Survey and Research Data

Business Excellence Produces Superior Results - European Research

Research published in 2005 by the Centre of Quality Excellence, the University of Leicester, and jointly sponsored by the European Foundation for Quality Management (EFQM) and the British Quality Foundation, [25] provides evidence that the effective implementation of the principles of the EFQM Excellence Model impacts bottom-line business results.

After extensive study of award winners, the team compared the financial performance of 120 award-winning companies that met specific criteria against comparison companies similar in size and operating in the same industries. The financial performance of the companies was tracked over an 11-year period.

The study found that compared to the comparison companies, award-winning companies experienced higher increases in share values, sales, capital expenditure over assets and capital expenditure over sales, higher growth in assets, and further reduction in costs over sales within a short period of time (one year) after having received their first award (see Figure 4).

During the final year that performance was tracked (i.e., five years after the award), the award winners experienced even greater increases (see Figure 5). When judged against the comparison companies, the award-winning companies experienced higher growth in sales by an average of 77%, higher increases in operating income by an average of 18%, higher increases in capital expenditure over assets by an average of 28% and capital expenditure over sales by an average of 30%, higher growth in assets by an average of 44%, and a further decrease in costs over sales by 4.5%.

Business Excellece Produces Superior Results – United States Research

A study of 600 worldwide quality award-winning organisations (using the Baldrige Criteria for Performance Excellence) was conducted over five years and published in 1999 by Singhal and Hendricks [26]. The results were compared to a control group of companies (of similar size and industrial sectors) and revealed a marked positive difference for the award-winning companies in every key measure against the control companies (see Figure 6).

Strong Relationship Between“Customer-Focused Results” and “Financial and Market Results”

The New Zealand Benchmarking Club aimed to help its member organisations improve by providing them with best practice benchmarking and business excellence services. From 2001-2002, improvements in business excellence scores against the Baldrige Criteria for Performance Excellence (CPE) were monitored and showed an average score improvement of 75 points across fifteen organisations.

The self-assessment data identified 57 strong relationships between different CPE categories and items. The strongest correlation identified (0.94) among CPE items was between “customer-focused results” and “financial and market results”. One of the strongest relationships between CPE categories was between CPE “enablers” and “business results” (see Figure 7).

Although scatter graphs do not identify causal relationships, it is clear from Figure 7 that organisations with excellent approaches to leadership, strategic planning, customer and market focus, information and analysis, human resource focus and process management—i.e., the business excellence enablers—are more likely to achieve excellent business results (composed of customer satisfaction results, financial and market results, human resource results, and organisational effectiveness results) [27].

Best Practice Shared by Baldrige Award Winners

A 2002 report presented findings on common best practice themes, benefits obtained and weaknesses observed as a result of the application process of Baldrige Award recipients in the USA.

The common lessons learned by award recipients included the following:

1. Need to gain the commitment of senior leadership
2. Having a strategic plan that tied all of the criteria together
3. Using multiple, different customer listening posts (methods designed to gather ongoing customer feedback to shape, guide and improve marketing communications)
4. Selectively segmenting, analysing and using data
5. Motivating, involving and empowering employees
6. Seeing all work as a process
7. Building long-lasting systems.

The benefits included:

1. Increased pace of improvement
2. Value gained from self-assessment and feedback
3. Improved morale and cooperation
4. Improved communications
5. Quality accepted as a strategic issue.

The common weaknesses included:

1. Weak information systems
2. Partial quality system
3. Poor quality definition [28].

Awareness of EFQM Excellence Model in UK Companies

In 2003, a survey was sent to 500 British companies to investigate what happened to quality management after an organisation had achieved ISO 9000. Eighty companies with ISO 9000 certification responded: 4% were micro (less than ten employees), 32% were mini (10-50 employees), 40% were medium (50-200 employees) and 24% were large (more than 200 employees).

Results

1. 56% of respondents had heard of the EFQM excellence model. Of these, 20% had started to assess themselves against the model’s criteria, 65% had done nothing, and 22% planned to begin assessment in the future.
2. 79% of large companies were aware of the EFQM model, compared to 69% of medium-sized companies, and only 29% of micro/mini companies.
3. The 37 respondents who had heard of the EFQM model reported that training was overwhelmingly the most important factor for perceived success.
4. Overall the companies reported that success was achieved through a combination of ISO 9000, EFQM, statistical methods, and training. [29]

National Strategies for Business Excellence

A study carried out between 2004 and 2005 examined the approaches to business excellence across 16 countries. Key findings were as follows:

1. 78% of Australian Business Excellence Framework users reported being either “very confident” or “extremely confident” that the design of the framework was based on sound principles and facilitated a reasonable assessment of business excellence.
2. 12 out of 16 business excellence model custodians believed that awareness of business excellence in their countries over the past three years had increased slightly or substantially (see Figure 8, the flags represent the different countries).
3. The following were identified as the five most important activities with respect to encouraging organisations to adopt a business excellence approach:

• Tours of good or best practice organisations
• Publications on business excellence
• On-line service/database of business excellence information
• Provisions of workshops/training in business excellence
• Provisions of seminars/conferences in business excellence. [3]

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