An integrated model for performance management based on iso 9000 and business excellence models

Coffee
Cooking Tips
Recipes & Food and Drink
Wine & Spirits
Elder Care
Babies & Toddler
Pregnancy
Acne
Aerobics & Cardio
Alternative Medicine
Beauty Tips
Depression
Diabetes
Exercise & Fitness
Hair Loss
Medicine
Meditation
Muscle Building & Bodybuilding
Nutrition
Nutritional Supplements
Weight Loss
Yoga
Martial Arts
Finding Happiness
Inspirational
Breast Cancer
Mesothelioma & Cancer
Fitness Equipment
Nutritional Supplements
Weight Loss
Affiliate Revenue
Blogging, RSS & Feeds
Domain Name
E-Book
E-commerce
Email Marketing
Ezine Marketing
Ezine Publishing
Forums & Boards
Internet Marketing
Online Auction
Search Engine Optimization
Spam Blocking
Streaming Audio & Online
Music
Traffic Building
Video Streaming
Web Design
Web Development
Web Hosting
Web Site Promotion
Broadband Internet
VOIP
Computer Hardware
Data Recovery & Backup
Internet Security
Software
Advertising
Branding
Business Management
Business Ethics
Careers, Jobs & Employment
Customer Service
Marketing
Networking
Network Marketing
Pay-Per-Click Advertising
Presentation
Public Relations
Sales
Sales Management
Sales Telemarketing
Sales Training
Small Business
Strategic Planning
Entrepreneur
Negotiation Tips
Team Building
Top Quick Tips
Book Marketing
Leadership
Positive Attitude Tips
Goal Setting
Innovation
Success
Time Management
Public Speaking
Get Organized - Organization
Credit
Currency Trading
Debt Consolidation
Debt Relief
Loan
Insurance
Investing
Mortgage Refinance
Personal Finance
Real Estate
Taxes
Stocks & Mutual Fund
Structured Settlements
Leases & Leasing
Wealth Building
Home Security
Mobile & Cell Phone
Video Conferencing
Satellite TV
Dating
Relationships
Game
Casino & Gambling
Humor & Entertainment
Music & MP3
Photography
Golf
Attraction
Motorcycle
Fashion & Style
Crafts & Hobbies
Home Improvement
Interior Design & Decorating
Landscaping & Gardening
Pets
Marriage & Wedding
Holiday
Fishing
Aviation & Flying
Cruising & Sailing
Outdoors
Vacation Rental
Book Reviews
College & University
Psychology
Science Articles
Religion
Personal Technology
Humanities
Language
Philosophy
Poetry
Book Reviews
Medicine
Coaching
Creativity
Dealing with Grief & Loss
Motivation
Spirituality
Stress Management
Article Writing
Writing
Political
Copywriting
Parenting
Divorce
Copyright © 2007
FindBestStuff
FindBestStuff.comFindBestStuff.
com
Web FindBestStuff
Google Search

AN INTEGRATED MODEL FOR PERFORMANCE
MANAGEMENT BASED ON ISO 9000AND BUSINESS
EXCELLENCE MODELS
ShannonMacey
Submitted
in partial fulfhent ofthe requirements
forthe degree of
MASTER OFAPPLIED SCIENCE
Industrial Engineering
at
DALHOUSIE UNIVERSITY
Halifax, Nova Scotia August, 2001
Copyrightby ShannonMacey, 2001

National Library Bibliothèquenationale
du Canada
Acquisitions and Acquisitions et
Bibfiographic Services senrices bibliographiques
395 WeUington Street 395. rueWellington
OltawaON KlAON4 Ottawa ON K1A W
Canada Cam&
The author has granted a non-
exclusive licence allowingthe
National Library of Canada to
reproduce, Ioan, distribute or sell
copies of this thesis inmicrofom,
paper or electronic formats.
The authorretains ownership of the
copyrightin this thesis.Neitherthe
thesis nor substantialextracts fkom it
may be printed or otherwise
reproduced without the author's
permission.
L'auteur a accordé une licence non
exclusive permettant à la
Bibliothèque nationale du Canada de
reproduire, prêter, distribuerou
vendre des copies de cetie thèse sous
la forme de microfiche/film, de
reproduction surpapier ou sur format
électronique.
L'auteur conserve la propriété du
droit d'auteur qui protège cette thèse.
Ni Ia thèse nides extraits substantiels
de celle-cine doivent être imprimés
ou autrement reproduits sans son
autorisation.

TableOf Contents
List ofFigures.................................................m....~.........em...........................~.........x
List ofAbbreviations . . . . . - . m . . . . . m ~ . . . . m ~ m ~ * - ~ ~ ~ m - . ~ m m ~ ~ ~ m ~ ~ ~ ~ ~ ~ ~ ~ m ~ ~ o o o oxi
1.0 Introduction ..........................~.......o...~....~....ooo..~~~.e...............................~e...o......1
Performance Management.............................................................................................................1
Models for Performance Management ......,..,.................................,.......................................-4
PerformanceMeasurement......................................... .... ............................................. 5
Performance Management in R&D .............................,......................................... ..........7
Case Study Organisation(CSO)...............................,................................................. .9
Ornanisationof the Thesis .............................................. ...................................... .. 1 0
2.0 Literature Review............................*................~o.....sm..........*.~*...........*........~...12
2.1 Introduction.............................................................................................................. . . . 12
2.2 PerformanceManagement................................ .................. .................. . ..............12
2.2.1 Models for Performance Management........................................................................ 13
2.2.2 PerformanceMeasurement...........................................................................,......................-27

2 3 PerformanceManagement in R&D ...........................................................................................-46
2.3.1 Addressing Issues Unique to R&D ....................................................................................... 46
2.3.2 Benefits of ImplernentingQuality Management in an R&D Environment........................... 49
2.3.3 ISO 9000 in R&D.................................................................................................................. 51
Motivation for Proposed Research........................................................................................ 52
Objectivesof Proposed Researcb ................................................................................................53
An Integnted Mode1 ForPerf~~nanceMuiagemcnt.................................5 4
Introduction ...............................................................................................................................54
Development of the OPIM ............................... .......... .............w........9.9..................................54
3.2.1 Framework Development...................................................................................................... 54
3.2.2 Criteria Development............................................................................................................ 57
3.2.3 Developmentof the Assessment Questions .......................................................................... 66
3.2.4 Establishmentof the Scoring Scheme................................................................................... 66
3.2.5 Scoring SchemeCornparison ................................................................................................ 73
3 3 Cbapter Summary ....................................................................................................................... 76
4.0 Seff Assessrnent .............................................................................................. 77
4.1 Introduction ..................................................................................................................................77
.......................................................................4.2 Self-Assessment at the Case Study Organisation 77
................................................................................................................................4.2.1 Planning 78
4.2.2 Assessrnent............................................................................................................................ 83
4.2.3 Final Score ............................................................................................................................ 89
4.2.4 Outcomes .............................................................................................................................. 90
4.2.5 Evaluation of Assessrnent Process........................................................................................ 93
5.0 Performance Measurernent ........e....................................................................96
5.1 Introduction .................................................................................................................................. 96

Cornparisonof Assessrnent ResulW to Quriity~ u d i tResults..............................................96
Implications for Simultaneous Auditing and Assessrnent................................................... 102
Result-based PerCormance Measurement...........................................................................-103
Review of Organisational Performance Measures............................................................. 103
Review of the Performance Measuresat Case Study Organisation.................................. 104
Self.assessment, Auditing and Result-based Performance Measuremeat.............................117
Comparing Self-Assessrnentand Result-BasedPerformanceMeasurement....................... 117
The Roles of Self.Assessrnent, Quality Audits. and Result B a d Perfomance Measurement
in the Organisational Performance Masurement System...................................................................... 119
........................................................................ .......................................5.5 Chapter Summary .. 120
6.0 Performance Management InR&D .............................................................. îîl
6.2 The R&D Environment at the CS0........................................................................................ 121
.........................63 Modifying the OPIM for Use in an R&D Environment ............................ 122
..........................................................................................................................6.3.1 Framework 123
................................................................................................................................6.3.2 Criteria 125
................................................................................................................................6.3.3 Scoring 128
6.3.4 Addressing R&D Issues with the Modified OPIM.............................................................. 130
......................................................................................................................Chapter Summary 131
Conclusions.................................................................................................. 132
...................................................................................................Contributionsof the Research 132
..................................................................Scope for Further Research ...............................134
References ....................................................................................................136
Appendices................................................................................................... 144

APPENDlX A .OPIM Questionnaire.............................................................................................1 4 5
APPENDIX B .ModifiedOPIM for R&D ..................-......................................................................160
APPENDIX C .Triiiium Results........................,............. ...............................................................169
APPENDIX D -Cornparison of PerformanceManagement Mode1Criteria......................................170
APPENDIX E -Approach. Deployment and Results Adapted from the EQA ...................................175

List ofTables
.......................................Table 2-1:Channeristicsof PerformanceManagementModels -21
......................Table 2-2:Strengthsand Weaknesses of Performuice ManagementModels 22
.....................Table 2-3: A Cornparison of the S c o ~ gSchernesfrom the Quairy A w d 24
............................................................Table 2-4:Selectionof Self-AssessrnentMethod -31
Table 2-5:Evaluation and ScoringMethods of the Performance Management Models.......33
Table 2-6: Descriptionof Evaluation EIementsUsed inthe EQA.....................................34
Table 2-7: ScoringGuidelinesfromtheMBNQA ...........................................................-35
..........................................................Table 2-8:Sample Score Calculation forMBNQA 3 6
Table2-9: Plan-Do-Check-ActCirde of Audit andSelf-AssessmentPrograms.................. 45
Table 3-1: InmaCaregoriesof the OPIM........................................................................57
Table 3-2: Initial fit of Mode1GiteriatoOPIM Framework.............................................58
Table 3-3:Changes to the OPIMCategories...............................................................60
.............................................................Tabie 3-4:Application of Cnteriato Frarnework 6 1
Table 3-5:FinalOPIM FrameworkwithComespondmgCritexia from XntegraredModels..64
Table 3-6:Calculauonof Scoresfrom Preferences............................................................71
. .Table 3-7:OPIM Scoring Cntena....................................................................................72
Table 3-8: Distributionof PointsArnongCriteriaof OPIM,MBNQA,and EQA .............74
Table 4-1:Sample from the Question Mauix ...................................................................82
..................................................................Table 4-2: Tirnelines for Self-Assessrnent 8 3
.................................................................................Table 4-3: Final ScoreCalculauon 8 9
Table 4-4:PrioritisingAreas for Improvement................................................................ 90
Table 5-1:ComparingOutcomes from Self-Assessment and Q d t yAudit .......................96
....Table 5-2:Recomrnendations, andNoncornpliance Issuesand Areas for Improvement 98
Table 5-3:Comparison of CS0 Scoreson Self-Assessmenrto Audit Findings................101
Table 5-4:ResultsCategories fromMBNQA and EQA ............................................... 103
.......................................................Table 5-5:Performance MeaswesUsed at the CSO 105
.................................Table 5-6:PerformanceMeasurement SystemInterviewQuestions 107

