Economists Albert N. Link from the University of North Carolina and John T. Scott from Dartmouth College published their evaluation of 45 Baldrige Award applicants on December 16, 2011. The report is available here (pdf). The Baldrige program asked the 274 organizations that submitted applications from 2007 to 2010 to participate in the study and 45 accepted the invitation. Link and Scott used a counterfactual evaluation method to determine the benefit-to-cost ratio, asking what the private sector would have had to invest to achieve the same level of benefits through the Baldrige program. Benefits were realized in three areas:

• Savings to the applicants in investment costs to achieve the same level of benefits from their performance excellence strategies as they realized from the Baldrige program
• Gains by consumers in greater satisfaction from higher quality products and services
• Gains to the economy from saving scarce resources because the Baldrige Criteria were available

As I understand it, the counterfactual evaluation case made by the study is that organizations that integrate Baldrige increase demand because they offer higher quality products and services and they reduce costs because of more efficient operations. They earn more and spend less.

Link and Scott describe the methodology in their report. They concluded that the ratio of social benefits to social costs among the 45 organizations that responded to the survey was 351:1 while the ratio for all Baldrige Award applicants was 820:1. They also extrapolated these ratios by sector: 456:1 for healthcare, 357:1 for manufacturing, and 119:1 for education. While they cautioned against attaching too much significance to these numbers because of the small sample size for each sector, they emphasized that integrating Baldrige benefits all sectors, arguing that the Baldrige program’s benefits “are not specific to any one sector but reflect benefits realized across all of the sectors.”

In their concluding statement, Link and Scott state: “The Baldrige Performance Excellence Program is a public-private partnership that…creates great value that could not be replicated by private sector actions alone.”

While the public-private partnership equation is changing with the end of federal funding, the value of the program remains the driving force behind those who are working to reinvent Baldrige to continue to bring value to the U.S. economy.

According to a press release from the Baldrige program, the state programs will work with TAB boards across the country to help small business operators learn the Baldrige Criteria and use the Criteria to assess and improve performance.

The new effort drew praise from Terry May, president of MESA Products, a 2006 Baldrige Award recipient in the small business category. “TAB is a great resource for learning and sharing with my peers,” May said, “providing real-world, practical guidance to help me improve and grow my business. The Baldrige process, both at the state and national levels, helped me take MESA to an even higher level of performance and achieve breakthrough results. So, a partnership between local TAB boards and state Baldrige programs will be a great resource for small businesses.”

The collaboration between the Baldrige program and the Alliance is another indicator of the new relationship between the programs. Earlier this month, the Baldrige program announced new conditions that basically require organizations to earn state recognition before applying for the Baldrige Award (more here). Strengthening the relationship is an important step in maintaining the viability of the Baldrige program in the face of federal funding cuts.

It’s a well-deserved honor. CPH has 247 employees and revenues of $35 million and provides more than 8,000 products to members of the Lutheran Church-Missouri Synod. It excels at customer service, starting with 98% customer satisfaction scores, exceeding the benchmark for U.S. call centers. It’s Customer Call Center has been considered a “Center of Excellence” by Purdue University each of the last three years.

Innovation helps CPH build customer relationships. Its Center for Client Retention collects and analyzes data from customers of competitors, categorizing sales and customer trends in more than 50 different ways to correlate product sales and types of customers. Its Emerging Products team studies how to use new technologies to deliver innovative products. The number of electronic products offered by CPH grew from 457 in 2008 to 1,927 in 2010.

CPH also excels at building relationships with its employees. Overall workforce engagement has exceeded the AAIM (formerly known as American Association of Industrial Management for Employers Association) national benchmark in seven out of eight cycles for the past three cycles. It was named one of the “Best Christian Workplaces in the United States” in 2009, 2010, and 2011.

