Malcolm Baldrige National Quality Award SCM 494 Dr. Ron Tibben-Lembke

Malcolm Baldrige August 20, 1987 – Award created August 20, 1987 – Award created Malcolm Baldridge secretary of Commerce. Died in rodeo accident Malcolm Baldridge secretary of Commerce. Died in rodeo accident Proponent of quality management as key to US economic survival Proponent of quality management as key to US economic survival Helped draft early version of quality act Helped draft early version of quality act Champion roper – National Cowboy Hall of Fame Champion roper – National Cowboy Hall of Fame July 25, 1987 N. California rodeo July 25, 1987 N. California rodeo Horse threw him, fell on him, and crushed him Horse threw him, fell on him, and crushed him

Categories Manufacturing Manufacturing Service Service Small Business Small Business Education (added 1999) Education (added 1999) Health Care (added 1999) Health Care (added 1999) Nonprofit (2005) Nonprofit (2005)

Why Apply? Fame and fortune Fame and fortune 300 hours spent looking at your application? 300 hours spent looking at your application? 50 page report: strengths, weaknesses 50 page report: strengths, weaknesses “Free” consulting from really good people “Free” consulting from really good people $2,000 application fee $2,000 application fee $20k for site visit expenses $20k for site visit expenses

Companies that have one Wallace Co., won in 1990, bankruptcy protection in 1992 Wallace Co., won in 1990, bankruptcy protection in 1992 Houston, TX, pipes, valves for oil & chemical plants Houston, TX, pipes, valves for oil & chemical plants 2 competitors closed up, customers bought their inventory 2 competitors closed up, customers bought their inventory Highly leveraged Highly leveraged 1991 – IBM Rochester bad year in – IBM Rochester bad year in – Cadillac – closed plants over low sales, labor costs 1990 – Cadillac – closed plants over low sales, labor costs

Winners 1992 AT&T Universal Card – 2 years old 3-5 years of data? 1992 AT&T Universal Card – 2 years old 3-5 years of data? Nuclear plant with history of safety violations Nuclear plant with history of safety violations Solectron won twice Solectron won twice

Application process Self-Assessment, Application turned in Self-Assessment, Application turned in Consensus Review: Initial screen by independent Board of Examiners (8) Consensus Review: Initial screen by independent Board of Examiners (8) Site Visit Review by teams of examiners Site Visit Review by teams of examiners Verify information, get questions answered Verify information, get questions answered Written summary of strengths, areas for improvement Written summary of strengths, areas for improvement 300 volunteer examiners 300 volunteer examiners U.S.-Based companies only U.S.-Based companies only Winners agree to spread the word about quality Winners agree to spread the word about quality

Preparing the Application Organizational profile describes org. and challenges Organizational profile describes org. and challenges Maybe need more information, identified problems, work on those first Maybe need more information, identified problems, work on those first Category teams: info & data on area Category teams: info & data on area Action plan for improvement Action plan for improvement Senior leaders, champions, teams evaluate how to improve process for future Senior leaders, champions, teams evaluate how to improve process for future

10-step Process 1. Boundaries of org. to be assessed 2. Champions for each area 3. Decide format & scope for self-assessment 4. Senior leaders, champions prepare Org. Profile Organizational profile describes org. and challenges & environment Organizational profile describes org. and challenges & environment Common understanding of what is important Common understanding of what is important System for improvement, strategic challenges System for improvement, strategic challenges Go directly to 9 – develop & implement improvement plan Go directly to 9 – develop & implement improvement plan

10-step process 5. Practice self-assessment with champions Use Item 1.1 Criteria for Performance Excellence Use Item 1.1 Criteria for Performance Excellence See if meeting goals, on track See if meeting goals, on track 6. Champions select category teams 3-5 enthusiastic team members, different levels 3-5 enthusiastic team members, different levels Maybe outside organization being studied Maybe outside organization being studied Read the criteria, gather data, write an analysis Read the criteria, gather data, write an analysis Explain how approaches used throughout org. Explain how approaches used throughout org.

10-step process 7. Share findings among teams, stengths & weaknesses 8. Prioritize key strengths and areas to improve 9. Develop and implement action plan for improvement Who will lead each step, what is to be accomplished, progress dates, how progress will be measured Who will lead each step, what is to be accomplished, progress dates, how progress will be measured 10. Evaluate and improve your self-assessment and action process

Core Values and Concepts Visionary leadership (and ethics) Visionary leadership (and ethics) Customer-driven excellence Customer-driven excellence Organizational and personal learning Organizational and personal learning Valuing employees and partners Valuing employees and partners Agility Agility Focus on the future Focus on the future Managing for innovation Managing for innovation Management by fact Management by fact Social responsibility Social responsibility Focusing on results and creating value Focusing on results and creating value Systems perspective Systems perspective

