The Baldrige Criteria ask: “What are the principal factors that determine your success relative to your competitors?”

With a little thought, most leadership teams can answer the question fairly easily. As with all things Baldrige, however, a quick response misses the underlying process question: How do you determine what those critical success factors (CSFs) are? Just because leaders brainstorm CSF candidates and agree on the final list doesn’t mean it’s the right list, any more than assuming you know what your customers expect is actually what they expect. You need a process for identifying your organization’s critical success factors because so much of what you do—strategic planning, performance measurement, process management—is aligned with those factors.

In “Finding your organization’s critical success factors—the missing link in performance management” (pdf), David Parmenter describes such a process whose goal is to define five to eight relatively specific CSFs. Some organizations, including some Baldrige Award recipients, use broad terms to describe their CSFs. For example, North Mississippi Medical Center (NMMC), which won the Award in 2006, has five CSFs: People, Service, Quality, Financial, and Growth. Parmenter argues that a CSF should clarify what is expected of all employees, and he gives a few examples:

• Delivering in full, on time, all the time, to our key customers
• Finding better ways to do the things we do everyday
• Maintaining a safe, happy, and healthy workplace
• Implementing innovative ideas from staff quickly
• Increasing repeat business from key customers
• Attracting quality staff to the organization

NMMC makes its CSFs more specific by defining the strategic challenges for each:

People: Maintain and enhance our employees’ satisfaction, skills, and engagement. Recruit and retain skilled staff. Develop staff and physician leaders.
Service: Increase our patients’ and physicians’ satisfaction. Enhance our patient-customer loyalty.
Quality: Provide high level, evidence-based, quality care and maintain patient safety.
Financial: Generate the financial resources necessary to support the organization in an environment of reimbursement pressures and increasing charity care.
Growth: Continue to expand in areas consistent with our Mission.

To nail down your organization’s CSFs, Parmenter proposes four steps:

1. Determine the already-identified success factors. Review your strategic documents from the last ten years to extract success factors. Ask senior leaders and other internal experts for input.
2. Hold a critical success factor workshop. Invite leaders and experts to a workshop to identify and come to consensus on your CSFs.
3. Finalize CSFs after wide consultation. Validate the list with the senior leadership team, the board, employees, and key customers and suppliers. Refine the list based on their input.
4. Explain the CSFs to employees. Use every available communication method to share the CSFs with employees. Deploy the CSFs by aligning your strategic plan and performance measurement system with them.

You can see the critical success factors of Baldrige Award recipients throughout their award applications, although they may call them something else. Your CSFs are a necessary link between your mission and vision and the plans you make to act on them—which is why you need a systematic process to identify, validate, and deploy them.

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