What Differentiates Baldrige Award Winners (Part 3)

In the first two articles in this series, I described five of the seven characteristics of organizations with sound management systems: (1) they think process; (2) they act on data; (3) they know where they’re going; (4) they align activities; and, (5) they blur boundaries. They exemplify all 11 Baldrige core values but one stands out: They have a systems perspective, which, according to the Baldrige Criteria, “means managing your whole organization, as well as its components, to achieve success.”

They also share these final two characteristics:

6. They treat people well. That means everyone the company touches: employees, customers, suppliers, community members—everyone. The striking difference between companies that treat people as commodities and companies that treat them well was captured in the transformation of Wainwright Industries. In the early 1990s, the leaders of this small Missouri-based manufacturer of machined parts listened to a speaker describe how his company thrived because of a sincere trust and belief in people. One of Wainwright’s leaders wondered what that meant. The CEO didn’t have a good answer, and that bothered him. What would Wainwright look like if it sincerely trusted and believed in its people?

The answer changed the company. A sincere trust and belief in people became one of its core values, and that value guided its actions. Quality improved. Safety improved. Customer satisfaction improved. Gross profit jumped 62 percent in just three years. And employees rewarded the company’s trust by generating more than one implemented improvement suggestion per employee per week. Most American companies struggle…

What Drives You?

Daniel Pink wrote a book about what motivates us to do what we do called Drive: The Surprising Truth about What Motivates Us. I have the book in my hand but I haven’t read it yet, but this video has inspired me to dig into it.

It turns out that study after study has shown that money works if you want people to perform simple, rudimentary tasks, but if you want them to do something more complex, you need the three elements of true motivation: autonomy, mastery, and purpose.

To learn more, watch the video — and then join me in reading the book.

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He Is 400x More Valuable Than You Are

Last week I wrote about David Calhoun, the executive Nielsen hired in 2006 to lead the company who is “earning” $78 million for five years of work (Shut! Up!), my point being that excessive executive compensation is ridiculous. Today, Ron Ashkenas made the same point by noting that CEO compensation in the U.S. was 40 times greater than that of the average worker in 1960 and now it’s more than four hundred times greater. Ashkenas writes, “From 1990 to 2005, CEO compensation increased 300% (adjusted for inflation) while the pay of average workers increased only 4.3%.” (“Rethinking the Assumptions Behind Executive Pay,” HBR)

Those are incredible statistics and they’ve been written about and talked about for years now but nothing is being done about it. It’s like watching that oil spewing into the Gulf of Mexico and everybody knows it’s bad and it matters to oil people because it looks bad, but eventually we turn our attention to other things and it’s back to business as usual. Nothing will be done about the cause of the oil spill or the causes of excessive executive compensation because the people who control those things stand to gain the most from the status quo. If I was making 400 times the average worker, I’d shut the hell up, too.

Ashkenas also quotes a recent study by compensation expert Graef Crystal, reported in Bloomberg Businessweek, that “there is no relationship whatsoever between CEO compensation and shareholder returns.” OK then, how about a relationship between CEO compensation and shareholder…

Learning from the Ritz

The Ritz-Carlton hotel chain has won two Baldrige Awards because of the quality of its management system. A key element of that system is how well it trains and empowers its hotel workers to satisfy and delight customers. Any employee can spend up to $2,000 on his or her own to improve a customers’ experience. Would you trust your employees with that responsibility?

Now an unlikely company has brought in trainers from the Ritz to show their dealers how to create a consistent sales experience and create loyal customers. The company? Cadillac.

According to an article in Bloomberg Businessweek, “Cadillac has copied Ritz’s pocket-sized ‘Credo’ cards, which explain how customers should be treated.” Cadillac service managers now have greater flexibility to “wow” customers. One dealer in the Chicago area gave employees $300 to $500 in “wow” money, which may be an iffy proposition if the employees haven’t been trained in how to dole out that money responsibly. The last I heard, new employees at the Ritz receive more than 250 hours of training in their first year of work, and a good part of that training is in customer service. Without the training, the “wow” money may just become, “Wow, look at all the money we wasted.”

It’s all about the culture and the management system. Companies that try to emulate one chunk of a world-class system without having the culture and the other key elements of the system in place may see short-term improvement, but it won’t last. The system will absorb…