Areas Leadership Leadership Strategic Planning Strategic Planning Customer and Market Focus Customer and Market Focus Measurement, Analysis, and knowledge management Measurement, Analysis, and knowledge management Human Resource Focus Human Resource Focus Process Management Process Management Business Results Business Results

2004 Categories and Items Point Values 1 Leadership Strategic Planning 85 3 Customer and Market Focus 85 4 Measurement, Analysis, and Knowledge Management 90 5 Human Resource Focus 85 6 Process Management 85 7 Business Results Customer -Focused Results Product and Service Results Financial and Market Results Human Resource Results Organizational Effectiveness Results Governance and Social Responsibility Results 75 TOTAL POINTS 1000

Leadership Examines how senior executives guide the company and how the company addresses its responsibilities to the public and practices good citizenship. Examines how senior executives guide the company and how the company addresses its responsibilities to the public and practices good citizenship. 1.1 Organizational Leadership Social Responsibility 50

Strategic planning Examines how the company sets strategic directions and how it determines key action plans. Examines how the company sets strategic directions and how it determines key action plans. 2.1Strategy Development Strategy Deployment 45

Customer and market focus Examines how the company determines requirements and expectations of customers and markets. Examines how the company determines requirements and expectations of customers and markets. 3.1Customer and Market Knowledge Customer Relationships and Satisfaction 45

Information and analysis Examines the management, effective use, and analysis of data and information to support key company processes and the company’s performance management system. Examines the management, effective use, and analysis of data and information to support key company processes and the company’s performance management system. 4.1Measurement and Analysis of Organizational Performance Information and Knowledge Management 45

Human resource focus Examines how the company enables its workforce to develop its full potential and how the workforce is aligned with the company’s objectives. Examines how the company enables its workforce to develop its full potential and how the workforce is aligned with the company’s objectives. 5.1 Work Systems Employee Learning and Motivation Employee Well-Being and Satisfaction 25

Process management Examines aspects of how key production/delivery and support processes are designed, managed, and improved. Examines aspects of how key production/delivery and support processes are designed, managed, and improved. 6.1V alue Creation Processes Support Processes 35

Business results Examines the company’s performance and improvement in its key business areas: Examines the company’s performance and improvement in its key business areas: customer satisfaction, customer satisfaction, financial and marketplace performance, financial and marketplace performance, human resources, human resources, supplier and partner performance, and supplier and partner performance, and operational performance. operational performance. The category also examines how the company performs relative to competitors. The category also examines how the company performs relative to competitors. better market performance, gains in market share, and customer retention and satisfaction better market performance, gains in market share, and customer retention and satisfaction

Quality Competitions in Japan Deming Prize (Japan) Named after noted quality expert Named after noted quality expert Established in 1950 Established in 1950 Florida Light & Power, AT&T Florida Light & Power, AT&T New prize in Japan

Other Awards Rajiv Ghandi award – India, 1991 Rajiv Ghandi award – India, US states have prizes 40+ US states have prizes Many state winners win BNQA Many state winners win BNQA

Is Baldrige a U.S. version of Japan’s Deming award? The basic purposes of both awards are the same: The basic purposes of both awards are the same: to promote recognition of quality achievements and to promote recognition of quality achievements and to raise awareness of the importance and techniques of quality improvement. to raise awareness of the importance and techniques of quality improvement. However, the Baldrige Award: However, the Baldrige Award: focuses more on results and service, focuses more on results and service, relies upon the involvement of many different professional and trade groups, relies upon the involvement of many different professional and trade groups, provides special credits for innovative approaches to quality, provides special credits for innovative approaches to quality, includes a strong customer and human resource focus, and includes a strong customer and human resource focus, and stresses the importance of sharing information. stresses the importance of sharing information.

Baldrige vs. ISO 9000 Purpose of MBNQA to enhance US competitivenes Purpose of MBNQA to enhance US competitivenes Promotes quality awareness, recognizes achievements of US companies Promotes quality awareness, recognizes achievements of US companies Vehicle for sharing success strategies Vehicle for sharing success strategies ISO covers less thatn 10 percent of the Baldrige award criteria ISO covers less thatn 10 percent of the Baldrige award criteria Many apply, few are selected Many apply, few are selected MBNQA not required for business MBNQA not required for business

Six Sigma, ISO, BNQA Six Sigma concentrates on measuring product quality and improving process engineering. drives process improvement and cost savings. ISO 9001:2000 Registration is a product/service conformity model for guaranteeing equity in the marketplace. concentrates on fixing quality system defects and product/service nonconformities. Baldrige Criteria for Performance Excellence focus on performance excellence for the entire organization in an overall management framework. identify and track all-important organizational results: customer, product/service, financial, human resource, and organizational effectiveness.