by Kennedy Smith
Baldrige Calendar
March 12--2004 eligibility packages due with
a nomination to the board of examiners
March 26--2004 examiners notified of selection
March 28-31--Quest for Excellence XVI Conference
April 13--2004 eligibility certification packages
due
May--Examiner training throughout the month
May 27--2004 award applications submitted on
paper due
June 2--Judges meeting
June 3--Judges/overseers meeting
July 15--2004 case study packet available on
the Web
July 26-27--State and local quality awards workshop
July 28--Improvement Day
July 29--Judges meeting
August-September--Consensus planning and consensus
calls
Oct. 17-23--Health care, service and small business
site visits
Oct. 24-30--Education and manufacturing site
visits
Nov. 5--2005 examiner applications due
Nov. 16-19--Judges meeting
Note: Award winners are typically announced
in December. As of printing, the date for the
2003 Baldrige Awards ceremony had not been set.
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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.
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.
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.”
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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 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.
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.
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.
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.”
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.
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.
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