should be reviewed to determine if they help optimize the system. Many companies will find that their policies do not help optimize the system. One reason is that many policies tend to demotivate employees – not motivate them.

A company produced five different grades of product that had to be dried through a continuous rotary dryer. Each product was put into its own separate silo. When changing from one product to another, the operator would have to change the lines from the dryer to the proper silo for that product. Mixing two products together in one silo made the entire contents off- grade – a $50,000 loss. The company had the policy that any operator who mixed two products in the same silo received three days off with no pay. What would you do if you were the operator and mixed two products together in a silo? Would you tell your supervisor? Of course not. Who wants to lose three days’ pay? The product goes out in railroad cars and is checked by taking a small sample from one compartment, so the mixed silo was usually not found until the customer found it when trying to use the material. This policy produced fear in operators. In addition, it did not take into account variation. Was the problem really due to special causes (the operators) or due to common causes?

The problem was actually due to common causes of variation – data proved this. It was not the operators’ fault; they were being blamed for the faults of the system once again. The solution: listen to the operators. They knew how to improve the process; they just didn’t have the authority to do it. Two simple solutions changed the frequency of mixing products in the same silo from once a month to only one time in three years. The lines were labeled and lights were installed so the operators could see better at night. Such a simple solution, but beyond the authority of the operators to accomplish. Management is sometimes embarrassed by the simplicity of solutions to problems.


Management with knowledge of psychology combined with theory of knowledge, variation, and a system, will be a strong force in the future. Implementation of Dr. Deming’s system of profound knowledge will be a time-consuming task for any organization. It will not be easy. It will require a massive training effort while making sure that the policies of the organization do not destroy training’s outcome. Planning and involvement of everyone in the organization is a requirement for successful implementation of the Deming philosophy. This leads us to point 14 of Dr. Deming’s 14 points: Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job.


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Thanks so much for reading our SPC Knowledge Base. We hope you find it informative and useful. Happy charting and may the data always support your position.


Dr. Bill McNeese
BPI Consulting, LLC

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