European Foundation for Quality Management - Report Example

Contemporary Management 3-EFQM Excellence Model Introduction European Foundation for Quality Management (EQFM) was a result of joint effort by fourteen European corporations whose main concern was the issues of quality and competitiveness (Munde and Marks, .p.44). The idea was that companies which sought to confirm the quality excellence of their operations could utilize the model framework to establish whether they were in line to achieve the required or anticipated performance levels. The model was fast adopted in Europe as a means of heightening the quality of their operations (Moeller, 2001.p.46: Van and Verweire, 2004.p.60). In essence, the EFQM model is a diagnostic tool founded on the principle of self assessment. Of the five recognized approaches to self-assessment, questionnaire, matrix chart, workshop, pro forma, and award simulation EFQM is a questionnaire model. The excellence model is founded on eight concepts; these are herewith enumerated (Hakes, 2010.p.13; Munde and Marks, 2009.p.46). Leadership and a constant goal Regular learning, innovation and improvement People development and involvement Partnership development Customer focus Management by processes and facts Corporate social responsibility Result orientation The excellence model follows a certain criteria which has nine elements. Five of these elements are classified enablers whereas the other four are noted as results. Under the enablers there are; leadership, people management, policy and strategy, resources, and processes (Nabitz, Klazinga and Walburg, 2000.p.192). Under results we have people satisfaction, customer satisfaction, impact on society and business results. These factors/criteria are represented as follows; Under the model, leadership represents the responsibilities of a leader in coming up with the mission, vision, values and ethics that guide the organization (Hakes and Wilkinson, 2007.p.49). This allows management systems to be in force and is also responsible for engaging with the society and cultivating a robust organizational environment as well as initiating change (European foundation for quality management. 2003). Policy and strategy enumerates the foundations of policy and strategy that allow the organization to meet the needs of all stakeholders (European Foundation for Quality Management, 2001). All the decisions made are based on actual evidence as gathered through performance measurement, research and learning. People represent the importance of a workforce planning, and management responsible for creating and sustaining competencies. Partnerships and resources outline the importance of coming up with and managing partnerships both internally and externally (Porter and Tanner, 2012.p.48). Processes are systematically built, managed and are continually upgraded to create value for all stakeholders (Construction Productivity Network, 1999). Customer result determines the perception as well the performance indicators responsible for monitoring, predicting and improving performance (Nabitz, Klazinga and Walburg, 2000.p.192). People results are same as customer result only that its main concern is improving staff performance. Society result, much less the same as people and customer results only that in this the orientation is towards the local community. Lastly, key performance results are used to monitor, predict and improve critical performance outcomes (Oosten & Captijn, 2008.p.69). Looking at the foundations of the model, it is easy to see why it created a buzz among corporate leaders. It amalgamates all the critical aspects of an organization and cultures them in a way that achieves specific goals and value to all stakeholders (Hakes and Wilkinson, 2007.p.53). The fact that the model also maximizes on actual evidence to determine the course of action or the direction a business should take contributes immensely to its credibility. At the moment, there is a definite orientation to anticipated future or probable earnings for all those in the commercial establishments. At the same time, they seek to maintain a keen eye on their present gains, assets and historical successes (Turner, 2011.p.476). For all these corporations, the means through which success is assessed is continually changing. This dynamism in a huge way explains why most organizations are turning to management frameworks and policy deployment mechanisms through which individuals can be understood. Such needs have in a large way led to the adoption of EFQM Excellence Model (Dangelmaier, 2010.p.59). As the orientation to management frameworks increase it has become overly important to establish the effectiveness of these frameworks as a means of ensuring efficiency in organizations. Particularly, this study takes a keen interest in EFQM Excellence Model (Jonker and Eskildsen, 2007.p.88). The main goal is to look at statistical data to determine whether the adoption of EFQM Excellence Model leads to improved performance in organizations, in essence, whether it impacts the bottom line of organizations. It is expected that if the conclusions point to the effectiveness of the Excellence Model then the framework provides a possible fruitful seam for future consultancy in the industry. Method Basically, the study seeks to draw conclusions from available data collected on award winning companies. Therefore, in presence of the primary data this study will only employ basic statistical tools to help derive necessary conclusions. The desire is to make use of tools that neatly and objectively represent the data in a way that makes drawing conclusions easy. This may involve the use of line graphs or histograms to represent various changes in performance following the adoption of the Excellence Model. The statistical summaries, represented in line graphs, will be based on means of basic industries, cyclical consumer goods (CCC), general industries (GI), and information technology (IT). Notably, implementation of EFQM model takes place after the time indicated as -3 to-1 years, -1 to +1 is the first year of operation following successful implementation of the model. In this case, the idea is to compare the performance of these industries before and after the implementation of EFQM in order to get a good idea on whether the model brings about the desired impact or improves the company’s standing as aggregately represented by the entire industry. This analysis will be based on % changes represented in the following graphs. Results Mean Difference of % change in capital expenditure/assets Before the implementation of EFQM model we can notice a low percentage change in capital expenditure/assets across all industries, we realize the least mean average as coming from the General Industries (GI). Following the implementation of EFQM model we notice a rising trend signifying an increasing mean percentage change in capital expenditure/assets across all industries. The biggest yet most irregular increase is seen in the General Industries and a more regular increase is seen in the Basic Industry and Cyclical Consumer Good industries. The Information Technology industry appears to experience a different effect following implementation of the framework; it is also the least affected industry by the change. The effects are within range though they start with a slight decline in the mean percentage range which stays on in the first, second and third period and only recovers slightly in the fourth period. Overall, the implementation of EFQM model appears to have a marked effect on the industries bar the IT industry which may be understood to have different dynamics from the other industries. Mean difference of % change in capital expenditure/sales In general, the capital expenditure to sales