Table 5-7: Applying the BaLnced Scoreard to the Performance Measurtment Syscemof the
Cs0..................................................................................................................... 110
Table 5-8: PerformanceMea~uresAccording to QuiLry, TirrP,Cos,and Flexibility........111
Table 5-9: PerformanceArev Addresseci bythe OPIM.................................................113
Table 5-10: SuggestedPerformanceMeasures to AddRelatingto Resources ...................115
Table 5-11: SuggestedPedomianceMeyures to Add Relatingto Society........................ 116
Table 5-12: SuggestedPerfonnuiceMevures to AddRelathg to Employees.................. 116
Table 5-13: Characteristics of PerfoxmanceMeasurementMethods................................. 117
.................Table 6-1: Chamteristicsof QwLtyManagement Addressing Issuesin R8rD 123
Table 6-2: StrategyCriteriaGomthe OPIM.................................................................127
Table 6-3:Moditied StrategyCriteriafiomthe OPIM ...................................................128
................Table 6-4:TheCategoriesof theModif1edOPIMAddressingthe R&D Issues 129
Table 6-5: ScoringSdiemeforthe ModifieciOPIM ................................................... 130
Table 6 4 Modifieci OPIMAddressingR&D Problems .................................................131

List of Figines
Figure 1-1:P e r f o ~ c eManagement........................................................................1
Figure 1-2: Methodsfor Performance Improvemmt..........................................................3
Figure 1-3:TheRelationshiph e e n Performance Management and Performance
Measurement.......................................................................................................... 3
Figure 2-1: Un-g Framewoxk for the Bddrige NationalQuaLF/Award Model ..........18
Figure 2-2: Enablen and Re& of the EQA .................................................................19
Figure 2-3: The Self-assessrnentProcess.........................................................................2 9
Figure 2-4: Sehssessment Process RrgourVersus Data Qua<ty ......................................32
. . .Figure2-5: OveMew of audit amvines...........................................................................3 8
Figure 3-1: OPMFramewotir ...............................................................................5 6
Figure 3-2: MeasuringPreference in Triilium ...................................................................70
Figure 3-3- A Cornparisonof the Point Distributions Among the Models........................75
Figure4-1: Stepsin the Self-Assessrnentof the CSO.......................................................77
Figure4-2: Test Operations &Svategic Sourcing.............................................................80
Figure 4-3: MvkRingand Sales................................................................................ 8 1
Figure4-4: ProductDevelopment ................................................................................... 81
Figure 4-5: Excerpt from Find Repon.....................................................................8 8
Figure 5-1: Cornparison of Scoreson Self-Assessmentto Audit Findings........................100
Figure 5-2: ComparingLow Self-AssessrnentScores to Non-Cornphces ...................... 102
Figure 5-3:Perfomance Measwement Categoxyfrom OPIM....................................104
Figure 5-4MeasuringEfficiencyand Effectivenessin Self-Assessrnent ...........................118
Figure 5-5:RelationshipofOPIM and Derforniance Management System.......................120
Figure 6-1: Deployment of O ~ a t i o n a land R&DGoals............................................ 122
Figure 6-2:TheModified OPIM Framework .................................................................124

List of Abbreviations
CS0-Case StudyOrganisation
TQM -TotalQuaLtyManagement
BEM -Business ExceilenceM&
MBNQA -Malcolm BaidngeNational QuaLtyAward
EQA -EuropeanQuaLtyAward
DP -DemingPlize
NPD -New Product Development
OPIM -OrganisationalPerformance Improvement M d
CE0 -Chef Executive Officer
Go0-Chief OperatingOfficer
VP -Vice President
QA -QdityAsnirance
PFM -Preference FunctionModebg

Acknowledgements
1would like to thankmy supervisor,Dr. St&v Karapevovic, for invithg me to take part
in thisresearch project and for all the guidance and supportthat he provideci throughoutthe
process. His knowledge of and experience in rhisfieldprovedLivduable and was a great
source of inspiration.
1wish to give thanks to the case studyoqpkation for pamcipatingin this project and for ail
the CO-opemion1received whik performingmy researchthere. Without its fwcial
support,thisproject wouldnot have been possible. Iwould specifidy liketo thankbot-
Mark DeKoning and MaxJaffer for theirinvolvement and advice. Theirsupportwas of
great benefit to the successfulcompletionof thisproject.
1would Idce to thankDr.John Blake forhis valuable feedbadcand tirne spent reviewingrhis
work andDr. Eldon Gunn for his encouragementand support. Thanluto both for serving
as memben of my guidingcomminee. Thank ou to Dr. Walter Wdbom for his Ume spent
reviewuigsomeof the w o i in the thesis and for travellingto Halifaxfor my defence.
Thanksalso to Dr. Car1Sandblomfor seming as a member of my guidance cornmittee.
Thanks also to the Department of Industrial Engineering at DalhousieUniversityfor
providing funding as well as the opportunityto serve as a teaching assistant. Thanksto ail of
the Industrial Engineeringdeparunent staff, especiallytoCindiSlaunwhiteand Linda
Seamone for their cheer and fnendship.
1would like to express my sincerest gratitudeto Greg Delbndge for hisinexhawible
encouragement,patience and supportthroughout myd e s .

In today's global economy, o&tions mua ourperform &eir cornpetitors in order to
survive. Theymust set goals and objectives chat willmove them into leadership positions in
their indusrries. To ensure that these goals are being me5 cornplnies are developing
performance management systems to help them measure and improve the efficiency and
effectiveness of theu activities. S e v d modek have been developed to assist organisations
in these efforts. Some of these models, such as ISO 9001, provide the minimum
requirements for a quality management system, while orhen, like the National Quality
Awards, provide a broader set of criteria that extend the prinaples of managementto
al1 organisational activities. Companies natudy question which model is best suited for
their performance management needs. It has been suggested that the model should be
selected based on the quélitymaturitylevel of the organisation. The ISO 9001 standard for
quality management provides a necessaxy foundation for the journey towards business
excellence- The Business Excellence Models can then be used to build onto this
foundation.
In this paper, a model that integrates ISO 9001, the Malcolm Bddnge National Quai;ty
Award, the European QuaLty Award, and the Deming Pxize is developed The
OrganisationalPerformanceImprovernentModei (OPM)is consideredto be a combination
of quality assurance standards that provide the minimum recpirernents for sU1i;ty
improvement, and business excellence models that illustrate the opportunities for
improvement.
Using a Canadian hi& technology Company as a case midy, a p h self-assessrnent is
conduaed againn the OPIM.This self-assessrnent pmcess is then compared to the two
other performance meanirement methods used within the organisation to cietennine its
usefulness as a tool for p e r f o m c e irnprovement. Because the case study organisation is
highly focused on its research and development activities, modifications were made to the
OPIM to create a more appropriate model for application and use in anR&D environment.
The OPIM was developed specifically for the case study organisation (CSO)but can be
easdy adapted to be used by other organisations. A comparry cm employ this model to
evaluate its current quality management system against the minimum requirernents in the
model and rhen apply the opportunities for improvement as a guide for continuous
improvement. Self-assessrnent against this model wili be beneficial in enhancing the
organisation's quality auditing program as well as its redt-based perfoxmance measurement
system.

1.0 Introduction
1.1 PerformanceManagement
Thepurpose of any organisationis to niccessfully achievein gods and objectives. To
remain cornpetitive,these goals need to be achievedin the most effiaent and effective
manner possible. Effectiveness and effiaencyconstitute the two fundamenddimensions of
performance (Neely et al, 1995). Effectivenessrefers to the exrentto wbich goais aremet,
while efficiencyis a m m of how economidlythe h ' s resouras are udised to redise
these goals. Organtationsmusr continuallyimprove their processes and the use of th&
resources to realise improvedo v e d performance. Perfoxmance managementisthe overali
process of managing aa organisation's effiaencyuid effectivenessin the adiievernent of its
corporateand funaionalstrategiesand objectives.
Performance management is a dosed loop process. Figure 1-1illustrates this d e .
............................
1
Audit .....................
Self-Assessrnent
Set Goais and Objectives 4
I lui for I.mprwemtnr I
Yes

As a firsrsep in thisprocess, the organisationmusc set irs and objectives. These cm
be baseci on benchmarking,standardsor othersuch refemce aiteria.
Once goals and objectives are determineci, performancemeasurement is used to nadr the
progress towardsthese goals. Performance measurement is the quantificationof the
effiuencyand effectivenessof an action (Neeiy et ai, 1995).
To narrowthe gap becweenthe m e n t lwel of perfomunceand rhelevels required to meet
its objectives,an organisationmust improve. Performanceimpmvement is the systematic
process of idennfyingand implementing changesto oqpisauonal processes in orderto
more efficiendyand effectivelyachieveset organisational objectives. Performance
improvement can be achievedin two ways. The fvstis to elimioateproblems or
deficiencies. The second ûto initiate actionsthat Mnaaualky result in improved
characterïstics.
There are rwo ways in which companies can elimliateproblems. These arecorrective and
preventative actions. Corrective actionsare those which are taken to eliminatethe cause of
an existing non-conformity[the non-fuifilment of a requirement (ISO 9000: 20W)Jor other
undesirable situation (ISO9000: 2000). Preventiveactions are those taken to elMinatethe
cause of a potential nonconformiryor other potentiallyundesirable situation (ISO9000:
2000).
Improved characteristics can be achieved through Kaizen or QuantumLeaps. Kaizen means
smd incremental irnprovernentstowards the achievement of objectives. Quantum Leaps or
breakthroughsare largerirnprovements. Both of these reduce the average nurnber of
defects or reduce variation.
Figure 1-2 illusvates the concept of performance irnprovement.

Quaiify= k d o mh m deficiencies ( 0 ) +imP'0ved characteristics (+)
ELIMINATE
PROBLEMS GET BETTER
F e ,once a goal or objective is reaiised, newgoals should be set to continuethe cycle.
Both performancemeasurementand improvernentare essenriaif an organisationwishes to
sirndtaneous~achieve its objectives andmaintain its cornpetitiveedge.
MANAGEMENT
The measurement synem un be seen, accordingto Bitichi et al. (1997),as the
heart of the performance managementqmem.
ACT
+
PLAN +
4
l IMPROVEMENT
v b
DO MEASUREMENT
L

There are xveral wysin which an organisationcan mevure its performance and plan for
improvement. One such methodis to compare its puformance to a given reference model.
There are manysuch modek used byo ~ t i o n stoday. Some of these models are
focused on specific processes within the organisationsuch the ISO 9001: ZOOOstandard
for sUai;tymanagement. Otherssuch as NationalQuaLtyA w d often referred to ar;
business excellencemodels (BEM)have a broader focus and uy to encompass all aspects of
an organisation. All of these models address the main aspectsof performance management:
performance measurernent and performance improvement.
1.1.1.1 ISO 9000: 2000 Standards forQuli;ty Management
The ISO 9000 seriesof @ty management syste.cnstandardsis an internationalset of
nandudsthat provide the minimum requkementsfor an organisation's qualitymanagement
system. The core standard of the series, ISO 9001,addresses the creation and
implementationof a quaiitypolicy, the standardisationof procedures, the identificationand
elimination of defects, cor-ve and preventiveaction,and the managementreview of the
qualitymanagement systea The standardis process onenteci, aïnu at customersatisfaction
asniance, and focuses an organisation's attention on the effectivenessof its quaiiy
management sysrem. It was conceived as a set of essential requirements for building a
qualiy management synem that fits the company's ne& in relation to its products, services
and customers.
1.1.1-2 National QuaiityAwards
Q d yawards are models for business excellence. These models consist of viteria to which
organisationscan comparetheiractivities and results. Theyhave been developed basedon
the p ~ a p l e sof Total QwLtyManagement FQM).TQM is a quality-oriedapproach
chat consisu of applymg qualitymanagement techniques t h r e o u t the organisation. The
evhtion criteria provide puideluiesto organisationsto measure theirprogress in these
efforts.

