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Performance ExcellencePerformance Excellence& ISO 9001:2000& ISO 9001:2000
ISO ISO 9001:2009001:200
00
PerformancPerformance Excellence e Excellence
ModelsModels
FinancialFinancial Performance
11 22 33
©Hammer Quality Solutions 2004
Model for Organizational Model for Organizational EffectivenessEffectiveness
Performance ExcellencePerformance Excellence& ISO 9001:2000& ISO 9001:2000
PerformancPerformance Excellence e Excellence
ModelsModels
11
Performance Excellence ModelsPerformance Excellence Models
Examples
• European Quality Award
• Kenyan Quality Award (KQA)
• Baldrige National Quality Program (US)
• California Governor’s Golden State Quality Award
• New York Governor’s Excelsior Award
Core Values of Excellence Models
• Visionary Leadership
• Customer-Driven Excellence
• Organizational and Personal Learning
• Valuing Employees and Partners
• Agility
• Focus on the Future
• Managing for Innovation
• Management by Fact
• Public Responsibility and Citizenship
• Focus on Results and Creating Value
• Systems Perspective
Performance Excellence ModelsPerformance Excellence Models
– Focus on Results
• Customer-Focused Results– Satisfaction, Retention, Customer-Perceived Value
– Key Product and Service Performance Measures
• Financial and Market Results– Key Financial Indicators, Return, Economic Value
– Marketplace Performance, Market Share, Growth
• Human Resource Results– Employee Well-Being, Satisfaction and Development
– System Performance and Effectiveness
• Organizational Effectiveness Results– Operational Performance, Productivity, Supplier Performance
– Regulatory/Legal Compliance and Citizenship
Performance Excellence ModelsPerformance Excellence Models
Performance ExcellencePerformance Excellence& ISO 9001:2000& ISO 9001:2000
FinancialFinancial Performance
22
Quality Management & Financial Performance
• 5-year study*
• 608 award winners from 51 industries
• 77% from the manufacturing sector
• 140 award givers
• Customer & independent awards
• Award winners represent “effective implementation”
Financial PerformanceFinancial Performance
* Impact of Total Quality Management on Financial Performance: Evidence from Quality Award Winners by Dr. Vinod R. Singhal, Georgia Institute of Technology and Dr. Kevin B. Hendricks, University of Western
Ontario, March, 2000
1988 1998'93
6 yearsbefore
'92'89 '90 '91 '94 '95 '96 '97
1 yearbefore
Award
4 yearsafter
ImplementationPeriod
Post-ImplementationPeriod
Determining the implementation and post-implementation periods for a firm thatwon its 1st quality award in 1994.
Financial PerformanceFinancial Performance
Time Period Measurement for Award Winners (Example)
Financial Performance Results
• Implementation Period = No significant differences
• Post-Implementation Period = Significant differences
Financial PerformanceFinancial Performance
20%
17%
12% 12%
21%
16%
21%
14%
25%
13%
0%
5%
10%
15%
20%
25%
First Year Second Year Third Year Fourth Year Fifth Year
Stock Return
Stock Price PerformancePost-Implementation Period
Award Winners
S & P 500
Financial PerformanceFinancial Performance
Award
9%6% 8%
0%
23%
7%
79%
37%
69%
32%
91%
43%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Return onAssets
Return onSales
Employees Total Assets Sales OperatingIncome
Performance Measures
Percent Change in Performance Measures5-Year Post-Implementation Period
Award Winners
Benchmark Firms
Financial PerformanceFinancial Performance
10%6%
17%
9%
25%
11%
49%
24%
33%
23%
73%
33%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Return on Assets Return on Sales Employees Total Assets Sales OperatingIncome
Performance Measures
Percent Change in Performance MeasuresAward Winners
5-Year Post Implementation Period
Independent
Customer
Financial PerformanceFinancial Performance
10%
4%
17%
7%
21%
9%
42%
18%
39%
20%
63%
22%
0%
10%
20%
30%
40%
50%
60%
70%
Return onAssets
Return onSales
Employees Total Assets Sales OperatingIncome
Performance Measures
Percent Change in Performance MeasuresAward Winners
5-Year Post Implementation Period
Smaller Firms
Larger Firms
Financial PerformanceFinancial Performance
(<$600m)
(>$600m)
Conclusions from Financial Study
