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1chapter
Frameworks for Achieving Business Excellence
1 . 1 I N T R O D U C T I O N
1 . 2 T H E E U R O P E A N F O U N D AT I O N F O R Q U A L I T Y
M A N A G E M E N T ( E F Q M ) B U S I N E S S E X C E L L E N C E M O D E L
1 . 3 T H E ( H A R V A R D ) B A L A N C E D S C O R E C A R D
1 . 4 T H E M A L C O L M B A L D R I D G E N AT I O N A L Q U A L I T Y AWA R D
1 . 5 R E G I O N A L E X C E L L E N C E AWA R D S A N D O T H E R
F R A M E W O R K S
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1.1 IntroductionWhen the term ‘Total Quality Management’(TQM) first became popular amongst
organisations seeking a methodology by which to improve their performance,
there were very few people who had a clear understanding of what TQM actually
meant.To many TQM was synonymous with ISO 9000 (previously BS5750) to
others it was also concerned with issues such as improving communications,
understanding customer needs and the development of a ‘mission’ or ‘vision’
statement.
What is clear is that many organisations embarked on TQM programmes
without an understanding of where they were going or indeed how they were
going to get there.Because of this lack of understanding, the term TQM has now
largely been dropped in favour of ‘Business Excellence’ or ‘Organisational
Excellence’.A number of frameworks have emerged which help organisations to
focus on the criteria which must be addressed in order to achieve excellence
through a programme of continuous improvement.
To achieve continuous improvement,organisations must be able to answer
three fundamental questions:
• Where are we now?
• Where do we want to get to?
• How do we get there?
The question ‘where are we now’ is most effectively answered by a
rigorous self-assessment programme using an appropriate model or framework.
The self-assessment process examines an organisation’s performance against key
performance criteria and establishes a baseline of performance supported by
objective evidence. In order to understand ‘where do we want to get to’
organisations must have a clear vision of the future, but, more importantly, must
establish and communicate the strategy and specific actions which will deliver
this ‘vision’.
There are many examples of organisations who have spent large amounts
of time and money developing impressive mission statements which are printed
on glossy newsletters and posters and yet, when questioned, the people within
the organisation are not even sure what it means let alone how it is going to be
achieved! These organisations have missed the point entirely, as the focus must
be on ensuring everyone in the organisation understands and, indeed, have
played a part in developing the mission and the specific actions which will
ensure achievement.The people in the organisation must know how they can
contribute to achievement and, in order to measure achievement, these actions
must have appropriate performance measures or indicators.The self-assessment
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process looks closely at the way organisations develop and communicate their
vision, mission and goals.
The question ‘how do we get there’ is answered by the specific
performance improvement activities which are identified and prioritised during
the self-assessment process. These improvements are prioritised with the
objective of achieving the organisation’s strategic objectives and they must be
integrated with the organisation’s business planning function to ensure that
responsibilities and timescales are identified and that the necessary resources are
provided. Repeated self-assessments will measure improvements against the
initial performance baseline and monitor progress towards ‘Business Excellence’.
This chapter now looks at some of the frameworks which are currently in
use and later chapters examine the self-assessment process in more detail.
1.2 The European Foundation for Quality Management(EFQM) Business Excellence Model
The European Foundation for Quality Management was established in 1988 with
the objective of improving the competitiveness of European companies in the
world market.The EFQM was originally made up of fourteen chief executives
from leading European companies. During a series of workshops held during
1990,they examined the key characteristics displayed by ‘excellent’organisations
and also the criteria used by existing quality award mechanisms such as The
Deming Prize and The Malcolm Baldridge National Quality Award.
From these workshops the simple model was established:
Figure 1.2.1 The Simple Model
The premise of the simple model was that organisations would achieve
better results through involvement of all employees (people) in continuous
improvement of their processes.
From the simple model the European Model for Total Quality was
developed in 1990 and this later became known as the EFQM Business
Excellence Model (see Figure 1.2.2).The Model was developed as the framework
for the European Quality Award and the award process was first launched in
1991.In 1993 the British Quality Foundation was established and,using the same
award framework, launched the UK Quality award in 1994.
