BUSINESS EXCELLENCE MODELS – AN OVERVIEW

Introduction
Dr Eliyahu Goldratt said, “The goal of a business is to make money today and, in the future.”
Most of us may not fully agree with this statement because businesses are corporate citizens
and hence should contribute to progress of the nation and its people. In return, businesses are
provided with facilities, privileges and concessions. However, any business that does not make
money today or in the future does not survive. It dies! So how do we resolve the obvious
contradiction in Dr Goldratt’s statement?

The business can make money today and, in the future only if it can consistently satisfy the
needs and expectations of all its stakeholders viz. customers, employees, shareholders, society
and government. This would require strong leadership, teamwork and an organizational culture
built on human values. In addition, the organization would have to be agile, decisive and adept
at managing change. This is where Business Excellence models can help!

Business Excellence Models

In 1988, the United States took a major step forward in quality management with the
development of the Malcolm Baldrige Business Excellence Model. This model represented the
first clearly defined and internationally recognised Total Quality Management (TQM) model.
It was developed by the United States government to encourage companies to adopt and
improve their competitiveness. They also established an award – Malcom Baldrige National
Quality Award – to promote adoption of the Model and publicize successes.

In response to this, a similar model was developed by the European Foundation for Quality
Management (EFQM) in 1992. This EFQM Excellence Model is the framework for the
European Quality Award. Several business excellence models are in use today. These models
are designed to guide and help organisations improve their business management systems and
achieve world-class performance levels.
The best-known business excellence models are the Baldrige Criteria for Performance
Excellence, the EFQM Excellence Model and the Deming Prize. There are more than 70
Excellence Models instituted by various countries across the world. However, most of these
models are modelled on Baldrige or EFQM Excellence Models. There are four Business
Excellence models in operation in India viz.
1. Golden Peacock National Quality Award (by Institute of Directors)
2. The Rajiv Gandhi National Quality Award (by Bureau of Indian Standards)
3. IMC Ramkrishna Bajaj National Quality Award (by Indian Merchants Chambers)
4. CII-EXIM Bank Award for Business Excellence (by CII and EXIM Bank)

Principles of Business Excellence

Business Excellence Models are built on sound principles of total quality management. It is
important to understand these principles in order to gain a sound understanding of the Business
Excellence models. These principles cover Stakeholder focus and management, Visionary
leadership, Human values, Operational management and Result orientation.

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Fig 1. describes the principles that form the basis of the Baldrige and EFQM Excellence
models. Interestingly, the
principles are similar to each other.

Deming Prize, on the other hand,

defines criteria that focuses
largely on the organization’s
ability to understand its business
environment and current situation
and apply appropriate TQM
practices to achieve their
objectives today and in the future.

Business Excellence Criteria

The Excellence Models employ
criteria for assessment of
organization’s business practices.
These criteria have been developed Fig 1: Principles of Business Excellence
based on principles and management
practices adopted by consistently successful organizations.

Baldrige Excellence Model

The Baldrige Excellence Model defines a management system comprising seven key elements
given in Fig 2 and evaluates the organization’s performance against these elements within the
context of the Organization (derived from the Organizational Profile). The seven key elements,
defined as criteria for Performance Excellence, are summarized below:
1. Leadership: How upper management leads the organization, and how the organization
leads within the community.
2. Strategy: How the organization
establishes and plans to
implement strategic directions.
3. Customers: How the
organization builds and
maintains strong, lasting
relationships with customers.
4. Measurement, analysis, and
knowledge management: How
the organization uses data to
support key processes and
manage performance.
5. Workforce: How the organization Fig 2: Baldrige Excellence Framework
empowers and involves its workforce.
6. Operations: How the organization designs, manages and improves key processes.

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7. Results: How the organization performs in terms of customer satisfaction, finances, human
resources, supplier and partner performance, operations, governance and social
responsibility, and how the organization compares to its competitors.

