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The Pursuit of Excellence
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Is performance excellence a goal for your company? In celebration of National Quality Month, Executive Boardroom presents a dialogue with Sun's Kay Kendall and Junaid Mohiuddin, who serve on the Board of Examiners for the Malcolm Baldrige National Quality Award, the premier award given to U.S. companies that demonstrate performance excellence in their operations. Q: For readers who may not be aware, what are the Baldrige awards? Junaid: The Malcolm Baldrige National Quality Award is an award presented by the U.S. Department of Commerce to promote and enhance best practices within organizations to help the U.S. increase its competitiveness and effectiveness. The award is one of the country's highest honors and is facilitated by the President of the United States along with the U.S. Commerce Secretary. It began in 1987 with then-Commerce Secretary Malcolm Baldrige in the Reagan administration and has been around ever since. Q: Do other countries have similar awards? Kay: There are at least 76 countries with award programs and three regional awards that are based on the Baldrige criteria. There are 42 states with state-based programs. Junaid: One of the interesting things I observed in my new examiner orientation was that many delegates from foreign countries were there to learn how Baldrige works in the U.S. with the intent of starting awards in their own, often newly-emerging, countries. Q: How are board members nominated and what is required of them? Kay: Examiners apply through a rigorous self-nomination process which includes referrals and references. Most people start off as examiners, and then some become senior examiners. Examiners are assigned to independently review applications with seven to nine examiners per application. Judges, who are appointed by the Secretary of Commerce, decide which applicants have the most promise for the award, and then about half of those applicants move on to "consensus." Here, examiners discuss the applicant, the judges meet again, and applicants are chosen for site visits where the examination team goes onsite to validate role model practices. Junaid: Kay and I are from different parts of the board hierarchy. I'm a first year examiner and Kay has climbed through the ranks and sat as a judge for the three-year term ending in 2005. She's back again this year as an Alumni Examiner. Kay: My experience with the Baldrige program has been very positive. It has been by far the best executive education I've ever received, and I've been through formal programs at various universities. I've never found anything close to what I've learned with Baldrige. Q: What are the business benefits to applying for and winning a performance excellence award such as Baldrige? Kay: Let me start with the business benefits for using the criteria to assess your organization, because there are many organizations that are not going to apply but see a benefit in implementing the criteria. The criterion, which has been in place since 1987, goes through a rigorous annual improvement cycle to evolve with validated management practices. It incorporates lessons learned throughout its history. The assessment is one of the few techniques I'm familiar with that doesn't have a functional bias. It looks at an organization holistically and fits the size of the organization as opposed to being a one-size-fits-all. Junaid: This year there are seven assessment criteria. These include:
The holistic attitude is key because different organizations in different industries subscribe to different methodologies. At Sun we're big proponents of Six Sigma and, to a certain extent, "Lean." Baldrige is high-level in that it can be used in evaluating any industry, any organization, for-profit and non-profit. Q: Whether you apply or just take the framework, what are some of the tangible business benefits? Kay: The framework creates clarity among your leadership around the important things. That sounds really simple, but organizations are very dynamic. In my experience working at other companies I facilitated a lot of internal assessments, and it was very hard for the leadership teams to agree on the most important markets and core products. If these folks aren't in alignment, the organization can't be. Because organizations are complex, the framework also looks at linkages and interrelationships. As example, rather than viewing retaining key employees as just an HR issue, you see that there are broader ramifications in leadership, strategic planning, and the way that you reward and recognize people. Junaid: One of the key things is the business results section. It's important to ensure that organizations are achieving the results they set out to achieve. So, if a university states that a goal is to measure the effectiveness of learning amongst its existing students, and then in the business results section they discuss how they grew enrollment, a linkage is missing. The linkages are important to a successful assessment. Kay: There has long been a misconception about Baldrige being more of a "soft award," but if you look at how the points are awarded in the application process, 450 out of 1,000 points are for results. So if anybody thinks that Baldrige is about the softer side of quality, they don't understand it. You can't win if you don't achieve. Q: Is it costly to undertake an assessment? Kay: It depends on the applicant's category, but the application fee is minimal. For a non-profit in education it's $500 and goes up to $5,000 for profit-based companies. If you garner enough points in Stage 1 (written application) to qualify for Stage 2 (site visit), the foundation offsets some of those costs, but you pay for the travel expenses of the examiners which ranges from $10,000 to $35,000. It has often been referred to as the lowest-priced, highest-value consulting an organization can ever have. Junaid: The primary cost for an organization is in the time to do the application properly. $5,000 equates to one executive business trip to Europe for a week, so it's almost negligible. Kay: I agree, and the organizations I've worked with who perceived the process as too costly were mostly concerned about it being hard work and uncomfortable. Dr. David Strong, a retired president from two Boeing divisions who were Baldrige Award recipients under his leadership, tells executives that the process is humbling. He likens it to a healthcare checkup where you check your weight and overall fitness but have to dig deeper to find silent conditions. His point is that you can't just casually look at your organization to get a true picture of reality. He also says that the further up you are in the organization, the more difficult it is for you to get candid feedback on the health of the organization. Junaid: Many times examiners uncover gaps or inconsistencies in organizational strategy. Having those uncovered early is far less costly than figuring it out once you have customer defections, market capitalization declines, and even brand equity problems. Q: Are there other reasons why a healthy company would spend the time, money or effort to apply? Junaid: I'm evaluating one organization now that's on its fifth application attempt. They describe how they've gotten better since the first attempt, and it's impressive to see the gains they've made in such a short amount of time. While I would describe them as "healthy," there is no perfect company. This is their opportunity to get a continuous review. Every year different examiners find new things. Kay: If companies are using the Baldrige framework as a way to improve rather than just get an award, they won't see the same problems repeatedly because, as they mature, examiners will recognize what they've done and help them get to the next level. The National Institute of Standards and Technology (NIST) publishes Issue Sheets which include success examples for CEOs and Baldrige findings on what characteristics make award recipients top achievers. Q: How do those companies that have done well compare to those who don't? Kay: Successful companies are relentless about who they are and what they do, and they understand themselves extremely well. That doesn't mean they can't shift as markets shift, but if they are in the business of healthcare, they know they're all about making people healthier. Successful companies are constantly comparing themselves to others and challenging themselves to get better. Q: What do you get if you win the award — either directly or indirectly? Kay: You get a huge amount of attention from other people who are on the journey, because they want to see what you're doing, what you know, what your best practices are. When you apply you agree to share best practices, excluding anything proprietary. Junaid: Winning raises the eyebrows of every customer and potential customer. You get a lot of media coverage and everyone wants to know the secret to your success. All of a sudden your products and services get exposure that they would never have had prior to winning. Kay: There are examples where previous recipients have come back to win the award a second time. They do this because they want to continue challenging themselves and facing that scrutiny.
There is a yearly conference in April called the Quest for Excellence that showcases award recipients. I've been a few times, and recipients are very candid about what they've learned and how they've succeeded in their quality journey. So even if an organization isn't interested in applying, there is much to be learned at this conference given the caliber of people in attendance. About Kay Kendall About Junaid Mohiuddin | |||||||
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Winners are presented with a 24-pound Steuben crystal trophy by the President of the United States. They also get to use the Malcolm Baldrige emblem on their letterheads and business cards, which gives them a lot of credibility.