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The Journey Toward Performance Excellence

Posted by Greg Jacobson

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Mar 15, 2019, 7:11:00 AM

Conceptual image of asphalt road and direction arrowThe urgency to improve organizational performance is at an all-time high. Today’s customers expect more value for every dollar, knowledgeable employees are difficult to find and retain, competition is fierce, technology and data grow increasingly complex, and business models evolve ever more quickly. Given all of that and the complexity of modern organizations, a scatter-shot approach to improvement is not enough. Organizations need a systematic approach to incremental change that will drive them toward the ultimate goal of performance excellence.

The Baldrige Framework, which was developed in 1987 as a public-private partnership to be managed by the Department of Commerce, specifically the National Bureau of Standards (now called the National Institute of Standards and Technology – or NIST), provides a structure that organizations can use to diagnose weaknesses and set priorities for improvement. The approach has been proven to help organizations transform with respect to customer satisfaction, employee engagement, leadership effectiveness, resource optimization, and ultimately performance excellence.

 

 

The History of the Baldrige Framework for Performance Excellence

The period following World War II was a productive and economically lucrative one for American manufacturers. The public appetite for products like TVs, cars, and home appliances was strong, and factories were operating at near peak capacity. Between 1950 and 1975 America experienced one of its longest eras of economic expansion. The more stuff businesses made, the more people bought, so quality and customer value became something of an afterthought.

Meanwhile, W. Edwards Deming, considered the father of the modern quality movement, took his talents, which were mostly unappreciated in the US, to Japan. There he helped organizations improve processes, reduce defects, and focus on what workers and customers value. Organizations like Toyota, Sony, and others became competitive and started gaining market share that had previously been enjoyed by American firms.

By the time the 1980s rolled around, the American economy was in trouble. The unemployment rate and interest rates skyrocketed. Several factors contributed to these conditions, including a savings and loan collapse, but America’s lack of attention to manufacturing quality products that customers wanted undoubtedly played a role as well.

Realizing that change was needed, public and private sector leaders started to develop a plan to show US companies the way to Japanese-style operational excellence. In 1987, Congress passed legislation creating the Malcolm Baldrige National Quality Award. (The law was named after Secretary of Commerce Malcolm Baldrige who died during his term in office after falling off a horse in a rodeo accident.) The program is managed by the National Bureau of Standards and Technology within the Department of Commerce. The first goal of the program was to recognize organizations that demonstrated outstanding quality and performance excellence. The second and more important objective was to highlight best practices and principles of performance excellence that lead to better results.

The Baldrige Framework has become the standard definition of performance excellence across the globe. Almost 100 countries have similar models and award programs, all based on the Baldrige Framework. Thousands of organizations are using it in the US across all sectors including healthcare system, professional service organizations, nonprofits, educational institutions, government agencies, and, of course, manufacturing. The industry doesn’t matter to the model because the principles of quality apply to processes of any type.

[WEBINAR] Engaging Leaders and the Baldrige Framework to Advance Excellence

 

Close up of hands connecting puzzle element and making jigsaw completeCore Values and Principles

The Baldrige model defines performance excellence as, “An integrated approach to organizational performance management that results in (1) delivery of ever-improving value to customers and stakeholders, contributing to ongoing organizational success; (2) improvement of your organization’s overall effectiveness and capabilities; and (3) learning for the organization and for people in the workforce.

The seven criteria for performance excellence rely on a set of values and principles. These ideas form the basis for bringing together the fundamental requirements necessary for a results-oriented framework. They represent behaviors that are found in organizations with quality-first cultures and high-performance results. The following descriptions are adapted from the Baldrige Excellence Framework 2018.

Systems Perspective

The organization should be managed as a unified whole with all components working in sync to achieve customer value and quality.


Visionary Leadership

Leaders operate as role models and set the mission, vision, and values of the organization. They must demonstrate those values, focus on the customer, and set high expectations for the workforce. Leaders practice strategy deployment and create the systems and methods necessary to accomplish the organization’s key objectives.

Customer-focused Excellence

The ultimate judge of an organization’s performance and quality is the customer. A customer-focused organization understands and improves the entire customer experience. It delivers more than the baseline requirements, offering unique features and value that differentiates it from competitors.

Valuing People

Valuing people means committing to provide the best possible outcomes for customers, community members, employees, shareholders, and any other groups that are impacted by the organization’s actions. Success is dependent on an engaged workforce that enjoys meaningful work, clear direction, personal growth opportunities, and accountability.

Organizational Learning and Agility

Performance excellence depends on an organization’s ability to adapt to changing conditions and continually learn. Operations must be flexible, with managed change and mitigated risk. Learning and agility apply to both incremental improvement of existing processes and breakthrough innovation that leads to new market opportunities. Learning must be built-in to organizational operations.

Focus on Success

Leaders should be focused on success today and into the future with a sharp understanding of both short and long-term factors that will impact the organization and market. This means developing a strong future orientation and the will to make investments that don’t pay off immediately but lead to success in the future.

Managing for Innovation

Innovation certainly applies to significant changes to an organization’s products and services that create new value for customers and other stakeholders. It applies equally to the daily task of improving the organization’s processes, operations, and work systems.

Management by Fact

Management by fact happens when decisions are made based on essential data about outputs, results, outcomes, processes, competitors, and the industry. What get measured is derived from the strategy and organizational needs.