RESULTSPROCESSESPEOPLE
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Following its development as the basis of the European and UK Quality
Awards, the EFQM Business Excellence Model has become a recognised
framework for carrying out self-assessments within a variety of organisations in
both the private and public sector – with the emphasis very much on achieving
continuous improvement rather than being used as the basis for applying for a
quality award.
Figure 1.2.2 The EFQM Business Excellence Model
The Business Excellence Model is based on the premise that Customer
Satisfaction, People (employee) Satisfaction and a favourable Impact on Society
are achieved through Leadership driving Policy and Strategy, People
Management, Resources and Processes, leading ultimately to excellence in
Business Results.
Each of the nine elements shown can be used to assess an organisation’s
progress towards Business Excellence. These elements are divided into five
‘Enabler’elements which are concerned with how an organisation approaches a
particular activity and four ‘Result’elements which are concerned with what the
organisation has achieved and is achieving.These nine elements are further sub-
divided into ‘Criterion Parts’ and ‘Areas to Address’ as shown in Figure 1.2.3,
below.
Organisations wishing to apply for the European or UK Quality Award must
prepare a detailed, written submission which addresses each element of the
Business Excellence Model and which describes clearly the approaches chosen
and the results which have been achieved. Relevant examples and commentary
are also included in order to demonstrate understanding and provide a guide to
the evidence which exists to support performance in each area.Trained assessors
will then review and ‘score’the award submission on the basis of two factors: the
Leadership
10%
Processes
14%
Businessresults
15%
Peoplemanagement
9%
Resources9%
Policy &strategy
8%
Peoplesatisfaction
9%
Impact onsociety
6%
Customersatisfaction
20%
Enablers 50% Results 50%
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excellence of the approach (or results) and the extent to which the approach (or
results is deployed, or achieved throughout the organisation.
From the percentage scores allocated to each element an overall
percentage score is then derived and converted into points according to the
weightings shown in the Model (see Figure 1.2.2, above).It is on the basis of this
overall score that organisations are selected for site visits to validate the evidence
presented in the submission and awards are then made according to these
verified scores.
Figure 1.2.3 The Structure of the Elements
The Enabler Elements
As has already been said, the enabler elements are concerned with how the
organisation approaches particular activities, and self-assessment programmes
will look specifically at the appropriateness of the activities, systems and
techniques in place. Self-assessment also examines the degree to which these
activities are systematic and prevention based, the use of review cycles and the
implementation of improvements resulting from reviews and the degree to
which these activities and systems are integrated into normal operations. The
following pages examine each element in more detail.
Element 1 – Leadership
The leadership element examines the involvement and commitment of all
managers in leading the organisation in customer focused, continuous
improvement activities. Also, it includes how managers demonstrate this
involvement and commitment through their support of staff training and
Element 1 Leadership
1d
1c
1b
1a
Criterion Parts
AREAS TOADDRESS
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development and their involvement in building relationships with customers and
suppliers. The leadership element is broken down into four criterion parts as
follows:
1(a) Visible Involvement of Leaders
How managers or leaders act as role models, leading by example in the carrying
out of improvement activities and by becoming directly involved in the giving
and receiving of training.
Also, how leaders of organisations communicate the values and
expectations of the organisation clearly with employees, give them the
opportunity to provide feedback and then act on this feedback to improve
organisational performance.
1(b) How Leaders Provide Resources and Assistance
How leaders of organisations ensure that training and improvement activities are
properly resourced and that people are encouraged to participate in these
activities by providing appropriate support.
1(c) How Leaders are Involved with Customers and Suppliers
How leaders are concerned with developing strong links with suppliers and
customers and in developing and participating in joint improvement activities.
Also, how they promote and support the achievements of the organisation
externally and are actively involved with professional bodies and participate in
conferences and seminars to promote Business Excellence.
1(d) How Leaders Recognise Achievement
The way leaders of organisations recognise the achievements of individuals and
teams from both within the organisation and externally, for example from
customers and suppliers.
