Journey to Excellence An Inside Look at the Baldrige National Quality Award Andrei Apruda Brent Driver Zach Evans

Who? What? When? Where? How? Why?

“ There is no better assessment of your organization’s performance available than applying for the Award. The Criteria for Performance Excellence are unique in addressing all the critical elements of your performance system.” Bruce W. Woolpert Chairperson 1996 Panel of Judges President & CEO, Graniterock 1992 Baldrige Award Recipient - Small Business

“ There is no better assessment of your organization’s performance available than applying for the Award. The Criteria for Performance Excellence are unique in addressing all the critical elements of your performance system.”

Bruce W. Woolpert

Chairperson

1996 Panel of Judges

President & CEO, Graniterock

1992 Baldrige Award Recipient - Small Business

Stock Market Success Common stock comparison study shows correlation between the use of the Baldrige Criteria and the increased stock market performance.

Common stock comparison study shows correlation between the use of the Baldrige Criteria and the increased stock market performance.

The Criteria Focus on Results Customer Satisfaction Globalization Supply Chain Cycle Time E-Commerce Environment, Health & Safety New Product Sales Employee Involvement Customer Retention Product Reliability Revenue Per Employee Profit Growth

Customer Satisfaction

Globalization

Supply Chain

Cycle Time

E-Commerce

Environment, Health & Safety

New Product Sales

Employee Involvement

Customer Retention

Product Reliability

Revenue Per Employee

Profit Growth

The Path to Excellence Accelerate Improvement Efforts Focus the organization on a common set of goals Improve your organization’s performance.

Accelerate Improvement Efforts

Focus the organization on a common set of goals

Improve your organization’s performance.

The Process The Voyage The Experience The Passage The Journey

Chugach School District South Central Alaska 22,000 square miles 214 Students 1/2 native Alaskan Preschool to 21 yrs 30 Staff Members

South Central Alaska

22,000 square miles

214 Students

1/2 native Alaskan

Preschool to 21 yrs

30 Staff Members

1994 : Chugach chooses Baldrige Increase Student Achievement Improve Value to Customers Maintain Overall Organizational Effectiveness “ Onward to Excellence”

Increase Student Achievement

Improve Value to Customers

Maintain Overall Organizational Effectiveness

Results CAT results went from 28th percentile to the 72nd. Scores also rose in: Reading (28th to 71st) Language arts (26th to 72nd) Math (54th to 78th) Spelling (22nd to 65th)

CAT results went from 28th percentile to the 72nd.

Scores also rose in:

Reading (28th to 71st)

Language arts (26th to 72nd)

Math (54th to 78th)

Spelling (22nd to 65th)

Results (cont’d) College entrance exams taken went from 0 to 70%. 1 graduate attended a post-secondary institution between 1975 and 1994. Since 1994, 14 of 17 graduates have gone on to a post-secondary institution. Staff turnover from 55% to 12%.

College entrance exams taken went from 0 to 70%.

1 graduate attended a post-secondary institution between 1975 and 1994.

Since 1994, 14 of 17 graduates have gone on to a post-secondary institution.

Staff turnover from 55% to 12%.

2001: Baldrige chooses Chugach Smallest Organization to Win Award First Education Organization to Win Award

Smallest Organization to Win Award

First Education Organization to Win Award

TNCPE Overview During the late 1970s and early 80’s, there was an increasing realization and concern that a key to effective international competition and national economic viability lie in the quality of goods and services being produced by American industry. The concern led to the development of the BALDRIGE NATIONAL QUALITY AWARD that was signed into law in 1987. BALDRIGE NATIONAL QUALITY AWARD

During the late 1970s and early 80’s, there was an increasing realization and concern that a key to effective international competition and national economic viability lie in the quality of goods and services being produced by American industry. The concern led to the development of the BALDRIGE NATIONAL QUALITY AWARD that was signed into law in 1987.

