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NIST  |  03/27/2012

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Baldrige’s Transition to a Sustainable, Enterprise Model

National quality program is transitioning away from federal funding

(NIST: Gaithersburg, MD) -- A self-sustaining business model based on income generation, and supplemented with support from the Foundation for the Malcolm Baldrige National Quality Award and other nonoperating income, is the new environment for the Baldrige Performance Excellence Program, which is transitioning away from federal funding through an appropriation to the National Institute of Standards and Technology (NIST). The model focuses on expanding markets, strategic partners, and customer relationships, with the goal of long-term sustainability and growth for the entire Baldrige Enterprise: the Foundation, the Alliance for Performance Excellence (35-plus state, local, regional, and sector-specific Baldrige-based programs serving nearly all 50 states), and ASQ.

New products and services will generate income and grow the customer base for the Baldrige Program and Enterprise. These services include training offerings, such as Baldrige training for international quality experts and others from organizations interested in the in-depth training currently offered to national Baldrige examiners. In addition, assessment services, such as a fee-based alternative assessment now under development, will provide the high quality of the Baldrige Award process but without the award competition; organizations that are not currently eligible for a Baldrige Award, such as recent recipients, are potential customers.

Another key Baldrige service is executive development through the Baldrige Executive Fellows Program. A second class for this program will begin in April 2012. The Fellows form relationships with and learn from Baldrige Award recipients and their senior executives, as well as from each other. At face-to-face sessions, the executives explore how leadership issues relate to the categories of the Criteria for Performance Excellence. The second class includes executives from the American College of Healthcare Executives, Ohio National Guard Bureau, John Deere Financial, Hewlett-Packard, The Johns Hopkins University School of Medicine, Lockheed Martin Missiles and Fire Control, The Chicago Department of Early College and Career Education, and the Gift of Life Donor Program, among others.

Conference exhibits and sponsorships, notably for the upcoming 24th Quest for Excellence conference in April and the Baldrige Program’s 25th anniversary at the Quest for Excellence conference in 2013, generate income and allow organizations to promote their own products and services at Baldrige events.

In the future, the Baldrige Program plans to bring to market other products and services identified as key income opportunities, such as communities of practice and Baldrige presentations. These new products and services will complement the historical program offerings: the award process and Quest and regional conferences. All are based on the program’s intellectual property and main product, the Baldrige Criteria for Performance Excellence.

With financial support from the Baldrige Foundation, the program is also exploring opportunities for services to other federal agencies.

In addition, to support the execution of the new business model, the program is reducing costs by eliminating operations that fall outside its core mission, streamlining the remaining operations, and shifting some operations to Baldrige Enterprise partners. More coordination and integration among these partners’ activities are leading to greater efficiency and effectiveness, with the first step being new Baldrige Award eligibility rules that encourage potential applicants to first seek their state or regional award.

The Baldrige Performance Excellence Program was created as a public-private partnership in response to the Malcolm Baldrige National Quality Improvement Act of 1987. In carrying out its mission to improve the competitiveness and performance of U.S. organizations, the program provides three public benefits:
• Create the Baldrige Criteria for Performance Excellence
• Manage the Malcolm Baldrige National Quality Award
• Educate organizations and their leaders in all sectors of the U.S. economy on the Baldrige Criteria and the practices of best-in-class organizations

During the Baldrige Program’s 24 years, these activities have resulted in a large international network of Baldrige Criteria users and supporters, including:
• The Baldrige Board of Examiners, a volunteer workforce of more than 500 members per year, who contribute the equivalent of more than $8 million in services each year
• An informal network of private consultants, who use the Baldrige Criteria to help their client organizations improve
• 95 Baldrige Award-winning organizations, which share role-model practices and strategies nationally and internationally
• Thousands of other organizations that rely on the Baldrige model and framework as an improvement methodology, management model, and certification or accreditation standard
• Hundreds of private, public, and international organizations that use the Baldrige Criteria. Examples include supplier assessments used by McDonald’s and Pizza Hut; internal assessments used by the U.S. Coast Guard, the U.S. Army, Cargill, Geico, Turner Broadcasting Company, the American Health Care Association, and the National Association of Home Builders; and international use by numerous foreign countries and by multinational companies such as TaTa, Infosys, and IBM Canada

Baldrige and jobs

Analysis of data from two-time Baldrige Award winners (Solectron, MEDRAD, Ritz-Carlton Hotel Co., Texas Nameplate, Sunny Fresh) shows that the median growth in number of sites was 67 percent; in revenue, 94 percent; and in jobs, 63 percent. The median growth in jobs was nearly 20 times greater than matched industries and time periods, according to the Bureau of Economic Analysis and the Bureau of Labor Statistics, which indicated a comparative average of 3.2 percent.

Two-time winners were the focus because they used the Baldrige Criteria for an extended period (at least six years must elapse before they can re-apply after receiving the award), and they represent a significant time span, reflecting the history and evolution of the Baldrige Program and Criteria.

Manufacturing and small business

Since 2000, Baldrige Award-winning manufacturers have posted an average annual improvement rate of 48 percent, with improved financial results, demonstrated satisfied customers, demonstrated satisfied and stable workforces, and improved operations. In addition, small businesses have demonstrated increasing sales, profits, and market share; increasing customer satisfaction and retention; improving employee measures; reduced defects and nonconformances; on-time delivery; and increasing productivity and return on assets. More information can be found in the Baldrige Talking Points.

Baldrige case studies for small business (e.g., Freese and Nichols, K&N Management, and Midway USA) and manufacturing (e.g., MEDRAD, Nestlé Purina, and Honeywell Federal Manufacturing & Technologies) are available from Baldrige Award-winning organizations.

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NIST

Founded in 1901, The National Institute of Standards and Technology (NIST) is a nonregulatory federal agency within the U.S. Department of Commerce. Headquartered in Gaithersburg, Maryland, NIST’s mission is to promote U.S. innovation and industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic security and improve our quality of life.

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