Malcolm baldrige national quality award

criteria and their uses for adopting TQM

TABLE OF CONTENT

ABSTRACT

Each year, The Quest for Excellence, the official conference of the Malcolm Baldrige National Quality Award, provides a forum for Baldrige Award recipients to share their exceptional performance practices with worldwide leaders in business, education, health care, and nonprofit organizations.

INTRODUCTION

In the early and mid-1980s, many U.S. industry and government leaders saw that a renewed emphasis on quality was necessary for doing business in an ever-expanding and more competitive world market. But many U.S. businesses either did not believe quality mattered for them or did not know where to begin. Malcolm Baldrige was Secretary of Commerce from 1981 until his death in a rodeo accident in July 1987. Baldrige was a proponent of quality management as a key to this countrys prosperity and long-term strength. He took a personal interest in the quality improvement act that was eventually named after him and helped draft one of the early versions. In recognition of his contributions, Congress named the award in his honor. The Malcolm Baldrige National Quality Improvement Act of 1987, signed into law on August 20, 1987, was developed through the actions of the National Productivity Advisory Committee, chaired by Jack Grayson. The nonprofit research organization APQC, founded by Grayson, organized the first White House Conference on Productivity, spearheading the creation of the Malcolm Baldrige National Quality Award in 1987. The Baldrige Award was envisioned as a standard of excellence that would help U.S. organizations achieve world-class quality. Malcolm Baldrige National Quality Award is started to promote quality awareness and to recognize quality and business achievements of U.S. organizations, and to publicize these organizations successful performance strategies. Now Americas highest honor for innovation and performance excellence, the Baldrige Award is presented annually to U.S. organizations by the President of the United States. Awards are given in manufacturing, service, small business, education, health care, and nonprofits. In conjunction with the private sector, the National Institute of Standards and Technology (NIST) designed and manage the award and the Baldrige National Quality Program. In the late summer and fall of 1987, Dr. Curt Reimann, the first director of the Malcolm Baldrige National Quality Program, and his staff at the National Institute of Standards and Technology (NIST) developed an award implementation framework, including an evaluation scheme, and advanced proposals for what is now the Baldrige Award. In its first three years, the Baldrige Award was jointly administered by APQC and the American Society for Quality, which continues to assist in administering the award program under contract to NIST.

The Baldrige Award is supported by a distinctive public-private partnership. The following organizations and entities play a key role:
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 The Foundation for the Malcolm Baldrige National Quality Award raises funds to permanently endow the award program. The National Institute of Standards and Technology (NIST), an agency of the U.S. Department of Commerce, manages the Baldrige Program. The American Society for Quality (ASQ) assists in administering the award program under contract to NIST. The Board of Overseers advises the Department of Commerce on the Baldrige Program. Members of the Board of Examinersconsisting of leading experts from U.S. businesses and education, health care, and nonprofit organizationsvolunteer their time to evaluate award applications and prepare feedback reports for applicant organizations. Board members also share information about the program in their professional, trade, community, and state organizations. The Panel of Judges, part of the Board of Examiners, makes award recommendations to the director of NIST. The network of state, regional, and local Baldrige-based award programs known as the Alliance for Performance Excellence provides potential award applicants and examiners, promotes the use of the Criteria, and disseminates information on the award process and concepts. Award recipients share information on their successful performance and quality strategies with other U.S. organizations.

According to Building on Baldrige: American Quality for the 21st Century by the private Council on Competitiveness, More than any other program, the Baldrige Quality Award is responsible for making quality a national priority and disseminating best practices across the United States. The Baldrige Program's net private benefits to the economy as a whole were conservatively estimated at $24.65 billion. When compared to the program's social costs of $119 million, the programs social benefit-to-cost ratio was 207-to-1.

In 2007, 2008, 2009, and 2010, Leadership Excellence magazine placed the Baldrige Program in the top 10 best government/military leadership programs in the United States based on seven criteria: vision/mission, involvement/participation, accountability/measurement, content/curriculum, presenters/presentations, and take-home value/results for customers, and outreach of the programs and products. Since the programs inception in 1987, more than 2 million copies of the business/nonprofit, education, and health care versions of the Criteria for Performance Excellence have been distributed to individuals and organizations in the United States and abroad. In 2010, more than 2.1 million copies of the Criteria were accessed or downloaded from the Baldrige Web site.