Social Responsibility

Social responsibility means that leaders support the environmental, social, and economic systems within the organization’s sphere of influence. Organizations demonstrating performance excellent see meeting all local, state, and federal laws and other regulatory requirements as only the baseline and recognize the opportunity to excel beyond minimal compliance.

Ethics and Transparency

Leaders should demand highly ethical behavior from every member of the organization and monitor stakeholder transactions and interactions to ensure that it is achieved. They serve as role models of ethics and transparency and ensure that expectations are explicit. Transparency requires consistent and honest communications on the part of all leaders and managers. When an organization is ethical and transparent, trust builds among all stakeholders.

Delivering Value and Results

Value must be produced and balanced across all stakeholders. There are often conflicting goals and priorities, but the strategy should include ways to provide value and meet stakeholder requirements. Performance metrics are focused on critical results with a mix of financial, process, quality, customer satisfaction, workforce engagement, and social impact.

[WEBINAR] Engaging Leaders and the Baldrige Framework to Advance Excellence

The Categories for the Performance Excellence Framework

Baldridge FrameworkThe Baldrige model consists of seven categories. These categories define an organization’s processes and the results it achieves. All of the elements are interrelated, and excellence is demonstrated through outstanding results.

The questions included in the Baldrige Criteria for Performance Excellence change every couple of years as the organization studies and understanding what high performing organizations are doing to achieve amazing results. They verify those practices and then including them in updated versions of the Criteria. That’s why the Baldrige Framework has become what’s now considered the “leading edge of validated management practice.” The Criteria form a set of best practices against which any organization can gauge their performance, find weaknesses, maximize resources, see rapid improvement and sustain results. The Framework is useful because it’s not a guess or theory, but instead an evidence-based system that has been proven to truly drive outcomes.

Category 1: Leadership

The Leadership category asks how senior leaders’ actions guide and sustain the organization. It addresses the organization’s governance system and how it fulfills its legal, ethical, and societal responsibilities.

Questions include:

  • How do your senior leaders lead the organization?
  • How do you govern your organization and fulfill your societal responsibilities?

Category 2: Strategy

The Strategy category covers how the organization crafts strategic objectives and action plans, implements them, revises them when needed, and measures progress.

Questions include:

  • How do you develop your strategy?
  • How do you implement your strategy?

Category 3: Customers

The Customers category deals with how an organization engages its customers for long-term marketplace success, including how it organization listens to the voice of the customer, serves and exceeds customers’ expectations, and builds customer relationships.

Questions include:

  • How do you obtain information from your customers?
  • How do you engage customers by serving their needs and building relationships?

Category 4: Measurement, Analysis, and Knowledge Management

The Measurement, Analysis, and Knowledge Management category asks how the organization selects, gathers, analyzes, manages, and improves its data, information, and knowledge assets; how it uses these findings to improve its performance; and how it learns.

Questions include:

  • How do you measure, analyze, and then improve organizational performance?
  • How do you manage your information and your organizational knowledge assets?


Category 5: Workforce

The Workforce category is about how the organization assesses workforce capability and capacity needs and builds a workforce environment conducive to performance excellence. The category also deals with how the organization engages, manages, and develops its workforce to utilize its full potential in alignment with the organization’s overall needs.

Questions include:

  • How do you build an effective and supportive workforce environment?
  • How do you engage your workforce to achieve a high-performance work environment?

Category 6: Operations

The Operations category addresses how the organization designs, manages, improves, and innovates its products and work processes and improves operational effectiveness to deliver customer value and achieve ongoing organizational success.

Questions include:

  • How do you design, manage, and improve your key products and work processes
  • How do you ensure effective management of your operations?

Category 7: Results

The Results category asks about the organization’s performance and improvement in all critical areas — product and process results, customer results, workforce results, leadership and governance results, and financial and market results. The category asks about performance levels relative to those of competitors and other organizations with similar product offerings.

Questions include:

  • What are your product performance and process effectiveness results?
  • What are your customer-focused performance results?
  • What are your workforce-focused performance results?
  • What are your senior leadership and governance results?
  • What are your results for financial viability?

 

Business person on a graph, representing success and growthUsing the Baldrige Framework to Achieve Performance Excellence

The Baldrige framework doesn’t tell leaders how to run their organizations. It is intentionally non-prescriptive. That’s why it applies to all sorts of organizations even if they have different strategic challenges, different operating environments, and different goals. The Framework doesn’t say that an organization must use a business management model like Lean or Six Sigma to achieve performance excellence. Of course, those approaches are useful to many organizations, but other tools and techniques can help deliver results as well.

Most organizations get value from the Baldrige Framework by accessing their current practices against the Criteria for Performance Excellence. The Framework becomes a benchmark against which organizations can gauge their own operations. The assessment usually begins by appointing a “champion” for each Category and then assembling Category teams to answer all of the related questions. The NIST provides tools to help including a Self-Analysis Worksheet.

The Baldrige Framework is a valuable tool for driving organizations toward excellence. By knowing where your organization sits regarding each of the Categories and internalizing the principles of excellence, you’ll find opportunities for improvement and growth. Organizations that embrace the criteria for performance excellence and incorporate them into their operational practices can expect to achieve results superior to their competitors.

Topics: Improvement Process, Improvement Methodology, Operational Excellence

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