In Pursuit of Excellence

This is the first in a series of posts that will look at key elements of the Baldrige Criteria. If you’re not familiar with the Malcom Baldrige Criteria for Performance Excellence, download here-it’s free!

 Why mess with Baldrige at all, except that if you’re good enough to win, you get a cool award from the President of the US? As was discussed in Beyond the Standard: Compliance to Commitment  it’s a matter of scope and intent. Both ISO and the Baldrige models can be intelligently utilized as benchmarks, without pursuing ISO certification or going after the Baldrige award.

Categories and topics examined in this series include (numbers represent the categories / sub-categories):

Baldrige, ISO, Six Sigma, Lean, Balanced Scorecard et al   There has been a long-running discussion about the value in general of the Malcolm Baldrige Criteria for Performance Excellence. Specifically, how does the Baldrige model fit in, with ISO9001 and approaches like Lean, Six Sigma and Balanced Scorecard? In a nutshell, very well. This post has links to, and excerpts from, several sources that help to validate the fit from several angles.

Learning From the Baldrige Evaluation Dimensions:   The way the Baldrige scoring is structured is itself worth learning from, examined in this post.

1.1 Senior Leadership: How do your senior leaders lead? Describe how senior leaders’ actions guide and sustain your organization. Describe how senior leaders communicate with your WORKFORCE and encourage high performance.

2.1 Strategy Development: How do you develop your strategy? Describe how your organization establishes its strategy to address its strategic challenges and leverage its strategic advantages. Summarize your organization’s KEY strategic objectives and their related goals.

2.2 Strategy Deployment: How do you deploy your strategy? Describe how your organization converts its strategic objectives into action plans. Summarize your organization’s action plans, how they are deployed, and KEY action plan performance measures or indicators. Project your organization’s future performance relative to KEY comparisons on these performance measures or indicators.

4.1 Measurement, Analysis, and Improvement of Organizational Performance: How do you measure, analyze, and then improve organizational performance? Describe HOW your organization measures, analyzes, reviews, and improves its PERFORMANCE through the use of data and information at all levels and in all parts of your organization.

ISO is a management system model primarily designed to manage daily operations, presented as a set of requirements in the ISO standard: “The organization shall (insert element / requirement)”.  The Baldrige model is more strategic in nature. It does not present requirements but a series of questions used to assess the organization’s effectiveness. What an organization provides as answers to the questions are key indicators of performance excellence. Example: “How do senior leaders set organizational vision and values?” How you do that is up to you. But you’d better be doing it very well–not just to go after the Baldrige but to compete, stay in business and succeed!

There are two evaluation dimensions that Baldrige examiners consider a company’s performance against: Process and Results. Below are the brief descriptions of the several attributes considered in these two dimensions. Think about your company’s performance against each of these attributes.

EVALUATION DIMENSION ONE: PROCESS looks at the methods an organization uses in addressing the items in each of the Baldrige categories. There are four factors used to evaluate Process: Approach, Deployment, Learning, and Integration.

Approach: methods used and their appropriateness and effectiveness, as well as how repeatable / systematic the methods are.

Deployment: the extent to which methods are thoroughly and consistently applied by all appropriate functions (effective execution).

Learning: refining methods by evaluating and improving the methods, and sharing refinements with other relevant areas (organizational learning).

Integration: the extent to which methods are aligned with organizational needs, and how widespread methods and systems are deployed across departments. Also assessed is general alignment in support of organization-wide goals.

EVALUATION DIMENSION TWO: Results (for Category Seven in the Baldrige Criteria only, which covers metrics / measures of performance levels)

“Results” refers to outputs and outcomes assessed against four factors: Levels, Trends, Comparisons, and Integration.

Levels: the current level of performance against the metrics outlined in Category Seven.

Trends:  performance improvements, or sustaining good levels of performance as noted by the slope of trend data.

Comparisons:  performance relative to benchmarks against industry leaders or similar businesses, whether competitors or other organizations.

Integration: the extent to which metrics used indicate performance on both current targets and indicators of future performance, and how much your metrics cross departments and processes …whether they are localized or are linked to organization-wide goals.

