Christina Boehme
Molly McNertney
Lacey Rathe
Laura Sackmann
Malcom Baldrige Award
IE 361 – Fall 2002
Prior to the inception of the Malcolm Baldrige Award in 1987, the state of American
business and the quality of products produced was being overtaken by the companies of the Far
East. The Japanese in particular were producing better quality goods at an alarmingly more
efficient rate. According to Robert Haavind, the author of the book, “The Road to the Baldrige
Award,” the need for the United States to regain its competitive edge led to the formation of the
National Productivity Advisory Committee, a presidentially appointed group that would
eventually recommend the creation of a national medal for achievement in productivity (Haavind,
Robert p.7). Leaders of many U.S. companies such as Ford Motor Company, McDonnell Douglas
and Florida Power and Light began to lobby Congress for the creation of the award. On August
20, 1987, President Ronald Reagan signed Public Law 100-107, which established the Malcolm
Baldrige National Quality Award. The award was named after Secretary Of Commerce, Malcolm
Baldrige, who was killed in a rodeo accident on July 25 of that same year. Malcolm had long
been a strong supporter and advocate for the creation of this award. Due to his efforts and the
timing of his death, the award was named in his honor (Bogan, Christopher, Hart, Christopher
p.13).
What is the Malcolm Baldrige Award?
The Malcolm Baldrige National Quality Award is a highly prestigious award given out
yearly to U.S. companies and businesses that show extraordinary strides in customer focused
quality. The President of the United States presents each organization with their award.
The Malcolm Baldrige Award was created to strengthen competitiveness between U.S.
businesses. Three goals of the award are:
1. To help improve performance practices and capabilities
2. To facilitate communication and sharing of best practices information among U.S.
organizations of all types
3. To serve as a working tool for understanding and managing performance, planning,
training and assessment
These goals are the foundation of the award criteria. (1997 Malcolm Baldrige Award Criteria,
URL)
At the present time, the Malcolm Baldrige Award is managed by the National Institute
for Standards and Technology (NIST) with help from the American Society for Quality (ASQ)
and other private sectors.
In order for a business to be eligible to receive the Malcolm Baldrige Award, they must
be officially headquartered within the U.S. They must fill out an application, which is reviewed
by a board of primarily private-sector experts in quality and business. Once they pass the initial
screening they are then visited by members of the board to verify all information is correct.
Both the government and individual businesses fund the Malcolm Baldrige Award. There
is a fee to be considered for the award. This typically ranges from $500 for a non-profit
organization up to around $5000 for businesses and organizations with more than 500 employees.
There are additional fees for any site visits a business might desire. These range from $20000 to
$35000 per visit. The government also contributes approximately $5 million yearly. Private
donations are also accepted.
The Malcom Baldridge award is presented annually to a maximum of 3 businesses in
each of the following categories: manufacturing, service, small business, education and
healthcare. The award is fashioned as an evaluative scoring system with assessment criteria that
are assigned values and total 1000 points. Some of the criteria are weighed more heavily than
others, and together these criteria make up the seven pillars of the Baldrige quality framework.
The seven pillars are leadership, information and analysis, strategic quality planning, human
resource development and management, management of process quality, quality and operational
results, and customer focus and satisfaction.
The Seven Pillars
The first pillar, leadership, focuses on senior executives and their personal leadership and
involvement in quality assurance. It examines how they create and sustain customer focus and
how the quality values have been integrated in to the company’s management system. How the
company takes care of its public responsibilities is an important factor of this pillar. Leadership
makes up 9% of the total weighing in the scoring process.
The second pillar is information and analysis. This pillar examines the use of data and
information by the company that is used in determining quality excellence and improving
competitive performance. The appropriateness and reliability of this data is also determined to
evaluate how valid the company’s conclusions are. Information and analysis is weighed as 8% of
the total score.
The third pillar, strategic and quality planning, focuses on the company’s plans for
quality and their goals for leadership. It examines the planning process and how quality and
performance requirements are deployed throughout the company. It also looks at the company’s
short and long-term key action plans. Strategic and quality planning makes up 6% of the total
score.