TNCPE Overview (cont’d) Beginning in the early 1990’s, individual states began developing quality award programs based on the Baldrige criteria. There are approximately 44 states with awards or developing programs. The Tennessee Center for Performance Excellence is an independent, not-for-profit corporation governed by a public-private Board of Directors drawn from: Manufacturing Service Health care Education Government sectors Today, the Tennessee Center for Performance Excellence is the most successful state or local award program in the US and is recognized nationally and internationally as a role model.

Beginning in the early 1990’s, individual states began developing quality award programs based on the Baldrige criteria. There are approximately 44 states with awards or developing programs.

The Tennessee Center for Performance Excellence is an independent, not-for-profit corporation governed by a public-private Board of Directors drawn from:

Manufacturing

Service

Health care

Education

Government sectors

Today, the Tennessee Center for Performance Excellence is the most successful state or local award program in the US and is recognized nationally and internationally as a role model.

TNCPE overview (cont’d) The purpose is not to give an award, but to provide a framework for the continuous improvement of the quality of Tennessee’s goods and services The multi-step “staircase to excellence” allows all organizations to participate and learn It is not a competition against another organization, but rather it is a competition against increasingly difficult criteria

The purpose is not to give an award, but to provide a framework for the continuous improvement of the quality of Tennessee’s goods and services

The multi-step “staircase to excellence” allows all organizations to participate and learn

It is not a competition against another organization, but rather it is a competition against increasingly difficult criteria

2003 Criteria Preface: Organizational Profile Governance system and description of the role of suppliers Organizational approaches to process improvement might include six sigma and other performance improvement methodology Category 1: Leadership Senior leaders’ role in creating an environment that fosters and requires legal and ethical behavior Social Responsibility has been modified to include key processes and measures for monitoring ethical behavior throughout organization Category 2: Strategic Planning How to sustain changes accomplished through your action plans

Preface: Organizational Profile

Governance system and description of the role of suppliers

Organizational approaches to process improvement might include six sigma and other performance improvement methodology

Category 1: Leadership

Senior leaders’ role in creating an environment that fosters and requires legal and ethical behavior

Social Responsibility has been modified to include key processes and measures for monitoring ethical behavior throughout organization

Category 2: Strategic Planning

How to sustain changes accomplished through your action plans

2003 Criteria (Cont’d) Category 3: Customer and Market Focus Building customer loyalty and exceeding customer expectations, as well as meeting their absolute requirements Category 4: Measurement, Analysis, and Knowledge Management Enhanced emphasis on addressing innovation and organizational and industry changes Now Information and Knowledge Management has a new Area to Address on the management of organizational knowledge, in recognition of its growing importance Category 5: Human Resource Focus Organization and Management of Work; Employee Performance Management System and Hiring and Career Progression (BF comment!) . Enhanced emphasis on employee motivation and career development

Category 3: Customer and Market Focus

Building customer loyalty and exceeding customer expectations, as well as meeting their absolute requirements

Category 4: Measurement, Analysis, and Knowledge Management

Enhanced emphasis on addressing innovation and organizational and industry changes

Now Information and Knowledge Management has a new Area to Address on the management of organizational knowledge, in recognition of its growing importance

Category 5: Human Resource Focus

Organization and Management of Work; Employee Performance Management System and Hiring and Career Progression (BF comment!) .

Enhanced emphasis on employee motivation and career development

2003 Criteria (Cont’d) Category 6: Process Management Value Creation Processes, is a new item (it addresses all the processes your organization considers important for creating value for all stakeholders. They are the processes most important to “running your business” and achieving a sustainable competitive advantage Category 7: Business Results Product and service results. This item was added to reflect the growing need for renewed focus in the areas of product and service quality Governance and Social Responsibility Results, is a new Results Item added to reflect the need to build stakeholder trust in the governance of your organization and to ensure ethical behavior and legal compliance

Category 6: Process Management

Value Creation Processes, is a new item (it addresses all the processes your organization considers important for creating value for all stakeholders. They are the processes most important to “running your business” and achieving a sustainable competitive advantage

Category 7: Business Results

Product and service results. This item was added to reflect the growing need for renewed focus in the areas of product and service quality

Governance and Social Responsibility Results, is a new Results Item added to reflect the need to build stakeholder trust in the governance of your organization and to ensure ethical behavior and legal compliance

