Why malcolm baldrige award

It looks as though manufacturers may have independently come to similar conclusions about the Award. The last manufacturing winner was Lockheed Martin in Since then, the Award list has mainly consisted of non-profits, educational institutions, and health-care organizations. But even these winners prompt questions among skeptics about the behaviors being recognized.

There are plenty of reasons to doubt the Baldrige Award ever rewarded performance that mattered. Connect with Design World. There are no profit guarantees accompanying a high score. Indeed, winning is neither a necessary nor a sufficient condition for financial success. It is not necessary because there are routes to profitability other than superior quality management. A long-standing patent, for example, or a one-of-a-kind production process can ensure financial success even if a company falls woefully short on the Baldrige criteria.

Some Wall Street analysts carry these arguments a step further: they actually short the stock of Baldrige winners in anticipation of poor financial performance. Winning, after all, is usually followed by a letdown, and the managers of these companies have grown accustomed to a long-term perspective rather than the pursuit of quarterly earnings.

While this reasoning may work for brief periods, over any reasonable time horizon, it is destined to fail. Baldrige winners are as vulnerable as other companies to economic downturns, changes in fashion, and shifts in technology. But they are far better positioned to recover gracefully because they have superior management processes in place. The Baldrige Award is thus a strong predictor of long-term survival and a leading indicator of future profitability.

In fact, the General Accounting Office has found that Baldrige winners and semifinalists perform well on a host of important operating and financial measures—quality, of course, but also market share, return on assets, customer satisfaction, and employee relations. Using a detailed survey and extensive follow-up interviews, the GAO concluded that there was a cause-and-effect relationship between the total quality management practices embodied in the Baldrige criteria and corporate performance, measured by employee relations, productivity, customer satisfaction, or profitability.

But they relied on common principles, including a strong customer focus; senior management leadership; a commitment to employee training, empowerment, and involvement; and the application of systematic fact-finding and decision-making processes to foster continuous improvement. The GAO study is a giant step toward quantitatively documenting TQM practices and their effect on corporate performance. But readers should be wary of extrapolating the results to other companies: the study was not performed scientifically using statistical methods, and the 20 participating companies did not answer all questions.

The average response was only 9 companies per question. Why was the response rate so low? Allan I. Many of the privately held companies and divisions of public companies that the GAO surveyed have strict prohibitions on divulging data.

For instance, the 11 companies that did not answer the employee satisfaction question were not hiding negative results, Mendelowitz said, but were simply following corporate nonreporting guidelines.

He insisted the poor response rate does not introduce a bias into the results because the findings were reinforced by follow-up interviews conducted by GAO staffers at the 20 companies.

The limitations of the GAO study highlight the difficulty of testing hypotheses about the effectiveness of the Baldrige Award. The one source of complete data, the National Institute of Standards and Technology, which oversees the award, has its own confidentiality requirements. NIST refuses to release aggregate data for scrutiny. There are valid reasons for its refusal, but without the data, serious study of quality principles will continue to be hampered.

Ideally, Wall Street should be using a longer, less-biased lens to assess the impact of the Baldrige Award. It might, for example, apply the same standards that it uses to judge research and development spending.

Yet in both cases, continued investment is essential to competitive success. The August Powers Report ranked Cadillac eighth in overall customer satisfaction for , down from fourth place in Like the criticism in myth 2, this concern, while accurate, misses the point.

The Baldrige Award was never designed to reward product or service excellence alone. Quality results do matter; of the available 1, points are for product, service, process, supplier, and customer satisfaction results. But the bulk of the award focuses on management systems and processes. There Cadillac performed extremely well. Yet a central question remains: How should the Baldrige Award be positioned for maximum effectiveness?

At one extreme lies a narrowly defined award, limited to product and service excellence and, perhaps, traditional quality control. At the other extreme lies an all-encompassing award, designed to reward overall management excellence and not quality management alone. Surprisingly—and importantly—in its current form, the Baldrige Award sits firmly between the two poles. The award is certainly not limited to product and service excellence or traditional quality control.

The judges award only a quarter of the total points for quality results, and categories such as employee well-being and morale and public responsibility which includes business ethics, environmental protection, and waste management are well outside the scope of a narrowly focused quality award. Yet, at the other extreme, the criteria clearly omit areas of great importance to managers: innovativeness, marketing savvy, strategic positioning, organization design, financial performance, and countless others.

Baldrige is in no way a complete award for corporate excellence. This positioning opens the award to criticism from both sides. Far from it.

The middle ground is precisely where the Baldrige should be. Consider the two extremes. If the Baldrige Award became a pure product or service award or was limited to traditional quality control, it would no longer capture the attention of senior managers. But if comprehensiveness is an asset, why not include additional categories and make the award a more demanding test of management excellence?

Largely because such an award would be almost impossible to judge. Applications would undoubtedly run several hundred pages, and knowledgeable examiners, skilled in all required areas, would be hard to find. What about effective advertising? Different industries have different competitive needs, and each would be certain to lobby for a scoring system slanted in its favor. The award is neither so narrow that it is uninspiring, nor so broad as to be unmanageable.

