ANQ Congress 2008 Bangkok
Development of the Korean Management Quality Index in Korea:
To use five Korean National Mental Hospitals
Jae-Young Moon1, Yang-Kyun Kim2, Yung-Ho Suh2, Jae-Hee Suh1, Fan Liu2
<1Dongseo University, jaymoon, jhsuh@gdsu.dongseo.ac.kr >
<2 KyungHee University, lukekim, suhyh, fanliu@khu.ac.kr>
Abstract
The purpose of this research is to develop the Korean Management Quality Index for performance excellence in
order to help the Korean national metal hospitals conduct self-assessments. This research addresses the level of
national mental hospitals’ management quality performances in Korea. We compare performance level between
seven Korean national mental hospitals between urban and rural area hospitals. Our comparison indicates that
average performance level of urban area hospital is greater than rural area hospitals.
Key Words: Health care performance Excellence, Quality Management, Management Quality Index
1. Introduction
The National Quality Awards are established and presented to companies which achieve outstanding
performances in order to strengthen competitiveness and to facilitate communication and sharing of best
practices among companies. (Kim et al., 2005; NIST, 2005). To encourage competitiveness of domestic
companies, most of the Organization for Economic Cooperation and Development (OECD) countries has
National Quality Awards. Among many National Quality Awards, the Malcolm Baldrige National Quality
Award (MBNQA) is one of the major Quality Management Awards in the world (Sharaph et al., 1989;
Thiagarajan et al., 2001; Baidoun, 2004). The MBNQA helps to estimate variable areas not only manufacturing
and service industries but also health-care, public sector, education and others (NIST, 2008).
The Korea National Quality Award (KNQA) was also founded about 30 years ago, and the focus was on
Quality Control of the manufacturing and service industry. It raised criticism that service companies were unable
to apply for the award (Duglas & Fredendall, 2004; Kim et al., 2005). Therefore, the operating committee of the
Korea National Quality Award (KNQA) started benchmarking the Malcolm Baldrige National Quality Award
(MBNQA) from 1997 since it includes all the necessary elements for assessment. However the KNQA has only
manufacturing and service area.
Therefore this research is based on the 2005 Malcolm Baldrige National Quality Award (MBNQA) health
care criteria which consist of seven categories which are; Leadership, Strategic Planning, Customer & Market
Focus, Human-Resources Focus, Process Management, Information & Analysis and Business Results (Kim et
al., 2005; NIST, 2005; Moon et al., 2007). There is a slight difference between these two models.
Recently, many of other Quality Management Awards benchmarked the Malcolm Baldrige National Quality
Award (MBNQA). However, countries with different cultural and industrial background might have to be very
careful about developing their own quality measurement model. Many countries which have adapted the
Malcolm Baldrige National Quality Award (MBNQA) model have subsequently studied their national quality
award to verify feasibility (Samson & Terziovski, 1999; Su et al., 2003).
The purpose of this research is to develop the Korean Management Quality Index for performance
excellence in order to help seven Korean national mental hospitals conduct self-assessments. This research
addresses the level of seven national mental hospitals’ management quality performances in Korea. We compare
performance level location of hospitals and between small and large hospitals based on the number of employee.
2. Literature Review
Many scholars have tried to explain TQM methodology and their effects on the performance of organizations.
Saraph et al., (1989) suggested combining previous research (Adam et al., 1981; Juran, 1981) and defined eight
core-factors of TQM (① The role of top Management, ② The role of the quality department, ③ Training, ④
Product/Service design, ⑤ Supplier quality management, ⑥ Process management, ⑦ Quality data and reporting,
⑧ Employee relations) using factor analysis. Hackman and Wageman (1995) developed the three core-factors of
TQM which is based on Deming, Ishikawa, and Juran's research. They are ① TQM Philosophy ② TQM
Interventions ③ TQM in Practice. They are basically trying to find the relationship among factors or functions
of the businesses.
