Business Excellence, Quest for Sustainable Excellence - Coursework Example

 Business Excellence Introduction Business excellence may seem like a rather vague concept but on a deeper examination of the issues involved, it becomes clear that business excellence and its measurement allows companies to see how far they have gone towards achieving the goals that they laid out for themselves. The aims of excellence are to provide a directional heading for the company which allow the leaders within the organisation to come up with a plan to follow that direction. The first step on that path is to understand the needs of the stakeholders and then to improve processes as well as the systemic structure of the organisation in order to become ‘excellent’. In this regard, there are three important international frameworks of business excellence which include the Malcolm Baldrige National Quality Award, the European Foundation for Quality Management Excellence Award and the Deming Prize. The model and award are often used interchangeably since the award depends on how the company has followed a given model (Laszlo, 1996). The Malcolm Baldrige model is a distinctly American model with the Deming model and prize come from Japan. As suggested by its name the European Excellence model has European origins and it is also one of the more refined models as compared to the MBNQ or the Deming model. For a better understanding of business excellence as well as the excellence models mentioned above, a comparison between them as well as individual analysis of these models becomes necessary. Quest for Sustainable Excellence The quest for sustainable excellence is not something which a business normally pursues in active terms when it comes to day to day operations. However, it can be understood as a philosophy which leads businesses to being more understanding of client needs and seeking ways in which they can improve the value which is given to all stake holders of the company. While the models are all focused on business excellence, the method and recommendations made by them are slightly different therefore it would be more useful to examine them on an individual basis. Malcolm Baldrige National Quality Award Loomba & Johannessen (1997) created an extensive study for the Malcolm Baldrige National Quality Award which focused on the issues surround the award and the problems that can be faced by companies that are trying to implement its given model. While they praise the award for being a system that allows companies to make improvements within their present systems as they apply the criteria for the award, they also criticize it for falling short of giving clear guidelines on sustainable excellence. For example, the award focuses 25% of its criteria points on business results along which can often become a short term criteria for excellence (Loomba & Johannessen, 1997). While the business results category includes things such as product quality and service quality results, the majority of the points are assigned to financial and operational results that can often be secondary considerations for those companies which are seeking to focus on sustainable excellence to lead to substantial profits in the long run. Further, possibly the most important aspect for sustainable excellence within the MBNQA is given the least number of points i.e. Strategic Planning. For any company to remain in the running for business excellence, strategic planning becomes a crucial element of their outlook (Hart and Bogan, 1992). However, the MBNQA largely gives this element a backseat as compared to financial results and customer satisfaction (Loomba & Johannessen, 1997). In fact, the effectiveness of integration of quality based requirements into the business plan of the company are not important to the MBNQA since the award seems to be a spot check of quality rather than a question for establishing methods to get sustainable excellence (Sims et al., 1992). The situation is not all that bleak since the MBNQA does focus on some very pertinent aspects of running a company and some of these do connect directly with the process of continued excellence in business (George, 1992). However, it does seem that the award is American in spirit as well as nature since it is more appropriate for evaluating and rewarding short term results rather than producing long term sustainable business excellence. In fact, one has to look at the European model to find better examples of sustainability in business excellence. European Excellence The European model can be said to be more important in the quest for sustainable business excellence primarily because it makes it incumbent upon companies to incorporate the learning, results and innovations discovered while the model is being applied. While working for the MBNQA, Xerox discovered more than 500 ways in which they could improve the processes at their company and they did use quite a few of them. However, these improvements were not mandatory from the perspective of the award itself (Loomba & Johannessen, 1997). On the other hand, the European model makes the search for quality, sustainability and the continued seeking for improvements a part of the company’s agenda (Hides et. al., 2004). In fact, the one of the primary aims of the EFQM is, “to be the driving force for sustainable excellence in organisations in Europe (Hides et. al., 2004, pg. 195)”. This means that instead of looking at short term results, the award is given to those companies who also show that they are ready to utilise what they have learnt from the application process. To make their point, Puay et. al. (1998) used statistical data to show that the European model is less focused on results as compared to several other national quality awards while the MBNQA is the one which is most focused on results. By making business excellence sustainability an essential part of the process of applying for the award, the EFQM creates a long term view for the company rather than the short term vision supplied by some other award systems. It seems that for the European model, sustainability is a part of the game when it comes to business excellence but we must also take a look at what the Japanese have done to see which model stands above the rest when it comes to sustainability of excellence. Deming Prize Loomba & Johannessen note that, “Ironically, Japan’s most prestigious quality assurance award, the Deming prize, created in 1951, honours an American quality guru (Loomba & Johannessen, 1997, pg. 60-61)”. The lessons of American quality were picked up by the Japanese and applied so rigorously with improvements and enhancements that the Americans themselves were forced to go to Japan to see how they could bring improvements to their own companies and production processes (Deming, 2000). Miguel (2001) notes that the primary purpose of the Deming Prize and the associated model is not to seek continued improvements; rather, it is a system that was designed to recognise improvements in a company that came from the implementation of company-wide quality control policies. In this manner, while other programmes such as the MBNQA and the European award focus on continued improvements or strategy in