1. 2 3 U.S. national quality award –Leadership –Strategic planning –Customer and market focus...

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Malcolm Baldrige

NationalQuality

Award

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• U.S. national quality award

– Leadership

– Strategic planning

– Customer and market focus

– Measurement, analysis, and knowledge mgt

– Human resource focus

– Process management

– Business results

• Formed to bolster U.S. competitiveness

• U.S. president grants awards each year

NIST. (2005e). The malcolm baldrige national quality improvement act of 1987: Public law 100-107. Retrieved June 10, 2005, from http://baldrige.nist.gov/Improvement_Act.htmNIST. (2005f). Frequently asked questions about the malcolm baldrige national quality award. Retrieved June 10, 2005, from http://www.nist.gov/public_affairs/factsheet/baldfaqs.htm

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1Leadership

2StrategicPlanning

3Customer

and MarketFocus

5Human

ResourceFocus

6Process

Management

7BusinessResults

Organizational Profile:Environment, Relationships, and Challenges

Measurement, Analysis, and K nowledge Management4

NIST. (2005b). Baldrige national quality program: 2005 criteria for performance excellence. Gaithersburg, MD: Author.

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• LEADERSHIP (120)

– Senior Leadership (70)– Governance and Social Responsibilities (50)

• STRATEGIC PLANNING (85)– Strategy Development (40)– Strategy Deployment (45)

• CUSTOMER AND MARKET FOCUS (85)– Customer and Market Knowledge (40)– Customer Relationships and Satisfaction (45)

• MEASUREMENT, ANALYSIS, AND KNOWLEDGE MANAGEMENT (90)– Measurement, Analysis, and Review of Organizational Performance (45)– Information and Knowledge Management (45)

• HUMAN RESOURCE FOCUS (85)– Work Systems (35)– Employee Learning and Motivation (25)– Employee Well-Being and Satisfaction (25)

• PROCESS MANAGEMENT (85)– Value Creation Processes (45)– Support Processes and Operational Planning (40)

• BUSINESS RESULTS (450)– Product and Service Outcomes (100)– Customer-Focused Results (70)– Financial and Market Results (70)– Human Resource Results (70)– Organizational Effectiveness Results (70)– Leadership and Social Responsibility Results (70)

NIST. (2005b). Baldrige national quality program: 2005 criteria for performance excellence. Gaithersburg, MD: Author.

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Receive Applications

Independent Review

Select J udges for Consensus Review

Consensus Review

Select J udges for Site Visit

Site Visit Review

Review & Recommend Winners

NIST. (2005d). Overview of award process. Retrieved June 13, 2005, from http://baldrige.nist.gov/Overview.htm

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NIST. (2005a). 1988-2004 award recipients' contacts and profiles. Retrieved June 10, 2005, from http://baldrige.nist.gov/Contacts_Profiles.htm

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-4

-2

0

2

4

6

8

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year

Bal

drig

e W

inne

rs v

s. S

&P

500

NIST. (2003c). Baldrige stock studies. Retrieved June 13, 2005, from http://baldrige.nist.gov/Stock_Studies.htm

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Category Measure Better Worse Same

Employee Satisfaction 89% 11% 0%Attendance 73% 0% 27%Turnover 64% 27% 9%Safety/Health 79% 21% 0%Suggestions Received 71% 29% 0%Reliability 100% 0% 0%Timeliness 50% 44% 6%Processing Time 50% 50% 0%Errors/Defects 53% 47% 0%Lead Time 54% 46% 0%Inventory Turnover 56% 38% 6%Cost of Quality 50% 50% 0%Cost Savings 50% 50% 0%Overall Satisfaction 86% 0% 14%Customer Complaints 50% 42% 8%Customer Retention 63% 25% 13%Market Share 82% 18% 0%Sales per Employee 50% 50% 0%Return on Assets 50% 39% 11%Return on Sales 80% 20% 0%

Employee

Customer Satisfaction

Operating

Financial Performance

Mendelowitz, A. I. (1991). Management practices: U.S. companies improve performance through quality efforts (GAO/NSIAD-91-190). Washington, DC: General Accounting Office (GAO).