1.1.1.3 Integration of ISO 9001and the Business Exceknce Models
Bo& the ISO9000 seriesandthe qualitymat&have beenadopted byorgaaisationsto
measure and improve perfomiuice. Manyoqpisations wonderwhether one mode1is
better than another, and whetherthe choiceof model shoulddepend on the type of
organisation. Many authorshave mggestecithat bothmo& are importantto an
organisation (vanderW d e et ai, 2000;Dale, 1999;Karapetrovic andWdborn, 2ûûlB). The
ISO 9001 standardis seen as providingthe minimumreS;rementsfor a &ty management
syaem or the basics to stan the joumey towards orgauisationalexceilence. The quality
awardr,provide guidance for the n a sep on this joumq..
Combiningthese modeis would provide an integrared set of criteriathat codd help an
organisation transition smooddy from its quaitymanagement systemt o w d the useof the
business exceilencemodek for improvernent. There are however, many differences between
these models and as a resuh, they cannot simpiybecur and pasteci together (Dale, 1999).
1.1.2 Performance Measwernent
To meet a company's organisationalgoals, performance measurement must be used to
evaluate,control and improve organisationalprocesses (Ghalayiniand Noble, 1996). This
process is used to interpret and descnbe quantitativelythe criteria used to mesure the
effectivenessof the organisation.
As noted previously, performance measurement can be defmed in terms of the rwo
fundamental dimensionsof performance. Performance measurement is thus the process of
quanufyuigthe efficiency and effectivenessof an action (Neelyet al, 1995). ISO 9000
(2000) defmes effciency as the relationship bmeen results achieved and resources used and
effecriveness as the extent to which planned aaivities are realised and planned results
achîeved

Three main performance mevurcment methods are used byo+tions today: self-
assessment, auditingand renilr-basedperformculce rneasurement.
As organisationssrriveto implementperfomunce management models, there is a redting
need to meanire progress and improvemencof the impIementation efforts. Self-assessrnent
involves the regularassessment and monitoringof organisational activitiesto determinewhat
is workingwell, what needs to be improved, and what ismissing (Dale and Bunney, 1999).
Instead of compliancewiththe criteria of thebusiness excelience model, self-assessment
idendes an organisation's strengths and opportunities for improvement in each area of a
predefmed set of criteria. Self-assessrnenuask "how doestheorganisationmeet the
criteria?"andwhether this approachis used consistendy(Le.well deployed) throughout the
enterprise.
Self-assessrnentusing am-ardmodels is focused on findingimpmvement opportuniriesand
new ways in which to drivethe organisation down the road of business excellence (vander
Weile et al., 1995).
The performancemeanirement merhod used to evaiuatean organisation's qUa;ty
management system is the quaiityaudit. The audit is used to evaluatethe complianceof the
systemwidi the criteria of the ISO 9001standard. The outcome is either complianceor
non-cornpliance. Audits are designedto provide independent, objectiveand documenteci
evaluation of the evidence that the qualitysystem &S.
Quaityau& are used to measure the effectïveness of an organisation's quahqr system
againstthe selected ISO 9000 model. Audits do not however, meanirethe efiaencyof the
system and therefore miss one essentd aspect of perfomance.

The auditsused with ISO9000 series registrationlook for noncornpliance and assess
whetherthe quJirymernand its undeliyingprocedures are king followed. In otherwords,
+ty audits ask 'if the organisationmeeuthe deria", wheeas self-assessrnenaask 'how,
and howwell, does the organisation meet the criteria".
1.1.2.3 Result-based performancemeasurement
Result-basedperformance measurernent isanother methodorganisationsuse ro meanirethe
effuency and effectiveness of theirprocesses. This involves the collection of information
and datato analyse process performanceuid/or input and output characteristics (ISO 9000:
2000). To do this, companies designor adopt performance measures that ~rovi&valuable
information about the current performancelwels of organisationalactivities. Performance
measwes are meuics used to quanafvperformance.
The set of performance measures used byan organisation fomis the performance
measurement system. Firms m m carefullyselect these m e m e s to provide a view of key
performance areas to control andimprove performancelwels. It is the seleaion of this set
of meanires that has proved chailenging.
1.2 Performance Management in R&D
Research and development (R&D)is an area in which there is muchvariabilityand
uncenainty. The abilityto innitute systematicdecision-making continuousimprovement,
experimentationwith new ideas, and tearnwork are cntical elementsof the TQM philosophy
that have been found to be important for a successful RBrDwork environment (Gamin,
1993, Kiella and Golhar, 1997). This area of research however has been found to be weak
as, for the most part, the lireraturedealswith the manufamiring and servicesectors.

Due to the l wtangibildy and repetiuon found in R m &pmnents, manufamiring-based
qualitypractices when applied to R&D my prove dislsrrorrr(Kumar and Boyle, 2001).
There are severalissues, specificto an R&D organisation,t&atshoulcfbe considered.
Individuaiachievement,as opposecito teamwork, has been recognised and awarded in
the R&Denvkonmentsfosteringa veryinciividualiswc workethic.
The goals and objectivesof the R&D funaion are often emphasisedover the o v d
companygoals, leadhg to a systemrhat is not f d y conduciveto the achievementof
these organisationalgoals.
In todn/s competitivemarketplace, companiesare facedwith the prospect of
introducingnewproducts at a fnghteningPace in orderto survive.
In a shon-sightedeffort to remain competitive, companiesreduce the numberof
resources avaiiable. The R&D department is often the fimtarget. Theexpectationis
that researcherswill continueto perform at the samelevelwith fewer resources.
W1th increased cornpetition, organisationsmust recognise that R8rD/new product
developmentis one of the moa important sources of competitive advanrage for a f m
aayawamaand Pearson, 2001).
The emergence of new technologygreadyimpacts the R8d) environment.R%D mus
view technology and scientificadvances as tools to assin the organisation in meeting
companygoals (McLaughhn, 1995).
Its responsiveness to and influence on changingcustomerneeds musr drive the R8rD
organisation.
The companyused as a case study (case mi+ organisation) for the research in this thesis is
very mu& f a e d on its research and development efforts to maintain its competirive
position in the marketplace. Many of the issues lined above applyto the R&D departments
in this organisation. The n a sectionprovides an overviewof the case study organisation.

1.3 Case Study Organisation (CSO)
The companyusedfor thiswork, whichwewiU caiIthe case studyorganisation (CSO)isa
Cinadianhrghtechnologycompanywhich desigm, manufacturesand marketseleamnic
components,p@ &con integratedcircuits (ICs) andthick-filmhybridcircuits, for
specialised applications.
The organisationhas rwo faciliaeswith totalplant space of 70,000square feet, encompassing
all aspects of integratedcircuit development,muiufacnviag and marketing. Revenue
exceeds f107million peryear. TheCS0employs ahost 500 people.
The companybasrecendyreorganisedintorhree divisions. The divisions are basedon
produa familiesand each indu&s marketin&sales, R&D, and manufacturingfunctions.
TheCSOrecognisesthat in today's fast-changingeconomy;initiative and ingenuityare
essenùalelementsof success. In 2000, it renewedits focus on RSrD,rampingup spending
to approximately 17percent of des.
The organisation is dedicated to quality. To ennue hi& qualityproduas and services, the
organisation's QualityProgram is registered to ISO-9001-94andis constantiyevaluated
through interna and extemalaudits. The quai~tysystemis currendy being updatedto meet
the ISO 9001:2000 standard forqualitymanagement.
W e the qualitysynem is being rnaùitained in accordance with the ISO 9001-94 standard,
the CS0 is awarethat these effortsare no longer adequate to maintain theircornpetitive
advantage. The companyneeds to continueits qualityjourney and expand its continuous
improvementefforts. SeveralNational Quality A . suggest cnteriathat should move the
CS0 into this nez phase of excellence.

1.4 Organisationofthe Thesis
The remainder of this thesis is organised as follows.
ChapterTwoisa nwqrof existingiitennire to develop a background for the problems
addressedin thisthesis. Thesetop& indude:
Performance Management
PerformanceManagement in R&D
Issues Uniqyeto R&D
ISO 9001in R&D
It dso indudes an o v e ~ e wof the motivation for and objectives of the research in this
thesis.
ChapterThree describes the developmentof an integrated model for performance
management based on the ISO 9001:2000 Standard for QwLty Management and severai
business exceilencemodels.
ChapterFour subsequendyreports on apilot self-assessrnentperformed in a business
division at the case study organisation. This self-assessmentwas conducteciagainst the
proposed model for performance management.
Chapter Five compares diree me&& of perfomance measurement used by theCSO.
These includethe self-assessment,the p h t yaudithg prognm, and the result-based
performancemeasurement system.
Chapter Six describesthe modification of the OPIM to be more appropriateforuse in an
R&D environment.

ChapterSeven condudes the thesiswith animmary of r e d a andconvibutionsof thework.
The scope forhtrtherresearch is also discussed.

2.0 Literature Review
2.1 Introduction
A nwqr of existingliteraturehas been conductedto reviewthe foliowing aspects of
performance management:
the main elemenu of performance management iadudingmewrement and
improvemenr;
existingfrarneworksand modeis for organisationaiperformance management;
the integdon of the minimum requirements for a qualitymanagement synem with die
cntexia frorn the more holinic national @ty awards;
three organisationalperformance measurement methob: self-assessment,audiring,and
redt-based performance measurement;
performance management in a research and devdopmentenvironment;
PerformanceManagement
Successof an organisation's business depends on its abilityto set svafegyand objectivesand
then plan for the resources and activities necessaryto achievethem To ensure that these
pluuied activities acniallyoccur and lead to the fulfhent of the set objectives, the
organisation needs to msnage and improve its performance. Perfomiancemanagement is
"the process bywhich the Companymanages its performance in linewirh irs corponte and
functional strategiesand objectivesn(Bititciet al., 1997). Performancemanagement is
essentiaito the successful operation of the enterprise. It has become a key business process.
The performance management process is a dosed loop deployment and feedback ryaem
that sanswith the company's vision, broken down into business objectives and strategic
goals. Action plans are created based on the achievementof these goals and objectives. To
monitorthe progress towuds the accompiishment of these goals and objectives,
performance measurement is used to collect information,indicatingwhere the nirrent
performancegaps exist. This informationis then fed into the performance improvement

process, which narrowsthe perfomunce gaps and then feeds information back into the
process. In SV, the main elementsof performancemanagement are:
establishmentof goals and objectives
pertonnancemeasurement
performance Unprovernent
These interdependent processes, hctioning hannoniousiy, usix~gvarious resourcesto
achieve goals related to the effiaencyand effeaiveness of organisationalprocesses, make up
the performance management system. (Karapetrovic and Wi11born, 1998A)
There are numerous rnodels for performancemanagement. The next section reviews several
of these.
2.2.1 Models for PerformanceManagement
This section outlinesthe frameworksand models used byorganisationstodayto design,
implement, maintain, and improvetheirperformancemanagement systems. These range
from models of the basic requirements for a quaRymanagement systemsuch as the ISO
9000 standard for q d t y management to more holisticmodels for business excellence. The
latter includes the Malcolm BaldngeNational Q d t yAwad, the EuropeanQ d r y Award,
and the Deming Prize.
2.2.1.1 ISO 9000:2000 Standard for Quality Management
Customen in today's marketplace require assurance of the quaiityof the products or services
that they are buying. To provide this assurance,organisationslook to the ISO 9000 series of
standards for q d c ymanagement to provide guiciance in the planning, implementationand
maintenance of an appropriate qualitysystem.

