Expert Opinion

Business Excellence Models

Several business excellence models are in use today. The models are designed to guide and help organisations to improve their performance and achieve world-class performance levels. In addition, national bodies use business excellence models as a basis for award programmes, which serve to identify and recognise role model organisations. However, for most national bodies, the awards themselves are secondary in importance to their desire to achieve widespread take up of the business excellence concepts by organisations, since it is this that leads to improved national economic performance. For example, in 2001, Link and Scott [2] made a conservative estimate of the net social benefits associated with the Malcolm Baldrige National Quality Award programme. They found that the ratio of economy-wide benefits to US federal government costs in supporting the programme exceeded 207:1.

The vast majority of organisations use business excellence self-assessments to identify opportunities for improvement—as well as their areas of strength—and put in place actions to move forward. When used as a basis for an organisation’s improvement culture, the business excellence model criteria broadly channel and encourage the use of best practices into areas where their effect will be most beneficial to performance. Conti [3] recommends that organisations undertake regular self-assessments and occasional award-style assessments. Research by Mann and Grigg [4] identified at least 82 countries with national business excellence awards. Miguel [5] stated that award programmes had the following objectives:

• Communication, publication and sharing of best practices
• Fostering of continuous management, organisational quality, and process improvement
• Promotion of an awareness of quality management
• Promotion, support, strengthening and enhancement of competitiveness
• Recognition of performance excellence, best practices and benchmarks
• Understanding the requirements for performance excellence.

The best-known business excellence models are the Baldrige Criteria for Performance Excellence [6] and the EFQM Excellence Model [7]. These models are described below, as is the Deming Prize [8]. The Deming Prize was created in 1951 and played an instrumental role in Japan’s quality movement and economic success. It is viewed by many as the precursor to the current business excellence models and awards, and still operates today.

The Baldrige Criteria for Performance Excellence

The Malcolm Baldrige National Quality Award was created in the USA in 1987. Its key aim was to improve competitiveness in US companies, particularly by promoting the development of quality in response to strong competition from Japanese companies. The award model and its criteria are based on the following core values and concepts:

• Visionary leadership
• Customer-driven excellence
• Organisational and personal learning
• Valuing employees and partners
• Agility
• Focus on the future
• Managing for innovation
• Management by fact
• Social responsibility
• Focus on results and creating value, and
• Systems perspective. [6]

These values and concepts underpin the model’s seven criteria, which are shown in Figure 1. Table 1 provides a comparison of the criteria used in the Baldrige and EFQM models.

The EFQM Excellence Model

Joe Goasdoué [9], chief executive of the British Quality Foundation, wrote that the EFQM Excellence model is based on the premise that the fundamentals of running a successful organisation in the public, private or voluntary sector are the same, irrespective of type or size of organisation to which they are applied. The model is based on the following core principles:

• Results orientation
• Customer focus
• Leadership and constancy of purpose
• Management by processes and facts
• People development and involvement
• Continuous learning
• Innovation and improvement
• Partnership development, and
• Corporate social responsibility. [7]

The nine criteria that emerge from these are represented in Figure 2. These criteria are divided into two categories: enablers and results. The first five criteria are the enablers and represent the activities of the organisation, whilethe results represent the level of performance achieved. Table 1 provides a comparison of the criteria used in the Baldrige and EFQM models.

The Deming Prize

In July 1950, the Union of Japanese Scientists and Engineers (JUSE) invited Dr. W. E. Deming (1900 - 1993), one of the foremost experts of quality control in the United States, to deliver a number of courses on quality control and, in particular, statistical quality control. The late Dr. Deming’s teachings had an impact on the Japanese quality movement and, consequently, the Deming Prize was established in his honour in 1951. The prize has two categories:

• The Deming Prize for Individuals: An annual award is given to individuals that have made outstanding contributions to the study of TQM or statistical methods used for TQM, or to individuals that have made outstanding contributions in the dissemination of TQM;
• The Deming Application Prize: An annual award is presented to an organisation that has achieved distinctive performance improvements through the application of TQM. The prize is open to organisations in all sectors - public or private, large or small, or domestic or overseas. Furthermore, a division of a company that manages its business autonomously may apply for the prize separately from the company.

Unlike the previous two models, the Deming Prize does not specify set criteria for examination during the award process, and therefore is not used for self-assessment. The applicant organisation is expected to show an understanding of its current situation, establish its own themes and objectives, and improve and transform itself company-wide. The award process examines not only the current results that have been achieved, but also the effectiveness that is expected in the future. The examiners assess whether the themes established by the organisation were commensurate to its situation, whether its activities were suitable to its circumstances, and whether or not its activities are likely to lead it to achieving its future objectives. The Prize Committee views the examination process as an opportunity for “mutual-development” rather than “examination.” [8]

In recent years in Japan, the Japan Quality Award has become more popular than the Deming Prize [10]. The Japan Quality Award was established in 1995 and is based on the Baldrige Criteria for Performance Excellence.

Adopting Business Excellence Models

• Business excellence models are used by organisations of different sizes and sectors from all over the world. They are used in different ways to facilitate organisational development:
• Weggeman and Groeneveld [12] described the conversion of the EFQM Excellence model to a research-specific application that identified a set of recommendations to facilitate research management.
• Farrar [13] described how the EFQM Excellence model could be used as an umbrella for different initiatives in an organisation.
• Saraiva, Rosa and d’Orey [14], as well as Wilson and McFarlane [15], have indicated how the EFQM Excellence model was adopted for use in schools and the public sector.
• Johnson [16] described how a small company was able to apply the Baldrige model successfully
• Daniels [17], Leonard [18] and Nelsen [19] discussed the application of the Baldrige model to organisations in the education, construction and healthcare industries.