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• Goal is to test the theory and causal performance linkages of Baldrige

• Objectives– Develop a measurement model, scales,

and constructs to model Baldrige criteria– Test the general theory that leadership

drives the system that creates results– Provide insight into the directions of

causation among the Baldrige categories

Wilson, D. D., & Collier, D. A. (2000). An empirical investigation of the malcolm baldrige national quality award causal model. Decision Sciences. 31(2), 361-390.

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• Baldrige model contradicts itself– Leadership impact should be recursive– Double-headed arrows imply otherwise– NIST does not understand relationships– Everything is related to everything else

• Recursive causal model must exist– Leadership must cause others to improve– Systems thinking or systems dynamics– Categories related in recursive model– Sign of path coefficients must be positive


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1Leadership

2StrategicPlanning

3Customer

and MarketFocus

- or -

7BusinessResults

5Human

ResourceFocus

6Process

Management

4Measurement,Analysis, and

K nowledge Mgt

SY STEM

H3

H4

H5

H6

H1

H2

H15

H16

H17

H9 H10

H11 H12

H7 H8

H13 H14


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• H1 - H6 — LEADERSHIP PREDICTS

– Business results– Customer and market focus– Process management– Human resource focus– Strategic planning– Measurement, analysis, and knowledge management

• H7 - H8 — PROCESS MANAGEMENT PREDICTS– Customer and market focus– Business results

• H9 - H10 — HUMAN RESOURCE FOCUS PREDICTS– Customer and market focus– Business results

• H11 - H12 — STRATEGIC PLANNING PREDICTS– Customer and market focus– Business results

• H13 - H14 — MEASUREMENT, ANALYSIS, AND KNOWLEDGE MGT PREDICTS– Customer and market focus– Business results

• H15 - H17 — MEASUREMENT, ANALYSIS, AND KNOWLEDGE MGT PREDICTS– Process management– Human resource focus– Strategic planning


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• Quantitative research methodology

• 101-item survey instrument

• Instrument validated via Delphi

• Two-phase survey– Pilot survey: 128 firms (29.7% response)– Final survey: 800 firms (28.3% response)

• Survey calibrated using pilot results

• Two-tailed hypothesis testing


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1Leadership

2StrategicPlanning

5Human

ResourceFocus

6Process

Management

4Measurement,Analysis, and

K nowledge Mgt

H3 = 0.229

H1

H2

H6 = 0.728

H5 = 0.295

H4 = 0.379

H15 = 0.160

H16 = 0.187

H17 = 0.556

H7 = 0.455

H8 = 0.193

H13 = 0.267

H14 = 0.245

H9 H10

H11 H12

3Customer

and MarketFocus

- or -

7BusinessResults

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• Baldrige theory fundamentally sound

– Leadership drives the system

• However, causal relationships exist– Baldrige is not recursive, but it should be

• Leadership “not” directly related to– Customer and market focus– Business results

• Human resource focus and strategic planning “not” directly related to– Customer and market focus– Business results


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• Strengths– Top-notch, scholarly peer reviewed article– Grounded in a strong literature review– Solid quantitative research methodology– Internal and external reliability/validity

• Weaknesses– Bibliography of economic studies is weak– Plant-level managers surveyed, not execs– Did not investigate causal links to firm-

level economic performance

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• Good example of quantitative

decision making• Shows managers how to develop

valid decision analysis models• Clears up some ambiguity associated

with Baldrige• Validates strategic importance of

leadership in business improvement• Lends scholarly credence to the

Baldrige award itself

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• Bell, R. R., & Elkins, S. A. (2004). A balanced scorecard for leaders: Implications of the malcolm baldrige national

quality award criteria. SAM Advanced Management Journal, 69(1), 12-17.

• Bell, R., & Keys, B. (1998). A conversation with curt w. reimann on the background and future of the baldrige award. Organizational Dynamics, 26(4), 51-61.

