by Kennedy Smith

It’s the highest recognition of quality in the United States. Some call it the Academy Award for performance excellence. Most just call it “The Baldrige.” Whatever the nomenclature, it’s agreed that the Malcolm Baldrige National Quality Award Program is not only beneficial to individual organizations seeking excellence in quality, and it’s also believed to boost the quality and economic levels of the entire country.

Nonetheless, criticism of the program does exist. For example, some think that as the criteria changes, its emphasis leans too heavily on business results and not enough on quality. Other challenges faced by Baldrige administrators are the difficulties in proving that the Baldrige journey does, in fact, reap measurable results.

Baldrige history

The MBNQAP is named after former U.S. Secretary of State Malcolm Baldrige, who held the position from 1981 until his death following a rodeo accident in 1987. Baldrige had a personal interest in quality management and improvement, and helped design a draft of the award program before his death. That year, Congress established the official award program to recognize U.S. manufacturing and service organizations of any size for their achievements in quality and named it in his honor.

Who’s eligible?

Until 1999, only manufacturing and service organizations were eligible to apply for a Baldrige Award. During the mid-1990s, award administrators developed criteria for two new categories: education and health care.

From 1988 to the present, 58 organizations have earned Baldrige Awards, including 24 manufacturing organizations, 14 small businesses, 13 service companies, four educational institutions and three health care organizations. (See the figure below.)

Now there is a push to enable not-for-profit organizations to apply for the award. In fact, the Miller-Hart bill, H.R. 3389, an amendment to the original act that helped establish the MBNQAP, is currently being pushed through Congress. The amendment would add the words “nonprofit organizations” to section 17(c)(1) of the Stevenson-Wylder Technology Innovation act of 1980.

Chris Zabel, administrator of Bethel Lutheran Church of Rochester, Minnesota, is looking forward to the inclusion of the not-for-profit category. Bethel earned the Baldrige-based Minnesota Quality Award in 2002. An evaluator with the Minnesota Council for Quality, Zabel says that Bethel may apply for the Baldrige Award, provided the criteria could be tweaked to better suit the needs of nonprofit organizations. Bethel has even had offers from organizations willing to underwrite the entire process to see Bethel go for the Baldrige Award.

The improvements Bethel is reaping from the infusion of Baldrige-based quality are many. “Worship attendance has gone up,” notes Zabel. “Financial support has gone up; we’re able to give more to our local, national and global benevolences. There’s a higher level of satisfaction from our congregation and staff.”

Churches are just one type of organization currently ineligible for the Baldrige Award. Other organizations include government agencies at all levels, charitable organizations, mutual insurance companies, credit unions and utility cooperatives.

With an expected influx of not-for-profits eyeing the Baldrige, questions arise about changes in the award criteria.

“We would not create a new set of criteria for not-for-profit organizations,” explains Harry Hertz, director of the MBNQAP. “We would actually make modifications to the business criteria overall to make some of the language more friendly across sectors.” The reasoning behind this decision is that not-for-profits include such a heterogeneous mix that developing separate criteria would be more confusing than simply tweaking the already developed criteria, Hertz says.

The criteria

The Baldrige criteria consist of seven key indicators of success. Winners are selected on a 1,000-point scale for their achievements in all categories, so if one indicator is lacking, the chances of winning a Baldrige decreases. The criteria include:

Leadership. This category takes a look at how top management guides the organization toward best practices.

Strategic planning. The organization must set strategic goals toward excellence and determine action plans.

Customer and market focus. This criterion examines how customers and markets are acquired, satisfied and retained.

Measurement, analysis and knowledge management. The organization must show effective management, use, analysis, and improvement of data and information to support its processes and performance management system.

Human resource focus. How does the organization empower and retain its workforce?

Process management. The organization must effectively design, manage, and improve its production/delivery and support processes.

Business results. This category studies the ways in which the organization performs against competitors. It examines performance in all key business areas, including customer satisfaction, financial and marketplace performance, human resources, partner performance, operational performance, governance and social responsibility.

Since their inception, the Baldrige criteria have been in a constant state of evolution, adapting to changes within the business climate. “We go through an annual improvement process that begins with studying what’s going on in the business, education and health care communities to understand their most important leading-edge challenges and approaches to improvement,” explains Hertz.

This process is followed by a solicitation of feedback from focus groups, Baldrige Award winners and those going through the award process. “Then a first draft of the next year’s criteria and any changes to process is developed and goes out to all of our judges, overseers and other contributors to see if we got it right from their perspective,” Hertz continues. “Based on that, the second and final draft is generated, which becomes the criteria for the next year.”

For example, in 2003, the issue of ethics was brought into the criteria after a string of companies made headlines for disreputable business tactics. This was an area not previously addressed in the criteria.

Other quality programs and Baldrige

One important factor in utilizing the Baldrige criteria set is that it fits with other quality improvement initiatives, meaning that an organization doesn’t have to overhaul its entire quality system in order to become eligible for the award. In other words, organizations don’t have to choose between their management system and the MBNQAP.

Examples of Baldrige winners using well-known quality methodologies include 1993 recipient Eastman Chemical Co., which has used ISO 9000 for more than a decade; 1988 and 2002 winner Motorola Inc., a pioneer of the Six Sigma methodology; SSM Health Care, the first health care recipient, which utilizes its own method called continuous quality improvement; and 1999 recipient STMicroelectronics Inc., which conforms to ISO quality standards, Six Sigma and Baldrige criteria.

The journey

Once an organization decides to embark upon the Baldrige journey, the ride doesn’t stop at the application process. From an improvement standpoint, applying for the Baldrige Award would be useless if the company didn’t gain new knowledge from it. Therefore, organizations that do apply receive extensive feedback reports from Baldrige examiners.

Lauded as one of the most useful tools garnered from the Baldrige journey, feedback reports suggest areas for improvement and can be used to gauge new directions in quality enhancement. In fact, it’s rare for Baldrige Award recipients to receive the accolade on their first try. Typically, they go through a process of receiving feedback reports, making improvements and reapplying until the highest honor is achieved.

When an organization receives the Baldrige Award, the journey doesn’t end there. Recipients are asked to participate in several forums to share their experiences and best practices. “It’s wonderful that the Baldrige requires companies to do a show-and-tell and make public presentations,” comments Richard Schonberger, president of Schonberger and Associates, a performance management consulting firm. “Most companies don’t know what’s going on and don’t have good probes into the outside world to find out what their competitors are doing and what their customers care about. Sharing best practices is the best way to learn these things.”

One of the most valuable tactics to ensure a successful Baldrige journey is to become an examiner. The MBNQAP doesn’t deem applicants becoming examiners a conflict of interest; rather, doing so is considered almost essential for fully understating the process. However, precautions are taken to avoid any appearance of conflicts of interest; examiners are required to disclose all business affiliations that might create an atmosphere of subjectivity. And, it’s a violation of the code of conduct for board members to inquire about applications other than those to which they’re assigned.

The most obvious advantage of becoming an examiner while going through the application process is that applicants know what they are in for.

Baldrige criticism

Although Schonberger gives great praise to the MBNQAP, he says the criteria are too focused on business results and not focused enough on quality. As it stands, the customer and market focus category counts for 450 of the criteria’s possible 1,000 points.

“The category of business results shouldn’t be in the criteria at all,” he argues. “Of course we want a quality award to be given to companies that are successful in business, but that’s mixing means and ends. It gives the impression that organizations aren’t sure that quality is the right thing to do, so they have to prove it with financial results. It reflects a basic doubt that quality really works.”

Although Schonberger believes the criteria’s evolution is causing instability and an overall drift from quality management, he is pleased with some recent changes. For example, he’s glad to see the “business process” portion of the process management criterion eliminated. “Although the process management category only accounts for 85 of 1,000 points, getting rid of business process requirements helps companies focus purely on quality.”

Another change he applauds is the weight of item 7.1, customer-focused results, which counts for 75 points. Financial and market results also count for 75 points, which Schonberger says is a step in the right direction.

“One criticism that’s hard to respond to is: ‘Prove that Baldrige is so good. Give us an across-the-board metric or index that shows that Baldrige Award recipients outperform other organizations,’” adds Hertz. “We struggle with trying to develop such a metric that would combine financial performance, customer satisfaction and internal operational success.” The idea of creating such a metric is challenging, particularly because every organization has different ways of measuring their successes.

The only existing comparative study is the Baldrige Index, a fictitious portfolio of stocks from publicly traded Baldrige Award recipients, which is pitted against the Standard and Poor’s 500. “The problem with that index--and we knew this was a problem from the start--is that it only represents a small fraction of Baldrige Award recipients,” explains Hertz. Privately held organizations aren’t included, and divisions of larger corporations must be weighted differently.

Another criticism Hertz has witnessed involves former Baldrige Award recipients that are no longer performing as role models. “We have no ongoing monitoring of former recipients of the Baldrige Award, and they have no requirement to not change management or continue to follow Baldrige,” he says. “Obviously we hope they will continue, but management changes, times change and organizations change.”

Yet another challenge that former Baldrige Award recipients encounter is keeping their workforce committed to Baldrige. As Hertz mentioned, companies, employees, top management and economics change over time, all making it difficult to keep the Baldrige journey a top priority. One example of a company that strives to stay on the Baldrige path is Motorola. This pioneer of the Six Sigma methodology was one of the first Baldrige Award winners in 1998, and they won again in 2002. “Keeping our eyes on the Baldrige journey is difficult when other immediate crises may come up,” he admits. “It’s a challenge of staying the course.”

Although some companies that have received Baldrige Awards in the past still believe that it’s a powerful tool toward performance excellence, they don’t continue to utilize the criteria as their primary method for quality improvement. More so, many former Baldrige Award winners don’t wish to apply again. Rather, they originally used the criteria as a way to organize and evaluate the status of their companies’ processes, not to win the award.

For example, Ames Rubber Co., a 1993 recipient in the small business category, uses an amalgam of processes to create a world-class system. According to a Baldrige CEO Issue Sheet, Tim Maril, CEO of Ames, says the Baldrige journey is only one step in his company’s quality goals. “Each organization has to choose what best serves its needs, but for success, they all require a commitment of resources.”

Baldrige and world quality

The Baldrige criteria are highly regarded within the United States, as evidenced by the fact that many state quality award programs mirror the MBNQAP. “We have a network of state and local programs,” says Hertz. “We bring them together once a year for a workshop to share information with them and for them to share information with each other. As far as I know, all U.S. state and local programs are now Baldrige-based to some extent.”

On a global scale, the MBNQAP stays connected to other countries’ excellence awards through the Global Excellence Model Network. Comprising leaders from award programs around the world, members of the GEM Network meet once every 12 to 18 months to benchmark one another’s programs.

The MBNQAP is also part of the European Foundation for Quality Management, which administers the European Quality Award, and is connected to quality awards in Japan, Australia, South Africa, India and Singapore.

Because the BNQAP focuses so much on sharing best practices, a prime resource for learning more about the program is its own Web site, www.baldrige.nist.gov. The site contains self-assessments, a schedule of events, applications, news and frequently asked questions.

About the author

Kennedy Smith is Quality Digest’s associate editor.

To read Richard Schonberger’s article “Is the Baldrige Award Still About Quality?” refer to the December 2001 issue of Quality Digest, which can be found through an archive search at www.qualitydigest.com.