A @ty systemis a set of interdependentprocesses tbat h & o n hamoniody, using
various resources, to achieve the objectivesrelateci to quality(Karapeuovicand Wiibom,
1998A). The quai~tyqmem is a sub-systemof the business systemof an organisation.
The ISO 9000 senes of standardswas developedin 1987as a set of models that stipdated
the requirementsuponwhich an e x t e d pany could assess an organisation's qualitysystem.
The senes consisted of guidance nandvdsand conformance standards. The guidance
standards ISO 8402, ISO 9000, and ISO 9004, provideci interpretationsfor using the
conforniancestandards. The conformance standardsISO 9001, ISO 9002, and ISO 9003
represented three distinct f o m of funaional capabilitysuitablefor extemai qyality
assurancepurposes. Companiesapplied the applicablestandardto their organisationto
assuretheircustomers of the @ty of theirproducts and senices and to make their quality
efforts more uaasparent.
The originalISO 9000 seneswas revised in 1994. The ISO 9001standard in this version of
the model consisted of 20 elementsthat addressed all aspects of a q d t y srjem. This
sysem induded the organisation,allocation of responsibilities, procedures, processes, and
resourcesthat joindy led to the provision of goods and seMces in accordance with the firrn's
qualitypolicy and objectives (PG,1995).
The standards emphasised the asniance of quaiityof products and servicesthrough:
clarification of management poiicies and cornmiunent
identifilcationof roles, responsibility and authority (Elmuti, 1996)
establishmentof clear instructionsto ali personnel affectingqualiry
development of precise procedures and instructions in al1areas of operationai activityto
enwe consistenq and uniformity (kadi et ai., 1996)
This model has been used extensivelybyorganisations1overthe world since its incepuon.
Today,over 400,000 companiesworld-wideare registered. There have been however,
severaicriticisms made of the model:

tao much emphvis ispiaced on documentation,creating bureauctacyin convol
rnechanismsand bodeneckswhen documentsneed to be c h g e d or updated
(Karapeuovk, 1999; Dale, 1999)
la& of emphasison impmvement (Chinet al., 1995;Pun,1998; Najmi and Kehoe,2000)
la& of a suong focuson nistomer satisfaction@odinson, 1991)
frequendymistakenas a guarantee for produa quahty(Bum, 1990)
In December 20d0, the ISO9000 seneswas updated forthe second time. The 1994
version,which emphasised+ty assurance, has now been replaced byISO9001:2000that
was developed to assis organisationsimplement and operateeffective quality management
systems. The sUa;tyasnuance standardprovided confidencethat the requirements for
quaiitywill be met (Karapetrovicand Wilibom, 1998A)through qualityplanning and
conuol. Thenew series addsthe process of qwLtyimpmvementinto a broader model
emphasising qualitymanagement. Q d t y managementis the combinationof quality
planning, q d t yconuol, and quaiityimpmvement. Thisnew emphasis on improvement
renilted in a section of the ISO9001 standard devoted to measurement, an+ and
improvemenr processes.
The changes manifest themselves in the underiymgp~ciplesof the model. Ir is based on
eight q d t y management principles.
1. Customer focused organisation
2. Leadership
3. Involvementof people
4. Process approach
S. System approach to management
6. Continualimpmvement
7. F a d approach to decision making
8. M u e beneficial supplierrelationships

By connectingthe prinaples of qu+ management to organisationalprocesses, the 2000
version of ISO9ûûû provides a greater orientationtawvds continualimprovement and
customersatisfaction,thus wideningthe scopeand the use of the standard
TheISO9000 senesnow consists of a pair of qualitymanagement system standards:ISO
9001andISO 9004.
ISOSM)I
ISO 9001 s p d e s requiremerits for a qu?litymanagrmentsystemthat c m be used for infernalapplication by
oqpnktions, or for cdcation, or for contracnui purposes. It focuseson the effectiveness of the qu;Jity
managementsystem in meetingcustomerqukments. (ISO9004:2000)
ISO 9004 givesguidance on a wider range ofobjectivesof a qu;ility managementsystem than does ISO 9001,
particulariyforthe continuaiimpmvementof anorganisation's o v d performanceandefficiency,aswd asits
effectiveness. ISO 9004is recommended asa guide for o ~ a t i o n swhose top management wishes to move
beyond the requirementsof ISO 9001in punuitofcontinual impmvement of performance. However, it is not
intendecl for certificationor forc o n d purposes. (ISO 9004:2000)
These IWO standards can be used alone or a complementaxymodels for an organisation's
quality management system ISO 9001sets the essenrial requirernents and ISO 9004 shows
the way for futuredevelopments. To maintainregistration status, an organisationmus
performintemal and extemal audits against the ISO 9001 model to showthat it has met
these requirements. It can however, enhancethe audit process by performing self-
assessments againnthe ISO 9004 model. This process can help identifystrengthsand areas
for irnprovement in the quaiitymanagement system intexms of its efficiency as well as its
effectiveness. If the issues identified in the self-assessrnentare addresseci, the results of the
next quality audit should show irnprovement.
While the ISO 9004standardis a model for improvingthe efficiencyand effectivenessof the
qualitymanagement system, other models have been keloped that address an even broader
set of organisationaiactivities. These are the National QuaLtyAwarb or Business
Excellence Models (BEM) as they are often referred to.

2.2.1.2 National Quality Awardc
QuaLtyawardsaremodeisof business excellenceconsking of uitexia to whidi
organisationscmcompare theiractivitiesand resuits.This compvison process, r e f e d to
as self-assessment, involves theregular assessrnent and monitoringof organisational
activiries (Dale and Bunney, 1999). hstead of cornpliance with the criteria of a business
excellencemodel (BEM), these assessmentsidenrifyan organisation's suengrhs,weaknesses,
and oppormnities for impravementin each area of the criteria.
Three of the most pop& q d t yawards are the Malcolm BaldngeNational Qua;tyAward,
the EuropeanQua;tyAward and the Deming Prize. Each of these a w d has its own
focus, famework, mteria and scoring method
This award is named for Malcolm Baldrige, who served as Secretaryof Commerce from
1981 und 1987. Hismanagerial excellenceconuibuted to long-termirnprovementin
efficiency and effectiveness of goverment (NIST,2001)
Organisationsthat aim at king world-classfocuson insrillingcore values such as good
leadership, amorner focus, respect for employees, and continuous improvement
(Pannirselvamand Ferguson, 2001). These form the basis of the MBNQAaiteria. The
model embodies these essential values in a frameworkof seven main categones.
1. Leadership
2. StrategicP l k g
3. Customer andMarket Focus
4. Information andAnaiysis
5. HumanResource Focus
6. Process Management
7. Business Results

There are two keyassumptionsthaxdevinthe modeL The fimisthat the leadership
provided bytop management isthe primvydriverofthe business. Top management m e s
organisationalvalues and goalsand direcrsorp.aiutionalimprovement. The secondis that
the basic goalof the slUi;typrocessis the delivery of mer-impruvingq d t yandd u e to
customers (Malcolm BaldngeNational QuattyAwad, 2000). Figure 2-1 provides the
frameworkcomecting and integratingthe categories.
4
Information and Adysis
Organisationsare evduated against a given set of criteria and a maximum total of 1000
points are allocated among seven awardcriteria Each critenon curies a different number of
points in accordancewith its relativevalue within the a w d
The EuropeanQualityAward (EQM)was introduced in 1991by the European Foundation
for QualityManagement (EFQM).

The EFQM ExcellencemoQl is based on a set of fundamental conceptsthat formularethe
definitionof excellence (EuropeanQualityAward, 1999). These are:
results orientation
amorner focus
leadership and consistencyof purpose
management by processes and facrs
people dwelopment &involvement
continuousleaminginnovation&improvement
partnership development
public responsibility
The mode1incorporatesthese FundamendConceptsin a set of nine criteria; five of which
are 'enablers', fourof which are 'redts'. The 'enablers' criteria address what anorganisation
doeswhilethe 'renilrs' coverwhat an organiution achieves. Figure 2-2 ilhwates the model
with the 'enablers' and 'results'.
1 Enablers Results
Leadership Processes
&Resources
u=LJ
People
Key
Performance
Redts
Innovation and Leaming I

organisationsare evaluatedagaiana given set of criteria and a maximumtotal of 1000
points are allocated among nine awd criteria. Each mterion carries ii different number of
points in accordance4thits relative valuewithiuthe a w d
The Deming Prizewas established, inhonour of Dr.W. EdwardsDeming, bythe Board of
Directon of theJapaneseUnion of Saentistsand Engineers W E )in 1951. Dr. Deming,
one of the fathen of quaiity,is best knownfor hiswork inJapan, d e r e from 1950onwad,
he taught top management and engineen' methob forthe management of qualiry. The
impact of Dr.Deming's teachingson American manufacturingand semice organisationshas
been profound
The orignal objective of this prize wasto assess a company's use and application of
statisticdmethod (Dale and Bunney, 1999).
The prize consins of a cheddisr with ten major categories. These are:
1. Policies
2. The organisationand its operation
3. Assembhg and disserninatinginformation
4. Standardisation
5. Human resources
6. Quaiiry asnirance
7. Mallitenance
8. Improvement
9. Effects
10. Futureplans
Each pricnarycategoryhas six sub-categories(except for q d t y assurance, which has
twelve). The cheddist expiiady identifiesthe factors and proceduresthat constitutethe
Company-WideQ d t yConvol and Totai QwLtyControl (CWQCrTQC) process.

Because it names specific techniques andappm&es, the ch& Y inherendypresuiptive.
Thereare no pre-designatecipoints allocaradto the individd sukategories.
TheDmimg PNc ir not b d on anudaiying fmmeworklinking concepts, aaiwies,processesand
resuitstogether. Furthemiore!, itdoesnotassumeanundcrtyingcausality. It si.& ~rovidesa lisr of
desirableor good gu;ility-orieûtedmanagement pncticcs. Its focusison poliaesand plans;
implement;iOon of p h ;information collection, a d + ;mdcontrol;resulrs flowing frorn the
implemenmtionof poliaes andthtireffects;and fuwc improverncnt p h .
(GhobadianandWoo, 1994)
2.2.1.3 Comparing the Models
Each of these rnodels har its ownfocus, scope, approachto evaluarion, andimprovement
strateW. Table2-1illusvates these majordifferences.
Responsibilityfor
Fspnwlists and top
management
Idmufication of
conformanceand non-
conformances,resulting
in a pasdfd verdia
ISO 9000
Conformanu (CO
p r o c h andCO
speafi&ons)
Qu&y assurance
Identificationof the
existenceof -ch
dement through an
auditingprocess
MBNQA
Iniprovan~~t(of
rmthodsandof
o v e d business
d u )
ExeCUfive
EQA
lmprovanenc(of
mcthodsa dof
o v d business
r d t s )
ExCCutive
nruigths and
oppominiriafor
improvemcnt, and
scom i n d i h g the
m;inuity of the
Deming Rizc
Statisud Mcrhods
(prevaition of
@ty ~ m b l m )
Executive
svcngths uid
oppomuiitics for
improvanent, and
scoresindiaringthe
cnanuityof the
Design and production
processes, and dimdy-
associatecisupport
activities
managunmtv a n
nie entire
management synem,
includligludcrstiip,
pluuung andthe use
of infornucion and
meuurunuits, the
dorelopmenrand
management of
people, the mcrhods
used for
understanding
clrstomcrandmarket
rtquirrmenrs,andthe
management of kcy
inuinessproceSKs.
managemcnt syscem
The entire
managanent system,
indudingleadership,
people, policy and
nntegv,puuiuships,
mourccs,proceses,
and the management
of key business
processes
Processorientcd
nrong emphasison
proces
management
Giteria confmed to
the applicationof
p r o ~ e ~&,
statisticdmethoch
and q d t yc i d a