The NQA model has been widely explored among many scholars. Several national quality awards have
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ANQ Congress 2008 Bangkok
been established to promote quality and serve as models of TQM. Wilson and Collier (2000) used SEM to
analyze the causal relationships among MBNQA categories, based on a proposed recursive model. Their model
of MBNQA consisted of a driver, system, and results. They suggested that Leadership leads to system
performances, and this in turn will lead to financial results and customer satisfaction results. Their model is in
similar with the MBNQA Model and its philosophy. Su et al. (2003) suggested the Taiwan National Quality
Award model to analyze the seven factors of the Taiwanese NQA. They showed that factors have relationships
and their national model is relevant in terms of relationship between performances and systems.
Ever since America conducted the NDP (National Demonstration Project) to improve quality in the field of
health service in 1987, such TQM techniques began to be applied in health services. Through this project, TQM
is proved to improve the management process and service process of health service organizations, and many
previous researches which is health care service suggested TQM is supported to improve the health care service.
Eubanks (1992) carried out an investigation on 781 hospitals in North America, finding that 58.5% of them are
conducting TQM or TQM related activities. Lin and Clousing (1995) studied on the implementation of TQM
from 31 hospitals in New Orleans, Louisiana, revealing that most hospitals have adopted TQM.
Conclusively, the National Quality Awards improve the inner and outer competitiveness of the enterprises,
which allow them to be in a better position in global market.
3. Research method
We surveyed five Korean national mental hospitals. We received 655 replies, however, 42 of them whose
contents were considered unreliable were dropped from the further analysis thus a total of 613 were used in the
final analysis <see Table 1>. From the data, there were one hospital which located in urban area and four
hospitals which located in rural area. There were two hospitals (40%) with less than 100 employees, two
hospitals (40%) between 101 and 200 employees, one hospital (20%) over 1,001 employees.
The survey started on October 1st in 2006 and ended on February 1st in 2007. We checked the reliability of
the measurement (questions) and measured the Korean Management Quality Index (KMQI). We developed the
formula of KMQI of each company as shown below;


xijk

MQI   (CriteriaSc aleij )  


n

max[
x
]
i
j
k  j

MQI: The Korean Management Quality Index of a company
CriteriaScale : The point of standard assessment item
xijk : The value of question
k
that belongs to category
i
and sub-category
j
max[ x ] : The maximum value of measurement item (which is 7 in Likert-7 point scale)
nij : The number of questions in category i and sub-category j
Table 1. The result of demographic analysis
(n=613)
Measure
Sex
Age
The number of employee
Items
Male
Female
20-29
30-39
40-49
Over 50
under 100
100-200
Over 200
Frequency
306
349
21
216
304
114
392
235
28
Percentage
46.7
53.3
3.2
33.0
46.4
17.4
59.8
35.9
4.3
4. Results
According to MBNQA Criteria, “The score of 50 to 69 percent in process category (1 – 6) represents an
approach that meets the overall requirements of the category and that is used consistently. The score in result
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ANQ Congress 2008 Bangkok
category (7) represents a clear indication of improvement trends and/or good levels of performance with
appropriate comparative data in the results areas covered in the category and important to the business.
Additionally, the score of 70 to 89 percent in process category represents an approach that meets the multiple
requirements of the category and is used consistently. The score in result category represents current
performance is good to excellent in most areas of importance to the category requirements (NIST, 2006; 2007).”
The results indicate that the average performance level of KMQI is 622.1 (67.9%) points as shown in Table
2. Among the 7 categories, the score of Leadership (1) and Customer & Market Focus (3) are the highest while
the score of Result (7) is the lowest. The comparison with sub-categories indicates that the score of Governance
and Social Responsibility (1.2) is the highest while the score of Financial Results (7.4) is the lowest. Notably, in
categories of Human Resource Focus (5), the score of Employee Well-Being and Satisfaction (62.8 %) is
relatively lower than that of Work Systems (65.4 %) and Employee Learning and Motivation (65.2%).