For more on Baldrige: Baldrige, ISO, Six Sigma, Lean, Balanced Scorecard et al Excerpt:

 There has been a long-running discussion about the value in general of the Malcolm Baldrige Criteria for Performance Excellence. Specifically, how does the Baldrige model fit in, with ISO9001 and approaches like Lean, Six Sigma and Balanced Scorecard? In a nutshell, very well. This post has links to, and excerpts from, several sources that help to validate the fit from several angles.

For any of this stuff to be of value, there must be some sort of applicable plan–a strategy for the Pursuit of Excellence.  Following is all the pieces of the puzzle I am addressing here, in a (hopefully) logical process. There are links to earlier posts for reference back as appropriate.

Just one man’s opinion here-please chime in: what’s missing, what’s out of sequence?

This post is important enough that it will be upgraded to a page linked at the top right of the Pursuit home page, to retain future visibility.

ONE: ENGAGE. While it’s open for discussion, I am maintaining that it all starts with engagement, triggered by involvement and nurtured by the work environment and culture, with healthy doses of change management and communication as live-in caretakers. We must start with capturing the head, heart and hands of the team as Towers Perrin puts it, or we’re spinning wheels. And it is becoming more clear that there is a bottom line benefit in doing so.

Unfortunately, innocently tucked between the lines of the previous paragraph is what amounts to a full-time, career-crowning undertaking in many cases. Look at what’s involved in achieving engagement: high involvement, a favorable work environment (culture), change management and communication. Add to the shopping list the fact that engagement is a highly personal state driven by the individual’s drivers and values. No one said it was easy….

Now, to argue the lead-off position of engagement: don’t all the pieces need to be in place for people to feel as if they can safely engage? Systems and Alignment are among the key process components still to come. I can buy into the need for engagement to come after there is something of clear substance for people to engage with. I prefer to think instead that this highlights the need for an ongoing effort to sustain engagement beyond the initial jump-start.

TWO: DEVELOP a ROBUST MANAGEMENT SYSTEM, essential to provide discipline, clarity and consistency in everyday operations. A management system may be based on two key models: ISO9001 and the Baldrige Criteria. If an ISO-based management system, a key barrier to fight through is the self-inflicted perception of ISO being limited to product quality.

A key point: the ISO and Baldrige models do not have to lead to certification and winning the Baldrige respectively. They are simply best practices to benchmark, within the company’s scope and intent.

Systems need tools (six sigma, lean, balanced scorecard) to be maintained in top working order. And tools need systems to provide consistency in application, discipline in execution and standardization of improvements. What is the nature of the interface among the ISO and Baldrige models, and six sigma, lean et al?

There is a good deal posted on management systems within In Pursuit of Excellence–here is The Roadmap.

An integrated system of human resource development manages and improves the human element, the gateway to all things worth achieving. The HRD system is one of the most important business management systems, and the system that can typically stand to improve the most.

THREE: IMPLEMENT EFFECTIVE CONTROLS, in the form of meaningful real-time and actionable lead metrics. People play better when you’re keeping score, but you must measure the right things at the right times, and act on what the metrics are telling you.

FOUR: ALIGN the TROOPS. I struggled with the sequence of the alignment piece-it is critical but I still feel it must follow having systems and controls in place. Or, must it??! Alignment-getting people on the same page- is much easier if people have bought into their role in the success of the company via engagement. But it is also much easier to engage people if there is a clear picture of the target and how the journey to the destination is managed-systems and controls. And people must have the necessary systems to work within, so they perceive that the task is clearly do-able. Still, wouldn’t it be better if people were involved / engaged in developing the management systems and identifying the goals that need to be met  / actions to be taken to achieve the company’s strategy?

So….Chicken or Egg?

Cascaded goals, clear expectations and accountabilities provide focus and direction to engaged troops. This is not rocket science! It is a simple formula in which accountability is just one element:

Clear expectations +

Knowledge, skills and abilities +

Accountability +

Follow-up

= Results.

FIVE: EXECUTE! It all comes together here. If process steps One through Four have been successfully initiated, the actual execution ought to be a snap. Just Take Care of Business.

“Just”…..

There has been a long-running discussion about the value in general of the Malcolm Baldrige Criteria for Performance Excellence. Specifically, how does the Baldrige model fit in, with ISO9001 and approaches like Lean, Six Sigma and Balanced Scorecard?

In a nutshell, very well. Following are links to, and excerpts from, several sources that help to validate the fit from several angles.