Element 2 – People Management
This element is concerned with how the organisation manages its most
important asset, its people. The criteria focus on how people are developed
through effective appraisal and training activities and also how the organisation
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involves its people in helping to meet its strategic objectives. The element is
made up of six criterion parts as follows:
2(a) How People Management Resources are Planned and Improved
This criterion looks for evidence of human resource plans and strategies being in
line with overall Policy and Strategy and whether the organisation has a clear
process for human resource planning using employee surveys, for example, as a
basis for planning decisions.
2(b) How Skills and Capabilities are Sustained and Developed
This criterion is concerned with how the organisation establishes its own
requirements in terms of skills and competencies and how it then measures the
skills and capabilities of its people. Having identified a gap between current
competencies and requirements,the criterion then looks at how the organisation
manages the bridging of that gap through training, development and
recruitment.
2(c) Agreement of Targets and Reviewing Performance
This criterion looks at how organisations devolve overall objectives to individual
and team level.These individual and team objectives must be consistent with
overall objectives and there must be an effective mechanism for agreeing and
reviewing objectives. This mechanism is often some form of appraisal system
which reviews the individual’s performance and provides help to improve
performance.
2(d) How People are Involved, Empowered and Recognised
This criterion is concerned with how leaders ensure that the organisation’s
people are involved in continuous improvement activities by providing
appropriate resources and assistance.Also,the criterion looks at the way in which
individuals and teams are empowered and how effective the organisation’s
approach is in achieving this.
In addition, the criterion examines how the organisation promotes the
involvement of people and teams and how effective any recognition systems are
in sustaining involvement and empowerment.
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2(e) How People and the Organisation have an Effective Dialogue
Here the organisation must provide details on the communication process,
showing how communication needs are evaluated, how top down, bottom up
communication is actually achieved and how the effectiveness of the
communication process is reviewed and improved.
2(f) How People are Cared for
This new criterion is concerned with how the organisation promotes awareness
in health, safety and environmental issues.How the organisation sets the level of
benefits and employee facilities such as sick pay, pensions, assisted transport etc
and how the organisation promotes social and cultural activities.
Element 3 – Policy and Strategy
This element examines how organisations set about formulating Policy and
Strategy and how they convert these into a common vision and/or mission
statement. This section is also concerned with how Policy and Strategy are
communicated and implemented throughout the organisation, to what extent
Policy and Strategy reflect a customer focused approach and how Policy and
Strategy are reviewed and improvements made.The Policy and Strategy element
is broken down into four criterion parts as follows:
3(a) The Information on which Policy and Strategy are Based
How the organisation uses appropriate information to formulate its Policy and
Strategy for example using information from customers, suppliers, and
employees and if appropriate from benchmarking activities and from economic,
environmental, social and legal data sources.
3(b) How Policy and Strategy are Developed
This criterion is concerned with the process by which the organisation
formulates its Policy and Strategy and how, for example, the needs of all
stakeholders are taken into account and how the short and long-term needs of
the organisation are balanced.
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3(c) How Policy and Strategy are Communicated and Implemented
This criterion examines how the organisation uses Policy and Strategy as a basis
for setting objectives and how effectively it communicates this to everyone in the
organisation. Also how the organisation tests awareness and understanding of
Policy and Strategy amongst its people.
3(d) How Policy and Strategy are Reviewed and Improved
This criterion examines the way in which the organisation reviews Policy and
Strategy to ensure its continuing relevance and how updates and improvements
or adjustments are made when appropriate.
Element 4 – Resources
This section examines how the organisation manages its resources to maximise
efficiency and minimise waste. For example, how financial resources are
managed in line with Policy and Strategy and how information systems are
managed to maximise benefits to the organisation’s people and customers.This
section is concerned with the management of all resources including buildings,
equipment, materials and technology.The element is made up of five criterion
parts as follows:
4(a) How Financial Resources are Managed
Financial resources are short-term funds needed for the day to day running of the
organisation and capital from various sources required for longer-term financing.
This criterion part examines how well the financial strategy is aligned with
overall Policy and Strategy and how the financial strategy is reviewed and
improvements made.
The criterion also examines the way in which the organisation manages
key financial parameters such as costs, profitability and cash flow and how the
organisation evaluates investment and risk.
