Journey to Excellence

An Inside Look at the Baldrige National Quality Award

Andrei Apruda

Brent Driver

Zach Evans

Who?

What?

When?

Where?

How? Why?

“There is no better assessment of your organization’s performance available than

applying for the Award. The Criteria for Performance Excellence are unique in addressing

all the critical elements of your performance system.”

Bruce W. Woolpert

Chairperson

1996 Panel of Judges

President & CEO, Graniterock

1992 Baldrige Award Recipient - Small Business

Stock Market Success

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

The Criteria Focus on Results

• Customer Satisfaction

• Globalization

• Supply Chain

• Cycle Time

• E-Commerce

• Environment, Health & Safety

• New Product Sales

• Employee Involvement

• Customer Retention

• Product Reliability

• Revenue Per Employee

• Profit Growth

The Path to Excellence

• Accelerate Improvement Efforts• Focus the organization on a common set of goals• Improve your organization’s performance.

The Process

The Voyage

The Experience

The Passage

The Journey

Chugach School District

• South Central Alaska– 22,000 square miles

• 214 Students– 1/2 native Alaskan

– Preschool to 21 yrs

• 30 Staff Members

1994 : Chugach chooses Baldrige

• Increase Student Achievement• Improve Value to Customers

• Maintain Overall Organizational Effectiveness

“Onward to Excellence”

Results

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

• Scores also rose in:– Reading (28th to 71st)

– Language arts (26th to 72nd)

– Math (54th to 78th)

– Spelling (22nd to 65th)

Results (cont’d)

• College entrance exams taken went from 0 to 70%.

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

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

• Staff turnover from 55% to 12%.

2001: Baldrige chooses Chugach

• Smallest Organization to Win Award

• First Education Organization to Win Award

TNCPE Overview

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

BALDRIGE NATIONAL QUALITY AWARDBALDRIGE NATIONAL QUALITY AWARD

TNCPE Overview (cont’d)

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

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

– Manufacturing– Service– Health care– Education– Government sectors

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

TNCPE overview (cont’d)

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

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

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

2003 Criteria

• Preface: Organizational Profile– Governance system and description of the role of suppliers

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

• Category 1: Leadership– Senior leaders’ role in creating an environment that fosters and requires

legal and ethical behavior

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

• Category 2: Strategic Planning– How to sustain changes accomplished through your action plans

2003 Criteria (Cont’d)

• Category 3: Customer and Market Focus– Building customer loyalty and exceeding customer expectations, as well

as meeting their absolute requirements

• Category 4: Measurement, Analysis, and Knowledge Management– Enhanced emphasis on addressing innovation and organizational and

industry changes– Now Information and Knowledge Management has a new Area to

Address on the management of organizational knowledge, in recognition of its growing importance

• Category 5: Human Resource Focus– Organization and Management of Work; Employee Performance

Management System and Hiring and Career Progression (BF comment!).– Enhanced emphasis on employee motivation and career development

2003 Criteria (Cont’d)

• Category 6: Process Management– Value Creation Processes, is a new item (it addresses all the processes

your organization considers important for creating value for all stakeholders. They are the processes most important to “running your business” and achieving a sustainable competitive advantage

• Category 7: Business Results– Product and service results. This item was added to reflect the growing

need for renewed focus in the areas of product and service quality

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

Membership

• Corporate– Platinum (6)– Gold (2)– Silver (3)– Bronze (7)– Brass (1)– Copper (24)

• Individual– Three-star members (8)

– Two-star members (3)

– One-star member (1)

– Members (21)