Membership Corporate Platinum (6) Gold (2) Silver (3) Bronze (7) Brass (1) Copper (24) Individual Three-star members (8) Two-star members (3) One-star member (1) Members (21)

Corporate

Platinum (6)

Gold (2)

Silver (3)

Bronze (7)

Brass (1)

Copper (24)

Individual

Three-star members (8)

Two-star members (3)

One-star member (1)

Members (21)

Corporate Member Listing BRONZE Baptist Health System of East Tennessee, Knoxville Thompson and Company, Memphis Cookeville Regional Medical Center, Cookeville Wackenhut Services, Inc., Oak Ridge Wellmont Health System (Oak Ridge Team), Kingsport Eaton Aeroquip, Gainesboro First Tennessee Bank, Memphis

Corporate Member Listing (cont’d) SILVER BellSouth, Nashville Federal Express, Memphis Memphis Light, Gas & Water, Memphis

Corporate Member Listing (cont’d) GOLD Dana Corporation, Tennessee Covenant Health System, Knoxville

Corporate Member Listing (cont’d) PLATINUM Bristol Tennessee Electric System, Bristol Fleetguard, Inc., Nashville Pal’s Sudden Service, Kingsport Tennessee Valley Authority, Knoxville Eastman Chemical Company, Kingsport Caterpillar Financial Services, Nashville

Benefits as a Member of TNCPE Knowledge-sharing from top business experts in the state who have worked and succeeded in environments very similar to yours. The chance to benchmark your organization with other organizations in similar areas, industries or circumstances. Extensive opportunities for education and learning through conference workshops. Exclusive access to the “Best Practices” database. Complementary TNCPE and Baldrige National Quality Criteria for Performance Excellence examiner training. Use of the TNCPE Association logo in your advertising, correspondence, etc. Complementary and/or discounted fees for the Center’s training services, focus area meetings and other materials Membership is not required for Tennessee organizations to participate in the Award Process, however, for those applicant participants external to Tennessee, Center membership is required.

Knowledge-sharing from top business experts in the state who have worked and succeeded in environments very similar to yours.

The chance to benchmark your organization with other organizations in similar areas, industries or circumstances.

Extensive opportunities for education and learning through conference workshops.

Exclusive access to the “Best Practices” database.

Complementary TNCPE and Baldrige National Quality Criteria for Performance Excellence examiner training.

Use of the TNCPE Association logo in your advertising, correspondence, etc.

Complementary and/or discounted fees for the Center’s training services, focus area meetings and other materials

Excellence Award recipients Eastman Chemical Company Philips Consumer Products Bristol Tennessee Electric System FedEx Nissan Bridgestone/Firestone Eaton Corporation of Shelbyville Methodist Medical Center of Oak Ridge Baptist Health System of Knoxville Fleetguard Caterpillar Financial Services Corporation Memphis Light, Gas and Water Eaton Aeroquip Corporation Pal’s Sudden Service John Deere Power Products of Greenville Tennessee Valley Authority Nuclear of Chattanooga Caterpillar Financial Services Corporation

Eastman Chemical Company

Philips Consumer Products

Bristol Tennessee Electric System

FedEx

Nissan

Bridgestone/Firestone

Eaton Corporation of Shelbyville

Methodist Medical Center of Oak Ridge

Baptist Health System of Knoxville

Fleetguard

Caterpillar Financial Services Corporation

Memphis Light, Gas and Water

Eaton Aeroquip Corporation

Pal’s Sudden Service

John Deere Power Products of Greenville

Tennessee Valley Authority Nuclear of Chattanooga

“ We are very honored to have won this award, we are committed to business excellence and processes that provide world class service to our customers and dealers worldwide. This award, together with, our record business results, and leadership in the financial services industry demonstrate that we are headed in the right direction, and our employees are committed to providing world class service." President of Caterpillar Financial Services Corporation James S. Beard

Caterpillar Financial Case Study

Background of Dan Walsh Started career with Caterpillar Inc. Moved on to Xerox First exposure to organizational quality Moved on to Ford Motor Credit First exposure to equipment financing Through a professional colleague, came back to Caterpillar as a Continuous Improvement Manager with Caterpillar Financial Been with Caterpillar Financial for five years Works as a part of the Business Excellence Department Also includes a Six Sigma team of approximately 30 people

Started career with Caterpillar Inc.

