Six Sigma


Performance Improvement
H. James Harrington

The Malcolm Baldrige National Quality Award

Is it friend or foe?

I was chairman of the board of directors of the American Society for Quality when the Malcolm Baldrige National Quality Award was struggling its way through the National Government Committee, the House of Representatives and Congress. It moved slowly, tied up in the committees, until President Reagan finally approved it in 1987. Many people testified in favor of the award, but even more testified against it. Those who opposed it fell into two camps. One group believed that if the award was necessary, private businesses--not the government--should be responsible for developing and administering it. The other group believed that, although a quality award might work in Japan, it wouldn't work in the United States. Moreover, they believed it was simply unnecessary. But when Malcolm Baldrige, then Secretary of Commerce, was killed in a rodeo accident, the award was named after him and quickly passed through the judicial system.

 It has been more than 10 years since President Reagan signed the bill that approved the Baldrige Award and made its presentation an annual event. Obviously, I strongly agree with and support the basic concepts behind the award; I served as treasurer for the Malcolm Baldrige National Quality Award Consortium in 1987 and 1989. The award was and is a fine concept, as it identifies organizations that have truly outstanding quality systems. Right?

 That may not actually be the case. For example, Solectron won the award, but its quality systems had to undergo a major overhaul before the company could be registered to ISO 9000. So if the real purpose of the Baldrige Award is to identify performance excellence, then it's not truly a quality award but a performance award. According to the Malcolm Baldrige National Quality Program 2000 application forms and instructions, the award "is the highest level of national recognition for performance excellence that a U.S. organization can receive."

 When you evaluate an organization's performance, you must consider many factors beyond just quality: creativity, profits, quality, cycle time, cost, reliability, productivity, return on assets and more. As a result, an organization that doesn't have all of its quality systems operating can still win the Baldrige Award. But wouldn't you think that, at a minimum, the winner of the nation's most prestigious "quality" award would need to be registered to ISO 9000, or at least have a quality system in place that complied with the minimum quality system requirements defined by the relevant ISO 9000 standard? It's something to think about.

 Now let's assume that the Baldrige criteria were developed to judge the performance levels of the very best U.S. organizations. You'd think it would be the standard with which all organizations strive to comply. But imagine for a minute that you're part of a small organization just starting out or an established business that is struggling to keep from going bankrupt. Don't you have a different set of priorities than those organizations that have already established themselves as market leaders? The best practices for low-performing and high-performing organizations are very different.

 The criteria set forth in the Baldrige Award are excellent for the 10 percent to 15 percent of organizations in the United States that are truly outstanding, but it can be destructive for the remaining 85 percent of the organizations if they use it as their survival guide. Data exist that prove there's one set of activities that help low-performing organizations become average performers and a different set of activities that need to be used to transform the average-performing organization into an outstanding performer. If an organization doesn't change its performance improvement activities once it becomes an outstanding performer, it slowly slips back to being an average performer. Too many consultants and successful business leaders have led us to believe that there is one set of best practices that apply to all organizations regardless of how well they are performing. This is a disastrous misconception that has caused many total quality management efforts to fail.

 The Baldrige Award is directed at what the best organization should be doing to stay best. Unfortunately, strategies employed by high-performing organizations can often be catastrophic to low-performing organizations. For example, benchmarking is essential for a high-performing organization to maintain its place in the pecking order, but it is often destructive to low performers.

 It's very important for the 85 percent of the organizations that aren't exceptional to understand that their model for success is very different from the ones used by the few organizations with outstanding performance.

 The concept of using different improvement strategies at different performance levels is based upon a comprehensive study conducted by Ernst & Young LLP and documented in the report TR 97.003 HJH "The Fallacy of Universal Best Practices." For a copy of this technical report, contact Dave Farrel of Ernst & Young at (408) 947-6582.

About the author

 H. James Harrington is CEO of Systemcorp, an Internet-software development company. He was formerly a principal at Ernst & Young, where he served as an international quality adviser. E-mail him at jharrington@qualitydigest.com .

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