In earlier posts on management systems, I have made the case for emphasizing a bigger picture management system vs quality management scope and intent. Some of the following sources make the distinction, while others still maintain the “Q” label.

Malcolm Baldrige Criteria for Performance Excellence, home page. You can download copies of the Baldrige criteria free. You pay quite a lot for the ISO standard. Be on the lookout for additional posts dealing with specific points of emphasis, highlighting the Baldrige model’s fit with the other models and tools, and in management system excellence in general.

Do ISO instead of applying Baldrige criteria … Not!  Journal for Quality and Participation, Jan/Feb 1994 by Townsend, Patrick L, Gebhardt, Joan E. Excerpt:

The information, procedures and material on which ISO 9000 certification requirements focus total to about 10 percent of what the Baldrige encompasses. Perhaps the most telling gap between the two is the Baldrige’s insistence on customer-impacting results, and plans and methodology for continuous improvement versus ISO 9000’s emphasis on current procedures and their documentation.

In that sense, there isn’t a major conflict between Baldrige and ISO 9000; ISO 9000 is simply a minor subset of Baldrige. ISO 9000 established minimums while the Baldrige points the way for an organization to reach for maximums.

A wise company views ISO 9000 as a starting place for an all-encompassing quality effort. In time, ISO 9000 will fade in importance and popularity as the still embryonic European quality revolution strengthens and expands beyond ISO 9000’s limited criteria. This evolution has already begun and will accelerate as more and more European countries establish national quality awards that use the Baldrige as their model.

Building World-Class Performance with the Baldrige Criteria In the quest for excellence, the Baldrige criteria begin where ISO 9000 ends. (by Anthony C. Fletcher, Quality Digest, August 1999)  Excerpt:

The (ISO) registration process is perceived by many organizations as the first step in their pursuit of world-class performance.… what can you do if you want to push your organization beyond this baseline level of performance? Consider evolving your QMS into a business management system (BMS) using the Malcolm Baldrige National Quality Award criteria. The QMS established during ISO 9000 implementation efforts can easily be expanded to support the addition of key processes that will sustain a world-class organization based on the Baldrige criteria.

ISO 9000-based standards are an excellent starting point for organizations working to improve their performance, but they should be viewed as only a first step. To achieve world-class performance, organizations must move beyond ISO 9000. The Baldrige Award criteria can help them get there.

Understanding the Important Differences Between the Malcolm Baldrige National Quality Award and ISO9000 Registration (no link) by Curt W. Reiman and Harry S. Hertz, Office of Quality Programs, National Institute of Standards and Technology, Gaithersburg, MD 20899, USA. Excerpt:

The relationship between the Baldrige Award and ISO 9000 registration is widely confused. Two common misperceptions stand out: (1) that they both cover the same requirements and (2) that they both address improvement, relying on high quality results, and thus, are both forms of recognition. Many have concluded that the Baldrige Award and ISO 9000 are equivalent and that companies should choose one or the other. These conclusions are incorrect. The Baldrige Award and ISO 9000 registration differ fundamentally in focus, purpose, and content.

The focus of the Baldrige Award is on enhanced competitiveness. The Award Criteria reflect two key competitiveness thrusts: (1) delivery of ever-improving value to customers and (2) improvement of overall operational performance. The Award’s central purpose is educational-to encourage sharing knowledge and experience of competitiveness and to drive this learning, creating an evolving fund of knowledge. By contrast, the focus of ISO 9000 registration is on conformity to practices specified in the registrant’s own quality systems. Its central purpose is to enhance and facilitate trade.

The Baldrige Award addresses competitiveness factors either not addressed in ISO 9000 registration or addressed differently. These factors include a customer and market focus, results orientation, continuous improvement, competitive comparisons, a tie to business strategy, cycle time and responsiveness, integration via analysis, public responsibility, human resource development, and information sharing. Baldrige, Six Sigma, and

ISO: Understanding Your Options  Provides insight into how to choose among these three performance improvement tools and how they can be used together to ensure the overall success of any organization. Excerpt:

This new issue sheet

• explains the differences among the three systems;

• discusses how they can be used individually or in combination to meet organizational needs;

• describes how four recent Baldrige Award recipients use Baldrige either alone or in conjunction with Six Sigma and/or ISO as the basis for their performance improvement efforts.

