:The Malcolm Baldridge National Quality Award. Paula K. Reynolds: University of Indianapolis McLaughlin Indianapolis, IN (317)

Size: px

Start display at page:

Download ":The Malcolm Baldridge National Quality Award. Paula K. Reynolds: University of Indianapolis McLaughlin Indianapolis, IN (317)"

Stephanie Whitehead
6 years ago
Views:

Reynolds is a part-time undergraduate student in Business

1 ~ :The Malcolm Baldridge National Quality Award Paula K. Reynolds: University of Indianapolis Paula K. Reynolds is a part-time undergraduate student in Business Administration at : the University of Indianapolis, Indiana McLaughlin Indianapolis, IN (317)

2 The Malcolm Baldridge National Quality Award In today's global economy, quality goods and services provided by American companies are no longer a choice--it is a matter of survival. In 1987, Congress enacted legislation to recognize quality achievement in individual companies, in order to share successful quality strategies and to promote quality awareness among the nation's :businesses. The Malcolm Baldridge National Quality Award is much more than a contest, it is a tool for recognizing excellence, and a means for companies to be aware of quality as a competitive device.

3 The Malcolm Baldridge National Quality Award is an annual award used to recognize companies for business excellence and quality achievement. "The Award promotes awareness of quality as a vital competitive element; understanding of quality :and excellence requirements, and sharing of quality strategies and benefits from their implementation" (10, p.18) HISTORY LEADING TO THE CREATION OF THE BALDRIIDGE AWARD The U.S. economy dominated the post-world War II era, and the demand for u.s. consumer products grew rapidly during the and For a while, American products set the standards for quality, but businesses were preoccupied with efficiency and price rather than effectiveness and value. An appetite for consumer products led to a mind-set that emphasized productivity at the expense of quality As the quality of goods made in America declined, consumers lost confidence in American products and began spending their dollars on foreign goods. By the U.S. manufacturing growth slowed dramatically while our trading :panners, panicularly Japan and other Pacific Rim nations, made strong gains. Many u.s. plants shut down and workers were laid off. The U.S. slipped into a deep recession, and congressional offices were flooded with demands for trade protection, Executives from U.S. Companies began touring foreign factories, especially in :Japan, and found defect levels were much lower than those in the U.S This superior :quality was being achieved on the production line rather than through extensive testing and rework. In fact, most executives found that the Japanese plants had no final :inspection or rework areas at all. 3

4 Various groups of industry and government leaders began looking at the seriousness of America's declining dominance in the global marketplace. Concerned executives formed the National Advisory Council for Quality (NACQ) in Another igroup formed the American Productivity Center, now the American Productivity and :Quality Center (APQC), and sponsored productivity and quality conferences whose outcome was a recommendation to establish a national quality award similar to Japan's Deming Prize. As the push for the award matured, so did the general consensus that it should focus on comprehensive quality management. In January 1985 John Hudiburg, Chairman and CEO of Florida Power & Light :approached Congressman Don Fuqua (D-Florida) to develop legislation for the award. A bill was introduced in 1986 but did not pass that year although support for the legislation grew. The bill was reintroduced in 1987 and was passed by the House of Representatives in June of that year. In July of that same year the Secretary of Commerce, Malcolm Baldridge, was killed in a rodeo accident. Since Mr. Baldridge had been a supporter of the award as a way to improve the U.S.'s competitive edge, the ':award was renamed in his honor. This action accelerated the bill's passage in the Senate, and President Reagan signed it into law on August 20, :4

5 classifications. WHO IS ELIGIBLE TO APPLY? Any U.S. for-profit company may compete under one of the following three Manufacturing companies Services companies Small businesses with fewer than 500 full-time employees WHO PICKS THE WINNERS? There are four groups that play key roles in determining the winners. The National Institute of Standards and Technology (NIST), an agency of the Department of :Commerce, is assisted by the American Society for Quality Control (ASQC) and is :!esponsible for managing the review and decision process. There is a Board of Overseers which evaluates the award's criteria and processes and suggests changes to the Secretary of Commerce and the director of NIST. Finally, there is a Board of Examiners that evaluates applications, prepares feedback, and makes recommendations to the director of NIST. THE AWARD PROCESS Each applicant must submit documents describing their activities in seven key performance areas. The size of the application is limited to 75 pages for manufacturing :and service companies and to 50 pages for small businesses. Once the application is submitted it goes through a four-step process. 1 Each applicant is assigned to a team of examiners who read the :application and submits his or her score to a senior examiner who develops a consensus score. Each examiner will create a list of strengths, :5.

6 areas for improvement, and site visit issues. If a firm scores low, the senior examiner will provide a feedback report that lists the areas of :strengths and areas for improvements, and advise them that they have been eliminated from further consideration 2. The Board of Examiners reviews the applicants that made it past the first step and determines which applicants warrant a site visit. 3. A group of four to six people including examiners, a senior examiner, and :a NIST observer will inspect facilities that made it past step two. The purpose of the site visit is not to collect additional information but to clarify, verify, and investigate. This inspection usually lasts three to five days and :the group interviews employees and verifies information submitted on the :application 4 A group of judges makes the final award decisions. Those who do not win are provided feedback and are notified by NIST. The Secretary of :Commerce telephones the winners. QUALITY EXCELLENCE REQUIREMENTS "The Baldridge Award has become the U.S. standard of excellence for total quality management. Baldridge winners deliver goods and services that are competitive with the best in the world. They attain this status by successfully applying TOM principles to every aspect of their business. The following essentials for total quality are embodied in the Baldridge criteria: 6:

7 Customers define quality. Senior corporate leadership must create clear quality values and build them into company operations. Excellent quality evolves from well-designed and well-executed systems and processes. Continuous improvement must be integrated into the management of all systems and processes. Companies must develop goals and strategic and operational plans to achieve quality leadership. Shortened response time for all operations and processes must be part of quality improvement efforts. Operations and decisions of the company must be based on facts. All Employees must be appropriately trained, developed, and involved in quality improvement activities. Design quality and error prevention must be key elements of quality systems. Companies must communicate quality requirements to suppliers and work to elevate their performance" (10, pp ). AWARD CRITERIA FRAMEWORK The excellence requirements described above are grouped into seven examination categories that comprise the major components of the Baldridge :application. They are broken down into examination categories, examination items, and areas to address. Each are briefly described below. 7.