1 ISO 9000
Fnmcwodc I Basecion the vroccss
nonconformanccsand
to pxwent m>ccurrrnce
of pmblans
MBNQA
B a 4on an
undcrjuig fnmework
linlunpconceps,
mkkks,processes
and rrnihstogerher
Appendix D provides a detailedcornpuison ofthe elemems covered by the ISO 9001
EQA
Basedon an
mdatying
fnmervorklinlung
concepts,&es,
proceses andre&
togtthff
CoaunlKnlS
ilxpvmmfuung
PIAN-DO-
CHECK-ACI'cyde.
standard,the MBNQA, the EQAandthe DemingPrize,in each oftheircntena Table 2-2
DrmingPrizt
Does not unime
anun-
udty,umpIy
provides a list of
&sirable or good
quality-oricnted
management
pncrices
( G h o b a b and
Woo, 1996)
Qualitylmpmvemcnt
t h r w g h d d
conml
presentsan overviewof the svengthsandweaknessesofeachmodel.
Model
1- 9001
MBNQA
Stmlgths
M i n focus ison the processes wnhiathe quality
management system
Quaiity system model is prescriptive and therefore
the way forward is clear and unambiguous
End point (achievingregistration)isweii defineci
and externaüyvaliàated (Najmi and Kehoe, 2000)
Constinites an integrai pan of an organisation's
o v e d managementsystern(Punet ai, 1999)
Addresses the identification and provision of
resources with a focus on idkanmm, the work
environment and the conml of documents
Forces an organisation to describe its key
processes and make thern more transparent (van
der WÏde et al., 2 0 )
Broad model addressingan organisation's o v e d
activities, not oniy those relateci to the quality
management system
Asks how the organisationmeeu the criteria
Focused on cunomermanagement
~
--
we;ikncsscs
Weak inthe area of humui
Providesody the minimum
requirementsfor the quaiity
management system
Does not specificafyaddress
technologyor financiai
resources
Primanlyaàdressiimited areas
of the enabler si& of the BEM's
Littleemphasison areas that
directlyimpact on business or
organisational effectiveness
(Poner and Tanner, 1996)
Process criteriagoes into less
depth than the ISO 9001
stanàard
Does not spetlftcalty îddress
the use of resources in its
cnteria

stmlgths
B d modei ;iddrcssingan orginisuion's o v d
activitics, not odythose r c i a dto the qu;ility
managementsysrem
Asks h mthe oqpimion meets the criteria
Addresses the efficientand effective use of
resourreswithinthe o ~ s i o n
Focused on the relationswiththe cornmunity,and
customer's andernployee's satisfaaion
Focused on q d t y control
Focuseci on compuiywide qu?layefforts,
conMwus improvement
Provides a List of desirableor goodqu;ilisr-
onentedmanagementpnctices
Weaknesscs
Processcritaia ~ o e sinto less
dephrbrnthefs09001
stvldvd
Does not &as howthe
orguiis;ition manages customer
rehionshipsand satisfacrionor
howit contribuus to socieiy
andmiaimises environmentai
impact
Gteriaare confined to the
applicationof process an&&,
mtisticdmethob andq d t y
d e s
Crimiasuch asCompanypoiicy
andp h m g d t s , or future
p h are p- concenieci
withquîlitywmce activiries
and q d t y resuits
Not bdonanunderjing
h e w o r k linkingconcepts,
aaivities,processes andd f s
together
The major points arisiig fromthiscornparisonprocess are:
The ISO 9000 standard providesoniythe minimum requkmeno for the q d t y
management sysrem but is seen as the foundationof an organisation's total &ty
efforts.
The MBNQAis a broad model addressing an organisation's overaii activities,not ody
those related to the qualitymanagement system. It does not specifiulh/ address the
organisation's use of resoumes.
The EQA is also a broad model for business excelience. Ir does not address customer
management in the same detail as the MBNQA.
The Deming PNe is a model focused on qualityconaol. Thecriteriais not as broad as
those in the MBNQA or the EQA but provides some importantpieces concemingthe
use of quaiitycontrol in a company's continuousimpmvement efforts.

Table2-3 provides a cornparisonof the majorcategories addressed by Bdi of the qudity
awardmodels asweli asth& respectivepoint values.
MBNQA 1
I (%)
Ladership 12.5 Leadership 10
Strategic
Planning
Customerand
Market Focus
Informationand
Human
ResourceFocus
1
1
8.5 PolicyandStntegy 8
8.5 People 9
1
Partnenhipsand 9
Resources
Process 8.5 Processes 14
Manaeement
Business Results
7 CustornerResuitsjfsocietyPeople resuitsResulu
Key Perfomiance
Results
Deming Rue
Orpiution andiu
'1
Assemblingand
information
Qu;ility-=
MÎiatenuice 10
Standardisation 10
Irnprovement
FuturePlans
Ir is evident that each of the awardsplaces emphasis on different areas of their criteria. Both
the EQA and the MBNQA however, assignthe most pointsto the Results sectionsof their
model. The DemingPrize does not singlethis categoryout as beingthe most important in
rems of its scoring xheme (each is valwd at 10%). TheMBNQA assigns 12.5% of its
points to Leadershipand distributesthe ren of its points amongStrategicPlanning,
Cusromerand Market Focus, Infornuon and Analysis, and HumanResource Focus

assigning8.5% for each. The EQA however, w i p ody 10%to Leadershipd e givhg
Processes 14%. ThePeople categoryisworth 9%, ody slghrh/higher thaoin the MBNQA.
Thiscornparison process has rwealed thateach of the performance management madels
have muiy nrengths. Each one couldcompensate for aaother's weaknesses. The next
sectionexamines, in furtherdetail, the research that has been done concemingtheir
2.2.1.4 Integrationof ISO 9001andthe Business Exceilence Models
The ISO9001standard forqualitymanagement is seen by manyas a requed foundation for
a company's @ry and performance improvement efforts (vanderWeile et al., 1997,Dde,
1999, Karapmvic and Willborn, 20O1B, Russell,2000, Meegan and Taylor, 1997). For
exampie, van derWeile et al (1997) makethe following comment:
Continuous improvément ody m;ikes senseif anorganisationh m what is goingon in reiationto
the processes,which are undedyingthe thingsthatneedto be improved.The ISO 9000 series forces
an organisationto desaibe the key processesand makethem more transparent.
Once the requirements for rhis standard have been met however, companies need to b d d
on these foundations to extend the principles learnedto ail organisational activities and not
just to the activitiesrelating to the quaiitymanagement *en This means irnproving a
qualitysynernbeyond the level of simplymeeting spec&cationsto creation of the proper
conditions for business excellence.
The synem required for accreditationWUoutlinethe organisationaistructure,responsibilities,
procedures, processes, and resources needed to knplementquaiitymanagement. The m i t i o n zone
[beyond ISO 90001begins then at the intersectionb e e n the operationaiand management
infrastnrctures (Meegan, 1997)
The transition from quaiitymanagement to business excellenceneed not involve leaving ISO
9000 behind to move on to somRhingsupenor (Meegan, 1997).To facilitatethe movement
from ISO 9001 quaiitymanagement to the o v e d business excelience embodied in the
qualityawards, researdien niggest that these models be integrated (Mannand Voss, 2000,
Tonk, 2000, Dale, 1999,van der Wkle et al., 2000, Pun et al., 1999).

Punet al. (1999),describe a self-assessedqual~tymanagement sysremusingthe frameworkof
the Baldnge M d forthe integrarion of ISO 9000: 1994,ISO 14000, and the Baldrige
criteria. In a case stuciy, the assessrnent against rhisf r a m e dd l consistedof the regukr
auditkg and performance assessmentsperformed by the organisation.
Whenthere is a co11ectionofafksystems orstan- fiamdifferentueu,efficiencyis difficult
andmisconcepuoasand coafurionoften occur. It is &us bento elimbae possibleconfusion and
sub-optimisationfromthe outset byestablishingandmaintainingat o d systems approach.
(Puriet 4 1999)
Finai conclusionsfrom Sun (2000), suggeathat TQM and ISO 9000 srandards musr be
completelyand systematicallyimplemented and integrad Researchersmust detemine a
method of combiig ISO9000 and TQM,and bridging the gap bnween the two.
Mann and Voss (2000) present an innovative approach used by one companyIO integrare its
ISO 9000-certified management systemwith the Baldrige model. The companyconcemed
developed its ISO 9000 qmem to address all elementsof the Baldnge criteria. Of parti&
note is its process improvement approach that prioritises improvemenr projects based on
their expected impact on the company's Baldnge score.
Companies,who are ar present working for an "integrated qualitymanagement sysremw
where ISO is a major contributor, go beyond the requirementsof the standard ro M e r
irnprovethe performance of the organisationin various dimensions. The ISO standard is
thus the comerstoneof TQM and, as such, presents both oppotrunitiesand challenges.
The challenges involved in integrating ISO 9000 and TQM arewell reviewed in the
literantre. We have seen that ISO 9000 has been advocated as the fxst step towards total
qualitymanagement. The ISO 9000 seriesand the excellencemodels clearlyhave different
goals and perspectives and define total quai~tymanagementat differentlevels of maturity
(van derWiele er ai., 2000). It is obviousthen that the uiteria fromthe ISO 9000 series
cannot simplybe incorporateciinto amodel for business excelience. The criteria represented
in the reference models are different, ISO 9000 representingthe minimum requirements and
the quaiityaward models king more holisric paie, 1999). If rhis were to o c w , it would

lose much of its potencyin the building of the foundatîon of an organisation's TQM
activities (Dale, 1999).
Thequaiitya d modelsand the ISO9001standarduse self-wessment and quality
auditingrespectivelyfor evaluationofrhe otganisauonagainstthem. To integratethe
modelswould requirethe integrationof these measurement methods. Karapetrovic and
Wiübom (2001B)explore the integrationof quality audits and seif-assessment processes.
Anotherdifficultyinintegrating the ISO9000andthe @ty awardmodeis is the different
'scoring" schernes used byeadi. For example, when Tonk (îûûû) describesthe integration
of theMBNQAand the ISO 9000 system, he suggesu:
TheBddrige scoringsystemuses percenrages, w h m s the ISO 9000 systernuses, in effect,a pus/fd
(conform;ince/nonconformuice)system Decisions needto bemade astowhetherto retainthe
MBNQA percenagescoring sysrem and ifso what scoringlevelswill bereqwredin each of the
uiterionin the new model.
2.2.2 Performance Measurement
Performancerneaswementis the process of coileccingdata pertaining to al1aspects of the
company's activiues. This data can then be usedto help controland correct waning
performance areas and to set new targets for improved performance.
According to Sinclairand Zain (1999, rhismeanvernent is exuemelyimportant to
organisations for severalreasons:
Meanirescan be analysedto enableappropriatedecision making.
Measurementprovides feedback and reinforces behaviour.
Measurementis an integral part of continuous impmvement; "if yaim o t meanve an
activity,you cannot irnproveit".
Measwement "helps an organisationdirect its scarceresources to the mon aMcnve
impmvement opportunities*.

