Quality Magazine

Assessing the Baldrige Award

May 1, 2003
Some organizations apply for awards, quality or otherwise, just to hang another certificate on the wall. Some do it to add another logo or tag line to their letterhead or advertising slogan. These companies often miss the true value of the award and its process. With no less than 30 national, automotive and government awards to apply for, not to mention a plethora of state and regional award programs, manufacturers could keep busy just applying for awards. Unfortunately work does not stop because an award is being applied for, nor does the work stop once an award is won.

But, it isn't only the award recipients that win when applying to the Baldrige award. Kay Kendall, vice president of corporate quality at Brooks-PRI Automation Inc. (Chelmsford, MA) and judge for the Malcolm Baldrige National Quality Award, says that just applying for the Baldrige Award allows a company to get feedback that provides an external view of itself. However, Kendall stresses that company's new to the process should strive to reach a certain level of maturity first.

"I think quality awards, in and of themselves, are not worth it," says Kendall. "I would strongly discourage any executive that's talking to me, whether at the state level or the national level, who wants to pursue an award. I think it's very demoralizing for the organization and that's just not the purpose of them. The purpose is really to try to present a framework for running an organization that really tries to integrate and align all of the pieces of the organization. The award is just some of the byproduct."

Baldrige basics
Celebrating 15 years, the Malcolm Baldrige National Quality Award is based on seven core values: leadership, strategic planning, customer and market focus, information and analysis, human resource focus, process management and business results.

Leadership. Examines how senior executives guide the organization and how the organization addresses its responsibilities to the public and practices good citizenship.

Strategic planning. Examines how the organization sets strategic directions and how it determines key action plans.

Customer and market focus. Examines how the organization determines requirements and expectations of customers and markets.

Information and analysis. Examines the management, effective use and analysis of data and information to support key organization processes and the organization's performance management system.

Human resource focus. Examines how the organization enables its workforce to develop its full potential and how the workforce is aligned with the organization's objectives.

Process management. Examines aspects of how key production, delivery and support processes are designed, managed and improved.

Business results. Examines the organization's performance and improvement in its key business areas: customer satisfaction, financial and marketplace performance, human resources, supplier and partner performance, and operational performance. The category also examines how the organization performs relative to competitors.

The Baldrige, unlike many other awards, is based on results and customer satisfaction. The award is not given for specific products or services. To be selected as an award recipient, an organization must have a system that ensures continuous improvement in the delivery of products and services and provides a way of satisfying and responding to stakeholders.

Up to three awards may be given annually in each of the following categories: manufacturing, service, small business, education and healthcare. Depending on the entries submitted in any given year, it is possible that no award may be given in any one or multiple categories.

The process
After the applications are received, the first stage is an independent review. The application package is reviewed independently by members of the Board of Examiners and at the conclusion of this stage, the judges determine which applications move to the second stage-Consensus Review.

During the Consensus Review, the application package is jointly reviewed by a team of examiners, led by a senior examiner. Kendall says that consensus is hammered out during two phone calls that last about five hours each. "There's a lot of discussion and sometimes pretty vigorous debate. Sometimes that is because you have people who are very knowledgeable about the criteria and sometimes because you have people who are very knowledgeable about the sector the applicant is coming from."

The examiners are looking to understand the relative importance of what the applicant has presented in the application, which will help them decide on the applicants that will go to the next step and receive site visits.

The number of examiners that visit a site depends on the size and complexity of an organization, but the team of examiners generally spends between two to four days on the applicant's properties. During site visits, Kendall says that examiners are trying to verify and clarify the information that was submitted to the competition. "There are some things (practices) that are potential role model practices that you would really like to verify on site to see that they're as good as you believe they are from the application and as important as the applicant tries to tell you they are within that sector. But you also have a whole lot of things that are just not really clear," she says.

Kendall explains that it is difficult in one page for large organizations to completely convince the examiners that an approach is deployed to the farthest ends of the organization at all levels and that all different functions in the organization are aware of it and practice it. She says, "Site visits are invaluable for that."

After the site visit is complete, Kendall says the examiners generally seclude themselves for two and a half days to finish the documentation for the site visit report. "We're looking at linkages across categories. Many times that's when a best practice or vulnerability will be found," she says.

An example of a vulnerability is an applicant that indicates some business parameter that is critical to remain globally competitive. The idea is part of the organization's strategic planning process, but it shows up in some of the strategic plans but not in others. For example, when examiners start looking at employee recruiting and employee training and development, an organization does not have any plans in place for how to recruit in-country marketing and employees. There is not any training and development in place for how to deal effectively in a global environment. There is not any sort of distribution channels established to support that. Kendall explains that now something that might show up as an individual comment on a specific category has been translated into much richer feedback for the applicant because the dots have been connected.