OBJECTIVE

MATERIALS AND METHODS

Basically the research is based on datas and analysis of these datas. We use various types of datas to achieve our objective of research or we may say that to complete our research successfully. Data refers to a collection of facts/figures usually collected as the result of observation or experiment. Data can be collected through various means depending upon the requirement.

1) Research Design Exploratory Research: Exploratory Research is an initial research which analyzes the data and explores the possibility of obtaining as many relationships as possible between different variables. This method basically explores various aspects of the research but does not give any conclusive result. a. Literature Survey The existing literature about the strategies adopted by various local companies to tackle the challenges of multinational companies in domestic market has been studied and reviewed. The books and magazines or reports consulted have been listed in the reference section. 2) Data Collection Method Most of the data has been collected secondarily from published sources.
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ANALYSIS AND DISCUSSIONS The Malcolm Baldrige National Quality Assurance Award The Malcolm Baldrige award was a program established in 1987 by congress to raise awareness for the importance of quality. The award is given annually to companies in three different categories. These categories are manufacturing, service and small business. Education and Health Care were added in 1999. Many government and industry leaders understood in the early 1980s that quality would be important for companies to embrace so that they would have continued success in the expanding world markets. Malcolm Baldrige was the secretary of commerce from 1981 to 1987. A strong advocate of quality management, Malcolm Baldrige played a key role in implementing the Reagan administrations trade policy. He was the CEO of a company called Scovill inc. before working for the Reagan administration. While working at Scovill, he transformed it from a brass mill that was in financial difficulty, to a highly successful producer of housing and industrial goods. While an organization can be outside the U.S. and still apply for the award, the division of the organization that is applying must be within the U.S. When companies apply for the Malcolm Baldrige award, they have to go through a rigorous process with many stipulations for entry. An independent board of examiners researches the organization and follows a specific criteria for this evaluation. Most organizations that apply for the award are headquartered in the U.S. The examiners on the Independent board are volunteers, and there are no rules that restrict the members of the board to be hired as consultants for the organization to align their objectives with the award criteria. The criteria evaluation considers two dimensions of the organization. Actual business performance is the basis of 45% of the evaluation, while 55% of the evaluation is based on how the organization is run. The evaluation concerning results is based on the results that the company keeps on its performance in areas such as financial, customer satisfaction, product and service quality, and supplier performance and productivity. The evaluation based on how the organization is run is measured by rating how the company leads, plans, measures, trains,
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controls, and processes. All major parts of the business are assessed, and the Baldrige looks for approaches that are continuously evaluated and improved. There are seven areas that are specifically needed for winning the award. These areas include Leadership, Strategic planning, Customer and market focus, Information and analysis, Human resource focus, Process management, and Business results. All aspects of criteria are tied together because it is difficult to place a priority on one area and neglect other areas. All criteria are tied together and will show up one way or another in the final criteria, the Business results. The first of the seven areas of focus is leadership. This includes the guidance of the organization by senior executives, how the organization takes into account public concerns, and how the organization is involved in the community. In the evaluation of leadership, the Independent board considers if the senior executives are totally committed to the concept of quality. The reason is that this will have an impact on the entire organization and all employees. If the leaders of the organization arent totally committed to the goal, then it would be unreasonable to expect the employees to be totally committed. The next evaluation is Strategic Planning. This includes how the organization sets strategic directions including clear objectives in achieving quality improvement. Key action plans are also included and consist of items that are needed to be implemented to meet the organizations objectives. Customer and market focus consists of how the organization determines requirements of customers and the expectations of the customer and markets. Information and analysis is how effective the company uses the information available to it, and how this information supports its key processes. The Human Resource focus considers if the organization enables its workforce to develop its full potential and also if the workforce is aligned with the organizations objectives. Process management examines aspects of key production, delivery and support process consisting of design, management, and improvement. The final criterion is Business results. This area emphasizes the organizations performance and improvement in its key business areas. The organizations performance is directly related to how well the organization performs in other areas of criteria. This shows the need for total commitment to improving all
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aspects of the business. The point values for each of these areas are as follows; Leadership 110 points, Strategic planning 80 points, Customer and market focus 80 points, Information analysis 80 points, Human resource development and management 100 points, Process management 100 points, Business results 450 points. If all other factors are aligned with the organizations plans, and the company has a good plan for managing quality, it will show up in the business results, this is the reason for its high point total. Most companies are rejected at the beginning of the process because they could not follow the directions of the application process. The process has three stages of evaluation; the independent review, the consensus review, and the site visit review. During each review, an applicant can be rejected. The MBQNA gives a feedback report to those that fail to qualify for the next review, also, a feedback report goes to the winners. Pat Croce, the current president of the Philadelphia 76ers, used to own a company called Sports Physical Therapists. His original company competed for the award, and Mr. Croce is quoted as saying Competing for the award had been enormously rewarding. The entire company had rallied around a common cause. Just by competing for the award, SPT improved itself by striving for a common goal. All areas of the business improved not only in the tangible areas like customer satisfaction and business performance, but also in employee morale and pride in the job they were doing. Just by competing for the award, the organization that is striving to win already sees the importance of quality, and has made a conscious decision to strive for excellence in the area of quality. The MBNQA can help an organization by having the entire organization rally around a common goal, by creating clear objectives to improve quality, and the national recognition should the company win the award. The performance of MBNQA winners is undeniable. Business week compared Baldrige winners with the S&P 500 and created the Baldrige index. Winners of the MBNQA outperformed the S&P 500 $33,185 to $18,613. This clearly shows the importance of quality improvement and gives tangible results of how winners improve their profitability for investors. In comparison with other awards such as the ISO 9000, the MBNQA stands out, for example, the ISO 9000 covers less
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than 10% of the MBNQA criteria for judging quality. When applying for an award, the organization cannot be doing so just to win, but needs to buy into the entire philosophy of quality improvement. It is in this way that the organization will get the most benefit. Total quality improvement will show in all aspects of the organization including increased productivity, employee morale, customer satisfaction, and improved profitability. The MBNQA is an extremely useful item for an organization to strive for. The purposes of the award are to:

