CHAPTER 2

PHILOSOPHY
AND
FRAMEWORKS
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 results in:

 Delivery of ever-improving value to customers,

resulting in improved marketplace success
 Improvement of overall company performance and
capabilities
 Organizational and personal learning
The Criteria consist of a hierarchical set
of categories, items, and areas to
address. The seven categories are as
follows:
1. Leadership
2. Strategic Planning
3. Customer and Market Focus
4. Measurement, Analysis, and Knowledge Management
5. Human Resource Focus
6. Process Management
7. Business Results
 Organizational Profile:
Environment, Relationship,
and Challenges

5
2
Human
Strategic
Resource
Planning
Focus

7
1 Business
Leadership Results

3 6
Customer Process
and Market Manageme
Focus nt

4
Measurement, Analysis, and Knowledge Management
Criteria Evolution (1 of 2)

 The specific award criteria are evaluated and

improved each year. The criteria have been
streamlined and simplified to make them more
relevant and useful to organizations of all types and
sizes.

 The change to “Strategic Planning” signifies that

quality should be a part of business planning, not a
separate issue.

 The term performance has been substituted for

quality as a conscious attempt to organize that the
principles of total quality are the foundation for a
company’s entire management system, not just the
The improvements include the following
shifts in emphasis: (2 of 2)

 From quality assurance and strategic quality planning

to a focus on process management and overall
strategic planning.
 From a focus on current customers to a focus on
current and future customers and markets
 From human resource utilization to human resource
development and management
 From supplier quality to supplier partnerships
 From individual quality improvement activities to
cycles of evaluation and improvement in all key areas
 From data analysis of quality efforts to an aggregate,
integrated organizational level review of key company
data
 From results that focus on limited financial
performance to a focus on a composite of business
Using The Baldrige criteria

 Companies use the Baldrige Criteria in different ways-

for self-assessment or internal recognition programs,
even if they do not intend to apply for the award. The
benefits of using the criteria for self-assessment
include accelerating improvement efforts, energizing
employees, and learning from feedback-particularly if
external examiners are involved.
Impacts of the Baldrige Program

 Most states in the United States have developed award

programs similar to the Baldrige Award. State award programs
generally are designed to promote an awareness of
productivity and quality, foster an information exchange,
encourage firms to adopt quality and productivity
improvements strategies, recognize firms that have instituted
successful strategies, provide role models for other business
in the state, encourage new industry to locate in the state,
and establish a quality-of-life culture that will benefits
residents of the state.
Baldrige and Deming

 It is no secrets that W. Edwards Deming was not an

advocate of the Baldrige Award. (Joseph Juran, however,
was highly influence in its development.) The competitive
nature if the award is fundamentally at odds with Deming’s
teachings. However, many of Deming’s principles are
reflected directly or in spirits within the criteria. In fact,
Zytec, which implemented its total quality system around
Deming’s 14 points, received a Baldrige Award. We provide
a discussion of how the Baldrige Criteria support each of 14
Points in the Bonus Materials folder.
The Deming Prize

 The Deming Prize is awarded to all companies that meet a

prescribed standard. However, the small number of awards
given each year is an indication of the achieving the
standard.

 The objects are to ensure that a company has so thoroughly

deployed a quality process that it will continue to improve
long after a prize is awarded.
European Quality Award

 The award was designed to increase awareness throughout

the European Community, and business in particular, of the
growing importance of quality to their competitiveness in
the increasingly global market and to their standards of life.

 The European Quality Award consists of two parts:

1. The European quality Prize, given to companies that
demonstrate excellence in quality management practice by
meeting the award criteria; and
2. The European Quality award, awarded to most successful
applicant. In 1992 four prizes and one award were granted for
the first time.
 European Quality Award Framework

Leadership Results

People
People Results

Policy Key
Processe Custome
Leader and
r Results Performan
Strategy s ce Results

Partnershi
ps and
Society
Resources Results
Canadian Awards for: Business
Excellence
(1 of 2)

 Canadian Awards for Business

Excellence quality criteria are similar
in structure to the Baldrige Award
criteria, with some key differences.
Separate, but similar, criteria are used
for business organizations, public
sector organizations, and “healthy
workplace” organizations.
The major categories and items within each category are:
(2 of 2)

1. Leadership: Strategies directed, leadership involvement, and

outcomes
2. Customer Focus: Voice of the customer, management of
customer relationship, measurement, and outcomes
3. Planning for Improvement: Develop and content of
improvement plan, assessment, and outcomes
4. People focus: Human resource planning, particular environment,
continuous learning environment, employee satisfaction, and
outcomes
5. Process Optimization: Process definition., process control,
process improvement, and outcomes
6. Supplier Focus: Partnership and outcomes

this category seek similar information as the Baldrige Award Criteria.