4(b) How Information Resources are Managed
Information resources are the business, technical and other data, along with the
means by which this data is made available and accessible. The criterion
examines how the organisation manages this information,how it ensures that the
people who need it have access to relevant information and how the
organisation sets about ensuring the integrity, validity and security of its
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information.The criterion also examines to what extent information has been
structured to support overall policy and strategy.
4(c) How Suppliers and Materials are Managed
Suppliers are defined as any individual or organisation providing goods,services,
knowledge or information to the organisation,and materials are physical items in
all their forms including raw materials, work in progress and finished goods.
This criterion examines how the organisation manages relationships with
suppliers in order to improve the supply chain and how it makes optimum use
of material inventories. Also, it examines how the organisation goes about
reducing and re-cycling waste, conserving non-renewable resources and
reducing its consumption of raw materials and utilities.
4(d) How Buildings, Equipment and Other Assets are Managed
This criterion looks at how the organisation manages the utilisation and
maintenance of all assets to improve the performance and lifespan of those
assets.Also,it looks at how the organisation optimises use of its assets in line with
overall Policy and Strategy and how the organisation considers the impact of its
assets on employees and other stakeholders.
4(e) The Management of Technology
This criterion examines how the organisation develops and exploits
technologies which are the basis of the products or services it provides. It also
looks at how research into new and emerging technologies is carried out and
how the organisation provides training and development for its employees to
ensure the benefits of technologies employed are maximised. The criterion is
concerned with how the organisation exploits technology to secure competitive
advantage.
Element 5 – Processes
Many organisations are moving from a traditional structure based around
functional areas to one focused on customers and products or services. This
element examines the extent to which these issues have been addressed and
(whether or not processes have been identified) how business activities are
reviewed and improvements are identified and implemented. The element is
made up of five criterion parts as follows:
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5(a) How Processes Critical to the Success of the Organisation are Identified
This criterion examines how the organisation has identified its key processes
including how any cross-functional issues have been overcome.In examining this
criterion, an assessor would expect to find a list of key processes available for
examination – particularly those which have a significant impact on the result
elements (6 – 9).
5(b) How Processes are Managed
This criterion looks at how ownership of processes has been established and
how process owners go about managing their processes.This will include how
the organisation has developed and uses operating standards and appropriate
performance measures and how the organisation have applied any quality system
standards such as ISO 9000 or environmental management systems.
Organisations who have obtained ISO 9000 certification would normally
expect to score fairly highly in this area,however, it must be remembered that in
many cases ISO 9000 systems do not cover all of an organisation’s key processes
– for instance, the Marketing and Finance functions may not be included.
5(c) How Processes are Reviewed and Improved
This criterion examines how the organisation sets about identifying and
implementing improvements to processes, for example by using information
from employees, customers and other stakeholders, to establish priorities and
targets for improvement. It also looks at how the organisation sets targets which
support its overall strategic objectives.
5(d) How Processes are Improved by Innovation and Creativity
This criterion looks at how the organisation uses the creative talents of its people
to innovate and create improvements to processes, how it makes changes to its
organisational structure to encourage innovation and change and how it
encourages continuous learning by all its people.
The criterion also examines how the organisation uses feedback from
stakeholders and new technology and techniques to stimulate creativity and
innovative improvements to processes.
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5(e) How Processes are Changed and Benefits Evaluated
This criterion looks for evidence of appropriate methods of implementing
changes to processes, for example by piloting new or changed processes. It also
examines how changes to processes are communicated throughout the
organisation and how people receive appropriate training to ensure that new or
improved processes are operated effectively.
The criterion is also concerned with how the organisation goes about
reviewing the changes which are made to ensure anticipated benefits are being
achieved.
The Results Elements
Results elements are concerned with what the organisation has achieved and is
achieving. Self-assessment will look specifically at how results show positive
performance against all internal targets,against competitors and ‘best in class’and
how results are combined with evidence of how future targets will be achieved.
Element 6 – Customer Satisfaction
This element is concerned with the organisation’s actual results with respect to
direct measurements of customer satisfaction. Measurements will include the
quality and reliability of products and services, identified by customer surveys or
other methods of gathering data.This section will also examine the identification
and measurement of indirect customer satisfaction measures such as the
percentage of repeat business and complaint levels.