Moved on to Xerox

First exposure to organizational quality

Moved on to Ford Motor Credit

First exposure to equipment financing

Through a professional colleague, came back to Caterpillar as a Continuous Improvement Manager with Caterpillar Financial

Been with Caterpillar Financial for five years

Works as a part of the Business Excellence Department

Also includes a Six Sigma team of approximately 30 people

How does the department work together? “If the organization was a symphony, the job of the Continuous Improvement Manager would be to make the entire symphony sound better, while the job of the Six Sigma team would be to make the tuba player sound better. The distinction is that making the tuba player sound better may or may not make the symphony as a whole sound better.”

“If the organization was a symphony, the job of the Continuous Improvement Manager would be to make the entire symphony sound better, while the job of the Six Sigma team would be to make the tuba player sound better. The distinction is that making the tuba player sound better may or may not make the symphony as a whole sound better.”

A Day in the Life of Dan Walsh Generates monthly reports for senior executives Include recommendations for improvement using one of three measures or a combination thereof Baldridge Award Criteria Internal measurements Benchmarks and best practices from external sources. Business excellence takes a very dedicated and patient senior management Without strong senior management buy-in and leadership any recommendation he may make will be useless

Generates monthly reports for senior executives

Include recommendations for improvement using one of three measures or a combination thereof

Baldridge Award Criteria

Internal measurements

Benchmarks and best practices from external sources.

Business excellence takes a very dedicated and patient senior management

Without strong senior management buy-in and leadership any recommendation he may make will be useless

Culture of Caterpillar Financial Nimble-by-design and championed by senior management Uses Baldridge Award Criteria as a specific tool to keep organization focused on continual improvement from top to bottom Communication is key Makes every attempt to communicate business excellence initiatives throughout entire organization

Nimble-by-design and championed by senior management

Uses Baldridge Award Criteria as a specific tool to keep organization focused on continual improvement from top to bottom

Communication is key

Makes every attempt to communicate business excellence initiatives throughout entire organization

Changing Culture Culture of organization ha evolved with the changes to the Baldridge Award Criteria Has been resistance to these changes Broken down through: Strong leadership Constancy of the message Genuine hunger to do better Communication Education Celebrations of both the large and small victories

Culture of organization ha evolved with the changes to the Baldridge Award Criteria

Has been resistance to these changes

Broken down through:

Strong leadership

Constancy of the message

Genuine hunger to do better

Communication

Education

Celebrations of both the large and small victories

Affect on Caterpillar Financial When informed of not winning Baldridge Award there was disappointment For the organization, the Award is the means and not the end they are after It is about the journey towards excellence and not the destination Many employees took the news of not winning as a rallying cry to continue to do better and to try again in the future

When informed of not winning Baldridge Award there was disappointment

For the organization, the Award is the means and not the end they are after

It is about the journey towards excellence and not the destination

Many employees took the news of not winning as a rallying cry to continue to do better and to try again in the future

Affects (cont.) Entire process requires organization to have guts and willingness to take constructive criticism about ways to improve Senior management must be willing to admit that what they did was just not good enough and that they need to do better in the future

Entire process requires organization to have guts and willingness to take constructive criticism about ways to improve

Senior management must be willing to admit that what they did was just not good enough and that they need to do better in the future

Affects (cont.) Since using the criteria beginning in 1993, 38 employees have become certified examiners. This allows the company to: Pick up best practices from the companies they examine Be servants to the local business community Allow individual to learn a great deal about good business practices in general

Since using the criteria beginning in 1993, 38 employees have become certified examiners.

This allows the company to:

Pick up best practices from the companies they examine

Be servants to the local business community

Allow individual to learn a great deal about good business practices in general

QUESTIONS?