EFQM Excellence Model

EFQM Excellence Model represented in the diagram (Fig. 3) is a non-prescriptive framework
based on nine criteria. Five of these are ‘Enablers’ and four are ‘Results’. The ‘Enabler’ criteria
cover what an organisation does and how it does it while the ‘Results’ criteria cover what an
organisation achieves. ‘Results’ are caused by ‘Enablers’ and ‘Enablers’ are improved using
feedback from ‘Results’. The criteria are summarized below:

Fig 3: EFQM Excellence Framework

1. Leadership – Excellent organisations have leaders who shape the future and make it
happen, acting as role models for its values and ethics and inspiring trust at all times. they
are flexible, enabling the organisation to anticipate and react in a timely manner to ensure
the on-going success of the organisation.
2. Strategy - Excellent organisations implement their mission and vision by developing and
deploying a stakeholder focused strategy. Policies, plans, objectives and processes are
developed and deployed to deliver the strategy.
3. People - Excellent organisations value their people and create a culture that allows the
mutually beneficial achievement of organisational and personal goals. They develop the
capabilities of their people and promote fairness and equality. They care for, communicate,
reward and recognise, in a way that motivates people, builds commitment and enables them
to use their skills and knowledge for the benefit of the organisation.
4. Partnerships & Resources - Excellent organisations plan and manage external
partnerships, suppliers and internal resources in order to support strategy and policies and
the effective operation of processes.
5. Processes, Products & Services - Excellent organisations design, manage and improve
processes to generate increasing value for customers and other stakeholders.
6. Customer Results - Excellent organisations achieve and sustain outstanding results that
meet or exceed the needs and expectations of their customers.

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7. People Results - Excellent organisations achieve and sustain outstanding results that meet
or exceed the needs and expectations of their people.
8. Society Results - Excellent organisations achieve and sustain outstanding results that meet
or exceed the needs and expectations of relevant stakeholders within society.
9. Business Results - Excellent organisations achieve and sustain outstanding results that
meet or exceed the needs and expectations of their business stakeholders.

The Deming Prize

The Deming Prize examination does not require applicants to conform to a model provided by
the Deming Prize Committee. Rather, the applicants are expected to understand their current
situation, establish their own themes and objectives, and improve and transform themselves
organization-wide. In addition to the processes used and results achieved, the effectiveness
expected in the future is also evaluated. The Deming Prize Committee views the examination
process as an opportunity for “mutual-development,” rather than “examination.” This approach
is different and has its own advantages and disadvantages.

The advantage is that the organization will implement TQM activities that are relevant to their
business rather than follow a model. This ensures that the organization is free from the
“examination effect” where the objective is to pass an examination. The disadvantage is that
there is very little guidance available for organizations in implementing TQM practices. Some
organizations may take longer than expected to implement appropriate TQM practices which
may result in demotivation.

The Deming Prize Committee believes that organizations should undertake this process of
“self-discovery” relying on the principles and practices of TQM. Further, it will create a sense
of ownership of their TQM system since it will be unique to their business.

The organization applying for the Deming Prize is expected to provide a written report that
describes their TQM status. This document is referred to as the “Description of TQM Practices”
or DTQMP. Although there is no prescribed format for DTQMP, it should generally include
the following:
 Outline of the applicant organization
 Management objective and policy
 TQM introduction and promotion
 Status of TQM implementation
 Effects of TQM implementation and future plans
 Senior executives' thoughts on TQM Practices.

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Deming Prize examines the organization on the following criteria (Fig. 4).

Fig 4: Deming Prize Criteria

Scoring Criteria
Another critical element of an Excellence Model is the scoring criteria. The typical scoring
criteria is based on the PDCA (Plan-Do-Check-Act) cycle. Excellence models require the
organization to define an approach based on their objectives or results. Then they have to ensure
that these approaches are deployed within all relevant areas and levels within the organization.
Post deployment, they need to verify the results to assess effectiveness of approaches in
achieving results.

Although used by the organization to score itself during Self-Assessment, the scoring
guidelines are an invaluable tool in assessing the effectiveness of implementation of TQM
practices. Moreover, the assessment ensures that it provides actionable feedback by identifying
areas of concern around key criteria.

Baldrige Scoring System

Process Scoring
Process refers to the methods the organization uses and improves to address the Model
requirements. The four factors used to evaluate process are Approach, Deployment, Learning,
and Integration (ADLI).
 Approach refers to the methods used, their appropriateness, their effectiveness and
repeatability
 Deployment refers to the extent approach addresses requirements and is applied
consistently across all relevant work areas
 Learning refers to refining through improvement and innovation, and sharing it with other
work areas
 Integration refers to the extent to which approach is aligned with organizational needs.