It shouldn’t be “either/or.” It can be “one, two, and/or three.” So say many Malcolm Baldrige National Quality Award recipients when asked if it is best to choose only one of the available performance improvement tools. To ensure the overall future development and success of an organization, you need a systems approach and Baldrige provides that. Where you begin often depends on what your organization needs now.

Although all three are quality measurement systems, the Baldrige Criteria for Performance Excellence, ISO 9001:2000 Registration, and Six Sigma each offer a different emphasis in helping organizations improve performance and increase customer satisfaction….

Baldrige vs. ISO9001 from The Balanced Scorecard Institute . Includes a good cross-reference matrix of ISO elements to Baldrige Criteria. Excerpt:

The matrix indicates that the Baldrige criteria are much broader in scope than the ISO 9001 criteria. The latter are focused mostly on manufacturing processes; this standard was developed in the industrial era for this kind of business. The balanced scorecard, with its metrics of learning and growth and customer satisfaction, is more appropriately measured by the Baldrige criteria and may be more appropriate than ISO 9001 for modern knowledge-worker organizations of the “new economy”.

Alignment of the Malcolm Baldrige Criteria for Performance Excellence with Six Sigma, Lean Thinking and Balanced Scorecard  By Paul Grizzell, Insights to Performance Excellence 2004: An Inside Look at the 2004 Baldrige Award Criteria, Published by the American Society for Quality.

Correlates the Baldrige Criteria with other initiatives—Six Sigma, Lean and Balanced Scorecard. There are tools, and then there are systems. Management systems require tools to keep running, and tools need systems to manage their application to full optimization. Excerpt:

“Baldrige? Six Sigma? Lean? Balanced Scorecard? We don’t have time for all of these initiatives! Let’s just pick one and go with it!” How many times have you heard (or perhaps even said) something similar to this? The statement suggests the initiatives are equivalent. They are not…the Baldrige Criteria for Performance Excellence represent a comprehensive set of processes that organizations should have in place in order to optimize performance. Six Sigma, Lean, Balanced Scorecard, and other initiatives represent some tools, albeit powerful tools, that organizations can use to enhance performance. However, the use of these tools in isolation, without regard to the needs of the entire management system, will not produce optimum benefits or optimum performance for the organization… thousands of organizations use the Baldrige Criteria as a management model and/or assessment tool to gauge the maturity and effectiveness of their own management system.

Einstein said: Only measure what is truly important. However, not all that is truly important is measurable. Some anonymous Einstein came up with a very profound part two: But remember, not all that is measured is truly important.

How do you know if you’re winning or losing if you don’t keep score? People play better when there is a scoreboard, but what makes an effective metric? The ideal is for metrics to serve as a real-time indicator of how things are going, at an actionable level so those who are accountable can impact performance and make real-time improvements when needed. 

To Get the Right Results, Measure the Right Things at the Right Place, at the Right Time!

ROA and market share are outputs—the result of many different impacting processes. When people hear continuously about how they need to improve on ROA and other output measures, they are understandably frustrated. Who among us can easily recognize the direct impact of our work on the bottom line or on market share?

It makes a whole lot more sense to target metrics for the critical impacting processes and establish SMART goals with clearly owned accountabilities. Then, initiate controls and the mechanism to follow-up and follow through on metric anomalies and continuously improve critical process capability.

Outcome / Lag Measures are historical “how did we do?” Included in the “lag” category are Big Picture metrics like profit, ROI, market share, defect rate.

Lead Measures are predictive: if the Lead metric numbers are good, the Outcome / Lag metrics will be improved and we’ll be closer to achieving the goal. Lead metrics measure critical impacting processes and are actionable. Lead metrics are aligned with big picture lag metrics, which means I can do or not do something and I can understand how it will impact the lag metric.

Lag metrics are obtained after the journey is over; lead metrics measure the drivers that help reach the destination. Lag metrics may be meaningful to summarize in staff meetings, but they don’t hold much water on the floor. Examples:

A Quick 5-point Check-up

1. Are metrics easy to decipher at a glance and presented in everyday terms? The more graphics, and the fewer big words the better (Understandability)
2. Are critical impacting processes measured (lead metrics), not Big Picture outcomes-lag metrics? (Actionability)
3. Is real-time data collected and communicated? How often is it updated? (Timeliness)
4. Do specific functions understand their ownership of, and responsibility for, lead metrics that indicate performance of their critical impacting processes? (Accountability)
5. If #4 is “yes” are the lead metrics clearly connected to the Big Picture lag metrics? (Alignment)

See page “In Pursuit of Excellence” Contents UPDATED,  thumbnail excerpt below.