Australian Business Excellence Award (1 of
2)

 the Australian Quality Awards (now called Business

Excellence Award) were developed independently
from the MBNQA in 1998. The award were previously
administered by the Australian Quality Awards
Foundation, a subsidiary of the Australian Quality
Council, a private, for-profit organization. In 2002,
Standards Australia International [SAI] formally
acquired a range of product and services previously
owned by the Australian Quality Council [AQC]. SAI’s
Professional Services Division became the new home
of the AQC and in recognition of the importance of
business excellence to SAI, the division has been
renamed Business Excellence Australia.
Four levels f awards are given: (2 of 2)

1. The Business Improvement Level – encouragement

recognition for “Progress toward Business Excellence” or “
Foundation in Business Excellence”

2. The Award Level – representing Australian best practices;

recognition as a winner or finalist

3. The Award Gold Level – open only to former Award winners;

represents a revalidation and ongoing improvement

4. The Australian Business Excellence Prize – open only to former

award winners; presents international best practices evident
throughout the organization
ISO 9000:2000

 As quality became a major focus of businesses throughout the

world, various organizations developed standards and guidelines.
Terms such as quality management, quality control, quality
system, and quality assurance acquired different , sometimes
conflict meanings from country to country, within a country, and
even within an industry.

 To standardize quality requirements for European countries within

the Common Market and those wishing to do business with this
countries, a specialized agency for standardization, the
International Organization for Standardization [IOS], founded in
1946 and composed of representatives from the national
standardization bodies of 91 nations, adopted a series of written
quality standards in 1987.

 They were revised in1994, and again (significantly) in 2000. The

most recent version called the ISO 9000:2000 family standards.
Australian Business Excellence Award
Framework

Leadersh
ip and
innovati
People
on Strategy
and
Business
Planning
Processe
Results
s
Process
Custome
es,
r and
Product
Market
focus s and
services

Data, Information and

Knowledge
 The standards have been adopted in the United
States by the American National Standards Institute
(ANSI) with the endorsement and cooperation of the
American Society for Quality (ASQ).

The standards were created to meet Five Objectives:

1. Achieved, maintain, and seek to continuously

improved product quality (including services)in
relationship to requirements.
2. Improve the quality of operations to continually meet
customers’ and stakeholders’ stated and implied
needs.
3. Provide confidence to internal management and
other employees that quality requirements are being
fulfilled and that improvement is taking place.
4. Provide confidence to customers and other
stakeholders that quality requirements are being
achieved in the delivery product.
Structure of the ISO 9000:2000 Standards

 The ISO 9000:2000 standards focus on developing,

documenting, and implementing procedures to
ensure consistency of operations and performance in
production and service delivery processes, with the
aim of continual improvement, and supported by
fundamental principles of total quality.
The standards consist of Three documents:

1. ISO 9000 – Fundamentals and vocabulary.

2. ISO 9001 – Requirements

3. ISO 9004 – Guidelines for performance improvements

ISO 9000:2000 Quality Management
Principles

 Principles 1: Customer Focus

Organizations depends on their customers and therefore should
understand current and future customer needs, should meet customer
requirements, and strive to exceed customer expectations.
 Principles 2: Leadership
Leaders establish unity purpose and directions of the organization.
They should create and maintain the internal environment in which
people can become fully involved in achieving the organization’s
objective.
 Principles 3: Involvement of People
People at all levels are the essence of an organization and their full
involvement enables their abilities to be used for the organization’s
benefit.
 Principles 4: Process Approach
A desired result is achieved more efficiently when activities and
related resources are managed as a process.
 Principles 5: System Approach to Management
Identifying, understanding, and managing interrelated
processes as a system contributes to the organization’s
effectiveness and efficiency in achieving its objectives.
 Principles 6: Continual Improvement
Continual improvement of the organization’s overall
performance should be a permanent objective of the
organization.
 Principles 7: Factual Approach to Design Making
Effective decisions are based on the analysis of data and
information.
 Principles 8: Mutually Beneficial Supplier Relationships
An organization and its suppliers are interdependent and a
mutually beneficial relationship enhances the ability of both
to creative value.
Benefits of ISO 9000

 Many diverse organizations have realized significant

benefits from ISO 9000 that range from higher
customer satisfaction and retention, better quality
products, and improved productivity.