• Significant positive financial impact
• Greater impact on smaller firms
• Core value focus is more important than customer criteria
• Patience is required and rewarded
Financial PerformanceFinancial Performance
Performance ExcellencePerformance Excellence& ISO 9001:2000& ISO 9001:2000
ISO ISO 9001:2009001:200
00
33
Core Values & Principles
• ISO 9001:2000 is based on core values of Excellence Models
• Core values incorporated as 8 principles of ISO 9001:2000
• 8 principles are mandated to emphasize importance
ISO 9001:2000ISO 9001:2000
Visionary Leadership
Customer-Driven Excellence
Organizational & PersonalLearning
Valuing Employees & Partners
Agility
Focus on the Future
Managing for Innovation
Management by Fact
Public Responsibility &Citizenship
Focus on Results & Creating Value
Systems Perspective
Visionary Leadership
Customer-Driven Excellence
Organizational & PersonalLearning
Valuing Employees & Partners
Agility
Focus on the Future
Managing for Innovation
Management by Fact
Public Responsibility &Citizenship
Focus on Results & Creating Value
Systems Perspective
Customer Focus
Leadership
Involvement of People
Process Approach
System Approach to Management
Continual Improvement
Factual Approach to DecisionMaking
Mutually Beneficial SupplierRelationships
Customer Focus
Leadership
Involvement of People
Process Approach
System Approach to Management
Continual Improvement
Factual Approach to DecisionMaking
Mutually Beneficial SupplierRelationships
ISO 9001:2000ISO 9001:2000 Core Values from
Excellence Models
Principles from
ISO 9001:2000
Principles to Requirements
The 8 principles are woven into 5 main elements of ISO 9001:2000
» Documentation
» Management
» Resources
» Product/Service Processes
» Improvement
ISO 9001:2000ISO 9001:2000
ISO 9001:2000
• Documentation Requirements
• Document Control
• Records Control
• Management Commitment
• Management Review
• Resource Management
• Training
• Infrastructure / Work Environment
• Customer Processes• Design & Development• Purchasing• Production & Service Processes• Calibration
• Customer Satisfaction• Internal Audits• Nonconforming Product• Analysis of Data• Continual Improvement• Corrective & Preventive Action
ISO 9001:2000ISO 9001:2000
Customer Satisfaction & Improvement
• Requirements of ISO 9001:2000 are integrated with organizational capabilities to improve customer satisfaction
• Improving the effectiveness of quality processes increases customer satisfaction
ISO 9001:2000ISO 9001:2000
CustomerWants
CustomerWants
ISO 9001:2000 & Customer Satisfaction
OrganizationHas
OrganizationHas
ISO 9001:2000Provides
ISO 9001:2000Provides
On-Time Delivery
Continual Improvement
Ability to Grow
Lower Costs
Zero Defects
Responsiveness
Control Systems
Trust Relationship
Communication
Corrective Action
Process Control System
Efficiency / Yield
Metrics
Inventory Control
Capacity
Quality System
Control of Suppliers
(7.2) Customer Processes
Communication(7.2.3)
Design / Development(7.3)
Purchasing(7.4)
Operations Control(7.5.1)
Customer Satisfaction(8.2.1)
Analysis of Data(8.4)
Continual Improvement(8.5.1)
Corrective Action(8.5.2)(8.5.3)
Communication
Cu
sto
mer
Per
cep
tio
n
Str
eng
th o
f P
roce
sses
ISO 9001:2000ISO 9001:2000
Effective Measurements = Effective Management
• ISO 9001:2000 provides effective measurements for management action
• Based on effective measurements, products and processes are improved to directly impact customer satisfaction
ISO 9001:2000ISO 9001:2000
ManagementReview
Quality Objectives(QMS-04)
Follow-up From PreviousManagement Reviews
(QMS-05)
Quality Policy(QMS-04)
Internal Audits(QMS-14)
All Processes
CustomerReturnsIndex
(QMS-13)
CustomerSatisfaction
(QMS-13)
Corrective &Preventive Action
(QMS-15)
ComplaintTrends
(QMS-16)
IndividualCustomer
Complaints(QMS-16)
ProductNonconformanceTrends (QMS-15)
Individual ProductNonconformances
(QMS-15)
ProposedCorrective orPreventive
Actions(QMS-16)
ProductReturns(QMS-15)
SupplierPerformance
(QMS-10)
ReceivingInspection
Performance(QMS-10)
BusinessChanges that
Impact the QMS(QMS-05)
New Processes &Major Changes
(QMS-01 & QMS-10)FutureBusinessChanges
= Recommendations for Improvement
ProductConformity
(QMS-11)
Resource Needs?
