In the 1990s, Honeywell created an internal award program, based on Baldrige, called the Honeywell Quality Value (HQV). Each year, business units submitted HQV applications. Internal examiners evaluated the applications to identify strengths, opportunities for improvement, and scores. Honeywell tracked the scores. After a few cycles, they graphed the scores to see if there was a correlation with key financial measures.
In 1994, the average score for the business units was 330 points. That average increased every year through 1999 when it reached 550 points. In 1994, Honeywell’s operating profit rate was 7%. That rate also increased through 1999 when it reached 13%.
These and other data showed a strong correlation between HQV score and profitability. You see the same correlation when you examine the applications of Baldrige Award recipients. The applications, which you can find here, include results in six key areas. If you look at when an organization started its Baldrige journey and compare that to the trends in its results, you quickly notice the correlation between integrating Baldrige and improving performance.
This chart shows the typical path an organization takes as it integrates the Baldrige model. Most organizations score 250 to 350 points on their first assessment or application. By addressing the low-hanging fruit this first evaluation exposes, an organization can quickly improve during the next couple years.
At 500 points, your management system is becoming a competitive advantage. Earning half the possible points on a Baldrige application may not seem noteworthy, but it means you’re twice as good as almost everyone else. You have effective, systematic, and well-deployed approaches in place for all areas of your management system. You systematically evaluate and improve these key processes, which are aligned with what your organization needs to accomplish. Most results show positive trends and good current performance and hold up well when compared to competitors or other benchmarks.
Baldrige Award recipients typically score around 700 points. They’re good at everything and great at a few things, for which they become role models the rest of us can learn from. They move from 500 points to 700 points by improving processes, strengthening alignment, and integrating their approaches to achieve strategic and operational goals.
By correlating Baldrige scores and performance on financial, customer, quality, employee, and other key metrics, you will not only track the pace of improvement in your organization, but you will also show the measurable benefits of the journey.
To find out more about the Baldrige journey, read: