1996 Baldrige Award Winners: A True Cross-Section of American Industry

by Marion Harmon

Four companies earn world-class
quality status by winning the nation's top quality award.

For 1996, the four U.S. companies honored with the nation's highest quality award represent a true cross-section of American industry. They operate in four different regions of the country and four different business sectors, and come in four different sizes. But they all share a commitment to superior achievement in quality management and business performance.

The four winners of the 1996 Malcolm Baldrige National Quality Award are: ADAC Laboratories (manufacturing), Dana Commercial Credit Corp. (service), Custom Research Inc. (small business) and Trident Precision Manufacturing Inc. (small business). President Bill Clinton and Commerce Secretary Mickey Kantor presented the winners with the award on Dec. 6.

"This is the third year I've had the privilege of honoring the Baldrige Quality Award winners, and every year I feel more strongly that this is the way America ought to work," said Clinton. "This is the way all of our organizations ought to work."

ADAC Laboratories

Founded in 1970, ADAC Laboratories in Milpitas, California, designs, manufactures, markets and supports products for health care customers in nuclear medicine, radiation therapy planning and health care information systems. These products and services are sold to hospitals, universities and clinics throughout the world. ADAC's 170 employees work primarily at its headquarters facility in Milpitas and at facilities in Houston and Washington, Missouri.

ADAC CEO David Lowe gives the Baldrige Award a lot of credit for the company's achievements in recent years.

"The adoption of the Malcolm Baldrige criteria, based on continuous improvement and intense focus on customer satisfaction, has been a key factor in our success over the past four years," says Lowe. "This approach to business has enabled the company to become the industry leader in diagnostic nuclear medicine, grow its market share from 12 percent in 1990 to 50 percent in 1996, and achieve a No. 1 ranking in customer satisfaction within the industry. The award is a tremendous honor because it validates our quality management approach to business and is the ultimate employee recognition for all of the people whose dedication to quality excellence makes ADAC a leader."

When Lowe became president of ADAC Laboratories in 1992, the company was too focused on short-term financial results and not oriented toward building an enduring, great firm for employees, customers and investors, he recalls. ADAC determined that they needed to benchmark other companies which had managed to better balance the needs of their customers with the needs of their employees and investors.

ADAC began using the Baldrige criteria in 1992 and first applied for the Baldrige in 1994, getting as far as the site visit. The resulting feedback report gave ADAC 48 areas for improvement that their management team used as an external reference. They proceeded to close the gaps by training their entire management team at the Center for Quality of Management, a consortium of companies that share TQM experiences and resources. The training and education developed by CQM has been instrumental in taking ADAC to the next step, says Lowe.

"All ADAC employees attend an intensive two-day version of CQM's six-day management course," explains Lowe. "As a result, everyone at ADAC thoroughly comprehends the four revolutions in thought, which are customer focus, total participation, continuous improvement and mutual learning. Everyone understands the dual nature of work, which means that our employees do not just deliver a product or service, but they also focus on improving the organization and delighting customers."

ADAC's focus on customers has led to a customer retention rate of 94 percent vs. an industry average of 50 percent. It has also led to their market share going from 12 percent six years ago to more than 50 percent this year, and their revenue per employee increasing by 75 percent over the last five years. The latest Baldrige site visit helped them realize one of their next areas for improvement: human resources management. While they have followed an intense program of measuring for the manufacturing process and customer satisfaction, they haven't applied that same rigor to human resources data.

"Although our human resources indexes have improved significantly, this last site visit pointed out an area for further improvement," says Lowe. "We need to be more rigorous with the individual data by department and by job type."

Dana Commercial Credit Corp.

Dana Commercial Credit Corp., an operation of Dana Corp., provides leasing and financing services to a broad range of business customers in selected market niches. Its primary offices are located in Toledo and Maumee, Ohio; Oakville, Ontario, Canada; and Weybridge, Surrey, United Kingdom. Activities include leveraged and single-investor leases, customized private-label leasing programs for equipment dealers and manufacturers, joint-venture leasing programs, and operating leases and asset-management services.

Dana Commercial Credit has assets of about $1.5 billion and employs 547 people. Those employees are the reason they were one of only six service companies ever to have won the Baldrige Award, according to Chairman and CEO Edward J. Shultz.

"The people of Dana Commercial Credit are the real winners of this award," says Shultz. "They have worked incredibly hard to build a service culture squarely aimed at satisfying customers."

The company makes sure employees are well-prepared for work challenges by providing an average of 48 hours of education, promoting from within and encouraging employees to set their own goals and judge their performance.

The company decided to pursue the Baldrige Award for two main reasons, says Shultz. First, in 1992 they adopted the Dana Quality Leadership Award, a Dana Corp. quality program based on the Baldrige Award criteria. After following that program for a few years, they decided the most efficient way to benchmark it against the Baldrige Award was to actually apply for the award. Second, taking on the challenge of pursuing the Baldrige Award was the best way to achieve rapid quality improvement in the company.

"I don't know how we could have improved as much as we did in the time that we did without this kind of process," says Shultz. "As a matter of fact, the senior management group held a vote two weeks before we won, and I said, 'If we win, what then?' And 100 percent said, 'We must continue with the process; it is that important.' "

One of the difficulties of being a service company and pursuing the Baldrige is that the applicants must show improvement in a measurable fashion. So instead of counting scrap parts, the company had to find ways to measure their services. For example, Dana Commercial Credit's Dealer Products Group U.S. has reduced the time it takes to approve a transaction from about seven hours in 1992 to an hour or less in 1996.