Recommendations to Improvethe Effectiveness of the QMS?
Recommendations to ImproveProducts?
Outputs
John
Steve
John
John
John
Steve
Eva
John
John
John
John
Paul
Dave
Dave
Paul
All
Dave
Paul
InternalAuditors
RelationshipIndex
(QMS-13)
On-timeIndex
(QMS-13)
ProcessPerformance
(QMS-11)
Rick
Opportunities forPreventive Action
(QMS-05)
ISO 9001:2000 & Performance Excellence
• Core values & principles provide focus for performance excellence
• Effective quality management impacts financial performance
• ISO 9001:2000 is a significant step toward performance excellence
ISO 9001:2000ISO 9001:2000
No formalsystems
Someformal
procedures
ISO9001:1994
ISO9001:2000
ExcellenceCriteria
EntrepreneurLeader is the
System
LeadershipRecognizesthe Need for
Structure
FormalDocumented
Structure
Principle-Based
Structure
Core ValuesGovern the
Organization
ISO 9001:2000ISO 9001:2000Steps to Performance Excellence
• Leadership is not committed• Leadership is not involved• Executive management does not function as a team• Poor implementation strategy• Poor internal or external consulting advice• Focus on certificate / not on effectiveness
ISO 9001:2000ISO 9001:2000
Why Do Organizations Lack Performance Improvement With
ISO 9001:2000?
ISO 9001:2000ISO 9001:2000
Absence of
Trust
I nattention
to Results
Fear of
Confl ict
Lack of
Commitment
Avoidance of
Accountability
2) Develop team purpose &identif y values
4) “Rope-Square”exercise
5) Describe roles &responsibilities
6) Myers BriggsSurvey
7) Power to ChangePowerPoint
8) Lif e maps (leaderfi rst)
9) Thomas KillmanSurvey
I nvulnerabilityUnwillingness to be
vulnerable — not openabout mistakes &
weaknesses
Artifi cial HarmonyTeams that lack trust areincapable of engaging inpassionate & unfi ltered
debate
AmbiguityWithout passionate debate team
members rarely buy-in and commit
Low StandardsWithout commitment team members avoidaccountability — hesitating to call their
peers on negative behaviors
Status & EgoFailure to hold one another accountable creates an
environment where team members put theirindividual needs above the goals of the team
Becoming a Team
Humility — Level 5 Leader
J ohari Window
Cognitive Maps
Ladder of I nf erence
Filtering Our Dialogue
Advocacy & I nquiry
Four Fatal Fears
Four Fatal Fears
Aut
hent
icit
y
Authenticity
Filtering Our Dialogue
Team DysfunctionsPersonal Development I ssues
Building Trust3) Five Dysfunctions
Survey1) Explain teams & high
perf ormance teams