Kennedy, Kelleher and Quigley [11] presented a case study in which the EFQM Excellence model was used to identify key business areas for improvement.

For organisations that wish to embark on the journey to business excellence, there are many training courses that enable a better understanding of the models and how they can be used to support organisational development. In addition, there are many independent organisations that offer consultancy services to support the development of business excellence.

BPIR itself has extensive resources to support the journey towards business excellence. In particular, BPIR showcases the best practices and business improvement tools that are related to the specific criteria of the EFQM Excellence Model, the Singapore Quality Award Model, and the Baldrige Criteria for Performance Excellence. BPIR also provides self-assessment tools so that organisations can measure their progress along the way.

The Business Tools used by Companies at Different Stages of Business Excellence Maturity

A large number of business tools can be used to assist the improvement process during the business excellence journey. By understanding the scope and limits of the techniques and tools, managers can select those that are appropriate for their business context and apply them successfully in a business excellence program.

Saunders and Mann[20] developed a maturity diagram (see Figure 3) to indicate which business tool to use at different stages of business excellence maturity (using the Baldrige Criteria for Performance Excellence as the model). The location of the tool on the diagram provides an indication of the sophistication of the tool and the resources needed to use it. Note that a tool listed at the bottom of the diagram under the ‘Starting’ or ‘Progressing’ phases of business excellence maturity is not restricted to these categories. It is also likely to be used by the most highly performing organisations, ones that would be rated ‘Excellent‘ in terms of business excellence maturity. It should be noted that a tool listed in the ‘Excellent’ category should not be discounted by organisations that are just starting the business excellence journey. All organisations can benefit from learning about the tools in advance of their implementation; the more sophisticated tools may provide an efficient route to performance improvement if they can be resourced and implemented effectively.

For information on all the improvement tools shown in Figure 3, as well as on when and how to apply more than 900 improvement tools, refer to the BPIR.com members’ area.

Assessing Business Excellence

There are several ways in which the level of business excellence development in an organisation can be assessed, including the following [21]:

1. An award approach. This approach involves writing a full submission document along the lines described by national business excellence award bodies. Based on the evidence within the submission document and supporting evidence from a site visit, internal or external assessors score the organisation.
2. A pro forma approach. This involves a pro forma (a partially completed form) being designed for each of the business excellence model criteria. Each pro forma requires the organisation to record how it addresses a particular criterion, indicating what its strengths and weaknesses are, and what actions are being taken for improvement.
3. A workshop approach. This approach usually involves a senior management team gathering data and evidence to present to peers at a workshop. At the workshop, performance against the model is scored and action plans are agreed upon.
4. A matrix chart approach. This involves the creation of a company-specific achievement matrix within the framework of a business excellence model. It typically consists of a series of statements of achievement for each criterion using a scale of 1-10 points. Individuals or teams use the matrix to score their business processes/organisation.
5. A questionnaire approach. This consists of a set of questions designed to assess the organisation’s performance for each criterion.
6. A software approach. This usually involves an independent organisation managing a programme in which many companies complete a questionnaire and have their scores logged on a central database. Organisations are then able to compare their scores against those of other organisations with similar profiles, and compare themselves against best practices.
7. A peer involvement approach. This approach has many similarities to the award approach but allows the Business Unit complete freedom in putting together its “submission,” which may, at one extreme, be a set of existing documents, reports or graphs and, at the other extreme, be something very similar to an award application document.

In addition, many organisations have developed bespoke self-assessment methodologies. For example, Dahlgaard and Nilsson [22] discussed the development of a ‘focused self-assessment’ questionnaire based on the EFQM model for a large service company in Denmark.

Global Developments in Business Excellence Models

In recent years, Business Excellence Model custodians (the national bodies that promote and administer business excellence awards) have increasingly recognised the need to pool resources and learn from each other, in order to maximise the impact of their models and grow interest in business excellence worldwide.

This new focus on collaboration and networking is demonstrated by the work of the Global Excellence Model (GEM) Council, which was formed in 2000 [23]. This network brings together the key custodians of unique business excellence models that cover a continent or large geographic area. Member countries and regions include Europe (EFQM), Australia, the USA, Japan, South Africa, Singapore, India and Iberoamerica.

The group meets each year to discuss how it can improve its models and supporting systems. These meetings serve as useful inputs to strategic planning processes, especially when major reviews of models are taking place. Most award custodians undertake minor reviews of their models on a yearly basis with major reviews taking place every three to five years.

Examples of major reviews include the following: the European Above the Clouds project, which was a major review of the design of the EFQM Excellence Model; Australia’s Beneath the Surface project in 2005, a major review of the design of the Australian Business Excellence Framework; the Japan Quality Program undertook a review in 2004 to mark 10 years of its existence; Mexico’s 2004-05 review of the Mexican National Quality Award; and NIST’s 2003 review of the Baldrige National Quality Program, which included the commissioning of the “Booz Hamilton” leadership attitude survey [24]. By sharing this information, Business Excellence Model custodians keep up-to-date with worldwide initiatives and improve both their systems and the design of the models. This has also led to—particularly with the awards process—a greater standardisation of approach, since the custodians have all learned from each other’s better practices.

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