some form or the other, the Deming Prize looks at other criteria to select a winner even though business strategy could be an element of those criteria. What saves the Deming Prize from being less conscious of continued improvements and the search for sustainable excellence than the MBNQA is the fact that it gives equal weighting to the various aspects of quality management. Therefore, while strategic planning is less important than leadership for the MBNQA, both will be given equal value for the Deming Prize and the associated model (Vokurka et. al., 2000). In the final analysis, it is the European model which comes out on top as compared to both the MBNQA and the Deming Prize and it seems that this is due in no small part to the relative ages and the cultural setups which produced the models. Despite knowing the differences in how the various models and award systems treat the search for continued excellence, the full understanding of these models comes only after we have examined the full variety of common aspects of the models. Commonalities The most significant commonality between the three systems is that they are respected and highly important awards for any company which is seeking or applying for them. As models for excellence, they all have certain baselines such as the response from customers and the impact of the company on society at large yet no model ignores the financial performance of the organisation even for the short term (Vokurka et. al., 2000). This means that a company has to look for both short and long term targets in order to obtain the business excellence model that it finds most appropriate for itself. At the same time, this makes it very difficult to recommend one model over another since they all seem to have their disadvantages and advantages. The most important common factor between them seems to be the fact that depending on the objectives of the company, as well as the vision presented by the leadership of the organisation, one particular model can lead to the fulfilment of those objectives. It can also be said that the models are all useful and could lead to significant benefits for a company which picks up any one of the models. This is because they were designed with a wide variety of companies in mind ranging from those dealing with the production of heavy equipment to small businesses around the world. Essentially, it would be difficult to find a company which could not benefit from applying one of the various models discussed above regardless of its location or business interests. The focus on quality and customer satisfaction which is inherent to all models of excellence should benefit even non-profit organisations that wish to improve their quality of service (Jackson, 2001). However, the inherent focus on generating profits and ensuring that the financial results remain positive and in good standing as compared to the rest of the industry mean that an entire sector business enterprise is ignored by the awards. In realistic terms, there can be situations where non-profit organisations and government institutes themselves become more efficient than companies which are only seeking to increase the wealth of their stakeholders. For example, a group like the ICRC (International Committee of the Red Cross) can be quite quick to respond to a developing world crisis, with excellent leadership that allows them to quickly resolve the situation in order to prove that they are highly efficient. On the other hand, an organisation like Microsoft may produce an operating system which has lapses in quality that create security vulnerabilities that may take weeks before they are fixed or removed. In this case, the efficiency or excellence of the organisation will not be considered by the award givers or even the award model itself since the ICRC does not have a finance centric profit making side to itself. This means that simply by being a market oriented company, a more inefficient organisation could be given the award while another, perhaps more efficient company remains awardless. Of course, there is a sense of pride and achievement which is associated with winning a prize such as the MBNQA or the Deming Prize but companies often go to great lengths to get there (Steeples, 1992). In fact, the approach could even lead a company to perform actions that can be termed unethical or morally doubtful such as retaining prize board members as consultants in the case of MBNQA and Xerox (Loomba & Johannessen, 1997). However, all companies that win such awards naturally gain prestige and could use it as a marketing tool to show how good they are as compared to the competition. This commonality means that the awards themselves are highly desired by any company in the world and such desire should lead that particular company towards improving its quality, increasing revenues and making customers happy in a larger sense. Therefore, such awards and mechanisms for business excellence are not something that should be avoided since they have certain drawbacks or because they are too focused on results. In fact, they need to be encouraged since they show that t governments of the world, as well as the standards organisations recognise that some companies are better than others when it comes to achieving their targets of quality as well as production output generated by them. In conclusion, I feel that these awards are quite useful for all stake holders in a company since they are the easiest measure for the success of a company in planning and establishing a system by which it can show how it ranks when compared to the competition. A company may not have the highest profits, but it can have the highest standards of quality which can be considered a higher achievement in certain cases. Additionally, I believe that with time, it is the company which offers the best value to its customers that shall stand out from the rest while others will simply have to follow the leader. Works Cited Deming, W. 2000, Out of the Crisis, MIT Press. George, S. 1992, The Baldrige Quality System, Wiley & Sons. Hart, C. and Bogan, C. 1992, The Baldrige, McGraw-Hill. Hides, M. et. al. 2004, ‘Implementation of EFQM excellence model’, The TQM Magazine, vol. 16, no. 3, pp. 194-201. Jackson, S. 2001, Using the EFQM Excellence Model within Health Care, Kingsham Press. Laszlo, G. 1996, ‘Quality awards - recognition or model?’, The TQM Magazine, vol. 8, no. 5, pp. 14-18. Loomba, A and Johannessen, T. 1997, ‘Malcolm Baldrige National Quality Award: Critical issues and inherent values’, Benchmarking for Quality Management & Technology, vol. 4, no. 1, pp. 59-77. Miguel, C. 2001, ‘Comparing the Brazilian national quality award’, The TQM Magazine, vol. 13, no. 4, pp. 260-272. Puay, S. et. al. 1998, ‘A comparative study of nine national quality awards’, The TQM Magazine, vol. 10, no. 1, pp. 30-39. Sims, A. et al. 1992, ‘Does the Baldrige Award really work?’, Harvard Business Review, vol. 70, no. 1, pp. 126-147. Steeples, M. 1992, ‘The Corporate Guide to the Malcolm Baldrige National Quality Awards’, ASQC Quality Press. Vokurka, R. et. al. 2000, ‘Comparative analysis of national and regional quality awards’, Quality Progress, vol. 33, no. 8, pp. 41-49. Read More