The judges -- a panel of nine of which two-thirds come up through the Baldrige process, while the other three are brought in to provide an outside look at the program -- meet for a week in November to review the site visit reports. During the weeklong meeting, every applicant is presented to the panel of judges and a teleconference is held between the judges and the team leader of the site visit for further clarification. Upon completion of the meeting, the judges have the opportunity to recommend up to three awards in any sector to the Secretary of Commerce. The Secretary of Commerce and the director of the National Institute of Standards and Technology (NIST), the agency that designs and manages the award program, are responsible for determining that the recommended award recipients are appropriate role models. The awards are then presented by the President of the United States.

Feedback
Even if a company does not win, those that applied receive detailed information that can be helpful to future business, Kendall says. "Every applicant receives a written feedback report, regardless of how far they move along in the process," explains Kendall. An examiner who was assigned an original reading of that application receives all of the other examiners' score books for that applicant and combines the information into a consolidated feedback report. The feedback report is a written summary of strengths and areas for improvement for each area of the criteria.

When rating organizations, examiners are looking for the applicant's response to what the criteria's asking for, but there also is an organizational profile. "It's not scored, but it sets the contacts for the examiners to understand from that organization's point of view what's important," explains Kendall. "It is an incredible foundation for examiners from different sectors to be able to give good, valid feedback to an applicant in a sector where the examiners really don't know what's involved. That's one of the things we look for right up front, from the organization's point of view, 'what's important (to them),' 'what is their world like?' Through the rest of the application, you're looking for evidence that they have systematic processes that address what they told you was important."

Kendall believes that whether or not an organization receives the award, the feedback report alone is well worth the application fee. According to information released by NIST, the application fee for 2002 ranges from $5,000 for large organizations to $500 for nonprofits. Organizations receiving site visits incur additional costs. For the application fee, organizations receive at least 300 hours of review by a minimum of eight business and quality experts. Organizations receiving site visits get more than 1,000 hours of in-depth review.

"I really do encourage companies that are looking for that independent, holistic evaluation to consider applying," suggests Kendall. "I just don't think that there's any other way of getting that kind of independent, in-depth assessment like the process. The caliber of the folks that you get at the national level as examiners and the business experience that they have is so strong that it's amazing how insightful that feedback is."

Kendall has had many applicants tell her that 70% of the information on the feedback report is what they already knew, but she stresses that 30% translates to a great deal of information that an organization would not have seen themselves but an outsider looking into the organization can see. "Sometimes it can be best practices, not just vulnerabilities," she says.

It never ends
Kendall stresses that recipients of the award are only obligated to do two things: present at that year's Quest for Excellence, which is a forum for the award recipients to showcase their performance practices, and share best practices. As for sharing best practices, companies are not asked to share proprietary practices. They can do as little as allowing NIST to post a company's best practices in a documented form on the NIST Web site to entertaining benchmarking requests or speaking. The actual commitment is up to the applicant.

But perhaps that is not even the difficult part of being an award recipient. Kendall has friends who come from Baldrige-winning companies. "One of the things that they've said it does is continue to force you to get better because if you win the Baldrige award, you have to imagine that your customers are even less forgiving of any problem that you might have, and so you have no choice but to continue to drive that improvement," Kendall explains. "In fact, that's one of the reasons why two organizations reapplied and won it for the second time -- Selectron and The Ritz-Carlton. The leaders in the organizations were very clear with their employees that the reason they wanted to reapply was to hold themselves to that level of scrutiny again. So to me, that's very compelling that there have been repeat applicants and repeat winners because if it was just about getting the logo, you've done it once."

Undecided
If an organization is undecided about whether or not it should apply for the award, Kendall suggests reading the NIST booklet, "Getting Started," which is available on NIST's Web site at www.nist.gov, to help become familiar with the award criteria and process. While she discourages companies that are just beginning the quality journey from applying for the award because the feedback will be more overwhelming than helpful, she does recommend taking the self-assessment. "Just asking some of the basic questions like 'who are our customers and our market, how are their requirements different and what do we do to tailor our approaches and our products and services to address those differences,' are fundamental questions that I think a lot of organizations think they can answer. But get a leadership group together and ask those questions. It's amazing what different points of view come out. And if the leadership team isn't aligned, the rest of the organization isn't going to be," Kendall says.

Kendall also encourages organizations that are considering applying for the award to attend the Quest for Excellence conference or regional conferences not only for the recipients' presentations, but also for the candid panel discussions, where recipients share the good as well as some of what they did not expect, which might not have been so good.

TECH TIPS
The award is based on seven core values: leadership, strategic planning, customer and market focus, information and analysis, human resource focus, process management and business results.

One of the most valuable parts of the award process, whether an organization receives the award or not, is the feedback report.

The feedback report contains credible and unbiased feedback to help an organization improve their process.