Help stimulate American companies to improve quality and productivity for the pride of recognition while obtaining a competitive edge through increased profits; Recognize the achievements of those companies that improve the quality of their goods and services and provide an example to others; Establish guidelines and criteria that can be used by business, industrial, governmental, and other enterprises in evaluating their own quality improvement efforts; and Provide specific guidance for other American enterprises that wish to learn how to manage for high quality by making available detailed information on how winning enterprises were able to change their cultures and achieve eminence.

THE CRITERIA FOR PERFORMANCE EXCELLENCE The award examination is based upon a rigorous set of criteria, called the Criteria for Performance Excellence, designed to encourage companies to enhance their competitiveness through an aligned approach to organizational performance management that result in: 1. Deliver of ever-improving value to customers, contributing to marketplace success. 2. Improvement of overall company performance and capabilities
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3. Organizational and personal learning The criteria consist of a hierarchical set of categories, items, and areas to address. The seven categories are: 1. Leadership: This category examines how an organizations senior leaders address values, direction, and performance expectations, as well as their focus on customer s and other stakeholders, empowerment, innovation, and learning. Also examined is how an organization addresses its responsibilities to the public and supports its key communities. 2. Strategic Planning: this category examines how an organization develops strategic objectives and action plans. Also examined are how chosen strategic objectives and action plans are deployed and how progress is measured. 3. Customer and Market Focus: This category examines how an organization determines requirements, expectations, and preferences of customer s and markets. Also examined is how the organization builds relationships with customers and determines the key factors that lead to customer acquisition, satisfaction, and retention and to business expansion. 4. Information and Analysis: This category examines an organizations information management and performance measurement systems and how the organization analyzes performance data and ensures hardware and software quality. 5. Human Resource Focus: This category examines how an organization motivates and enables employees to develop and utilize their full potential in alignment with the organizations overall objectives and action plans. Also examined are the organizations efforts to build and maintain a work environment and an employee support climate conducive to performance excellence and to personal and organizational growth. 6. Process Management: This category examines the key aspects of an organizations process management, including customer-focused design, product

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and service delivery, key business, and support processes. This category encompasses all key processes and all work units. 7. Business Results: This category examines an organizations performance and improvement in key business areas customer satisfaction, product and service performance, financial and marketplace performance, human resource results, and operational performance. Also examined are performance levels, relative to those of competitors. The seven categories form an integrated management system. The umbrella over the seven categories reflects the focus that organizations must have on customers through their strategy and action plans for all key decisions. Leadership, Strategic Planning, and Customer and Market Focus represent the leadership triad, and suggest the importance of integrating these three functions. Human Resource focus and Process Management represent how the work in an organization is accomplished and leads to Business Results. These functions are linked to the leadership triad. Malcolm Baldrige National Quality Award Criteria Framework Baldrige Award Criteria Framework A Systems Perspective Organizational Profile: Environment, Relationships, and Challenges

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Each category consists of several items or major requirements on which businesses should focus. For example, the Leadership Category consists of the following items and areas to address: 1.1 Organizational Leadership a.Senior Leadership Direction b.Organizational Performance Review 1.2 Public Responsibility and Citizenship a.Responsibilities to the Public b.Support of Key Communities

System Operations The system operations are composed of the six Baldrige Categories in the center of the figure that define your operations and the results you achieve.