6(a) Customers’ Perceptions of the Organisation
This criterion is concerned with the excellence and trends in results of direct
measurements of customer satisfaction, for example from customer surveys or
focus groups. The criterion will also examine the extent to which results are
available for all of the organisation’s products and services, measures may
include: response times, complaint handling, value for money, reliability etc.
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6(b) Additional Measures of Customer Satisfaction
The second part of customer satisfaction is concerned with the excellence and
trends in indirect measurements of customer satisfaction and the extent to which
results of these other, indirect measurements are available. Types of measures
could include: market share, complaints and levels of repeat business etc.
Element 7 – People Satisfaction
This element is concerned with the results and trends in results of direct and
indirect measurements of employee satisfaction.Direct measures are often made
by employee attitude or satisfaction surveys and it is the perception of the
employees which is under examination, not the excellence of the measurement
process.This section will also look for indirect employee satisfaction indicators
being measured,such as staff turnover levels and the number of grievances.It also
looks at whether the results of employee surveys are made known to people and
how the results are acted on.
7(a) People’s Perceptions of the Organisation
This criterion is concerned with the excellence and trends in results of direct
people satisfaction measures on issues such as: opportunities for training and
development, recognition, communication, job security, pay and benefits etc.
7(b) Additional Measures of People Satisfaction
This second criterion is concerned with the excellence and trends in results of
indirect measures such as: grievances, levels of sickness and staff turnover,
feedback from suggestion schemes,training evaluation results and response rates
to people surveys.
Element 8 – Impact on Society
This Element is concerned with how the organisation has approached the issue
of care for the environment and protection of global resources. It will also
include impact on the local community and, if measures are being maintained,
the relevance and trend of those measures.
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8(a) Society’s Perception of the Organisation
Within the award process, this criterion looks at society’s perception of the
organisation from surveys, reports, media etc. and may include perceptions on
issues such as impact on the local/national economy, activities to reduce health
risks, noise and pollution and support for the local community. In reality, many
organisations, particularly smaller ones, do not undertake such surveys or
research, and in these cases the criterion is concerned with the results of
activities undertaken within the organisation which have an impact on the
community in which it operates.
8(b) Additional Measures of the Organisation’s Performance
Whereas the first criterion is concerned with the public’s perception this second
criterion is concerned with the internal measures made by the organisation in
respect of those issues which impact on society. For example, the organisation’s
own measurements and results in respect of issues like: impact on local
employment, reduction of waste, pollution levels, usage of re-cycled materials
etc.
Element 9 – Business Results
This section examines the organisation’s performance with respect to its planned
business results. Measures will include key financial targets such as profit
margins, costs, sales and return on capital non-financial measures could include
performance measures such as the time taken to resolve complaints, delivery
times etc. The questions are also concerned with trends in performance,
projections of future performance and comparisons with competitor
organisations.
9(a) Financial Measures
This criterion is concerned with the excellence and trends in financial results
and in the extent to which results are available.Types of results could include:
budget management and control, income,expenditure,cash flow and returns on
investment.
9(b) Additional Measures of Performance
This second criterion is concerned with the excellence of and trends in other
results which show how well the organisation is performing. These other
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measures are usually the performance measures associated with the key
processes identified in element 5. Types of measures could include: order
processing times, time to resolve complaints, supplier performance and market
share.
1.3 The (Harvard) Balanced ScorecardThe Balanced Scorecard was first proposed in the January-February 1992 issue of
the Harvard Business Review and provides a comprehensive framework for
translating an organisation’s strategic objectives into a coherent set of
performance measures. The Balanced Scorecard provides four different
perspectives within which a limited number of critical performance measures
can be identified.
Figure 1.3.1 The Balanced Scorecard (source, Harvard Business Review)
Many organisations already have a large number of performance measures
which tend to be local measures derived from the ‘bottom up’ and which are
aligned to ad hoc or traditional hierarchical processes.The Scorecard’s measures,
however, are based on the organisation’s strategic goals, and by focusing
managers and staff on a limited number of critical measures the Scorecard helps
concentrate on the achievement of this strategic vision.
