In Pursuit of Excellence

There are many business standards by which companies pursue excellence and continual improvement. While the companies comprising Ergon, Inc. implement the International Organization for Standardization’s ISO 9001:2000 requirements, another system used by many companies today is the Baldrige National Quality Program and its related Malcolm Baldrige National Quality Award (MBNQA) which will be summarized later in this article.

ISO had its 1946 beginnings in partnership with the International Electro-technical Commission (IEC), mechanical engineering organizations and delegates from 25 countries, now grown to 145 member countries. This company periodical, FOCUS – An Ergon Perspective on Quality includes a series describing the ISO requirements in detail. ISO 9001:2000 requirements have involved 5 main categories of performance criteria, called “elements” or “clauses” related to an operation’s:
• Quality management system
(clause 4, Summer 2005 Focus, p. 11)
• Management responsibility
(clause 5, this issue of Focus, see p. 11)
• Resource management (clause 6, future issue)
• Product realization (clause 7, future issue)
• Measurement, analysis and improvement
(clause 8, future issue)

The Baldrige National Quality Program and award are named in honor of Malcolm Baldrige, U.S. Secretary of Commerce from 1981 until his death in 1987.

A 1987 Act of Congress established the Malcolm Baldrige Criteria for Performance Excellence and it has become a road map for high-performing organizations in the United States. Although it initially seemed to be of interest to only a handful of large businesses who applied for the Award, the criteria has now evolved into a business management model used by organizations of all sizes and types to increase their customer satisfaction, enhance growth, improve profitability and overall performance.

Similar to ISO’s 40-year research of top thinkers, industrialists, engineers and leaders to identify, analyze and distill the “best practices” of the most successful business enterprises around the world, the Baldrige criteria was also developed by asking high-performing organizations what they do to be successful and turning their responses into a set of criteria or ingredients in a business “recipe for success.”

The National Institute of Standards and Technology (NIST) partnered with the Baldrige National Quality Program to create the “Baldrige Index”, a THEORETICAL stock fund of Baldrige Award-winning organizations. The “Baldrige Index” is a fictitious stock fund made up of publicly traded US companies that have received the Malcolm Baldrige National Quality Award. Each year, NIST makes a hypothetical investment of $1,000.00 in this Baldrige Index, then tracks its performance against the real-life Standard and Poor’s (S&P) 500 index, and has consistently outperformed S&P 500. In fact, Baldrige Award recipient companies have outperformed the Standard & Poor 500 stocks by a 3 to 1 margin!

For more details on-line, refer to www.nist.gov/public_affairs/stockstudy.htm

Baldrige is a framework for how highly effective groups of people work. By defining clear outcomes and results, sharing feedback on progress towards those outcomes and results with the people directly involved, reflecting on the effectiveness of efforts, and revising the approach or plan as results indicate, a cycle of continuous improvement is created. The approach is summarized in the well-known 4-step model for continuous process improvement: Plan, Do, Study (or check), Act [PDSA or PDCA] Cycle.

The Performance Excellence Criteria are grouped into 7 categories that are organized into 19 specific items. The seven categories of performance include:
1. Leadership
2. Strategic Planning and Execution
3. Customer Focus
4. Human Resource Management
5. Management of Processes, Products and Services
6. Information Management
7. Customer, Human Resource, Financial and Operational Results

These categories of criteria are scored on three evaluation dimensions: Approach, Deployment and Results.

“Approach” refers to how you address the Item requirements – the method used.

“Deployment” refers to the extent to which your approach is applied to all requirements of the Item.

“Results” refers to outcomes in achieving the purposes given in the Item. one thousand total points are possible.

Designed to help American business and industry gain a competitive edge in the global market, the Baldrige Criteria reflect current best thinking on organizational practices. Both ISO and Malcolm Baldrige Criteria provide a basis for assessment and feedback to organizations and create the foundation for an organization’s continuous improvement journey.

Baldridge Criteria