Table 2 Analysis of location of hospitals of the KNQA
Urban area
(n=235)
Category / Item
1. Leadership
Point
77.0
100
1.1 Senior Leadership
1.2 Governance and Social
Responsibility
2. Strategic Planning
2.1 Strategy Development
2.2 Strategy Deployment
3. Customer & Market Focus
3.1 Customer & Market Knowledge
3.2 Customer Relationships and
Satisfaction
4. Information & Analysis
4.1 Gathering and Measurement of
Organizational Performance
4.2 Analysis and Using of
Organizational Performance
4.3 Information and Knowledge
Management
5. Human Resource Focus
5.1 Work Systems
5.2 Employee Learning and
Motivation
5.3 Employee Well-Being and
Satisfaction
6. Process Management
6.1 Process Management
6.2 Manufacture and Delivery
Processes
6.3 Support Processes
7. Results
7.1 Human Resource Result
7.2 Products and Service Result
7.3 Customer Satisfaction Result
7.4 Financial Result
60
44.6
15.0
5.6
40
13.4
6.6
7.1
14.2
7.4
45
34.2
7.4
85
60.5
85
77.0
10.1
32.4
40
45
Ratio
(%)
S.D.
64.6
30.7
33.9
63.3
29.1
40
85
74.7
74.3
81.0
10.8
74.7
70.2
Sig.
2.88
0.0
6
0.00
1.868
32.6
5.9
81.5
-2.59
0.80
72.8
62.5
29.5
32.9
64.0
29.1
13.8
6.8
7.3
13.7
7.3
73.5
73.6
73.1
75.3
72.8
1.94
2.1
1.67
-0.64
0.00
0.05
0.03
0.09
0.52
0.99
76.0
34.9
7.1
77.6
-1.23
0.22
76.0
76.8
75.3
74.5
13.5
42.1
15.6
t
71.2
61.6
14.2
72.5
-0.99
0.32
Difference
(%)
2.3
4.1
-0.5
2.5
3.2
2.2
-0.8
0.0
-1.6
-1.3
25
18.0
4.1
72.0
17.8
4.3
71.2
0.65
0.52
0.8
25
17.3
4.6
69.2
17.8
4.5
71.2
-1.44
0.15
-2.0
35
25.2
5.8
72.0
26.0
6.3
74.3
-1.67
0.10
-2.3
35
55.5
23.5
16.4
6.8
67.1
54.5
22.5
15.7
6.8
64.1
64.3
0.77
1.82
0.44
0.07
25
16.3
5.2
65.2
16.3
4.7
65.2
-0.14
0.90
0.0
25
15.7
5.1
62.8
15.6
4.9
62.4
0.13
0.90
0.4
85
76.6
110
65.3
17.6
69.6
75.5
18.0
68.6
0.73
0.46
1.2
2.8
1.0
35
25.6
6.1
73.1
25.4
5.9
72.6
0.44
0.66
0.5
35
24.3
6.4
69.4
24.2
6.5
69.1
0.24
0.81
0.3
40
26.7
272.6
61.0
58.7
47.0
43.4
6.9
58.1
12.7
11.7
14.6
13.9
66.8
60.6
76.3
73.4
58.8
62.0
26.0
282.7
63.4
61.9
48.9
44.2
7.6
57.2
12.6
12.2
14.6
13.4
65.0
62.8
79.3
77.4
61.1
63.1
1.22
-2.15
-2.34
-3.24
-1.59
-0.67
0.22
0.03
0.02
0.00
0.11
0.50
47.3
12.1
67.6
49.1
12.1
70.1
-1.73
0.08
-2.5
50.6
670.0
11.1
136.2
72.3
67.0
51.2
675.4
11.3
135.8
73.1
67.5
-0.64
-0.49
0.52
0.63
-0.5
450
80
80
80
70
7
0
TOTAL
Mean
Suburban area
(n=420)
Ratio
Mean
S.D.