Unlike traditional performance measures,the Balanced Scorecard provides
a balance between external measures, such as income and profitability, and
Vision
Strategy
Financial Customer Internal Growth
Performance Measures
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internal measures, such as new product development and innovation.The four
measurement areas (as shown in Figure 1.3.1) normally contain 4 or 5 key
performance measures in each area and it is these which serve as the focal point
for an organisation’s efforts, defining priorities to managers, employees,
customers and all stakeholders. In companies which have developed Balanced
Scorecard Measures these have replaced the annual budget as the primary
business planning tool.
Figure 1.3.2 The Four Scorecard Perspectives (source, Harvard Business
Review)
Preparing a Balanced Scorecard
Creating a Balanced scorecard is different for every organisation and often
depends on how far the organisation has developed its own vision and strategic
planning process.Most organisations will,however, follow most of the following
8 stage programme.The implementation process is normally led by a facilitator
who is either an external consultant or a senior executive from within the
organisation.
Stage 1 – Scoping
The organisation must first decide upon the geographical and organisational
scope for the Balanced Scorecard and whether or not the Scorecard should be
FinancialPerspective
CustomerPerspective
Internal Business
Perspective
Innovation and Learning
Perspective
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piloted and then implemented in just one, or a number of business units, or the
entire organisation. In general terms, the Balanced Scorecard is suitable for units
which have their own customers, service/production facilities and their own
financial performance measures.
Stage 2 – Stakeholder Interviews
The facilitator will plan and carry out a series of interviews with the
organisation’s senior management team along with a number of key
stakeholders, such as principal shareholders and customers.These people will
first of all receive background information on the Balanced Scorecard process as
well as any internal documents which describe the organisation’s vision,mission
and strategy. The interviews themselves are carried out to establish individual
views and input into the organisation’s strategic objectives and to identify
preliminary proposals for scorecard measures.
Stage 3 – Senior Management Workshop 1
The facilitator brings the senior management team together to begin to develop
the scorecard.This is achieved by discussing and arriving at a consensus about
the organisation’s mission and strategy statements and then considering the
question: ‘if I succeed with my vision and strategy how will my performance
differ for shareholders; for customers, for internal processes and for my ability to
innovate and improve?’
Data gathered during stakeholder interviews carried out in stage 2 can be
considered during the debate in order to provide an external perspective.The
objective at this stage is to define the key success factors and arrive at a
preliminary scorecard which contains measures of success for the organisation’s
strategic objectives. At this stage narrowing the choice of measures is not critical,
even though there will often be more than 4 or 5 measures for each perspective.
Stage 4 – Senior Management Interviews
The facilitator reviews and consolidates feedback obtained during stage 3 and
documents this for review by the senior management team.Senior managers are
then interviewed once again to obtain their individual views on the preliminary
scorecard and examine any implementation issues.
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Stage 5 – Senior Management Workshop 2
Stage 5 may involve one or more workshops to achieve the following objectives:
• Involve a broader cross-section of middle managers and other
employees to consider the organisation’s vision, strategy and
preliminary balanced scorecard.
• Comment on the proposed scorecard measures.
• Identify links between the proposed measures and current operations
and initiatives.
• Develop an implementation programme which includes targets for
each of the proposed measures.
• Agree final measures along with targets and action plans to achieve
the targets.
• Agree an implementation programme which includes communicating
the scorecard to all employees and development of an information
system to support the scorecard.
Stage 6 – Implementation
Ideally, a new team should be established with responsibility for implementing
the scorecard – including communicating the scorecard throughout the
organisation and linking scorecard measures to databases and information
systems.
Stage 7 – Periodic Review
Balanced scorecard measures should be reviewed monthly by managers, teams
and individuals involved in the achievement of each measure. The measures
themselves should be reviewed annually as part of the normal business planning
process.
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Figure 1.3.3 Linking Measurements to Strategy (source Harvard
Business Review)
Creating Process Performance Measures
Traditional,financial performance measures report on what happened last period
without indicating how managers can improve performance in the future.As we
have already seen,by linking performance measures to an organisation’s strategic
objectives, balanced scorecard measures provide a cornerstone for the
organisation’s current and future success.
