:The Malcolm Baldridge National Quality Award Paula K ...pages.uindy.edu/~lgardner/reynolds.pdf · The Malcolm Baldridge National Quality Award is an annual award used to recognize

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: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.

3345 McLaughlinIndianapolis, IN 46227

(317) 865-3503

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.

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 19505 and 19605. 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 19805 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.

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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 1982. 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, 1987.

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WHO IS ELIGIBLE TO APPLY?

Any U.S. for-profit company may compete under one of the following three

classifications.

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,

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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:

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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. 21-22).

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.

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: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

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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.

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: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).

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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.

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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, 1992.

{3) Hart, Chistopher W. L., Christopher E. Bogan. The Baldridge. New York:

McGraw-Hili, Inc., 1992.

:(4) Hodgetts, Richard M. Blueprints for Continuous Improvement. New York:

AMA Membership Publications Division, 1993.

Future. Quality Digest. November 1998. 17 Apr. 1999.

<http://www.qualitydigest.com/nov98/html/cover.htm/>

Off Page. November 1998. 17 Apr. 1999.

< http://www. 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. 818407. July 1998. 17 Apr. 1999

<http:///wwwquality.nist.gov/ceo-rpt.htm>:

(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. 1061-94-CH, 1994.

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\(10) Steeples, Marion Mills. The Corporate Guide to the Malcolm Baldridge

NationalQuality Award. Milwaukee: ASQC Quality Press, 1993.

(11) Woolper1, Bruce W. "Going Beyond Financial Measurements",

Lessons Taught by Baldridge Winners, Report No.1 061-94-CH, 1994,

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