Malcolm Baldrige and the Evolution of Total Quality Management

Quality and productivity can be considered mutually inclusive. An organization that aims for quality will eventually results to better productivity in the concept of services, goods being produced, personnel and human resources development, not to mention capital gain, increase in competitiveness, and increase in investment opportunities. Though it may be a good concept, a governing body should be present to determine the necessary criteria and set for definitive standards to follow. In the United States, the two governing body in quality standard award are the Ron Brown Award and the Malcolm Baldrige National Quality Award.

Malcolm Baldrige, a U. S. Secretary of Commerce during the era of the Reagan Administration, is the one responsible for organizing a conference on productivity in the White House. Apparently, he initiated the conception and blueprint in 1987 of the Malcolm Baldrige National Quality Award: which focuses on quality. The award, through the National Quality Improvement Act of 1987 (Public Law 100-107), gives emphasis on quality services being given by different sectors such as education, health care, business, and non-profit organizations (Marion p.

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1).

These quality services are based on the practices of the Total Quality Management System (TQM) principles and contain seven criteria to determine the awardees: Leadership, Strategic Planning, Market and Customer Focus; Measurement, Analysis and Knowledge Management, Focus on Workforce, Process Management, and Results. These criteria are considered significant to U. S. competitiveness in terms of improving the capabilities, practices, and results of an organization; sharing and facilitating the most excellent practice among the different sectors; and to serve as a working tool guide for planning and managing.

Most of these criteria are taken from the principles and techniques in quality management developed by Philip Crosby, W. Demings, Armand Feigenbaum, and Joseph Juran. Moreover, the award aims to promote significant level of quality consciousness; to be able to distinguish the achievements of U. S. companies in the context of quality; and to make available to the public the thriving strategies on quality. The process of selecting the winner involves an assessment of the written examination submitted by the applicant, a site visit on the company (provided that the company achieved a high score), and a final evaluation.

Since the Malcolm Award is based on the principle of Total Quality Management, the system have evolved or developed in terms of the factors in performance measurement that includes the following: operating or in service measures, employee relationship, satisfaction of customers, and performance on financial aspects. For instance, based on the data of the 12 Companies that submitted their respective pertinent data for evaluation, on an annual basis product reliability increased by around 11. 3 %; the time of processing the order is reduced annually by 12% on the six companies; product errors and defects decreased by 10.

3% on the seven companies; and around five companies have reduced cost by 9%. This created a savings of around $1 Million to $115 Million. Aside from the improvement on the factors on performance measurement, indicators of employee relationship also improved. Employee satisfaction improved by 1. 4%, employee turnover (voluntary request for separation) decreased by around 6%, health and safety measures improved by 1. 8%, and the accumulated total-quality suggestions made by the employees increased by 16. 6%. The total customer satisfaction also increased by 2. 5% with complaints coming from the customer being reduced by 11.

6% and retention of customers also improved by 1%. Market share is increased by 13. 7% and the return of assets by 1. 3% (Shetty p. 4-6). Thus, Total Quality Management had eventually improved in terms of quality, customer satisfaction, and reduction in cost. Furthermore, the Total Quality Management System had an affirmative impact on all of the significant areas of concerns: improvement in product reliability, increased in customer satisfaction and responsiveness, and reduction in cost. Apparently related to these are the increase in job satisfaction, improvement of health and safety measures, and reduction in employee turnover.

This improvement and reduction on specific areas will eventually yield to increase in the market share, profitability, and quality. The result of such will also produced a certain degree of competitive advantage, which is eventually acquired as a result of committing to quality. A firm competitive position will give the company a unique place in the market wherein the consumers are willing to pay for the product, and the established quality will become difficult to surmount by the competing companies. Another factor to consider in achieving a competitive advantage is through the reduction of cost by improving quality.

Reducing cost is synonymous to reduction of the in-process work inventory, handling of materials, capitals on equipment and maintenance, thus reducing claims on liability. The reduced costs will in-turn lead to a higher profit margin, increase in the sales, and lower prices of the product. Therefore, cost and quality are the most important factors to achieve a competitive advantage and these can be realized through the implementation of Total Quality Management System. The implementation of the Total Quality Management depends on the need and the nature of the business.

Companies that adopted a TQM, and subsequently succeeded on all areas described above still have to continue on developing the system. It is considered a continuous process and development. Different sectors of the industry such as in the health care, manufacturing, services, and small businesses are becoming more aware of the positive impact of adopting TQM, and the aspiration of being recognized as one of the Malcolm Baldrige National Quality Awardees set forth the scene to a strong commitment towards excellence in management quality and company performance.