The fourth pillar, human resource and development and management looks at how the
people who work in the company are managed in a way that maximizes their benefit to the
company. It evaluates how effective the company is at developing the full potential of their work
force. It also examines how the workforce is aligned with the company’s objectives in mind. As
the pillars are becoming more important their weights are increased, this pillar makes up 15% of
the total score.
The fifth pillar, management of process quality, examines how the processes that
contribute to the production of the company’s goods and services are managed and improved.
The key elements of process management that are focused on are design management, process
quality, and systematic quality improvement and assessment. This pillar is also one of the more
important categories, therefore it makes up 14% of the total score.
The sixth pillar, quality and operational results, looks at the company’s quality levels and
the trends in their improvement quality. The performance of these quality levels are examined
relative to the levels of the company’s competitors. This pillar is a measure of progress for the
company, so it is one of the most heavily weighed pillars. Quality and operational results makes
up 18% of the total score.
The seventh pillar, customer focus and satisfaction, is the most important category in the
Baldrige quality framework. It deals with the company’s relationship with customers and their
knowledge of customer requirements. The company’s knowledge of the key quality factors that
determine their competitiveness is also important to this pillar. Because this pillar is so important
to the award it is weighed as 30% of the total score.
Benefits of the Baldridge Assessment
The Malcom Baldridge assessment is successful in increasing profitability by improving quality
because of its extensive application process. The application process does the following: involves
and motivates people, provides a proven quality system, focuses on the customer, assesses
quality, demands data, provides feedback, encourages sharing, stimulates change and builds
financial success. (George, Stephen p. 153-166)
Involves and Motivates People: The process invites people to think about what they do
individually and as a part of a group, department and division to exceed the customers
expectations. Companies use internal experts instead of hiring outside experts to assess quality
processes.
Provides a Quality System: The criteria have been designed and are continuously improved by
leading quality and business experts. It provides businesses with a standard and effective process
to assess their quality issues.
Focuses on the Customer: The application process helps businesses that have forgotten their
reason for existence focus on meeting and exceeding their customers needs.
Assesses Quality: Businesses are able to determine their strengths and weaknesses and find out if
they are headed in the direction of improved quality.
Demands Data: The award is based on proof not just stories, assumptions and opinions.
Provides Feedback: Reports what needs to be changed to improve the quality.
Encourages Sharing: Businesses can benchmark themselves against other businesses to see how
competitive they are and find ways to improve their quality through other businesses successes
and failures.
Stimulates Change: Problem solving techniques are used to improve quality based on the results
of the application process.
Builds Financial Success: It can improve financial performance by increasing business,
establishing an image as a quality leader, reducing the cost of poor quality, and improving critical
financial measures.
A report of the 20 top scorers in the Baldridge competition in 1988 and 1989 confirms that:
§
The annual average increase in market share was 13.7 percent
§
The annual average increase in sales per employee was 8.6 percent
§
The average annual increase in return on assets was 1.3 percent
(George, Stephen p. 165)
The Malcolm Baldridge Award in its short time of existence has positively impacted quality
improvement in the United States. A business can gain the knowledge and tools needed to
increase profitability while improving quality by filling out the Baldrige application.
References
George, Stephen. 1992. The Baldrige Quality System. New York: John Wiley & Sons, Inc.
Goetsch, David L. and Stanley B. Davis. 1997. Quality Management Third Edition. New Jersey:
Prentice Hall.
Haavind, Robert. 1992. The Road to the Baldrige Award. Boston, MA: Butterworth-Heinemann.
Hart, Christopher W. L. and Christopher E. Bogan. 1992. The Baldrige. New York: McGrawHill, Inc.
http:/www.nist.gov/public_affairs/factsheet/baldfaqs.htm
http://www.quality.nist.gov/index.html
1997 Malcolm Baldrige Award Criteria:
http://www.clicnet.com