It has been shownthat perfo~llil~lceimproves ifindividuasare givea targets, and is
. .maxunisedif targets are seen as cbillenging but achievable.
Measurement is impoxtant in the maintenanceof longtermfocus.
Measurementaiso plays animportantrole in qualityand producOvYyimprovement
(Oadand,1993). It:
ensuresthat customerrequirrmentshave been met
provides standardsfor establishiog cornparisons
provides visibilityand a scoreboard for ~eopleto monitorth& ownperformance levels
highlighrs qualityproblems and deremines which areas require priority attention
gives an indicationof the costs ofpoor q d t y
justifies the use of resources
provides feedback for drivingthe improvementeffort
Each of the National QluLtyAwub provides guidelines for perfonningorganisationalself-
assessments agalin the given set of criteria for business excellence. MBNQA provides a
Guide to Self-assessrnent and Action. The EQA provides detailed guidanceto organisations
and suggests a self-assessrnent approach depending on the quaiity rnaturity of the
organisation.
These organisations usually perform self-assessrnent in one of rhree ways (van der Weile et
a.,1999):
taking the a d guideha and foiiowing these for intemal use in the sarne way as
prescribed in the respective guidance booklets for those organisations who are putting
forward a formal application for the chosen award
adjusting the cnteria and/or the scoring to fit the specifîc situation and goals of the
organisation

speQfyingthe parh and sepsto bet&n h m the present situationro the end goal.
Conti (1993) suggescs that organisations should use already existing data in the assessment
process and as additional information for the goal setting process. Some examples of this
data are:
cunomer survgs, amornercornplaint statistics, marketing strategies
employee wqs, work safety statistics, illaess rates, absenteeism and fluctuation,
human resources development plans
processes e.g. processing Ume or process liability,~rojectsand gainedimprovements
producr e.g. e m r rate. life duration and failurerates
fmancial e.g. trends concemingprofits, sales volume, renim on investment (ROI),qwlity
coas &ink and Schmidt, 1998)
2.2.2.1.1 Self-AssessrnentProcess
The self-assessrnentprocess usually followsthe Deming PLAN-DO-CHECK-ACTqde.
Figure 2-3 has been adopted from the EFQM (1995). It provides ano v e ~ mof the self-
assessment process.

Wbde the unciersiagpmcess re& the same, the ISO 9004 standard, the MBNQA and
the EQAeachhas its own m a for conducOngthe self-assessment.
The assessmentmethod suggestedin the ISO 9004 standardinvolves the evaluation of the
mamrityof the @ty management synemfor each major dause in ISO9004 on a scale
ranghg from 1(no formal system)to 5 (best-inclas performance). The standardprovides
exvoples of typid questionsthat cm be asked duriagthe self-assessment. It is suggested
that self-assessmentcan be used in a flexibleway accordingto the needs of the organisation.
Two recommended mdods are to:
perfoxmthe self-assessrnenton an individualbasis for allor part of the quality
management system and then to pursue improvement.
have a cross-function group of people perfonn self-assessment on ail or part of the
qualitymanagement system, followed by groupreview and an*, then consensus
building,to detemilie improvementprioriries and action plans.
MBNQA
The Baldrige National QwlttyProgra.provides a Gui& to Self-Assesunentand Action.
This document ourlinesten seps ro conductinga self-assessment.
1. Idenufythe boundaries of the organisation to be assessed.
-7
2. Decide on a format for the assessment and action plan.
I3. Write the business/organisaüon oveMew
l
-4. Select seven championsand teams, one for each criteria categoty
5. Practice self-assessrnenttechniqueswith the seven category
6. Càtegoryteams prepare a response for their assigned teams
7. Shareresponses amongte- and fiiulisethe fmdings J
8. Assess the organisation's strengths and o p p o d t i e s for improvement e-4-I
u
9. Develop and implement an action plan for improvement 1 -10. Evaluate and improvethe self-assessrnent and action process JLl . ~ m1

EQA
Accordingto the EFQM,selectïonamongassesmient methods shouldbe dependenton the
qualityma- of the organisation. Table 2-4 presenu self-wessment approaches
correspondmgto the maturityof the oqpnkation and the desiredeffort level.
Facihateciworkshop
Award simulation
Pilot a w d simulation
Pro-formaand wofkshop
Vervdetaïleci questionnaire
This approach involvesthe creation of a questionnaireused to gather infomtion about the
perceptionsof people within the organisation. Some questionnaires can consisr of simple
y e h o questions. Othenprovide a set of possible a m e r s nich asA-Fullyachiwed, B-
Considerableprogress, C-Someprogress, or D-Not started. These questionnaires are
dinnbuted and used alone, or as nippon formore elaborate self-assessment approaches.
In this approach, an achievement ma& is developed For each category of the award,
statementsperraliing to possible achievernents by the organisationare set on a scaie from 1
(minimum achievement) to 10 (greatest achievement). Thisis used as a basis for
management discussion and sening objectives for improvement.
Pro-forma
Here pro-formasare created for each sub-category. The descriptionof the critexia in the
sub-categoryis printed at the top of the page with areas to address beneath it. The
assessrnententails f&g in suengths, areas for improvement, and evidencecollectedon the
pro-forma itself.

Woikshor>
The managementteam is responsiblefor gathering dam fromtheir unit andpresentingthe
results to theirpers in a workshop environment.
Thicappmachis effectivelya simulationof enteringforthe award. The unit undenakingthe
self-assessrnentwntes a full submission document. A team of trainedassessors then
evduates this report.
The EFQM dso indudes in the EQA document, a figurethat iilmted the relationship
between the rigourof the different approaches andthe quaiityof data captured.(See Figure
Process
Rigour 4
Low
Q r n h u t i
Pro-f o n
c3<workrhop>
Based on Opinion

Table 2-5 presentsthe evduationand scoringmethodsusedbyachmodeL
Mode1
ISO 9004
~ a&le
S y s t d c pmess-bued
appmpC4 Fufy=%e of
system~tlcrmprovement ,
&ta avaiiableon
c o n f o m c e to
objectives and existence
of improvement vends
Evaluation and Scoring
Evalu?tes the m;uuntyof thequ;rlitymanagtznenr
system forcach major ciause in ISO 9009 on a s d e
riangingfrom 1(no formai system)to 5 (best-inîlus
performuice).
hpmvement process in
use; goodresuits and
susuineci improvement
I I trends
r
Details
1
2
100%.
Evaluates each elexnent in the award criteria based on
No systematicapproach
cvident, no results, poor
d t s or unpredimbIe
d t s
Problem or systemaric
appfo;idr; minimumdata
on improvementresuits
Evaiuates eachelement in the a d criteria bved on
the appmach, the deplaymentof appmch, andresuits
re?lised These are evaiuated on a d e from 0% to
these elemenu. These are evaiuatedon a s d e fkm
OYo to 100%.
5
the approach,the depIoymentof approach, the resuits
r e d i d , and the assessrnent and review (RADAR)of
I
Cfiecklistis evaiuatd Each categoryis worth the same.
Strongiyintegrated
impmvement process;
best-in&s results
dernonstrateci
SeeTable2-7for details.
SeeTable2-6for details

Table 2-6 desaibes the evaluationdimensionsusedby the EQA.
Results
r--Assessrnent & Review
r
Embodiesevduation, improvemendleaming
1sb d on diable inforrmtionand &ta
Dcsaiptim
Mallod(s)dto
;iddressitem
requvcmcnu
Alignmeat witho ~ t i o dneeds
Eviduice of innovation
Elernmt is cvaiuatcdbased on
Appmpri?tenessof the methods to the
rrgUiranmfs
Effectivcness of the use of the methods
Exrem COwhich
a p p r d is applied to
4the in
each item
1 . breacith, and importanceof ~our
Use of the approach in addressingitem
requtementsrelevant to your organisation
Use of the a p p r d by1appropriatework
units
OutcomesinachieVing
thepurposes of the
item
CuITentperformance
Performancerelative to appropriate
compvisons or bencbmarh
The scope of evidence
Gtpn frommeasurement and leamhg is
/ anw and useci KIidentify,prioritise, plan
performance impmvements
Remilu me;uurement of the effectivenessof
of measurernent,
leaming and
Unprovernent activities
1 and impIernent improvementr
t h b r o a c h anddeplaymentis carrieci out
Levniagacùvities areusedto idenufyand
share best practice and improvement
opportuniues

Table 2-7illusuates the wduation dimensionsused bytheMBNQA
I m a c h and Dcployment
no systematicapproachaident; andotal
l
eariystages of a transition from re?ctingto
problemsto generai improvernent
orientation
major gaps exist in deplayment dut wouid
inhibit progress in ?chi+ the prinury
a sound, systematica p p d , responsive
to the primîrypurposes of the item
I
a faa-based improvementprocess in place
in key areas;more emphasisis piaced on
improvementthanon reaction
no major gaps in deployment, though
( someunrmayixineariyrvges
a sound, systermticapproach,responsive
to overailpurposes of the item
1 a fact-basedirnprovernent process is a key
management toil; dear evihenceof
I refinmientand improved integrauon as a
redt of improvement@es and adysk
approachis well-deployeâ, with no major
gaps; deployrnentmay Varymong some
areas orwork units
a sound,systematicapproach,fully
responsive to al1the requirements of the
item
1 a very nrong, fut-basedimprovement
I
pm&s is akey managem&t tool; nrong
refinement and integrauon- backed by
excellent axmlysis
approachis f d ydeployedwithout any
sipificuit weaknesses or gaps in any ueas
R c d s
no resuitsor poor resultsin areas reponed
evfy sages of âevelopingtrends; some
improvementsd meariy good
performance levels in a few areas
resultsnot r e p o d for mvry to mostareas
of importanceto the cornpuiy's key
businessrequirrments
improvement trends digood
performance levels reporteci for m;ury to
moa ueu of importince to the company's
kqr business fequirements
no p a m of adverse trendsd m poor
performancelweis in areas of importance
to the appliant's key business requinmenu
sometrends and/or current perfommce
lwels-evaiuated againstrelevant
cornparisonsd mbencbmuks-show
areas of svengrh and/or good to very good
relative performancelevels
currentperformanceis good to excellentin
most key ares of importanceto the
company's key business requirements
most improvement trends andlorcurrent
performance lwels aresustained
muiy to rnost trends and/or current
performance levels-evaluated a g a ,
relevant cornparisonsand/or benchmuks-
show areas of leadershipand very good
relativeperformancelwels
currentperformanceis excelientin most
ares of impoxtanceto the company's key
businessrequirements
excellentimprovementmdsand/or
sustainedexcelent performance in most
ares
mongevidence of industry and benchmvk
leadershipdernonsvated in many areas

