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0406 HR Magazine: Winners and Learners

By Ann Pomeroy   4/1/2006
 

HR Magazine, April 2006

Vol. 51, No. 4

Applying for the Baldrige Award is a win-win situation, say applicants  even if you lose.
  
In the early 1990s, Dale Crownover’s small family-owned business was struggling. Then something truly important happened: Crownover, who had replaced his father as CEO of the Texas Nameplate Co. a few years earlier, stumbled across the Baldrige Criteria for Performance Excellence. When he did, he realized that “it was a business plan—and it was free!” he says.

With the help of that free business plan, and the feedback from the Baldrige National Quality Program, which administers the process for the prestigious award, Crownover led his organization from near bankruptcy to a successful operation within a few short years.

Ultimately, after only three tries, Texas Nameplate landed the Malcolm Baldrige National Quality Award in 1998 in the small-business category. In 2004, the company applied and won again. (Winners must wait at least five years to reapply.)

The process has proved so valuable that Crownover says he plans to apply “again and again. I’ve already got my game plan for 2010.”

What Crownover and others have learned is that while winning the highly competitive Baldrige Award is a high honor, the insights gained from the expert feedback—and even from the process itself—can provide an invaluable boost to business performance.

‘Born Out of Crisis’

The Baldrige National Quality Program (named for Malcolm Baldrige, Secretary of Commerce from 1981 until his death in 1987) is a public-private partnership aimed at improving national business competitiveness. It was “born out of crisis, a crisis in the quality of our competitive manufacturing position,” says Harry Hertz, who has directed the program for the National Institute of Standards and Technology (NIST) since 1996. NIST is an agency of the U.S. Department of Commerce’s Technology Administration.

The program, created by Congress in 1987 and implemented the following year, has expanded at the request of the business community to cover all areas of the economy, says Hertz. Today, in addition to manufacturing, there are categories covering the service, small-business, education and health care sectors. And this year a pilot program has been added for nonprofits, including the federal government.

The criteria for the award, which are reviewed each year and rewritten as necessary, have changed dramatically over the years, says Hertz. For example, corporate governance scandals prompted “ethical rewrites” in 2003. And in 2005, the criteria were rewritten to help companies better execute their strategies, recognizing “that it’s easier to develop strategy than it is to execute it,” says Hertz.

Some organizations use the criteria to turn a company around, as Texas Nameplate did; others use it “to get better,” says Hertz. For many organizations, the criteria form the basis for their strategic business plan.

The Malcolm Baldrige National Quality Award

While any organization can follow the criteria for the Baldrige Award on its own, companies have a lot to gain by undertaking the rigorous application process.

Certainly, winners reap positive national exposure as they receive the award from the President of the United States. (Up to three winners can be chosen in each category, but there is no requirement to name even one; in 2005, judges selected a total of six winners in all categories.) But when it comes to the Baldrige Award, how you play the game really is more important than winning.

“If you are applying for the Baldrige to win an award, don’t bother,” advises Hertz. He agrees with a previous winner, who said, “We didn’t apply to win an award. We applied to win business.”

Hertz says the big advantage for applicants, even those who “know they aren’t award-ready,” is the wealth of help they receive in the form of a 50-page feedback report from experts.

Visit:
http://www.baldrige.nist.gov/Calendar.htm  for more dates.

The report, which represents many hours of careful review, has been called “the best consulting bargain in America,” he says. Although applicants pay an entry fee—$2,500 for non-profits and $5,000 for all others—that fee represents a tiny fraction of the cost of hiring a team of consultants to provide feedback, which is essentially what the report provides.

If your company is interested in applying, says Hertz, a good way to begin is to use the program’s survey tools, “Are We Making Progress?” and “Are We Making Progress as Leaders?” Both are available on paper and online (see the online version of this article for links to the appropriate web pages) and will help companies find out if their perceptions agree with those of their employees and managers. Often, says Hertz, staffers believe the company is performing at a higher level than managers do, “which indicates poor communication.” He believes employees want to do a good job and assume they are doing so unless managers tell them differently.

Writing the 50-page award application is a good way to validate your perceptions of your business, says Hertz, and may provide some “aha!” moments.

For example, many organizations don’t have a strategic plan for HR, says Hertz, or if they do have one, it’s not coupled with the organization’s strategic plan. “Baldrige forces that coupling,” he says, because the award’s seven criteria form an integrated set.

