1

Return on “Investing in Quality”Return on “Investing in Quality”

Problem

– Data and evidence are available that using the Baldrige Criteria and investing in Quality improves the performance of organizations, but apparently these data are not compelling!

Objective

– To develop compelling “Return on Investment” evidence that demonstrate that investment in “Quality” and using the Malcolm Baldrige Criteria is worthwhile

2

Pearl RiverPearl River

3

Pearl RiverSchool District 1989

1992

1994

1995

1997

1999

2001

School Reform MissionMore Effective Schools

NYS Governor’s Excelsior Award

Excelsior Award WinnerPalisades Institute Award Winner

Baldrige Education Pilot

USA Today/RIT Quality Cup

Baldrige Applicant

2000 Baldrige Applicant

4

Pearl RiverSchool District

Student Achievement, Market Share, Stakeholder Satisfaction

42%

90%

71%

93%

55%

63%

35%

45%

55%

65%

75%

85%

95%

1991 2004

Regents Diploma Rate Market Share Budget Vote Plurality

5

Pearl RiverSchool District

Cost EfficiencyR

ES

UL

TS Annual Per Pupil Expenditure

vs. Consumer Price Index

0.0

19

2.35.2

8 10.111.9 13.7

16.117.8

16.7

-3.3

-4.3

-4 -1

4.4

8.912.6

-10

-5

0

5

10

15

20

25

CPI 2.3 5.2 8 10.1 11.9 13.7 16.1 17.8 19

PPE 0.0 -3.3 -4.3 -4 -1 4.4 8.9 12.6 16.7

1995 1996 1997 1998 1999 2000 2001 2002 2003

6

ChugachChugach

7

* *

* Benchmark

High School Graduation Qualifying Exam 2000

Chugach vs Comparable Districts

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Chugach Wrangell Haines LowerYukon

Yupiit

Sophomores Who Passed

Reading Writing Math

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Consolidated District 15 Fast Facts

• Our 20 schools:– 15 elementary, 4 junior high,

1 alternative school

• Our enrollment:– 12,956 students

• 37.5% minority• 24.0% low-income• 32.0% limited English proficiency

9

Lessons Learned

ITBS Second-Grade Reading

0%10%20%30%40%50%60%70%80%90%

100%

1999-00 2000-01 2001-02 2002-03 2003-04

Me

et/

Ex

cee

d G

rad

e L

eve

l

Reading Target National Avg

100% target

Good

State Top 3%

10

Results

ITBS Cohort Data

50%55%60%65%70%75%80%85%90%95%

100%

Math Reading Core Total

Me

et/

Exc

ee

d G

rad

e L

ev

el

1998-99 (Grade 2) 2000-01 (Grade 4)

2002-03 (Grade 6) Target

Good

90% target

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Measurement/Results

  Market Performance

  Operating Cost Per Student

Overall ISAT Student Performance

Cost PerPercentage Point

Performance

D15 $9,358 83.6 $111.93

District A $9,240 77.5 $119.23

District B $9,118 76.9 $118.57

District C $8,406 68.7 $122.36

State $8,195 62.7 $130.70

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Pal’s Fast FoodPal’s Fast Food

13

Higher is Better

Pal’s Fast Food - Customer CountsPal’s Fast Food - Customer Counts

1996 1997 1998 1999 2000 2001

Cu

stom

ers

PalsBest Competitor

14

Pal’s Fast Food Complaints per 1000 Customers

Lower is Better

14

1995 1996 1997 1998 1999 2000 2001

Pal's

BestCompetitor

15

BoeingBoeing

16

Before BaldrigeBefore Baldrige After BaldrigeAfter Baldrige

1992 1993

1994 1995 1996 1997 1998

$ in

Mill

ion

s

PLAN ACTUALS

C-17 Earnings Performance

17

WHAT’S THE CORRELATION?WHAT’S THE CORRELATION?

200

400

450

500550

600

0

1

2

3

4

5

6

7

1992 1993 1994 1995 1996 1997 1998 1999

0

5

15

20

25

10

300

Assessment Score

RONA

Cost Of Quality ($M/unit)

It appears to correlate!

ROS

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Boeing Aerospace Support’sRevenue Performance

2000 2001 2002 2003

PLAN ACTUALS AVG GROWTH

Started Baldrige

19

Boeing Aerospace Support’sEarnings Performance

2000 2001 2002 2003

PLAN ACTUALS

Started Baldrige

20

50%

50

54

58

62

66

1999 2000 2002 20032001

EI

ESIStarted Baldrige

Boeing Aerospace Support’sBoeing Aerospace Support’semployees are more motivatedemployees are more motivated

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Baldrige Stock IndexBaldrige Stock Index

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THE BALDRIGE STOCK INDEXTHE BALDRIGE STOCK INDEX

Percent ReturnOn Shareholder

Investment

Whole CompanyRecipients 1991-01

Sites Visited 1991-01

Award Recipients

S&P 500

Baldrige Index Outperforms S&P 500by 2.94 to 1 for the Same Period

0

100

200

300

400

500

600

All Recipients 1991-01

23

Georgia Tech StudyGeorgia Tech Study

24

91%

43%

69%

32%

79%

37%

23%

7% 8%

0%

9% 6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

OperatingIncome

Sales TotalAssets

Employees Return onSales

Return onAssets

Award Winners

Control Firms

Performance Measures

Per

cen

tag

e C

han

ge

GEORGIA TECH STUDY ON USE OF MBGEORGIA TECH STUDY ON USE OF MB

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So let’s Brainstorm on what else we So let’s Brainstorm on what else we can try!can try!