An engaged workforce focused on serving customers produces impressive results. Each employee’s goals are aligned with department and corporate goals through CPH’s Goal Keeper System, which documents employee accomplishments, communication with management, and performance reviews, and which supports the company’s pay-for-performance system. This alignment extends to suppliers through CPH’s Vendor Certification Program. CPH shares scores on product quality, delivery times, and overall performance with suppliers semiannually and works with suppliers to move them from the bronze level to the silver level—the percentage has nearly doubled since 2009—and from silver to gold—70% of CPH’s vendors are in the gold level.

In a difficult time for the publishing industry, CPH’s earnings before interest, taxes, depreciation, and amortization as a percent of net sales were at plus 5% in 2010 compared to minus 10% for other comparable church publishers.

To read the complete profile of Concordia Publishing House, click here. To read more about the three 2011 Baldrige Award winners in healthcare, click on these articles:

• Schneck Medical Center
• Southcentral Foundation
• Henry Ford Health System

The study confirms what similar studies of business performance have also shown. No matter what their organizations do, leaders need to consider these results and, if their organizations are not integrating Baldrige, ask how they, too, can achieve similar high rates of improvement.

Thomson Reuters uses independent public data to measure hospital performance and identify the national benchmarks for balanced excellence. It publishes the best 3% in an annual list of 100 Top Hospitals. For this study, it measured the association between 38 Baldrige hospitals (Award winners plus site-visit hospitals that gave permission) and 100 Top Hospitals on key indicators of performance and improvement. The analysis showed:

• Substantial agreement between the results of the Baldrige process and the Top 100 Hospitals award: Baldrige hospitals are significantly more likely than their peers to win a 100 Top Hospitals award.
• Baldrige hospitals were significantly more likely than their peers to display faster five-year performance improvement.
• Baldrige hospitals were about 83% more likely than non-Baldrige hospitals to be awarded a 100 Top Hospitals award for excellence.
• Baldrige hospitals outperformed non-Baldrige hospitals on nearly all of the individual measures of performance used in the 100 Top Hospitals composite score including risk-adjusted mortality, risk-adjusted complications index, patient safety index, CMS core measures score, severity-adjusted average length of stay, and adjusted operating profit margin.

You can read the Thomson Reuters report here.

You can read how businesses achieve similar stellar results here, here, and here.

These studies validate the value of integrating the Baldrige model whether your organization is a hospital, small business, manufacturer, service provider, government agency, nonprofit, or school. The data provide tangible evidence of the efficacy of using the Baldrige process because it delivers “significantly higher rates of improvement in balanced organizational performance” compared to competitors who do not use Baldrige.

To learn more about how your organization can use the Baldrige process to achieve similar results, click here.

The finalists for the Award are:

• 6 healthcare organizations (40 submitted applications)
• 3 nonprofits/government organizations (14)
• 1 educational organization (8)
• 1 small business (2)

Two manufacturers and three service companies also submitted applications but none was awarded a site visit.

According to the press release from the Baldrige program, “examiners will provide 300 to 1,000 hours of review to each applicant receiving a site visit, and all applicants will receive a detailed report on the organization’s strengths and opportunities for improvement.”

Organizations that take integrating Baldrige seriously recognize that the site visit and resulting feedback are the real value of the Baldrige process. Sure, winning the Baldrige Award is satisfying and rewarding, a testament to the hard work you’ve been doing, but visionary leaders see the Award as recognition for the quality of their management systems while the site visit and feedback drive significant improvements to those systems. They are passionate about improving performance and a Baldrige site visit and feedback report feed that passion.

This has been true since the earliest days of Baldrige. In my book, The Baldrige Quality System, Bill Lesner, a Cadillac plant manager, described the site visit it received in 1990, the year Cadillac won the Baldrige Award:

“Part of the problem in the day-to-day operation of business is that you see and respond to problems. You ask yourself, ‘Are we that bad?’ ‘Do we have that far to go?’ The site visit shows you what’s positive. At one plant they talked to the man who was the bumper polisher, maybe the worst job in the plant. An examiner asked him who his customer is, and he said, ‘Do you want to know about my internal customer or my external customer?’ Over and over, people amazed me with the consistency of their responses. People understand.”