 The sub-title of In Pursuit of Excellence mirrors my focus… Engagement > Alignment > Execution, the three-legged stool that leads to excellence and results. As the quantity of posts grows, it becomes more difficult for viewers to find what they are looking for. So I am maintaining a Roadmap for each of these three topics, posted under “Pages” at the top right of the Home Page. These will be updated regularly with new posts.

In addition to the Roadmaps for these three topics, see “Roadmap of Categories and Topics”  for a thumbnailed list of topics to help you find what you’re looking for.

A Roadmap to Alignment

Alignment is a bit of a baby topic right now, but it’s critical and will be added to soon and often. As the sub-title of In Pursuit of Excellence is “Engagement > Alignment > Execution > Results” I am maintaining a Roadmap for each of the first three topics, posted under “Pages” at the top right of the Home Page.

Alignment, pet term “being on the same page”, comes in many shapes and sizes, the most critical being alignment…

• Between the company’s goals and values and your own;
• Of your position’s accountabilities to the company’s top strategies; and
• Of your job and career to your personal strengths and motivators.

In A Roadmap to Alignment  are thumbnails for posts related to strategy and alignment. Scope of “strategy” includes vision, mission, guiding principles and how these are communicated and acted upon. Both personal alignment and business alignment are examined, per the three bullets above. NOT in scope is how to develop a plan. I’ll assume that your company already has a plan or you wouldn’t be here browsing around, you’d be on the street corner looking for spare change.

This post briefly describes the elements of a Human Resource Development (HRD) system (see diagram), and how the elements are integrated in an ideal system.

People flow effortlessly without friction through an integrated human resource development system, just like product and work flows through any production process. “Integrated system” simply means that all the processes and practices of the HRD system shown below cannot be stand-alone.

The critical input to the HRD system is the company’s strategy, and the most important element that aligns all the HRD processes to strategy is the job write-up, or position specification.

 Integrated HRD Starts With Alignment, the Position Spec is the Enabler

What is the company’s strategy and what are the key challenges the company faces? How does each function and its positions support the strategy and help to address the challenges? The job write-up is the justification for a position’s existence. The write-up must clearly connect the position to strategy, and describe how the position helps support the strategy and achieve goals.

Strategy is cascaded down through the company, as goals are set with increasing levels of specificity. Accountability is established until each function and each position is clearly aligned with the top and is directly responsible for a portion of the strategy.

Promotions, hiring and placement decisions are driven by the position spec. The position spec serves as the basis for recruiting and interviewing, and eventually placing a person into a vacant position. If the company knows what positions will come vacant through known attrition (retirements, promotions, backfills). The write-up for the position being vacated is the list of qualifications the successor will need (succession management).

People are groomed for advancement ahead of the need and are ready to move up when the need arises, minimizing the impact of attrition. The performance management process is the planning and monitoring tool for development of employees, and provides essential input to the training and development function. Input from performance management plans is used to determine the curriculum for meeting the developmental needs of individuals and the position needs of the company.

I have been deeply involved in ISO9001 including conducting regular audits to verify compliance to standards. Auditors had a bulls-eye on our backs when out on the floor conducting an audit. In a scene straight out of Gunfight at the OK Corral, our band of auditors would hit the outskirts of town, loaded clipboards at our sides. Nothing but tumbleweeds to be seen, except for the occasional store keeper spotted peering from behind a boarded window.

As there have been increased views of the several posts on management system effectiveness, I wanted to provide you with a front page roadmap to the various management system topics covered. The Roadmap will be updated when new posts are made. For a series of posts on management system excellence, see Roadmap to Management System Excellence .

Needs Better PR. “Audit” has a bit of a bad rep. Ask about anyone what comes to mind when they hear “audit” and chances are they will break out in a sweat and start shaking uncontrollably. Audit = IRS (or, shudder, corporate or a customer nosing around) = bad stuff.