 Thus, using ISO 9000 as a basis for a quality system

can improve productivity, decrease costs, and
increase customer satisfaction. In addition
organizations have found that using ISO 9000
resulted in increased use data as a business
management reviews, and improved customer
communication.
Six Sigma

This concept is facilitated

through use of basic and
advanced quality improvement
and control tools by teams whose
members are trained to provide
fact-based decision-making.
This is based on a statistical
measure that equates to 3.4 or
fewer errors or defects per million
Evolution of Six Sigma

Motorola pioneered the concept

of six sigma as an approach to
measuring product and service
quality.
The late Bill Smith, a reliability
engineer at Motorola, is credited
with originating the concept
during the mid-1980s and selling
it to Motorola’s CEO, Robert
The Core Philosophy of Six Sigma
is based on some key concepts:

1. Think in terms of key business processes and

customer requirements with a clear focus on overall
strategic objectives.
2. Focus on corporate sponsors responsible for
championing projects, support team activities, help to
overcome resistance to change, and obtain resources.
3. Emphasize such quantifiable measures as defects
per million opportunities(dpmo) that can be applied
to all parts of an organization: manufacturing,
engineering, administrative, software, and so on.
4. Ensure that appropriate metrics are identified early in
the process and that they focus on business results,
thereby providing incentives an accountability.
5. Provide extensive training followed by project term
deployment to improve profitability, reduce non-value-
added activities, and achieve cycle time reduction.
6. Create highly qualified process improvement experts who
can apply improvement tools and lead teams.
7. Set stretch objectives for improvement.

One of the key learning's GE discovered was that Six Sigma is

not only for engineers. Welch observed the following:

 Plant managers can use Six Sigma to reduced waste,

improve product consistency, solve equipment problems,
or create capacity.
 Human resource managers need it to reduce the cycle
time for hiring employees.
 Regional sales managers can use it to improve forecast
reliability, pricing strategies, or pricing variation.
 For the matter, plumbers, car mechanics, and gardeners
can use it t o better understand their customers’ need and
tailor their service offerings to meet customers’ wants.
 Six Sigma as a Quality
Framework

 In many ways, Six Sigma is the realization of many

fundamental concepts of “total quality management,”
notably, the integration of human and process elements
of improvement.

 Human issues include management leadership, a sense

of urgency, focus on results and customers, team
processes, and culture change; process issues include
the use of process management techniques, analysis of
variation and statistical methods, a disciplined problem
solving approach, and management by fact.
As the traditional notion of total quality management. Some
of the contrasting features include:

 TQM id based largely on worker empowerment and team;

Six Sigma is owned by business leader champions.
 TQM activities generally occur within a function, process,
or individual workplace; Six Sigma projects are truly
cross – functional.
 TQM training is generally limited to simple improvement
tools and concepts; Six Sigma focuses on a more
rigorous and advanced ser of statistical methods and a
structured problem – solving methodology DMAIC –
defined, measure, analyze, improve, and control .
 TQM is focused on improvement with little financial
accountability; Six Sigma requires a verifiable return on
investment and focus on the bottom line.
 Baldrige, ISO 9000 and Six Sigma

 Three major frameworks frameworks for quality

management system:
 The Baldrige Criteria for Performance Excellence
 ISO 9000, and
 Six Sigma
Although each of these frameworks are process –
focused, data based, and management – led, each
offers a different emphasis in helping organizations
improve performance and increase customer
satisfaction.
 The 2000 revision of ISO 9000 incorporated many of
the Baldrige criteria’s original principles, it still is not a
comprehensive business performance framework. In
provides systematic approaches to many of the
Baldrige criteria requirements in the Process
 For companies in the early stages of developing a
quality program, the standards enforce the discipline
of control that is necessary before they can seriously
pursue continuous improvement.
 Implementing Six Sigma fulfills in part many of the
elements of ISO 9000:2000, including the Quality
Management System, Resource Management,
Product Realization, and Measurement, Analysis, and
Improvement sections of the standards.
 A criteria question is whether an organization using
Baldrige will be more successful if it also uses Six
Sigma, and vice versa.
 Six Sigma enhances the ability of leadership to focus
on the criteria factors that make a business
successful and select appropriate strategies and
action plans.
One example of merging Baldrige with Six
Sigma is Baxter Healthcare International. The
Business Excellence organization is a small
group of people focused on helping internal
clients improve their operations. Specific areas
of responsibility in Business Excellence include:

 The Baxter Award for Operational Excellence

 Development of the Baxter Integrated
Management System
 The Corporation Quality Manual
 The Baxter Quality Institute
 The Quality Leadership Process
 Lean Manufacturing Initiative
 Six Sigma Initiatives