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Leadership (Category 1), Strategic Planning (Category 2), and Customer Focus (Category 3) represent the leadership triad. These Categories are placed together to emphasize the importance of a leadership focus on strategy and customers. Senior leaders set your organizational direction and seek future opportunities for your organization. Workforce Focus (Category 5), Process Management (Category 6), and Results (Category 7) represent the results triad.

Your organizations workforce and key processes accomplish the work of the organization that yields your overall performance results. All actions point toward Resultsa composite of product, customer, market and financial, and internal operational performance results, including workforce, leadership, governance, and societal responsibility results. The horizontal arrow in the center of the framework links the leadership triad to the results triad, a linkage critical to organizational success. Furthermore, the arrow indicates the central relationship between Leadership (Category 1) and Results (Category 7). The two-headed arrows indicate the importance of feedback in an effective performance management system. System Foundation Measurement, Analysis, and Knowledge Management (Category 4) are critical to the effective management of your organization and to a fact-based, knowledgedriven system for improving performance and competitiveness. Measurement, analysis, and knowledge management serve as a foundation for the performance management system. Criteria Structure The seven Criteria Categories shown in the figure are subdivided into Items and Areas to Address.

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Items There are 18 Items, each focusing on a major requirement. Item titles and point values are given on page 3. The Item format is shown on page 30. Areas to Address Items consist of one or more Areas to Address (Areas). Organizations should address their responses to the specific requirements of these Areas.

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AREA OF FURTHER RESEARCH

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CONCLUSION

The principles of the Malcolm Baldrige award provide an organization with guidelines to compete in todays global market place. The ideas envisioned in 1987 have encouraged many US organizations to adopt and implement entirely new practices. Although there were some initial growing pains, the results of this effort have been mostly positive. For many organizations, an award is secondary to its normal business practices. These organizations would be performing these activities regardless of receiving a national award for doing so. These companies continue to profit, not only financially, but also in increased customer, employee, and public relations. Companies are witnessing first hand the benefits of focusing on quality.

As mentioned previously, several of the past Baldrige award winners did not perform as well financially in subsequent years. At least one of these even filed for bankruptcy. It is important that companies realize that the work is not finished after the award is won. A culture of continuous improvement is a necessity. Any organization in a state of stagnation is bound to fail. Competitors, both foreign and domestic, are always looking for the slightest advantage. Processes and activities need to be constantly redesigned, improved upon, and tested in order to keep pace with the changing business environment. Something else has changed over time. The Baldrige Award criteria have been revised to the extent that business results account for nearly half the number of the points allotted. The award itself, according to Schonberger (2001, P.1) has strayed a good deal from its emphasis on quality. Moreover, the language of the award has lost its prescriptive orientation and has shifted to open-ended questions more reflective of general management. There is an eight-year time difference between when Eastman Chemical Company won the award in the manufacturing category and Pals Sudden Service won in the small business
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category. The extent to which revised criteria played a role is uncertain. It is not uncommon, however, for business results to be affected by circumstances that have little to do with quality practices. Companies may select the wrong technology, make a poor acquisition, enter an economic downturn, or experience market conditions beyond their control. This very point is made with regard to prior winners, Motorola and Xerox (Schonberger, 2001). The Baldrige Award has been well worth the investment according the economic evaluation conducted on behalf of the National Institute of Standards and Technology (Link and Scott, 2001). The cost to the Institute and organizations applying for the award averages about $7 million per year, with the cost going up due to the addition of two categories, education and health care. However, the benefits to winning companies and other organizations using the criteria are estimated to be in the billions of dollars, to the extent that a cost/benefit ratio of 1-to-207 has been reported (Link and Scott, 2001, p.37). Many companies continue to use the Baldrige criteria for internal assessment, supplier certification, and corporate quality awards.