8 :Examination Categories The major components of the total quality management system are contained in the Award's seven examination categories that include: "Leadership-Have the senior leaders clearly defined the company's quality values, goals, and ways to achieve the goals. Are senior executives personally involved? Does this involvement include communicating quality excellence to groups outside the company? Information and Analysis-Is the information used to guide the company's quality management system reliable, timely, and accessible? Strategic Planning-How does the company plan to strengthen its competitive position? How are these plans integrated into its overall business planning? Human Resource Focus-How does the company develop the full potential of its work force? Process Management-How are products and services designed? How are product and service production and delivery processes managed? How does the company assure that suppliers meet its performance requirements? Business Results-How is the company performing in key business areas, and what are its plans for improving Customer Focus and Satisfaction-Is quality defined by the customer?"(1). The total value of these categories is 1,000 points. and each category carries a different weight according to their importance in a total quality management system. :8.

9 :Examination Items Under each of the seven examination categories there are at least two or more examination items that deal with key quality components. Applicants provide written responses to these key items and describe their practices within each specific area. Areas to Address Areas to address describe the intent of the examination items. They provide specific information on the requirements in each examination item. There are between two and six areas to address for each examination item. DOES THE BALDRIDGE GET RESULTS? Between February and April 1998, the Foundation for the Malcolm Baldridge; National Quality Award commissioned a survey of 308 CEO's in the country. Two of the questions asked if they felt the Baldridge criteria and award stimulated improvement in quality and improvement in competitiveness in U.S. businesses. "Significant majorities :of the CEOs believe that the Baldridge criteria and award are extremely or very valuable in stimulating both improvements in quality in U.S. companies (79%) and improvements in the competitiveness of U.S. Businesses (67%) (7); however, there are those who :would disagree. Critics claim that the benefits have been exaggerated and that the Baldridge has done less for industry and U.S. businesses than its supporters would :have us believe. Philip Crosby, author and quality guru, is one who questions the Award's values. :"I'm not a critic of the government giving an award. I'm a critic of being self-nominated and offering a criteria which gives the impression that compliance with it will produce an :organization that does things right" (6). 9

11 Many organizations believe that the application process itself is beneficial experts. There are others, however, who feel that because the feedback isn't prescriptive, the application process and related costs are not worth it because they :,don't know what actions to take to improve. Bruce W. Woolpert, President and CEO of are viewing it through experienced eyes in their given industry. whether you are a ::'arge or a small company, you cannot get someone from AT&T, for example, to visit your company and tell you what they see from their experienced eyes. But you can get :this type of advice by applying for the Baldridge Award. You will benefit from these other people's experiences" (11, P 19. There are no guarantees that the Baldridge award or any other quality awards :will bring success, but Baldridge winners have shown improvement in all aspects of theirs business. CONCLUSION Competing for the Malcolm Baldridge National Quality Award is not an easy task. :It requires a large investment of time and money, and most that apply do not win on their first application. Furthermore, the Award and its criteria have proven to be both interesting and controversial. There are some that question the Award's real value, but \its self-assessment process continues to earn respect among businesses in the U.S. One thing is certain, since the award was established in 1987, the program has helped :make quality a national priority. I I

12 REFERENCES (1) American Society for Quality. Who was Malcolm Baldridge and Why Did they Name :(2) Haavard, Robert, and the editors of Electronic Business. The Road to the Baldridge Award. Boston: Butterworth-Heinemann, {3) Hart, Chistopher W. L., Christopher E. Bogan. The Baldridge. New York: McGraw-Hili, Inc., :(4) Hodgetts, Richard M. Blueprints for Continuous Improvement. New York: AMA Membership Publications Division, Future. Quality Digest. November Apr < Off Page. November Apr < qual ityd ige5t. com/nov98/htm I/tq m. html> (7) National Institute of Standards and Technology. The Nation's CEOs Look to the Future, Study No July Apr < (8) Porter, Les, Steve Tanner. Assessing Business Excellence. Oxford: Butterworth-Heinemann, 1998 (9) Reimann, Curt W. "The Purposes and Processes of the Baldridge Award", Lessons Taught by Baldridge Winners, Report No CH, :

13 \(10) Steeples, Marion Mills. The Corporate Guide to the Malcolm Baldridge NationalQuality Award. Milwaukee: ASQC Quality Press, (11) Woolper1, Bruce W. "Going Beyond Financial Measurements", Lessons Taught by Baldridge Winners, Report No CH, 1994, 13

Malcom Baldrige Award IE 361 Fall 2002

Christina Boehme Molly McNertney Lacey Rathe Laura Sackmann Malcom Baldrige Award IE 361 Fall 2002 Prior to the inception of the Malcolm Baldrige Award in 1987, the state of American business and the quality