Starting with the word “audit” itself, traditional ISO terminology is confrontational. Auditors find nonconformances, for which corrective action must be taken. Then some genius came up with the idea that you could minimize all that negativity by calling nonconformances and the need for corrective action “Opportunities to Improve”. Nice try, but for most folks it still means “I got busted and now I have to do all kinds of extra work to fix this…”

Proactively Identify Improvements. Let’s set the record straight on what an assessment (OK, “audit”) is intended to do. It is simply a gap analysis between:

• Desired results and current results;
• Documented procedures and policies, and current practices;
• Guidelines of a quality standard like ISO9001, and the company’s management system

In other words, a means to figure out where you’re not getting the results you’re supposed to be getting. As such, an assessment is the means to identify areas for improvement, NOT areas of “nonconformance” as many audits are perceived to be.

The Pulse of the Management System. Any external assessor working for a registrar will tell you the quickest way to determine the overall health of a company’s management system is to take a close look at the internal assessment and corrective action processes.  Timely due diligence, or going through the motions? Good assessors can spot a good system a mile away. When an assessor finds that the company shows discipline and commitment to these two areas, they know the company is effectively maintaining its own system and it will be a smooth assessment. The company is effectively maintaining its own system.

Awareness and Education Value. This is a huge missed opportunity. For starters, who are the trained internal assessors? I mentioned in the first of this series that assessors tend to be Quality Assurance staff. The best management systems I have seen utilized predominantly hourly production people for assessors.

Assessors are granted a chance to take an up-close look at the area they are assigned to assess. Most of us appreciate the value of people having a solid grasp of the overall workings of the company, especially getting to know your internal customers and suppliers.

Assessors are required by ISO to be unattached to the area they are assessing to ensure objectivity. So they normally require “guides” in part simply to keep them from getting lost. Who are the best guides? A management person, or (again) an hourly, first level person? Guides learn a good deal about their own area and work processes.

New Perspective. Assessments are best conducted by an impartial person who has no ties to the areas being assessed. This ensures objectivity, and minimizes the “country club” effect. It’s tough to ding your friends and coworkers. But a fresh, outsider perspective often brings to light things that someone closer to the action may overlook, or just take for granted and not question or examine as closely as needed.

While the registrar assessor(s) cannot move from assessor to consultant role, there is no restriction on internal audits. An experienced assessor can be an invaluable resource for the area being assessed. They have been around the block, up-close and personal, and bring to each audit an increasingly broader perspective of the way the work really gets done.

The best thing about being an outsider is that it allows you to ask innocent, “dumb” questions…and you’re not pretending: “I don’t understand this process—could you tell me how this works, and why you do it this way?” It’s really a good gig, and expands the assessors’ knowledge base of the overall work flow outside their normal area of accountability.

We are making a huge, dangerous assumption if we think that even a third of our people truly understand half of leadership’s strategic musings. Actually, can you be sure the individuals on the leadership team interpret your strategy the same way? If not, how can they execute?

Why is it so many mission statements never come down off the wall? Because they’re written in a foreign language. Same with strategy.

“An operational definition puts communicable meaning into a concept. An operational definition is one that people can do business with. An operational definition of safe, round, reliable, or any other characteristics must be communicable, with the same meaning to vendors, purchasers and the production workers. Same meaning, yesterday and today.” (W Edwards Deming)

Look inside and answer these questions with absolute honesty. Better yet, if your leadership team can openly discuss these kind of things, come to a group conclusion. The absolute ideal…have an objective outsider with assessment experience do an assessment of the front line troops. Then, listen and take action.

1. How widely understood is our company’s mission and / or vision and top strategy among our employees?

2. Do we have a published set of values or beliefs? How widely known are they? Do they make a difference?

3. What are the company’s macro metrics that are most communicated to the most people? How well are these macro metrics connected to the company’s top strategy? Can you easily tell which metric assesses which strategic element?

4. Do areas or departments have their own clear objectives that are consistent with / in support of the company’s mission / vision / strategy? How clear is the connection to top strategy?

5. Are local objectives measured? Can people impact their department’s metrics in their daily work? Are status updates provided real-time and areas of concern acted upon?

6. Do people know what is important about the job they do, and how they can move the numbers – how they really do make a difference?

Do any of your responses point toward an opportunity for improvement? So what are you doing just sitting there?