The Award started at 1988 and after 20 years, around 79 companies are recognized. The impact of adopting the criteria of Malcolm Baldrige through the implementation of TQM had significantly produced quality and productivity to several companies such as: The ADAC Laboratories, Custom Research Inc. , Dana Commercial Credit Corp. , and Trident Position Manufacturing Inc. (Malcolm Baldrige recipients of 1996). Of these four, Trident and Custom Research belongs to the small business category, ADAC in the manufacturing sector, and Dana Commercial on services.

The ADAC Laboratories, founded in 1970, have its product line in the design, manufacturing, marketing, and support intended for customers belonging in the health care sector such as in radiation therapy, information system in health care, and nuclear medicines. These services and products are sold to universities, hospitals, and clinics worldwide. The impact of adopting the criteria of Malcolm Baldrige has significantly improved the company’s market share (12% in 1990 to 50% in 1996), and customer satisfaction (no. 1 ranking).

Before, the company was only focused on short-term financial goals, and not totally oriented towards attaining a quality firm for investors and customer’s satisfaction, and employee development. Determined to over-turn the current situation, the company adopted the criteria of Malcolm Baldrige. In 1994, ADAC applied for the Malcolm Baldrige getting up to the 2nd level (site visit). The site visit consequently gave the company a feedback assessment with around 148 areas of concerns that needs improvement. The company then utilized the feedback report as an external resource to eliminate the gaps.

The management team attended the Center for Quality of Management, a consortium of experts in the field of Total Quality Management. The intensive two-day training made all employees understands the four relevant thoughts: shared learning, total involvement, focus on customer, and continuous development. Consequently, the turn-around of the company to focus on customer satisfaction had lead to a strong rate of retention with 94% as compared to the previous 50%; market share increased by 50% as compared to 12% six years ago; and the revenue per worker increased by around 75% (Marion p.

1). The results by adopting the criteria verified the kind of quality management the company had developed with emphasis on quality and excellence. Dana Commercial Credit Corporation, a subsidiary of Dana Corp. , provides financing and leasing services to a wide range of businesses and specific markets. Located at different offices such as in Canada, United Kingdom, and Ohio; the company have activities that includes management of assets services, combined-venture leasing consortium, and leasing of equipment for manufacturers and dealers.

The company decided to apply for the Malcolm Baldrige Award for two compelling reasons: after receiving the Dana Quality Leadership award, the company intended to benchmark it alongside the Malcolm Baldrige; and the challenge of pursuing the Baldrige award will provide a significant “push” towards a fast improvement in quality for the company. Making through the process of the Baldrige criteria eventually created a strong culture with emphasis on service quality and customer satisfaction.

In return, the morale of the employees is high as well as the profit. Custom Research Inc. is one of the small firms that received the Baldrige Award that clearly shows that no matter what the size of the company, better quality management can also be achieved just like those of multinational companies. Established in 1974 by Jeff Pope and Corson, CRI caters big companies in designing and conducting projects that can provide relevant information to make effective decisions in business.

The main office is located at Minneapolis with several offices in Ridgewood and San Francisco, and New Jersey. In 1998, the company had reduced its client from 138 to 67, primarily to provide better service as well as establish partnership with their biggest clients. From 1992 to 1994, the company had applied for an assessment to Baldrige and reached the site visit level three times. After receiving the Minnesota Award for Quality in 1995, CRI decided to re-apply again for the Baldrige since the award was patterned to it.

Winning the state award had helped the company achieving its goal to be awarded by Baldrige in 1996. Since the employees are less, all took part during the application and assessment process wherein each employee knows the whole process, the criteria, and how it is should be implemented in their respective field of work. Thus, the Baldrige Award had greatly influenced all employees towards achieving quality and productivity creating a positive atmosphere to the company.

In return, the employees are all motivated that results to better business opportunities and results. Trident Precision Manufacturing Inc. is a private company that manufactures various components of sheet metal (precision), customized products, and assemblies (electromechanical). With its lone manufacturing plant in New York, the Company developed processes and tooling to manufacture and assemble components intended for the different sectors of the industry such as in equipment used in office, banks, health care, and even defense.

Trident began to exploit the criteria of Baldrige in their quest for quality in 1989. The criteria had served as an open window to know the areas of weaknesses and strength of the company. April Lusk, Trident’s administrator for quality, emphasized that the biggest significant asset of the Baldrige Quality Award process was the feedback report, which stands for an unbiased assessment of a company’s strength and weaknesses.