To create effective process performance measures the first step is to define
what kind of factors, such as time, cost, quality and product performance are
critical to satisfying customers. The next step is to map the ‘cross-functional’
processes which are used to deliver results and, as part of this process, identify
the critical tasks and capabilities required to complete the process successfully.
Finally, appropriate measures can be designed to track these tasks and
capabilities.
Statement of Vision1 Definition of organisation
2 Mission statement3 Vision statement
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
__________________________________________
__________________________________________
__________________________________________
__________________________________________
With my ability toinnovate & grow
Innovation &learning
With my internalprocesses
Internalperspective
To my customers
Customerperspective
To myshareholders
Financialperspective
THE BALANCED SCORECARD
What is myVision of
the Future ?
If my visionsucceeds,how will I
differ?
What are thecritical success
factors?
What are thecritical
measurements?
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1.4 The Malcolm Baldridge National Quality AwardThe Malcolm Baldridge award criteria are the basis for making awards and for
giving feedback to applicants. In addition, the award criteria claim to:
• Help improve performance, practices and capabilities.
• Facilitate communication and sharing of best practices among and
within organisations of all types.
• Serve as a working tool for managing performance, planning, training
and assessment.
The Baldridge Award was established in the USA during the early nineteen
eighties in response to faltering productivity in US industry.One outcome of the
debate on improving productivity and performance was an agreement that
organisational excellence should be rewarded and the Malcolm Baldridge
National Quality Award was therefore launched in 1988.The criteria for the award
were established by learning from other award models such as the Deming Prize,
established in Japan in the early fifties, and by lengthy discussion with business
leaders.
Core Values and Concepts
The award criteria are built upon a set of core values and concepts.These values
and concepts are the foundation for integrating customer and company
performance requirements within a results oriented framework. These core
values and concepts are:
• Customer driven quality.
• Leadership.
• Continuous improvement and learning.
• Employee participation and development.
• Fast response.
• Design quality and prevention.
• Long-range view of the future.
• Management by fact.
• Partnership development.
• Corporate responsibility and citizenship.
• Results orientation.
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Award Criteria and Framework
The core values and concepts listed above are embodied in seven categories as
follows:
1.0 Leadership.
2.0 Information and analysis.
3.0 Strategic planning.
4.0 Human resource development and management.
5.0 Process management.
6.0 Business results.
7.0 Customer focus and satisfaction.
The framework connecting and integrating the categories is shown in the
figure below:
Figure 1.4.1 The Malcolm Baldridge National Quality Award
The framework has three basic elements:
Driver
Senior Executive leadership sets directions, creates values, goals, expectations
and systems and pursues customer and business performance excellence.
Leadership
1.0
ProcessManagement
5.0
Human ResourceDevelopment and
Management 4.0
StrategicPlanning
3.0
Information andAnalysis
2.0
Customer Focusand Satisfaction
7.0
BusinessResults 6.0
System
Driver
Goal
Customer &MarketplacePerformance
*CustomerSatisfaction*CustomerRetention*CustomerSatisfactionRelative to
Competitors*Market Share
*Competitiveness
BusinessPerformance
*Product & ServiceQuality
*Asset Productivity& Growth*Supplier
Performance*Public
Responsibility*Financial
Performance
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System
The system comprises the set of well defined and well designed processes for
meeting the company’s customer and overall performance requirements.
Goal
The basic aims of leadership and the purposes of the system are two-fold:
Customer and marketplace performance
Customer and marketplace performance means delivery of ever improving value
to customers, high levels of customer satisfaction and a strong competitive
position.
Business performance
Business performance is reflected in a wide variety of financial and non-financial
results, including human resource development and corporate responsibility.
