KIM Company of the Year Awards 2011

The Journey to Excellence

A Brief History and Evaluation Dr Alex Douglas Editor The TQM Journal Reader in Services Quality Management Liverpool John Moores University, UK

History of Quality Improvement Strategies

Guilds Inspection Quality Control Process Control Quality Assurance Total Quality Management Excellence

The Rise of the Quality Gurus

.

The TQM Age

1970s and1980s -The Quality Crises A notoriously imprecise term; Declining citations since end of 1980s 1990s - Total Quality has failed Emergence of Excellence. 2000+ Re-emergence of TQM in India and China;

Models of Excellence
The Deming Prize (Japan) The Malcolm Baldrige National Quality Award (USA) The European Quality Award (EFQM) Other national and regional awards based on the EFQM Model or Baldrige - e.g. Finland, Brazil, Australia, India, Kenya! Increasing use for organisational self-assessment; External assessment for Quality Awards.

Background
Developed from the experience of successful organisations Based on a Total Quality Model Tests how effectively the organisation applies excellence principles Frameworks to which all other activities and initiatives can be related Largely, but not entirely, similar

EFQM Excellence Model: Fundamental Concepts

Results Orientation Customer Focus Leadership and Constancy of Purpose Management by Processes and Facts People Development and Involvement Continuous Learning, Innovation and Improvement Partnership Development Corporate Social Responsibility

EFQM Excellence Model

ENABLERS 50%
People 9%

RESULTS 50%
People Results 9% Customer Results 20% Society Results 6% Key Performance Results 15%

Leadership 10%

Policy & Strategy 8%

Partnerships & Resources

Processes 14%

9%

INNOVATION & LEARNING

EFQM 1999. The Model is a registered trademark of the EFQM

Improvement Strategy:
Results

LEADERS HIP People Processes

Kenya - Organisational Performance Index

Leadership and Management HR Focus Customer Orientation and Marketing Financial Management Innovation, Technology and Information Management Corporate Social Responsibility and Environmental Focus Productivity and Quality

The Journey to World Class

Time

300: Good organisation, quality assurance in place, starting continuous improvement 500: Very good organisation, sustaining improvement, process orientation, clear performance improvement 700: Excellent organisation, improvement a way of life, empowered employees, sector benchmark, sustained excellent business results

BUT

 Across Europe a large number of companies have invested in a systematic approach to pursuing Excellence; Many more have not; Who is right? Does Excellence pay off on the bottom-line?

Does Investing in Excellence Pay?

Any Evidence?
The danger of self-evident truth; the Quality Religion ? Phil Crosby no such thing as the economics of quality; Case Studies or Surveys; reliance on management perception! BUT - what is the objective evidence?

The Excellence Strategy Pays! - US Vinod Singhal and Kevin Hendricks

Baldrige study 1990s (Management Science 1997); Used publicly available data to compare performance of Excellence Award winners and other companies in their sectors; Found Award winning companies have superior performance on share price and usual financial measures, for up to five years following an award; The perfect investment portfolio!

A European Study : 2005-6

Data collected 2005-6; Commissioned by EFQM and BQF; Undertaken by the Excellence Team then at the Centre of Quality Excellence at the University of Leicester - Tony Bendell, Louise Boulter and Hanida Abas.

Methodology
Identify award winners that have effectively implemented the principles of Excellence; Identify the year in which a company received a first award; Collect accounting data for the award winning companies; Identify comparison companies; Collect accounting data for the comparison companies; Calculate the performance differences between each award winner and its comparison company.

Size of Study
All available European, National and Regional Award winners 1990 2004; Numbers reduced due to requirement to be publicly listed plus match pair requirement; Overall analysis thus based on population of 120 Award winning companies and their Comparison companies
85 European head-officed companies: 70.8% 35 Non-European head-officed companies: 29.2%

Improvements within a short period of time after having received a first award Compared to the comparison companies award winners experience further mean increases in performance by an average of: 8% in sales 3% in sales over assets 13% in capital expenditure over assets 10% in capital expenditure over sales 12% in assets 3% in employees 1.5% reduction in total cost over sales

Award Winners: One Year Before to One Year After Winning

Award Winners: Three Year Improvements in Financial Performance After the First Award
.

Compared to the comparison companies award winners experience further mean increases in performance by an average of:
36% in share value 17% in Revenue/Sales 20% in Assets 5% in Sales over Assets 1.5% reduction in Total Cost over Sales

Award Winners: One Year Before to Five Years After Winning

Award winners experience even greater increases in growth and cost efficiency measures; Compared to the comparison companies, award winning companies indicate higher performance by an average: 77% in sales 18% in operating income 28% in capital expenditure over assets 30% in expenditure over sales 40% in assets 4.4% reduction in costs over sales

Summary of Findings:
An Excellence strategy appears to pay! Improvements in Excellence-focussed companies compared to the comparison companies are more about increased/improved sales and assets etc than cost reduction; Award winning companies have superior performance on share price and usual financial measures, for up to five years following an award; Performance over time is complex and varies between companies, markets and countries.

However..
Quality improvement is not just about money! Quality is an essential property of products and services; Quality management is an activity vital to society; Quality products now enable us to live longer, healthier lives and have liberated us from the drudgery endured by past generations; Quality is delivered by people to people,

And finally..
High quality products are those that meet customer needs, do not fail during use, and pose no threat to human well-being Joseph Juran, 2003 Thank you for listening enjoy your evening!