Trident then utilized those feedback reports to narrow the gaps and eventually achieved better results: due to a strong focus in customer satisfaction, the company has been able to maintain its position as the main supplier to chief customers even though it reduced their supplier percentage to 65%; the focus on employee involvement also played a major role achieving a 100% employee participation on departmental occupation team, around 95% of the improvement on processes have been established, the recognitions and rewards for the employees increased, employee turnover decreased, and the company have invested 4.

6% of the payroll towards education and training (Marion p. 1). The continuous improvement of the employee, their commitment to the internal and external clientele, and the eventual “control” of their processes have made Trident to stand out and establish a dedication towards excellence and quality. More so, Trident’s strong affirmation towards an environment that is family oriented, continuous effort for improvement, and teamwork are the main factors the Baldrige Award considered.

Responsibilities are shared, suggestions considered and implemented so as to create an environment where the employees are satisfied and their morale is high, resulting to a stronger and a healthier business. The background discussed on the four companies clearly illustrated the impact of implementing the principles of Total Quality Management System through the Malcolm Baldrige Quality Awards. These companies aspired to achieve the Baldrige Award and the results improved the company’s overall quality and productivity program, as well as their business status and competitiveness.

By analyzing the stories behind each success of a company towards achieving the Malcolm Baldrige Quality Awards, several key pointers should be emphasize such as the following: Leadership also plays an important role towards attaining quality. Top management should exert effort in terms of leadership and support since the adherence to quality usually accompanies changes in the company’s operating systems or philosophy.

Clear goals should be determined as well as a positive atmosphere or culture to encourage the employees to attain such goals. The presence of a highly motivated staff or employees also has significant contributions towards attaining quality. Quality depends on the employee’s efficiency, and subsequently to the employees work motivation. It also encompasses all the aspect of human resources such as employee training and recruitment program, job descriptions, and rewarding as well as empowering employees.

Employee involvement are considered an important aspect, and also the encouragement of a corporate vision towards quality-related improvement activities and programs may require several major adjustments or changes the way the employees are being managed (Shetty p. 6) Another factor that is significant is the aim for a total customer satisfaction. Realizing this vision will create an effort towards improving quality. Exceptional external and internal systems are necessary to supervise customer satisfaction through the use of surveys, evaluation of services and products, and investigation of complaints (Reiman p.11)

Analysis of information is also critical since this will serve as a basis on making corporate decisions and adjustments. Efficient and complete data gathering serves as a powerful tool for the company since these will reflect the strengths, weaknesses, goals, quality, and service standards, to name a few. Suppliers also have a significant role in the pursuit of quality. Usually, successful companies develop long-lasting relationships with suppliers having a vision for quality.

The company relatively engages the suppliers to become an integral part of the firm’s TQM. Consultations, trainings, and continuing contracts are some of the ways the company engages the suppliers on its TQM program. Thus, the suppliers become a partner in administering quality efforts, which in turn have major effects on how the suppliers are conventionally managed. The commitment to quality is a boundless process; therefore, a continuous program for improvement and development should be implemented.

The results on the companies that implemented the Total Quality Management System in pursuit of achieving the Malcolm Baldrige National Quality Awards proved to be a success. The end-results created better customers satisfaction, high morale of employees, reduced cost, decreased on employee turn-over, good competitive advantage, improved health and safety measures, better production processes, increased in market share and profits, quality and productivity.

The Malcolm Baldrige Award provides a vast range of quality concerns. The feedbacks made by the Award committee can be use by the company to narrow the relevant gaps, which are based on the findings. The award served as an effective guide with respect on streamlining the business and management practices. The criteria set forth by Baldrige, based on the principles of Total Quality Management, provided the significant standards of excellence to achieve quality and productivity.The award served as an effective catalyst to strengthen and improve the company’s competitiveness.

Works Cited Shetty, Y. K. “The Quest for Quality Excellence: Lessons from the Malcolm Baldrige Quality Award”. Sam Advanced Management Journal. 22 March 1993: 1-14 Harmon, Marion. www. qualitydigest. com. Jan. 1997. Retrieved April 23, 2009. http://www. qualitydigest. com/jan97/baldrige. html Reiman, Curt W. "Winning Strategies for the Malcolm Baldrige Award," Journal of Quality Management, July 1990, pp. 9-25.