The seven criteria categories shown in the figure above are sub-divided
into ‘Items’ and ‘Areas to Address’
Items
There are 24 Items, each focusing on a major requirement.These are:
1.0 Leadership
1.1 Senior Executive Leadership
1.2 Leadership System and Organisation
1.3 Public Responsibility and Corporate Citizenship
2.0 Information and Analysis
2.1 Management of Information and Data
2.2 Competitive Comparisons and Benchmarking
2.3 Analysis and Use of Company Level Data
3.0 Strategic Planning
3.1 Strategy Development
3.2 Strategy Deployment
4.0 Human Resource Development and Management
4.1 Human Resource Planning and Evaluation
4.2 High Performance Work Systems
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4.3 Employee Education,Training and Development
4.4 Employee Well-being and Satisfaction
5.0 Process Management
5.1 Design and Introduction of Products and Services
5.2 Product and Service Production and Delivery
5.3 Support Services
5.4 Management of Supplier Performance
6.0 Business Results
6.1 Product and Service Quality Results
6.2 Company Operational and Financial Results
6.3 Human Resource Results
6.4 Supplier Performance Results
7.0 Customer Focus and Satisfaction
7.1 Customer and Market Knowledge
7.2 Customer Relationship Management
7.3 Customer Satisfaction Determination
7.4 Customer Satisfaction Results
Areas to Address
Each Item consists of one or more Areas to Address. For award applications
information is submitted by applicants in response to the specific requirements
of these areas.
Items and Areas to Address are structured as in the following example:
1.0 Leadership
The Leadership category examines senior executives’ personal leadership and
involvement in creating and sustaining a customer focus, clear values and
expectations, and a leadership system that promotes performance excellence.
Also examined is how the values and expectations are integrated into the
company’s management system,including how the company addresses its public
responsibilities and corporate citizenship.
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1.1 Senior Executive Leadership
Describe senior executives’ leadership and personal involvement in setting
directions and in developing and maintaining an effective,performance-oriented
leadership system.
(A-D)
*See below for a description of this symbol.
Notes:
1 ‘Senior Executives’ means the applicant’s highest ranking official and
executives reporting directly to that official.
2 Values and expectations should take into account needs and
expectations of key stakeholders – customers, employees,
stockholders, suppliers and partners, the community and the public.
3 Review of overall company performance is addressed in 1.2b.
Responses to 1.1a (3) should focus on senior executives’ roles in such
reviews and their use of the reviews to set expectations and develop
leadership.
4 Evaluation of the company’s leadership system (1.1b) might include
assessment of executives by peers, direct reports, and/or a board of
directors. It might also include use of surveys of company employees.
Making The Application
Writing an application for the Baldridge award involves responding in 70 or
fewer pages to the requirements given in the 24 criteria items shown above.The
first stage in the application is the preparation of a ‘business overview’. The
business overview outlines the key factors that influence how the business
Areas to Address
a How senior executives provide effective leadership and direction in buidlingand improving company competitiveness, performance and capabilities.Describe how senior executives (1) create and maintain an effectiveleadership system based upon clear values and high expectations; (2)create future opportunity for the company and its stakeholders, setdirections and integrate performance excellence goals; and (3) reviewoverall company performance, capabilities and organisation.
b How senior executives evaluate and improve the company’s leadershipsystem, including their own leadership skills.
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operates and where it is headed,the business overview is prepared in addition to
the main submission.
The business overview is:
An appropriate start, point for writing and self-assessing the award
application, helping to ensure focus on key business issues and achieve
consistency in responses.
Used by the examiners and judges in all stages of the application review,
including the site visit.
The business overview is structured under the following headings:
• Basic description of the company.
• Customer requirements.
• Supplier relationships.
• Competitive factors.
• Other factors important to the applicant.
Having written the business overview, applicants then prepare their
written submissions against each of the 24 criteria items.
These written submissions are then ‘scored’according to the classification
of each Item.These are designated either *(A-D) = Approach/Deployment or (R)
= Results (as shown in the example above).
The Scoring Mechanism for Approach/Deployment
Score Approach/Deployment
0% • No systematic approach evident; anecdotal information.
10% to 30% • Beginning of a systematic approach to the primary purposes
of the item.
• Early stages of a transition from reacting to problems to a
general improvement in orientation.
• Major gaps exist in deployment that would inhibit progress in
achieving the primary purposes of the Item.
40% – 60% • A sound systematic approach responsive to the primary
purposes of the Item.
• A fact based improvement process in place in key areas; more
emphasis is placed on improvement than on reaction to
problems.