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Results Scoring
Results refers to organization’s outputs and outcomes in achieving the Model requirements in
the “Results’ category. The four factors used to evaluate results are Levels, Trends,
Comparisons, and Integration (LeTCI).
 Levels refers to current level of performance
 Trends refers to the sustainability of good performance
 Comparisons refers to performance relative to competitors or benchmarks or industry
leaders
 Integration refers to the extent to which results measures address important customer,
product, market, process, and action plan performance requirements.

EFQM Excellence Model Scoring System – RADAR

RADAR logic (Fig. 5) is a dynamic assessment framework and powerful management tool that
provides a structured approach to questioning the performance of an organisation.
RADAR logic states that an organisation needs to:
 Determine the Results it is aiming to achieve as
part of its strategy.
 Plan and develop an integrated set of sound
approaches to deliver the required results both
now and in the future.
 Deploy the approaches in a structured way to
ensure implementation.
 Assess and refine the deployed approaches
based on monitoring and analysis of the results Fig 5: RADAR Scoring Logic
achieved and ongoing learning activities.

Deming Prize Scoring System

Deming Prize scoring system employs different evaluation methods for different criterion.
Evaluation methods are as follows:
 Basic Category
Evaluation angles Levels
1. Effectiveness - Effective to achieve the objectives 1. No Activity
2. Consistency - Consistent throughout the organization 2. Inferior
3. Continuity - Continuous from mid- and long-term 3. Fair
viewpoints 4. Excellent
4. Thoroughness - Through implementation at the department 5. Exceptional
involved

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 Outstanding TQM activities
Evaluation angles Levels Criteria for Overall Evaluation
1. Effectiveness 1. None exists 1. Non-admirable activity
2. Reproducibility 2. Hardly any exists 2. Activity can be found elsewhere
3. Innovativeness 3. Somewhat exists 3. Good activity, but not excellent
4. Exists 4. Excellent activity constituting an
element of the core technology
5. Greatly exists
5. Exceptional activity can be other
organizations’ benchmark

 Roles of Top Management

Scoring
An overall evaluation is made using the scale of 100 points in consideration of the
examination findings from the executive interviews, basic items and Outstanding TQM
Activities as well as the management results obtained.

In summary, Excellence models provide an organization with an effective tool to assess its
current status of TQM implementation and then create a roadmap to becoming a world-class
organization. Organizations have the freedom to determine their own pace to becoming world-
class since every effort in that direction would improve the organization’s system and
performance. Annual assessments will help gauge progress and show transformation unfolding
gradually. Further, organizations should understand that this is an ongoing process and a pause
or stop along the way can derail progress and demoralize the organization. Hence, it is
recommended that organizations implement Excellence models gradually.

Conclusion
Most organizations conduct an annual assessment based on the Excellence Model to ascertain
their areas of strength and areas of improvement. They use this information to devise strategies
for improvement. However, sometimes organizations can get caught up in the assessment
scores and ignore the opportunities for ensuring effectiveness of their processes and systems.
Therefore, it is important to ensure that Top Management and Key stakeholders have solid
understanding of the Excellence model and scoring criteria to derive maximum benefit.

By adopting the practices laid down in the Excellence models, organizations can derive
immense benefits even if they don’t apply or win for the Award. It is said that the real benefit
is reaped by the organization on this journey of discovery and self-improvement when they
implement an Excellence Model, while winning the Award is just the “icing on the cake”.

Bibliography
1. History of TQM and Business Excellence - https://www.bpir.com/total-quality-
management-history-of-tqm-and-business-excellence-bpir.com.html

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2. Baldrige Excellence Framework 2017-18, © NIST
3. EFQM Excellence Model © EFQM
4. Deming Prize Application Guide © JUSE
5. Baldrige Criteria for Performance Excellence - http://asq.org/learn-about-
quality/malcolm-baldrige-award/overview/overview.html
6. Deming Prize Application Guide -
https://www.juse.or.jp/upload/files/Deming_prize_EN/.../Application_Guide.pdf

About the Author

Ashok Kurup is Founder Director at Zencore Management Services LLP, a boutique quality
management training and consulting organization in Mumbai. In addition, he is associated with
NCQM as a Faculty. Ashok is a Consultant in Quality and Six Sigma with over 20 years of
rich experience leading Quality Management, Six Sigma, Organizational Excellence,
Operations Management and Customer Service Management programs. Ashok has been
associated with reputed organizations like Nielsen, Fullerton India, DCB Bank, KPMG,
Citigroup Global Services in India and Middle East. He is a Machine Tool Engineer by
qualification and holds a Post Graduate Diploma in Business Management.