Corporate Member Listing

BRONZEBRONZEBaptist Health System of

East Tennessee, Knoxville

Baptist Health System of East Tennessee,

Knoxville

Thompson and Company, Memphis

Thompson and Company, Memphis

Cookeville Regional Medical Center,

Cookeville

Cookeville Regional Medical Center,

Cookeville

Wackenhut Services, Inc., Oak Ridge

Wackenhut Services, Inc., Oak Ridge

Wellmont Health System (Oak Ridge Team),

Kingsport

Wellmont Health System (Oak Ridge Team),

Kingsport

Eaton Aeroquip, Gainesboro

Eaton Aeroquip, Gainesboro

First Tennessee Bank, Memphis

First Tennessee Bank, Memphis

Corporate Member Listing (cont’d)

BellSouth, Nashville

Federal Express, Memphis

Memphis Light, Gas & Water, Memphis

Corporate Member Listing (cont’d)

GOLD

Dana Corporation, Tennessee

Covenant Health System, Knoxville

Corporate Member Listing (cont’d)

Bristol Tennessee Electric System, Bristol

Fleetguard, Inc., Nashville

Pal’s Sudden Service, Kingsport

Tennessee Valley Authority, Knoxville

Eastman Chemical Company, Kingsport

Caterpillar Financial Services, Nashville

Benefits as a Member of TNCPE

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

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

• Extensive opportunities for education and learning through conference workshops.

• Exclusive access to the “Best Practices” database.

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

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

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

Membership is not required for Tennessee organizations to participate in the Award Process, however, for those applicant participants external to Tennessee, Center membership is required.

Membership is not required for Tennessee organizations to participate in the Award Process, however, for those applicant participants external to Tennessee, Center membership is required.

Excellence Award recipients

1. Eastman Chemical Company2. Philips Consumer Products3. Bristol Tennessee Electric System4. FedEx5. Nissan6. Bridgestone/Firestone7. Eaton Corporation of Shelbyville8. Methodist Medical Center of Oak Ridge9. Baptist Health System of Knoxville10. Fleetguard

11. Caterpillar Financial Services Corporation12. Memphis Light, Gas and Water13. Eaton Aeroquip Corporation14. Pal’s Sudden Service15. John Deere Power Products of Greenville16. Tennessee Valley Authority Nuclear of Chattanooga

Caterpillar Financial Services Corporation

President of Caterpillar FinancialServices Corporation

James S. Beard

“We are very honored to have won this award, we are committed to business excellence and

processes that provide world class service to our customers and dealers worldwide. This award, together with, our record business results, and

leadership in the financial services industry demonstrate that we are headed in the right

direction, and our employees are committed to providing world class service."

Caterpillar Financial Case Study

Background of Dan Walsh

• Started career with Caterpillar Inc.• Moved on to Xerox

– First exposure to organizational quality

• Moved on to Ford Motor Credit– First exposure to equipment financing

• Through a professional colleague, came back to Caterpillar as a Continuous Improvement Manager with Caterpillar Financial– Been with Caterpillar Financial for five years– Works as a part of the Business Excellence Department

• Also includes a Six Sigma team of approximately 30 people

How does the department work together?

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

A Day in the Life of Dan Walsh

• Generates monthly reports for senior executives• Include recommendations for improvement using one of

three measures or a combination thereof– Baldridge Award Criteria– Internal measurements– Benchmarks and best practices from external sources.

• Business excellence takes a very dedicated and patient senior management– Without strong senior management buy-in and leadership any

recommendation he may make will be useless

Culture of Caterpillar Financial

• Nimble-by-design and championed by senior management

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

• Communication is key– Makes every attempt to communicate business excellence

initiatives throughout entire organization

Changing Culture

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

• Has been resistance to these changes– Broken down through:

• Strong leadership

• Constancy of the message

• Genuine hunger to do better

• Communication

• Education

• Celebrations of both the large and small victories

Affect on Caterpillar Financial

• When informed of not winning Baldridge Award there was disappointment

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

• It is about the journey towards excellence and not the destination– Many employees took the news of not winning as a rallying cry to

continue to do better and to try again in the future

Affects (cont.)

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

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

Affects (cont.)

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

• This allows the company to:– Pick up best practices from the companies they examine

– Be servants to the local business community

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

QUESTIONS?