Since , NIST has distributed over , copies of the application guidelines throughout the world. Understanding Baldrige is one thing, putting it to use another. After all, quality improvement takes time. A company can create a world-class quality system only with years of work and constant refinement.

For companies about to embark on this journey, the first question is obvious: Where do we stand? Here, Baldrige provides a helpful road map.

Most judges and examiners agree that there are clear patterns in the applications they have reviewed, with distinct bands of performance as measured by the scores in each category.

Companies can be arrayed along a continuum, from best to worst. The mature, high-scoring quality programs, the medium-rung performers, and the low scorers will each cluster around common profiles and shared strengths and weaknesses. At the heart of these groupings are two concepts central to the judging process: deployment and integration. Quality experts use the term in two ways: to measure the extent or spread of the quality effort across an organization what I call horizontal deployment and to measure the extent to which strategic, customer-oriented objectives have made their way from the CEO to lower levels of the organization what I call vertical deployment.

Horizontal deployment is important because it provides a quick, but effective, maturity test. A company that has firmly established its quality program in manufacturing or operations but has made little dent in support areas will not receive a high Baldrige score. Examiners work hard to distinguish them from more mature programs, where quality activities exist throughout the company and have become pervasive.

Examiners use various techniques to assess horizontal deployment. As one judge observed, site visits uncover the darnedest things. Vertical deployment, by contrast, involves the tying together of lower-level activities and strategic goals. The top and the bottom of the organization will then move in concert. Here too, companies differ sharply in maturity, and examiners have developed a number of litmus tests.

One, used on virtually all site visits, is to ask the same question, usually something about customers or a major quality initiative, of both the CEO and shop floor employees.

If their answers are the same, vertical deployment is high; if they diverge, it is low. A related test involves quality action teams, consisting of low- and mid-level employees, and the degree to which their activities are independent and unrelated or fit within a larger, well-understood strategy and plan.

Low-scoring companies have few quality action teams and offer them little or no strategic guidance; medium scorers have many teams that work with few ties to the strategic plan; and high scorers have a large number of teams all working to meet strategic goals.

Integration is closely related to deployment, and at times, judges and examiners seem to use the terms interchangeably. Integration refers to the degree of alignment or harmony in an organization—whether different departments and levels speak the same language and are tuned to the same wavelength. This concept is often hard to grasp, and an analogy may help.

In the typical game of telephone, integration is poor. Each child remains in a separate world, and there is no attempt to improve communication or eliminate the sources of bias and distortion. A well-integrated telephone group would be quite different. Because of prior training, common goals, continued practice, and years of collaboration, there would be few slips in communication. Each year many companies apply for the Malcolm Baldrige National Quality Award and the winners are chosen based on seven criteria.

The criteria are leadership ; strategic planning ; customer and market focus; measurement, analysis , and knowledge management ; human resource focus; process management ; and results. Leadership 2.

Strategic planning 3. Customer and market focus 4. Measurement, analysis , and knowledge management 5. Workforce focus 6.

And the value of the Baldrige process, which was first taken as an article of faith when the program started, has now produced significant, quantifiable, and measured return on investment. One such study completed in , found that the return on investment for the money spent to operate the Baldrige Performance Excellence Program to economic benefit has a ratio of Those returns are measured in greater efficiency, less waste, more jobs created, increased customer and employee satisfaction, and economic growth.

Other studies in health care and education have demonstrated that Baldrige-based organizations significantly outperform their non-Baldrige peer organizations in virtually all critical measurements, including, in the health care field, the cost of care, the availability of care, errors, complications and fatality rates. In education, graduation rates rise, dropout rates decrease, and student performance across numerous measures increases as organizations mature using the Baldrige Framework.

More recently, Baldrige has once again proven its relevance and ability to adapt to contemporary needs with its development of a Cybersecurity Framework and the new Communities of Excellence initiative.

Working with the private sector, the Baldrige Program and Foundation have worked together to develop and promote a Cybersecurity tool called the Baldrige Cybersecurity Excellence Builder. The eventual goal will be to have a full Cybersecurity Framework, train examiners using a case study, conduct assessments, and recognize best-in-class processes and performance during an annual conference. The Communities of Excellence initiative uses the Baldrige methodology and applies it to local communities.

The Communities of Excellence Framework is a systematic approach for community leaders, residents, and collaborative partners to strengthen the effectiveness of their efforts towards healthy and thriving residents and safe communities. Using this framework, communities can achieve better results, faster, in the areas that really matter: educational attainment, economic vitality jobs , health status, and safety.

COE is currently piloting several communities. For a more extended look at the founding and development of the Baldrige Enterprise, click here. Help us provide inspiration to the thousands of organizations in manufacturing, health care, education, and government who are using the Baldrige Framework to create jobs and strengthen the economy, increase the quality and access to health care, and improve K and higher education as we navigate these challenging times.

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