(%)
70
1,000
1.8
-2.2
-3.0
-3.0
-2.3
-1.1
-0.8
Our comparison indicates that the performance level of rural area hospitals (623.2) is greater than that of urban
area hospital (620.2) as shown in Table 3. The result of t-test indicate that there is significant difference of the
performance level between urban area hospital and rural area hospitals (t=-0.29, p=0.78). With respect to subcategories, the difference in the performance level between two sectors is only rejected for Information and
Knowledge Management (4.3) and Employee Learning and Motivation (5.2) (t=-1.67, p=-2.3; t=-0.14, p=0.0,
respectively). The performance level of Process Management (6.1) is the largest difference (0.5%) between
urban area hospital (73.1%) and rural area hospitals (72.6%). The score of Senior Leadership (1.1) is the highest
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ANQ Congress 2008 Bangkok
in urban area hospital, while the score of Strategy Development (2.1) is the highest in rural area hospital. The
score of Human Resource Result (7.1) is the lowest in both companies.
Table 3 Analysis of the KMQI
Category / Item
Point
100
60
40
85
40
45
85
40
45
85
25
25
35
85
35
25
25
110
35
35
40
450
90
130
110
120
1,000
1. Leadership
1.1 Senior Leadership
1.2 Governance and Social Responsibility
2. Strategic Planning
2.1 Strategy Development
2.2 Strategy Deployment
3. Customer & Market Focus
3.1 Customer & Market Knowledge
3.2 Customer Relationships and Satisfaction
4. Information & Analysis
4.1 Gathering and Measurement of Organizational Performance
4.2 Analysis and Using of Organizational Performance
4.3 Information and Knowledge Management
5. Human Resource Focus
5.1 Work Systems
5.2 Employee Learning and Motivation
5.3 Employee Well-Being and Satisfaction
6. Process Management
6.1 Process Management
6.2 Manufacture and Delivery Processes
6.3 Support Processes
7. Results
7.1 Human Resource Result
7.2 Products and Service Result
7.3 Customer Satisfaction Result
7.4 Financial Results
TOTAL
Mean
75.5
43.0
32.5
63.2
30.0
33.3
63.7
29.1
34.6
61.2
17.9
17.6
25.7
54.8
22.9
16.3
15.7
75.9
25.4
24.2
26.2
227.7
56.5
85.1
69.2
72.3
622.1
S.D.
15.4
10.6
5.8
13.7
6.7
7.3
13.9
7.3
7.2
14.0
4.3
4.5
6.1
16.0
6.8
4.9
5.0
17.9
6.0
6.5
7.4
50.9
17.5
18.8
13.1
21.9
128.9
Ratio (%)
75.5
71.7
81.3
74.4
75.0
74.0
75.0
72.8
76.9
72.0
71.6
70.4
73.4
64.5
65.4
65.2
62.8
69.0
72.6
69.1
65.5
50.6
62.7
65.5
62.9
60.3
62.2
Our comparison indicates that the performance level of hospitals with under 100 employees (686.9) are
greater than hospital with over 200 employees (620.2) and hospitals between 101 and 200 employees (682.1) as
shown in Table 4. The result of One-Way Analysis of Variance (One -Way ANOVA) indicate that there is
significant difference of the total performance level among the three groups..
The post-hoc test indicate that the performance level of hospitals with under 100 employees is different
from companies with over 200 employees and companies between 101 and 200 employees. However, the
performance level of hospitals with less than 100 employees and hospitals between 101 and 200 employees is
the same.
The score of Senior Leadership (1.2) is the highest in hospitals between 101 and 200 employees is Gathering
and Measurement of Organizational Performance (4.1) is the highest and hospital with over 200 employees is
Governance and Social Responsibility (1.2) is highest, while the score of Analysis and Using of Organizational
Performance (4.2) is the highest in hospitals with less than 100 employees. The score of Human Resource Result
(7.1) is the lowest in hospitals less than 100 employees, the score of Support processes (6.3) is the lowest in
hospitals between 101 and 200 employees, and the score of Financial Results (7.4) is the lowest in hospital with
over 200 employees.
Table 4 Analysis of the number of employees
Over 200
(n=235)
Category
/ Items
1. Leadership
1.1 Senior Leadership
1.2 Governance and Social
Responsibility
2. Strategic Planning
2.1 Strategy Development
100-200
(n=249)
Under 100
(n=171)
Score
Mean
S.D.