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APPENDICES Which organizations have received the award?

2009 Honeywell Federal Manufacturing & Technologies Kansas City, Mo. (manufacturing) MidwayUSA Columbia, Mo. (small business) AtlantiCare Egg Harbor Township, N.J. (health care) Heartland Health St. Joseph, Mo. (health care) VA Cooperative Studies Program Clinical Research Pharmacy Coordinating Center Albuquerque, N.M. (nonprofit) 2008 Cargill Corn Milling North America Wayzata, Minn. (manufacturing) Ft. Collins, Colo. (health care) -Statesville Schools Statesville, N.C. (education) 2007 PRO-TEC Coating Co. Leipsic, Ohio (small business) Janesville, Wisc. (health care) San Diego, Calif. (health care) ty of Coral Springs Coral Springs, Fla. (nonprofit) U.S. Army Armament Research, Development and Engineering Center (ARDEC) Picatinny Arsenal, N.J. (nonprofit) 2006 MESA Products, Inc. Tulsa, Okla. (small business) San Diego, Calif. (service) Tupelo, Miss. (health care) 2005 Sunny Fresh Foods, Inc. Monticello, Minn. (manufacturing)
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New Orleans, La. (service) Plano, Texas (small business) Dallas, Texas (education) Jenks, Okla. (education) Kalamazoo, Mich. (health care) 2004 The Bama Companies Tulsa, Okla. (manufacturing) Dallas, Texas (small business) Greeley, Colo. (education) Hamilton, N.J. (health care) 2003 Medrad, Inc. Indianola, Pa. (manufacturing) St. Louis, Mo. (service) Nashville, Tenn. (service) Stoner Inc. Quarryville, Pa. (small business) Palatine, Ill. (education) Pensacola, Fla. (health care) Kansas City, Mo. (health care) 2002- Motorola Inc. Commercial, Government and Industrial Solutions Sector, Branch Smith Printing Division, and SSM Health Care 2001- Clarke American Checks, Incorporated, Pals Sudden Service, Chugach School District, Pearl River School District, and University of Wisconsin-Stout 2000- Dana Corp.-Spicer Driveshaft Division, KARLEE Company, Inc., Operations Management International, Inc., and Los Alamos National Bank 1999- STMicroelectronics, Inc.-Region Americas, BI, The Ritz-Carlton Hotel Co., L.L.C., and Sunny Fresh Foods
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1998- Boeing Airlift and Tanker Programs, Solar Turbines Inc., and Texas Nameplate Co., Inc. 1997- 3M Dental Products Division, Solectron Corp., Merrill Lynch Credit Corp., and Xerox Business Services 1996- ADAC Laboratories, Dana Commercial Credit Corp., Custom Research Inc., and Trident Precision Manufacturing Inc. 1995- Armstrong World Industries Telecommunications Products Division Building Products Operation and Corning

1994- AT&T Consumer Communications Services, GTE Directories Corp., and Wainwright Industries Inc. 1993- Eastman Chemical Co. and Ames Rubber Corp. 1992- AT&T Network Systems Group/ Transmission Systems Business Unit, Texas Instruments Inc. Defense Systems & Electronics Group, AT&T Universal Card Services, The Ritz-Carlton Hotel Co., and Granite Rock Co. 1991- Solectron Corp., Zytec Corp., and Marlow Industries 1990- Cadillac Motor Car Division, IBM Rochester, Federal Express Corp., and Wallace Co. Inc. 1989- Milliken & Co. and Xerox Corp. Business Products and Systems 1988- Motorola Inc., Commercial Nuclear Fuel Division of Westinghouse Electric Corp., and Globe Metallurgical Inc.

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REFERENCE

Baldridge award application. (1995). Retrieved May 2005 from http://www.cunixinfotech.com/articlesite/balridge.pdf Baldrige national quality program. Retrieved May 2005 from Biography of Malcolm Baldrige , Web site: http://www.quality.nist.gov/Biography.htm. Deavenport, E. (1994, June). Winning the baldrige award. Chief Executive, (95) pp. 36-39. Baldrige National Quality Program. National Institute Of Standards and Technology. 2 April 2001 http://www.quality.nist.gov/ Zhang Liang, Lee K. O. Mathew, Zhang Zhe And Banerjee Probir, Critical Success Factors of Enterprise Resource Planning Systems Implementation Success in China. Proceedings of the 36th Hawaii International Conference on System Sciences, 2002

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