ratio tries to give an idea of how much of the current investments are geared for the future. An increasing mean average ratio is a good indicator as it shows that companies in a given sector or industry are continually increasing their investment aimed for the future. This is important as companies need to continually innovate and create products to safeguard their future sales revenue. Based on the computed figures we realize that the worst performing industry in regard to this investment was the General Industry, however; we see a general increase in these investments following the implementation of EFQM model. There is a sharp decline in the third period following implementation but this appears an isolated case as the general increase is sustained thereafter. The general increase in mean difference change for this ratio is seen across all the other industries with the biggest effect following implementation being seen in the cyclical consumer goods industry. In total, we can clearly see a positive effect arising from the implementation of the EFQM model on the mean capital expenditure/sales ratio. In essence, we can conclude that the implementation of the EFQM model leads to increased investment for the future and thus leads to more sustainable industries. Mean difference of % change in assets In general, a general increase in the amount of assets held by an indivdual company is a good indicator. It is thus expected that an increase in assets within a given industry is a sign of improvement or a thriving sector. Given the focuses of the EFQM model we would generally expect an increased asset base across all industries. We realise this expected increase in the Basic Industry which has the biggest increase, the other two industries, cyclical consumer good and General Industry have also recorded a general though minimal increase following the implementation of EFQM. However, this expected trend is not seen in the IT industry which has a gradual decline from the first period to the seventh period and an accelerated decline in the seventh and eighth period. The effect seen in the IT industry appears secluded, largely due to the industry dynamics. The general observation is that the implementation of EFQM model tranlsates to a larger investment in company and thus industry assets. Mean difference of % change in sales Based on the changes observed so far, we realise the least and most consitent impact while observing the trend of sales. Looking at the above graph, we realise a very consistent growth in sales both before and after the implementatition of the EFQM model. One of the notable changes is seen in the Basic Industry which had at the start of the computation period recorded a negative sales ratio. This grows sharply and within the second period of computation the sales ratio is approaching zero. All the same, we realise that following the implementation of EFQM model all industries record a positive sales ratio which can be summed as the most crtical observation for the purpose of this study. Therefore, we can conclude that EFQM model helps improve or atleast ensure consistency of the sales recorded in eaach of the industries. Mean difference % change in total cost/sales The percentage change in total cost/sales is the other ratio we look at in an attempt to conclude whether the implementation of the EFQM model improves a company’s standing as will be deduced by looking at the difference seen across the different industries. Looking at the graph, we realise a negative total cost/sales ratio across all industries bar the cyclical consumer good industry. The worst perfromance is seen in the Basic Industry which further declines in the second year of computation. This is followed shortly by a sharp increase following the implementation of the EFQM model. The other industries do not show such a major change in the ratio both before and after implementation as they all remain within the same range. A different change in the ratio is seen in the ecyclical consumer goods industry, the ratio is intially positive but continually and slowly declines to record a negative ratio from the point where the model is implemented. Based on the other industries it is safe to conclude that the EFQM model has an impact, though not as big, in the total cost/sales ratio. Mean difference of % change in employees Percentage change in employees is another element computed to determine whether the model is as effective as anticipated. At the beginning of the computation period, all the industries have almost the same percentage ratio of employees, this ratio remains balanced until the third period after which the model is implemented (Turner, 2011.p.476). Following implementation, all the industries bar the General Industry maintain more less the same ratio. An abnormal increase in the ratio is seen in the General Industry where the change records a sharp increase shortly after the implementation of the model. Observing the percentage change in employees reveals the most consistent change across all the industries. With the growth remaining in a tight range near zero, the only outlier in this case is the General Industry. Conclusions In line with the existent empirical studies on EFQM and its precident TQM we notice that there is a clear effect following implementation of the model. This study has looked at data supplied for different industries indicating their perfromance before and after the implementation of EFQM (Moeller, 2001.p.46). With a desire to neatly and consistently represent this data, the study has resulted to the use of line graphs to show the geenral trend of the different ratios observed to help make the necessary conclusions. In a recap of the observations, we provide the following conclusions. EFQM leads to an improved percentage change in capital expenditure/assets , a similar effect is seen in the capital expenditure/sales ratio, percentage change in sales, assets and employees. Even though the impact seen on employees change is somehow minimal we can still draw that EFQM is responsible for a minimal but consistent change (Lyons, p.176). Based on these observations we can conclude that EFQM has an ouright advanatage on companies and thus to the entire industry (Boulter, Bendell & Dahlgaard, 2013.p.210). Notably, different industries may experience different effects following the implementation of the model as seen with the IT industry in most of our representations. However, these differences should be examined not on the surface but in complete knowledge of the underlying factors that are unique to these sectors or industries. At the same time, it is proper to examine the approaches, expectations and the context within which the model is implemented (Turner, 2011.p.476). Sometimes, the anticipated results are not only down to the dictates of the model but are also determined by the approach used in the implementation process. It is expected that proper implementation of the model will lead to optimum results which clearly and positively affect the bottom line of the organization, this includes both financial and non-financial aspects of the organisation. Recommendations Based on the observations made throughout this study and the conclusions resulting thereafter it is clear that EFQM has a positive impact on the organization. It is thus the study’s recommendation that organizations seeking improved performance, both financial as well as non-financial, adopt this model (Boulter, Bendell & Dahlgaard, 2013.p.211). The implementation of the model should be done with the absolute consideration of the available resources as well as the presence of the required supportive environment in order to ensure that the anticipated results are recorded. 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