Those criteria include leadership, strategic planning, customer and market focus, information and analysis, human resource focus, process management, and business results.

Joe Muzikowski, former vice president of business processes and strategic supply at Solvay America, was involved in the award program for 13 years as an examiner, senior examiner, judge and head judge. He says the criteria are “a good solid way to run a business. They cover all the bases.”

Hertz agrees. Every organization can benefit from following the Baldrige criteria, he says, because “it’s a holistic, systemic approach to looking at your organization.”

Behind the Review Process

Once a company completes its application—a process that may take months, “depending on the state the company is in when it starts,” says Hertz—the work of the examiners and judges begins.

Stage one, the first independent review of applications by examiners (who typically spend 25 to 50 hours on each application), concludes with a statistical analysis of the scores, which are sent to the panel of judges. Beginning with the lowest, the judges review the scores for all the companies, which are identified only by number.

As the judges conduct in-depth discussions about the applicants, Muzikowski says their mantra is “Don’t block a winner.”

Next, the judges make the first cut. Those candidates whose scores indicate they are not ready to move on to stage two are assigned a feedback report writer, and the company is dropped out of the running. Many applicants use this feedback to make business improvements and then reapply another year.

The second round of judging may entail up to 20 hours of conference calls among panel members. Discussions continue until the judges reach consensus and produce a “consensus scorebook.” At any point, a judge can ask for further discussion of any application. The working mantra now, says Muzikowski, is “It’s not over ’til it’s over.”

Stage three, the homestretch, pares the applicants down to “about a dozen” who will receive site visits from a team of examiners. It is only at this stage that judges learn the names of the applicant companies.

The judging process is highly ethical, stresses Muzikowski. “Baldrige errs on the side of caution,” he says, and any possible conflict of interest—a judge who has reviewed an organization in the past, for instance—results in that judge being recused.

The purpose of the site visits is to “verify and clarify” material on the applications. “A site visit is not an audit,” says Muzikowski. “It has a definite agenda.” The examiners need to be “polite but firm” and avoid “getting pulled away by applicants who want to take you over here and show you this cool stuff.” Examiners need to stick to their agenda, he says, because “that cool stuff may not be germane to the application.”

Each team of examiners spends up to three or four days visiting facilities and talking with many of the company’s employees. Then the team is sequestered as it writes up the results of the visit. Sometimes the group “pulls an all-nighter” while they finish this stage of the process, says Muzikowski.

Companies that have a site visit receive the equivalent of more than 1,000 hours of consulting time by teams of experts. And that’s the real prize, many say. Winning the award is “simply the icing on the cake,” says one applicant.

A Baldrige judge puts it this way: “There are no losers in the Baldrige process; there are only winners and learners.”

Winners are notified in late November and receive their awards from the president early the following year at a ceremony in Washington, D.C.

As role models, the winners are expected to share their stories at the annual Quest for Excellence Conference in April. In addition to describing what worked, they also share “where they stumbled along the way, and why,” says Hertz.

The Metrics of Success

“Baldrige is one of the most high-impact programs in the federal government,” says Hertz, providing a real bang for the taxpayers’ buck. An economic impact study conducted in 2001 showed a social rate of return to the government for its investment (about $5 million annually) of 207 to 1.

“For Baldrige, we measure everything,” he says, and one key metric is downloads of the criteria from the NIST web site, which average 100,000 per month.

Another testament to the program’s success is the fact that the criteria have been widely copied. In addition to 45 state and local “mini-Baldriges” in the United States, says Hertz, the U.S. definition of excellence is being adopted around the world. A recent Australian study identified 78 quality award programs worldwide, 60 percent of which were based on the Baldrige criteria.

The beauty of the criteria framework is that it’s fact-based, says Hertz, which enables companies to manage based on facts and not on guesswork. “It helps you do the right work, not the wrong work,” he says.

Ann Pomeroy is senior writer for HR Magazine .

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Some Key 2006 Dates
for Applicants
 

April 11—Eligibility certification packages due.
April 23–26—Quest for Excellence XVIII Conference, Washington, D.C.
This annual event features the 2005 winners of the Malcolm Baldrige National Quality Award, who share their stories with attendees.

May 11—Award applications submitted on CD due.
May 25—Award applications submitted on paper due.
Oct. 15–21—Health care and manufacturing site visits.
Oct. 22–28—Education, service, small business and nonprofit pilot site visits.
Late November—2006 winners notified.

 



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