In self-assessment, oncethe evduationofeachelement is complete, the cmmhtive scores
are usedto calculate a fnalscore. In both the EQA andthe MBNQk this is a score out of
lûûû. These IWO points have k e n distributedamongthe caregoriesof the award by the
developers of these modeis basedon the perceived imponanœof each.
Table2.8 uses the MBNQAcategonesto illusvate howa final score is calculated. First, each
categoryis evaluated out of 100% accordingto the process describedpreviously. Nem,each
scoreis calculated basedon the total poim value of the categoty andthe evaluationv h .
For the Leadership category, the evaluationwu 60%, the total point value for the categoryis
125so the score for Leadershipis 75 (125x 60%).
In an initial assessment such as this, mon organisationsdo not score more than 250 out of
1000points. World class perfoxmance would achieve a score of around 700 points, while a
C;rtegory
Leadership
SrrategicPhnning
Custornerand Market Focus
Information andA d y m
Human ResourceFocus
score of 500 is exception@ good (Public Service Office, 2001)
Evduation
60%
45%
55%
60%
52%
Point Vaiues
85
450
IO00
L
A scoreof 200 is reporte* typical for an initiai assessmentof an organisationat the
beglining of a Baldxige-basedqualityeffort (McWaid, and Gale, 1995).
Aau;ilScore
75
38.25
46.75
51
43.35
It is important to emphasisethough, the importance of improvementover the a d score
M h u m Score
125
85
85
85
85
34
157.5
370.85
Process Management
Business Resulfs
Totai
achieved in any specificassessment.
40%
35%

Qrulity auditingis anothermethodrhPo e t i o n s unuse to meastuetheir performance.
A qualityaudit is
A systematic, independent,anddocumenteciproces for ob- auditMdmce, andwaluati~it objecüvely
to determinethe extent to which agreedaiteria uefulfilled
(ISO 9000:2000)
Severaielernents are essentialto the performa~lceof an effective audit Fint, there is the
audit standard. Standardsprovide guidance on the prinaples of auditing, the management
of audit programs, the conduct of a& asweil as the competence of auditors (ISQ 19011:
2002). ISO 10011is the m t standard for @ty management system audi*. A new
auditkg standardhowever, ISO 19011,is beingdraftedto integrate qualityand
environmentalmanagement systemau&.
There are three ~/pesof auditsthat c m be perfomd These are first, second and rhird
parry audits. First puty audits, otheWe knownas intemal audits,are performed bythe
organisation on itself. Secondp a q audits are initiated by a customer (die dient) to venfy
that the organisationmeas their qualityrequirernents. Third party audits are refemed to as
exvinsic audits. These are performed byan outside f m calieda registrarand are prompted
by the organisation directiy (Goetsch and Davis, 1998).
Before performing the audit, its scope m m be defmed. This should be based on the
objectivesor information desired byrhe client and should be communicatedto the auditee
pnor to the audit (ISO14010,1995). It is prudent rodo so to ensure that the auditee is
prepared wirh necessarydocuments or objective evidence to demonstrate cornpliance to the
cnteria being auditeci.
Audit criteria are the set of policies, procedures or requirementsused as a reference (ISO
19011,2002). Audit evidenceare the records, statementsof fact or other information, which

evaluationof the coiiected a d t evidence a g dthe audit &ria.
Audits shouldnot be stand-doneprocesses, but part of an overali auditingsystem (Goetsch
and Davis, 1998; Karapetrovicand Wdbom, 2ûûlA). Wdibom andCheng (1994) suggew
thara badine audit (a more cornprehensiveand inteasive audit) establishesthe starting
effectiveness ofthe sysremand t h du+ the eariypendof implementation, regulu audits
should be scheduledat reg& intervals to mainuiathe inaeases ineffectivenessof the
system. As the systemmatures andthe effectiveness stabilises,audits shouldbe scheduied
less frequendy.
The executionof anyaudit indudes sweral steps. ISO 19011prodes a dugramto illustrate
the activities involved in the auditingprocess (SeeFigure 2-5)
T
Initibg the audit
Appointhgthe auditteam leader
Definingobjectives,scope and criteria
Determinhg the feasibilityofthe audit
Estabidmg the auditteam
Establishinginid contanwith theauditee
Conduaingdocumentrevicw 1
Review relevantmanagement system documents,
induding record,and determiningtheir adequacy
w
Prcparingfor in-site auditactRritics
1 Preparetheaudit p h I
/ Arrigningwoik to the audit team I

Gmductingon-sitewdit actinties
ConducMgopeningmccting
Communicationduringtheaudit
RoksandresponsibilRiesofgui& and observen
Cdlectiagaud verifyinginformaion
Genvllringaudit fin+
Prepuingaudits conciusions
Conductingclosingmecting
Preparing, approvinganddistributhgthe audit
rtport
Prepariq the audit repon
Approving and distributhgthe audit report
I Completingthe wdit
RRÎinuigd~cuments
F ithe audit
I ...-...---...-...- ---....
Conducting auditfoilow-up
The objectives of a quality audit, as outlinedby the ISO IO011standard, are to:
determinethe conformityor nonconformityof the qualitysystem elernentswith
specifiedrequirements
determinethe effeaivenessof the implemented quality v e m in meeting specified
qualityobjectives
provide the auditeewith an opportunityto improve the @ty systern
meet regulatoryrequirements and
permit the listing of the audited organisation's qualitysystem in a regiaer
Audits of management sysrems are invaluablein assuringthat a system is perfomhg
effenivelyand meetingits objectives. It is also a necessaxycomponent in the continuous

improvementprocess. The achievememofcontinu ou^ improvement can ody occur if
qualityaudits are used in a dynamicand proactive rnanner (w;ubom, 1990;Banhelezllyand
Zairi, 1994;and Peters, 1998). If organisationuse a u d i a onlyas a tool to verify
cornpliancewidiagreed standYbwïthout dieduog the aptness of the standardsthernselves
or seekinginformationabout the effectivenessof the q d t ysystemin meetingobjectives
(Beeler, 1999),auditiugwill not lead to impmvement.
Result-bued perfomunce measurementis athirdmnhd for meaniring performance.
Redt-based measurement system is an integnl pan of an organisation's performance
management system. It is a means of gatheringdatato supportand CO-orciinarethe process
of makingdecisions and taking actionthroughout the organisation(Schallcwyk, 1998)
Organisations, and researchersin the performance management field, have developedmany
performance mevurement models. These models range from a balanced set of indicators
that periodicdy show an organisationhowit is performingin various areas of the business,
to integrated models that provide real t h e informationwith respect ro how thqr are
performing cmently and forecasts how thq. mry do in the future. As competitiveness
increases, organisationsrequire measurement synemsthat provide not ontyup to date
performance idonnation but also examinehow these meanires interrelate so theycan make
more informeddecisions. Performancemeasurementsystems should be alignedwith
organisationaigoals and objectives. This helps to ensurethat the organisation is measuring
the efficiencyand the effectivenessof the activities that have the greaten effect on the
achievement of these goals.
The set of measures selected by a parcicular organisationshouldprovide m e n t information
penainingto the health of the organisationand also linkdirecrtyto suategic objectives.
Traditionalperfomiance meaSuTemenrs systems are based mady on finand performance
measures 6.e. retum on invesunent, renun on sdes, productivityand profit per unit

production) that were once sufficientto s u c c e s s ~express a compmy's perfomunce.
However, organisationsneed more than a badrwvd giance at howw d rheyhave done over
the past p e n d Lgging metrics, apparent on firunadreports,were the r e d t of past
decisions and are not seen as usefdin operationalperformance asessrnent (Ghalayuiiand
Noble, 1996). An organisationneeck to see how w dir is doingnow,int e m of con, t h e ,
flexibilityand quality. Not oniydo they need to k m theircurrent perfomimce but also
how thqr CUI improve thisperfomiance. Neely (1999) suggeststhat the mevures in today's
Companyneed to be:
focused on organisational strategy
provide data on @y, responsivenessand flexibility
encouragemanagers to se& improvementcontinually
provide informationon what cunomers want and howcornpetitors are performiag
indicatewhat would happen in the short rem andthe longterm
Selectinga set of measuresthat will fulfilthese requirementscan be a dauntingtask. One
methodthat researchers have used is to i d e n euiticaiperformance areas and
correspondingmeanires to coiiea the important data This data is then used to control and
improve performancein these key areas.
It is becoming increasinglyimportant for companies to understand how allareas of their
organisationare perforrning. If properlyconsvucted, performvv~meanires provide
information to managementto enable fact-based decision making. They are also important
foreffective communication. Their use increases constructiveproblern solving, increases
influence,monitors progress, and gives feedback and reinforces behaviour (Sinclairand
ZaLi, 1995A). Performancemeasuremenr helps an organisation allocate scarceresources to
processes withweaker perfomiance because it highghts areas that require these resources
the most.
If anorganisation dwelops performance mevurrs for each process, this mayresult in avery
large lia of measures. The question is, how does one select a few kqrmeasuresthat wili

ensuremanageable data collectionbut yet provide a good indicationof the nausof the
organisation's health.
M q authon have trieci to develop guidelines or approaches that willhelp in this selection
process (Keegan et al., 1989,Fitzgerald et ai., 1991,Kaplan and Norton, 1996,Dixon et al.,
1990,Neeiy et al., 1995,Globenon, 1985). To d s ethe contributionsof these
authors,performancemeasures should:
be linkedto strategy
stimulate action
support long-terniimprovement
emphasisewhar isimportant to the organisation currently
cover ali the appropriateelementsof perfonnance, not jus the finanaal ones
not be in conflict with eachother
enablecornparisonwith other organisationsin the same business
simpleand easyto use
be mainly ratio-based Uistead of an absolutenwnber
be under convol of the evaluated organisationalunir
be desiped based on discussionswith the people involved (cunomers, employees,
managers)
be madyobjective
Vary berween locations -one meanire is not suitablefor all departmenu or sites
change as circumaancesdo
provide fan feedback
stimulate continuousimprovement ratherthan simplymonitor
Nurnerous performance measurernent frameworkshave been developed since the late 1980s.
These framewoh provide information about the types of measuresan organisation c m use
to track perfoxmancein a "baiancedmway. Thisensuresthe Companyis not just lwking at
its financiai situation as an indicatorof its perfomunce but that allelementsof performance

are being m e d and monitod Twoof such h e w o & are the Balanced Scorecvd
developed by Kaplan and Norton (1996)andthe model fromNeeiyet al. (1995),which
consists of four elemenrs of perfoimance.
The Balanced Scorecardanernptsto capture an organisation's performancefrom four
differentperspectives. The first is a finand perspective, Le. howthe organisation looksto
th& shareholden. The second is an intemal businessperspective, which asks at what the
organisationshould excel. The thirdlooks at howthe organisationappean to the cwomers
and the founh perspective is one of innovazionand leamingwhich asks how the Company
cm Lnprove and createvalue.
This nructureis basecionthe premise t h to achieve finuiciaisuccess, thedt;matr? purpose ofa q
organisationmust be to satisfycustomers.Soorginisltonsmut optimise theirintemaivaiue-creating
processes. To doso,theymua l m andth& employeesmust growin theirindividual capabilities.
(APQÇ2 w
Neebet al (1999)suggest that an organisation's m a n u f a h gperformance measures
should fdinto four categones. These are quality,Ume, cost and flexibility. These cm be
extended to cover the performanceaspectsof other deparmients as wd.The performance
of design and development processes for instance canbe viewed from these four
perspectives.
2.2.2.4 Cornparison ofPerformance Measurement Methods
Three methods of performance meanirement have been presented in this lireraturereview.
This section wdl review the work done to compare these methods in terms of their
applicabilityand usefulness to organisations.
2.2.2.4.1 Auditing and Self-Assessrnent
Auditing and self-assessrnentare systematicapproachesused to measureperformance in an
organisation. The auditsused with regard to ISO 9000 seriesreginnuonare madylooking

for non-compliance and wess whether the system andthe undedyingproceduresare being
followed. On the other hanci,self-asessrnent against the a w d modek is focusedon
fmdingimprovement opportunities and newwys inWUto drivethe organisation d o m
the road to business excellence (van derWeile et al., 1995).
Both audits and self-assessmentsshouid be dosed loop processes that foiiow Deming's
PLAN-DO-CHECK-ACTloop. Thk mearis planning forthe auditor assessment,
perfomiingthe a d t or assessment,reviewingrheauditing or assessment process for
adequacy and effeheness, and makingimpmvementsto the process as identifed in the
review.
Each of these processes isused as an evaluationmethodto detemine the aatusof the
current syscem A seriesof auditscan be usedto meawe the achiwed improvementof an
organisation's quaIitysystembut do little to indicate how fast it is goingin a chosen direction
of improvement (effuency) (Karapetrovic andWdbom, 2001B). Self-assessmentsare able
to measure this efficiencythrough the a-s of current approaches to and deployment of
these approachessatisfyinga given set of BEM cnteria. The uialysis should indicate
whetherthe current approachesare sound and integrated and whether there is systematic
and implemented deployment of these approaches. The remit is the abilityto predict
whetherthese are sufficientto leadto improvement of the system. Thus, the objective of an
audit is to venfy compliancewith a set of cnteria and self-assessmentis used to examine the
driven for improvement (Karapetrovic, and Wdborn,2001A).
The r e d t of a quality audit is either complianceor non-cornpliancewith the criteria. Either
the organisationmeets the criteriaor it does not In a self-assessrnentprocess, the objective
is not to cornplywith the cntena but to use it as a frarneworkfor idendjing svengthsand
oppominities for improvement in each area of the BEM cxkeria.
When it cornes to perfonning the audit or assessment,the procedure is sirnilar. Both
processes are designeci around DemLig's Plan-Do-Che&-Actd e .