Shultz stresses that companies wanting to go through the Baldrige process must have the leadership there to back them up. The first year they took on the Dana Quality Leadership program, they did it because the corporate office said they had to, admits Shultz. But then they took stock of their accomplishments through the process and saw that it really was working. And this year, they also won the Dana Quality Leadership Award. Winning the Baldrige meant more than putting another award in their trophy case; going through the process was the real added value.

"I look around today after we have been in this process for four years, and I see we are a much better company," says Shultz. "Morale is up, and so are profits. It is an amazingly efficient process."

Winning quality awards seems to be a tradition at Dana divisions. To date, 12 Dana Corp. sites have received state-level quality awards, including Dana Commercial Credit's Dealer Products Group, which was the sole recipient of the 1995 Michigan Quality Leadership Award.

Custom Research Inc.

CRI, a national marketing research firm with about 100 employees, is the smallest company ever to win the Baldrige Award. The company is also the first professional service firm of any size to receive the award.

"It is an honor for CRI to win an award that recognizes high-quality performance in business," says Judy Corson, CRI partner. "This shows that a small professional services firm can apply quality principles just like a large manufacturing company."

Corson and Jeff Pope founded CRI in 1974 after leaving Pillsbury Co. The company works with large multinational corporations to design and conduct projects that provide information to help make better business decisions. The privately owned corporation employs 105 people. Clients are served from its headquarters in Minneapolis and offices in San Francisco and Ridgewood, New Jersey.

CRI reduced its overall client base from 138 in 1988 to 67 in 1995, as part of a strategy to better serve and build partnerships with its biggest clients. Along with business success, fun and hoopla have always been a part of the way CRI operates. The company celebrates successes and creates an atmosphere that encourages recognition, including monthly "Good News Meetings" and companywide trips to places like Walt Disney World to celebrate achieving major business goals.

"Quality is just good business," says Pope. "Our clients are happier, our employees are more committed, and our profits are up."

CRI had applied for the Baldrige Award and reached the site visit stage three previous times&emdash;from 1992 to 1994. The company received the 1995 Minnesota Quality Award, which is patterned after the Baldrige Award. Such awards have played a big role in their quality process, says Corson.

"After we won the state award, we said, 'OK, let's go for the Baldrige again,' " says Corson. "We believe winning that state award had a big impact on winning the Baldrige in 1996."

As with the other Baldrige winners, CRI employees played a big role in winning the award, according to Corson. And the employees themselves got a lot out of the process.

"Because we are a small company, 100 percent of our full-time people had an opportunity to talk with the site-visit examiners, unlike many companies where they can only do a sampling," explains Corson. "As an employee, when you have to prepare yourself for a site visit, you have to read the application, you have to understand the criteria, you have to understand how all the criteria are deployed through the organization and how you fit in. So there must be that alignment, and without that we wouldn't have won."

The Baldrige process was a positive experience for CRI. "We have found that this has been good business for us," concludes Pope. "Our customers are more satisfied, our employees are more motivated, and our business results are up. So it's been a win-win situation for the company, our customers and our employees. We are big Baldrige supporters for that reason."

Trident Precision Manufacturing Inc.

Founded in 1979, Trident Precision Manufacturing Inc. is a privately held contract manufacturer of precision sheet metal components, electromechanical assemblies and custom products. The company develops tooling and processes to manufacture components and assemblies designed by its customers in a variety of industries, including office equipment, medical supplies, banking, computers and defense. The company's 167 employees are based in a single manufacturing facility in Webster, New York.

Trident began utilizing the Baldrige criteria in their total quality journey in 1989. They saw the criteria as a means to identify whether they were on the right path and what areas were their weaknesses, says April Lusk, Trident's total quality administrator.

"The greatest asset of the Baldrige process is the feedback report," explains Lusk. "Here is an unbiased view of your business' strengths and weaknesses. An area identified for improvement during our last site visit was to further develop our supplier certification process."

Trident lists two years of zero defects in its custom products as among its recent quality accomplishments. As a result, Trident has been able to give customers a full guarantee against defects. Due to a strong customer satisfaction focus, the company has been able to maintain its status as a key supplier to major customers, even after those customers reduced their suppliers by 65 percent to 75 percent. They are the only supplier of General Dynamics to receive its Supplier Excellence Award.

Trident has also focused heavily on employee involvement. They have a record of 100-percent participation on departmental work teams since 1992. Since 1991, more than 95 percent of process improvement recommendations have been accepted, and reward and recognition of employees has climbed steadily, from just nine incidents in 1988 to 1,201 in 1995. Employee turnover has fallen from 41 percent in 1988 to just 5 percent in 1995, and the company invests 4.6 percent of payroll in training and education.

"Our employees played a key role in the Baldrige process," says Lusk. "Their continuous improvement efforts, the ownership of their processes and their commitment to both our external and internal customers allowed Trident to excel. Through this dedication to excellence, we have been able to achieve levels of excellence in our business community."

The main factors that led to Trident's status as a Baldrige recipient are its strong commitment to a family environment, teamwork and its continuous improvement efforts, according to Lusk. The leadership's commitment to quality and the training of employees have allowed Trident to become a company of the future, she adds.

Lusk offers some advice to Baldrige hopefuls: "1. Do not be afraid to look at your business through the eyes of the criteria; 2. Take time to appreciate your strengths; 3. Define, attack and resolve your inefficiencies through the use of teams. Share the responsibilities with your people&emdash;their suggestions will make the business stronger, healthier and your overall morale better."

Baldrige winner criteria

Although operating in different industries and from different areas of the country, these four companies have in common some key characteristics that seem to make for a winning combination. Their strong commitment to quality, focus on leadership and unwavering commitment to employees have helped them become world-class companies.

And while winning the award has added prestige and acclaim, the message from each company is clear: The Baldrige process gave them much more than "15 minutes of fame" and will continue to help them achieve their quality and performance goals.