• Chong, P. S., Calingo, L. M. R., Reynolds, G. L., & Fisher, D. G. (2003). Using an innovative approach to shorten coaching and assessment time when applying the baldrige health care criteria for performance excellence in a substance abuse treatment setting. Total Quality Management & Business Excellence, 14(10), 1121-1129.

• Curkovic, S., Melnyk, S., Calantone, R., & Handfield, R. (2000). Validating the malcolm baldrige national quality award framework through structural equation modelling. International Journal of Production Research, 38(4), 765-791.

• Garvin, D. A. (1991). How the baldridge award really works. Harvard Business Review, 69(6), 80-93.

• Hill, R. C. (1993). When the going gets rough: A Baldrige Award winner on the line. The Academy of Management Executive. 7(3), 75-79.

• Hodgetts, R. M., Kuratko, D. F., & Hornsby, J. S. (1999). Quality implementation in small business: Perspectives from the baldrige award winners. SAM Advanced Management Journal, 64(1), 37-47.

• Lee, S. M., Rho, B. H., & Lee, S. G. (2003). Impact of malcolm baldrige national quality award criteria on organizational quality performance. International Journal of Production Research, 41(9), 2003-2020.

• Link, A. N., & Scott, J. T. (2001). Economic evaluation of the baldrige national quality program (Planning Report 01-3). Gaithersburg, MD: National Insitute of Standards & Technology (NIST).

• Przasnyski, Z. H., & Tai, L. S. (1999). Stock market reaction to malcolm baldridge national quality award announcements: Does quality pay? Total Quality Management, 10(3), 391-400.

• Przasnyski, Z. H., & Tai, L. S. (2002). Stock performance of malcolm baldrige national quality award winning companies. Total Quality Management, 13(4), 475-488.

• Rajan, M., & Tamimi, N. (1999). Baldrige award winners: The payoff to quality. Journal of Investing, 8(4), 39-42.

• Shetty, Y. K. (1993). The quest for quality excellence: Lessons from the malcolm baldridge quality award. SAM Advanced Management Journal, 58(2), 34-40.

• Wilson, J. P., Walsh, M. A. T., & LaScola-Needy, K. (2003). An examination of the economic benefits of ISO 9000 and the baldrige award to manufacturing firms. Engineering Management Journal, 15(4), 3-10.

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• Kan, S. H. (1991). Modeling and software development quality. IBM Systems

Journal, 30(3), 351-362.

• Kan, S. H. (2002). Metrics and models in software quality engineering. Reading, MA: Addison Wesley.

• Kan, S. H., Basili, V. R., & Shapiro, L. N. (1994). Software quality: An overview from the perspective of total quality management. IBM Systems Journal, 33(1), 4-19.

• Kan, S. H., Dull, S. D., Amundson, D. N., Lindner, R. J., & Hedger, R. J. (1994). AS/400 software quality management. IBM Systems Journal, 33(1), 62-88.

• Kan, S. H., Parrish, J., & Manlove, D. (2001). In-process metrics for software testing. IBM Systems Journal, 40(1), 220-241.

• Kekre, S., Krishnan, M. S., & Srinivasan, K. (1995). Drivers of customer satisfaction for software products: Implications for design. Management Science, 41(9), 1456-1470.

• Pine, B. J. (1989). Design, test, and validation of the application system/400 through early user involvement. IBM System Journal, 28(3), 376-385.

• Sulack, R. A., Lindner, R. J., & Dietz, D. N. (1989). A new development rhythm for AS/400 software. IBM Systems Journal, 28(3), 386-406.

• Tang, V., & Collar, E. (1992). IBM AS/400 new product launch process ensures satisfaction. Long Range Planning, 25(1), 22-27.

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• Are Baldrige and Six Sigma related?

• Does Baldrige address innovation?

• Should Baldrige address globalization?

• Does Baldrige bolster competitiveness?

• Is Baldrige specific to U.S. culture?

• Is Baldrige too broad and diluted?

• What are the costs/benefits of Baldrige?

• Does Baldrige encourage competition based on cost and quality vs. Michael Porter’s strategic positioning?

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