One of the more ambiguous elements of a Six Sigma project is the level and type of compensation the organization should give to its Six Sigma leaders and team members. On the one hand, setting compensation is not an integral part of any stage of a Six Sigma project; on the other hand, compensation is an important instrument to build loyalty and a sense of accomplishment that is a crucial element to the organization’s Six Sigma success. While there are no hard and fast rules for compensation for Six Sigma leaders and team members, there are some good ways to think about how to productively provide compensation to your people.

Black Belts are the key change agents for the Six Sigma process. They have an important role and should be compensated accordingly. If your organization is large enough to have people dedicated full-time to leading Six Sigma projects, their base pay should be in the top of your organization’s range for their level of management. If your organization is asking a manager to also devote part of his or her time to leading a Six Sigma project, you need to find some way to compensate them for their extra efforts. In addition to base pay, you can find creative ways for recognition for completed projects. Black Belts should receive some special and public recognition for their efforts, whether it is dinners, award ceremonies, plaques, etc. Whatever fits best with your organizational culture. Such recognitions should not be strictly limited to Black Belts either, as acknowledging the achievements of all who participated in and benefit from the Six Sigma project should receive some sort of recognition to boost morale.

Monetary bonuses are another way to compensate people for successful Six Sigma projects. Since Six Sigma projects are about helping the organization make more money it makes sense to share some of the cost savings from Six Sigma projects with the Six Sigma team. Develop a structured, team-based process improvement bonus system that will appropriately benefit each worker in the organization. As measurable and lasting improvements are made to processes, it is appropriate to share a part of the financial gains with employees. Just be sure there is a formal performance appraisal system that will identify what is to be accomplished, what success looks and feels like, and how an employee will be compensated, and that this is fully communicated to everyone. Such an organizational goal-sharing program will effectively support Six Sigma efforts. Being able to link compensation to Six Sigma implementation is much easier in a small company compared to a larger company.

Bonuses can also be paid to Black Belts, but with differences due to their unique status. Instead of paying bonuses to Black Belts as a share of actual process improvement, pay them bonuses related to specific project goals. There is a danger in directly tying their bonus with a share of the actual improvements as they may be motivated to inflate or misconstrue actual gains. That still leaves you with many concrete project milestones that can be the basis for their compensation.