Ratio
(%)
Mean
S.D.
100
60
77.0
44.6
15.0
10.1
77.0
74.3
73.6
41.7
16.5
11.0
Ratio
(%)
73.6
69.5
40
32.4
5.6
81.0
31.9
6.3
40
64.6
30.7
13.4
6.6
76.0
76.8
61.9
29.3
14.5
7.2
85
4
Mean
S.D.
76.2
42.7
14.1
10.4
Ratio
(%)
76.2
71.1
79.7
33.6
5.1
84.0
73.0
73.2
63.2
29.9
12.5
6.1
74.3
74.7
ANQ Congress 2008 Bangkok
2.2 Strategy Deployment
3. Customer & Market Focus
3.1 Customer & Market
Knowledge
3.2 Customer Relationships
and Satisfaction
4. Information & Analysis
4.1 Gathering and Measurement
of Organizational Performance
4.2 Analysis and Using of
Organizational Performance
4.3 Information and Knowledge
Management
5. Human Resource Focus
5.1 Work Systems
5.2 Employee Learning and
Motivation
5.3 Employee Well-Being and
Satisfaction
6. Process Management
6.1 Process Management
6.2 Manufacture and Delivery
Processes
6.3 Support Processes
7. Business Results
7.1 Human Resource Result
7.2 Products and Service Result
7.3 Customer Satisfaction Result
7.4 Financial Result
TOTAL
5.
45
33.9
63.3
7.1
14.2
75.3
74.5
32.7
62.9
7.7
14.5
73.0
75.1
33.3
65.5
6.8
12.4
74.0
77.0
40
29.1
7.4
72.8
28.6
7.6
71.5
29.8
6.8
74.5
45
34.2
7.4
76.0
34.4
7.5
76.4
35.6
6.4
79.1
85
85
60.5
13.5
71.2
64.1
15.9
75.4
66.5
13.5
78.2
25
18.0
4.1
72.0
21.3
5.4
85.2
21.6
4.9
86.4
25
17.3
4.6
69.2
21.0
5.7
84.0
21.9
4.8
87.6
35
25.2
5.8
72.0
21.8
5.6
62.2
23.0
4.9
65.7
35
55.5
23.5
16.4
6.8
65.3
67.1
54.1
22.5
16.3
7.1
63.6
64.2
55.0
22.6
14.8
6.3
64.7
64.5
25
16.3
5.2
65.2
16.4
4.9
65.6
16.2
4.6
64.8
25
15.7
5.1
62.8
85
15.3
5.0
61.2
16.2
4.6
64.8
16.8
7.0
60.3
81.4
69.7
29.7
14.3
6.3
63.3
84.4
25.6
6.1
73.1
66.4
28.5
35
24.3
6.4
69.4
23.9
6.7
68.2
24.5
6.2
70.0
40
450
90
130
110
120
1,000
26.7
222.8
55.8
83.9
67.1
70.5
6.9
51.3
17.9
18.7
12.8
21.8
66.8
49.5
62.0
64.5
61.0
58.8
620.2
128.8
62.0
14.0
283.2
57.6
85.7
70.2
69.7
682.1
4.5
62.9
17.9
19.7
13.5
22.8
150.5
35.0
65.0
64.0
65.9
63.8
58.0
68.2
15.5
290.8
55.7
86.0
70.6
78.6
686.9
3.7
56.7
16.2
17.7
12.8
19.5
124.0
38.7
64.6
61.8
66.1
64.1
65.5
68.6
110
35
76.6
17.6
69.6
Conclusion
Today, the focus of performance measurement has been changed from financial perspectives to quality
excellence (Sousa et al. 2005). The National Quality Award has focused on quality excellence and has
highlighted the importance of performance indicators in achieving quality excellence not only manufacturing and
service industry but also education, healthcare, public sector and others. This research develops the Korean
Management Quality Index for measuring the performance excellence in order to help Korean hospitals conduct
self-assessments.
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ANQ Congress 2008 Bangkok
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