I T ~dentifyo ~ o x d s u u c n i r eandmq&d
cornpetenceforaudit program management
1 1 Define audit..pr--.. objectives, wope, mler
I 1 0 Ennve cornpetence and suitab* of auditors
DO
I 1 Cummuniuteaudit pian
and respoasibdiaes
Identifywditteams
I 1 Manage the planning and suitabilityof auâitors
I 1 Gxnmuniute audit pian
I I Manage the piamhg andarecutionof
I 1 Perfm foÏlow-uPactionsand/or audits
Select approach and scope
A m
Establishd-assessrnent teams
Execute wessment
perfofxxLlnce
Review and irnproveaudit prognmh u g h
feedbackand recommendationsfromthe
dent.a& andauditor
Identifyr e q d actions
0 Incorponte actions intop h
Implement pians
Karapevovic and Wdbm (2001A)comparethe principles and practices of qualicyaudits
and self-assessmentsfor the purpose of examinligth& compatibihtyand providing the
basis for integration.
The authors suggest severai suategies for increasingthe capabilityand potentialaiigriment of
audits and self-assessrnenu. These include:
Integration of reference models. This smtegymayinvolve a gradd conversion from
the basic requirementsof ISO 9000 to the all-encompassing criteriaof excelience
models, suggesred in literafufe. In that sense, self-assessmentsincorporatequalityaudits.
Integration of evduation merhodologies. Qwlity audits w o d be used for assessing
'hard controls", while self-usessmentswould be used for 'softer" issues and idenufying
improvemenu. In pnctice, this strategyis alreadyapplied.
Goss-use. Quaiityaudits can be appliedto enhanceself-assessments, and vice-versa.

2.3 Perfo~nafliceManagement inRkD
A largeportion of the quîliryproblems rhat viseon the manufactuxingfloorcould have
been avoided completelywithproperattentionto the design process. Quaiitycannot be
tested into a manufacturecip d u a , but musc be designeclimothe produa. Most of the
focus of qualitymanagement research however, &als Mththe manufacniringand s e ~ c e
secton and lacksRSrD focus.The qualitymanagement pracrices that are successfd in
rnanufacniringenvironmentsare wd knownandwidelypublishd The applicationof these
manufacnuing-basedd t ypnctices in anR8rD environmentis not as successful dueto
the lads of replication and highlevel of variability in RBd) projeas (Kumar and Boyle,
2001). There are also highlevels of uncextainry in terms of the impact of the produa on the
market and the revenue it wiU generare overthe followhgyears. It ismore difficult to apply
@ty practices in such an environmenthowever,the undedyingconcepts of quality
managementare essenria to decreasingthisvariab'ilityin theR&Dprocesses. Research is
needed to examine an R&Doperation and idennfypertinent qualitymanagement aspects
that are applicable in nich an environment. To adequatelyaddressthisproblem, thereneeds
to be an understandingof issues that are specificto anR&D organisation.
2.3.1 Addressing Issues Uniqueto R&D
IndividuaiRecognitionof Achievement and Organisational Goais vs. R&D
Objectives
EspecialIyin North Amencan industry,the manner in which researchers and scientists in
R&D roles have been recognised and awarded has fostered a very individualistic work ethic.
Researchersoften prosper byphcipating in a systemthat rewards individual achievement
and discouragesalliance building and CO-operation(McLaughlui,1995).This individual
recognition crûares an amiosphereplagued with individds workingtoward goalsthat will
move hem ahead without due considerationfor the overall goals of the RgrD funaion itself.
This is counterpfoductiveto the achievement of these goais. Individualperformance and
mards need to be replacedwith systemsthat rewardteam accomplishments.

As individuah are rewardedfortheir personal contributionsto R&D activities, the
environment becomes onethat encouragesthe achievemat of persona1goals
The (R&D) environmentis academicand contributionsto and supportof o%;iniszuonaigoals and
objectivesare minimai. In fact,mon researchenare unrwve ofwht the o ~ u o dgoah and
objectivesare.
(Swyt, 1999)
It is exuemelyimportant that r e s e d organisationsensuretheyare focused on projects that
addressthe saaregic needs of the organisation and that rhese needs are being met effuendy.
Fast Pace and Factorsthat IncreaseCycle Tirne
In today's competitivemarketplace,companies are faceddthe prospect of introducing
new products at a fnghteningpace. The abilityto reduce one's cyde rimein product
development is viewed as the keyto innovation nuicess and profitability (Cooperand
Kleinschmidt, 1994). The redt is a need for efficient and effectivenew produa
development (NPD)processes that willailow the Companyto mainuin its competitiveness
within its indunry. What R&D facilities are facing now ody increases the pressurewhile
acting as a barxier sometimesto the achievement of good processes and competitiveoutputs.
Thereis a need for a systematicapproach to irnprovingdesign and developmentprocesses,
and the management systems surroundinghem, to provide the bea environment for
&taking cornpeutive advanrage.
Manyof the factorsthat influence NPD cyde Ume are outsidethe R&D department's
control, making the process that much more difficult. Coprate decision making,customer
needs, and orpan;Sational goals are all factorsthat impact the t h e to market of manynew
products (McLaughLR 1995).

Fewerresources
As companies downsize as a meam of c o s CU&& theR%D departmentisofrenthe hm
target.
Poor oruncertaineconomic conditionscui causehavocwithR&û funcihgandpersonnel. These
uncertainconditionshave a dmmxicandpowerfulpsychologid effect on projects, innovation,and
creativity.
@kLaughttr,1995)
Executives expect that the R&D functionwill perform successfullywithreduced resources
and unrealisric objectives (Kumarand Bayle72001). Thisreductionin resources affectsthe
spirit of the R8rDteams d o meanwhilemust nniggle to keep improvingcyde times to
keep up withthe market.
W& moa researchorganisationsthere is a constant pressure to produce more results with
less budget in lessrime. It is imperativethereforet h research organisations ensuretheir
cnticd resources, the research naff, are focused on proieas that address thestrategicneeds
of the organisationand that these needs are being met efficiendy(Endres, 1992).
Increased competition
R&Dor new ~roductdevelopmentis one ofthe mon important sourcesof cornpetitive
advantage for a f m (Jayawamaand Pearson, 2001). With increased competition in today's
global marketplace,organisationsneed to not oniysatisfycustomers,theyneed to M e
them widi their abilityto foresee and fulfilall their requirements. Gmpanies that do diisthe
best are dependent on the^ R&D departmentsto recognisethe needs oftheir target markets
and translate them into produas and servicesefficiendyand effectively.

Emergencc ofncw technology
The unergence of new technologygready impacts theRBrD environment.RSrDmua view
tedinologyand scient& advames as tools to assis the o~anisationin meeting Company
goais (McLa.gbi.i, 1995). Inevitabiy, tedinology must be manageci withinthe R%D
organisationto benefit all employees/shuaiolders. The abilityto manage effectivelycan
best be achievedthrough the implemenmionof quîlaymanagement priuciples
(McLaughlin, 1995).
Capturingthe customa's changing needs
TheR&D organisation mus be driven byits responsivenessto changing cunomer needs.
Thisis one of the greatest challenges forRBrD hinctions. At the initial stages of a new
product developmentproject, researchers and scientistsmusr accurat* and precisely
ascertain customer requirements. These arethen translateciinto a set of specificationschat
defmethe proâuct to be designed. A new challengearises when customersrequest changes
ro rheir on& requirementsin the rnidst of the design stage. Thismay onlynecessitate
smd changesto the design, but could result in the designteam starcingagain from scratch.
These changes increase cyderime, costs, penon houn and affect the RSrD schedule,rying
up employeesthat are requireà on other projects.
As a r e d t of these factors, the need forteamwork, efficientand effecrivemanagement
sysrems, and appropriate management of technologieshas become critical (McLaughLn,
1995).
2.3.2 Benefits ofImplementingQualityManagement in an R&D Environment
One of the main benefits of irnplementing qualitymanagement in an R&D environment that
authors have reponed is the darificationof the defdtion of 'qualityin RBrD' (Pa&o, 1997,
Kumarand Boyle,2001, Pearson, et ai., 1998). Several&finitions have been suggesteù. A

reviewof litaamreby K w and Boyle (2001)providesthe followingcomponents of
'quaiity in R&D':
an understanding of who the R8rD client is and his or her values and expectations
what the keytechnologiesare and how they can be used to meet R&D clients'
expectationsand the needs of the entire organisation
who theR&Dcornpetitorsare and how t h qwill respond to emergingR&D clients
needs
Qing diuigs nghtonceyouknowyou areworkingon the nghtthings?c o n c e n t h g on
continuallyimprovingthe system.
enabling people by removing barrien, and encoUrap;igpeople to maketheir maximum
connibution
Manyauthorshave written about the need to have systemaucprocesses for managing quality
to gain and remain in a cornpetitiveposition (Cooperet d,1990, Colurao, 1998,Auer et al.,
1996). The result of irnplementingsuch a q d t y approach is a hmthat continuody
servesthe needs of its customers (both internaiand extemai) in an efficient and effective
manner (McLaughhn, 1995).
Q d t yawarb can be w d as a yardstick for measuring 'qualityin R&D' progress and
idenufylng gaps for improvement, as well as providuig a comrnon focus or directionfor
the whole Company. (Pearson,et al., 1998)
Systematicdecision making,continuousimprovement,experirnentationwith new ideas
and teamwork are important for a successfulresearch and developnieit environment
( G d ,1993).
Severalreasons have been provided in the literaturefor the limited use of quality
management practices in R8rD. These are:

An integrated model for performance management based on iso 9000 and business excellence models

An integrated model for performance management based on iso 9000 and business excellence models

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to An integrated model for performance management based on iso 9000 and business excellence models

Similar to An integrated model for performance management based on iso 9000 and business excellence models (20)

Recently uploaded

Recently uploaded (20)

An integrated model for performance management based on iso 9000 and business excellence models