A site visit is an exhilarating experience. Congratulations to the 11 organizations set to benefit from it this year.

Over the past couple of weeks, I’ve posted articles about the results achieved by Baldrige organizations. They provide compelling evidence of the value of the program:

• A study by the European Foundation for Quality Management of 120 Award-winning companies, including 24 from the U.S., compared their financial performance to that of similar companies that had not won awards. Five years after receiving their awards, these companies outperformed the comparison companies by 77% in sales, 44% in assets, and 18% in operating income.
• Cargill has an internal Baldrige assessment process. The cumulative earnings after tax vs. budget of business units that have a high degree of deployment of the Baldrige model is 30% compared to 13% for those with partial deployment and -12% for those just starting the Baldrige journey.
• The five two-time Baldrige Award winners grew significantly between their first and second Awards: 67% in number of sites; 63% in jobs; and 93% in revenue

This Thursday, please take a few minutes to tell your federal representatives why America Needs Baldrige:

Step 1: Prepare to participate in America Needs Baldrige by looking up contact information for your Senators and Congressman/Congresswoman:

• Go to www.congress.org
• Enter your home zip code; some sites may also have you enter your street address
• Click on each elected official to get detailed information
• Click on the “Contact” tab to get the phone number, fax number and/or Webform (email) address
• Put this information someplace handy; you will need it for Step 2.

Step 2: On Thursday, September 8, between the hours of 8:00 a.m. and 5:00 p.m., call, fax, and email your Senators and Congress Members.

Step 3: Share ONE simple and compelling message:

AMERICA NEEDS BALDRIGE!

Explain WHY America Needs Baldrige:

• Baldrige is about improving schools and health care
• Baldrige is about increasing revenue and creating jobs
• Baldrige is about saving taxpayer dollars
• Baldrige is about making and keeping America competitive

PERSONALIZE your message:

• Baldrige is helping my organization grow and prosper
• Baldrige has improved my company, school, college, hospital, clinic, city, or other organizations
• Baldrige helps meet the needs of the people in my state and district by promoting excellence

Issue a CALL TO ACTION: Get the facts before you act. FUND BALDRIGE!

One way would be to identify key indicators of performance excellence. One indicator would be productivity, which many organizations include in their Baldrige applications. The following chart, from an article in Mother Jones, shows that productivity in the U.S. has improved by 80% since 1979. According to NationMaster.com, the U.S. ranks second in overall productivity behind only Luxembourg.

Some of that is due to automation and technology, but it’s also because Americans are working harder. Forty percent of professional men and 23% of middle-income men work more than 50 hours a week. In a healthy society, one would expect that the people responsible for improving productivity—and working longer and harder to do it—would benefit from their efforts. Not in the United States. As the blue line on the chart shows, average overall wages increased about 3% in 30 years. As Mother Jones reports, “If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.”

The red line on the chart shows where some of the value of our productivity increase has gone. More is going for corporate profits, which are up 20% in 20 years. As the blue line on the chart and our high unemployment rate indicate, tax cuts for the rich and tax breaks for businesses do nothing to improve the employment or wage picture for 99% of Americans.

A healthy society would promote the best interests of all of its citizens, not just its richest. It would aspire to have the best education and healthcare in the world, not just the most expensive. It would recognize that the demand for products and services cannot grow if the ability to pay for them doesn’t grow.

The Baldrige model provides a systems perspective of organizations. Based on results, the U.S. education and healthcare systems are broken, as is our political system. As is our approach to capitalism. Without a shared systems perspective and consensus on how to move forward, none of these systems will improve.

Perhaps I’m missing something here. How would you measure our society’s performance? And how are we doing?