1. What makes you want to jump out of bed and come to work?
2. How do we build a culture that supports that?

Two years later, PVHS collaborated with Colorado State University to identify key staff requirements, which became the framework for its semiannual Employee Culture Survey. The requirements are:

• Teamwork and cooperation
• Safety in innovating
• Listening to each other
• Respect and fairness
• Enthusiasm
• Feedback and accountability
• Resources and participation

It’s hard to find anything unusual about this list. What is unusual is the systematic approach PVHS used to identify these requirements and how it has continued to refine the list–and what it means–ever since.

As with customer requirements, it’s easy to assume you know what is required to engage and satisfy your employees. Such assumptions are dangerous. PVHS knows what its employees require and it acts on that knowledge to improve both engagement and satisfaction.

Workforce engagement is a PVHS core competency and is measured on its semiannual survey. In 2007, PVHS was as good as or better than the top 10% nationwide in four survey questions on engagement and in the top 10% on 11 of 16 attitude areas.

Based on results, it’s clear PVHS knows what its employees want.

To find out more about Poudre Valley Health System, read its award application summary.

To read more about employee engagement, click on these articles:

• Engaging Employees to Improve Performance
• What Drives You?
• Workforce Well-Being
• Increasing Employee Satisfaction in a Time of Decline
• Why HR Needs Baldrige
  

The scope of the problem is brilliantly described in two 10-part series by Aaron Carroll on The Incidental Economist.

In the first series, “What makes the US health care system so expensive,” Carroll makes the point that, indeed, health care in the United States is very expensive when compared to the 30 countries in the Organization of Economic Cooperation and Development (OECD). Those 30 countries are bunched together between spending 6 and 11% of their Gross Domestic Product on health care. The one outlier, at 16%, is the United States.

Some argue that we should be spending more on health care. Carroll agrees:

“We are richer, and it is appropriate that we therefore spend more. We would expect to get better outcomes for that extra spending, which would also be appropriate. But as you can see [in Figure 1—click on “continued” at the end of this article to view it], every other country lines up on an almost straight line. There is a very stable relationship between how much money a country has in terms of GDP per capita, and how much it spends on health care.”

Thirty countries line up along the line. The U.S. doesn’t. One could easily argue that the money being spent above the line is waste.

The second figure is from Carroll’s series, “How do we rate the quality of the US health care system.” He uses data from the OECD and the Commonwealth Fund to compare the quality of U.S. health care to that of six countries almost as wealthy as the U.S.: Canada, France, Germany, Italy, Japan, and the UK. You should read the series to understand the data behind the conclusions in Figure 2. For example, one article in the series addresses the third line in Figure 2, “Disease Care,” which Carroll rates as “really bad” in the United States. Charts in his article on disease care show how the U.S. compares to the other six countries in different types of cancer, respiratory disease, and heart attacks. His final chart lumps them all together as “deaths from all causes per 100,000 population”: The U.S. ranks last.

Integrating Baldrige is a proven approach to lowering costs and improving quality. AtlantiCare, a Baldrige Award winner in 2009, ranks in the top 10% on key CMS measures of disease care. To read more, click here. Poudre Valley Health System, which won the Award in 2008, has been one of just seven U.S. hospitals named a Thomson 100 Top Hospital for superior outcomes for five consecutive years. To read more, click here.

You can read about the great results of all 11 health care Award winners in the profiles and aware application summaries, available here.

Figure 1. Per Capita Health Care Spending

Figure 2. U.S. Health Care Quality Compared to 6 Similar Countries

One of the distinguishing characteristics of Baldrige Award recipients is how well they align people, plans, and processes with the mission and vision of the organization. Every department, team, and individual not only knows what the mission and vision are, but they also understand what they must do to support them. The connection between an employee’s work and the mission and vision of his/her organization is documented and measurable.

Poudre Valley Health System, which won the Baldrige Award in 2008, calls this its “Global Path to Success.” Like other Award recipients, it uses its strategic plan and balanced scorecard to cascade its vision, mission, values, and strategic objectives throughout the organization, as shown in its award application summary:

According to PVHS, the Global Path to Success “provides a leadership system and framework for this culture, incorporating: (1) the performance management system, which links individual goals to organizational goals through each employee’s personal goal card; and (2) the Code of Conduct, Behavior Standards, and Leadership Competencies, which outline specific behaviors that support organizational values, key customer requirements, and key workforce requirements. Members of the workforce understand and demonstrate the Vision, Mission, and Values and, through their goal cards, focus on how they can help the organization provide world-class care.”

You can measure the effectiveness of this approach at producing world-class care through the results PVHS has achieved:

• One of seven U.S. hospitals named a Thomson 100 Top Hospital for superior outcomes, patient safety, and operational and financial performance—for five consecutive years
• Recognized as the nation’s number one hospital for sustained nursing excellence in 2007 and 2008 by the American Nurses Association and the National Database of Nursing Quality Indicators
• Patient satisfaction scores that surpass the national top 10%, according to the Center for Medicare and Medicaid Services

You will find similar outstanding results in all Baldrige Award recipients because all have aligned their people, plans, and processes with their missions and visions.

To learn more about alignment, read:

• An Achievable Mission and Vision
• Alignment and Integration
• The Priorities of Leadership
• KEYSTONE: Mission and Vision

Each set of measures was important but just part of a bigger picture, and each a lagging indicator of performance on all of the processes that produced these results.

The balanced scorecard directs leaders’ attention to how their organization operates, and how it operates determines how it will perform. A scorecard is also a powerful tool for aligning the activities of an organization with its vision, mission, goals, and objectives. Most Baldrige Award winners rely on balanced scorecards, along with their strategic plans, to focus everyone on what the organization must do to succeed.

I recently sat in on a Webinar by Stacey Barr, a performance measurement expert, in which someone asked a basic question about how you figure out what to measure. The Baldrige Criteria put it this way: How do you select data and information for tracking daily operations and overall organizational performance?

Barr suggested asking a different question. Rather than thinking about how to measure something, start with your goals and objectives. Make sure they clearly convey what you wish to achieve. Consider words you would use to describe meeting the goals and objectives such as effective, efficient, reliable, quality, engaged, systematic, and sustainable. What does it look like when the goal or objective is being achieved? That should point you toward the key measures.

As for which measures should be in your organization’s scorecard, 2008 Baldrige Award-winner Poudre Valley Health System uses 13 questions to find the best measures:

1. What is the purpose of the measure?
2. Why was the measure chosen?
3. How was the measure chosen?
4. How should the measure be defined?
5. How often should this item be measured?
6. What is the format of the measure?
7. What are acceptable and unacceptable values for this measure?
8. Are the definition and range acceptable for all levels of the organization?
9. What sources were consulted for possible industry benchmarks?
10. Is there an industry benchmark?
11. Are there a data source and benchmark for this measure?
12. If a benchmark is not appropriate, why not?
13. Are there other factors to consider?

PVHS aligns its strategies and action plans, along with its system balanced scorecard, with six strategic objectives. It has 17 measures in its scorecard that support these objectives. To learn more about how PVHS ensures alignment—and how that alignment helps deliver world-class results—read Categories 2 and 4 in its award application summary here.

To find out more about alignment and measurement, read:

• Alignment and Integration
• Transforming Measurement
• Creating a Visual Scorecard
• 10 Steps to World Class

The 2008 Baldrige Award recipients are:

• Poudre Valley Health System, a not-for-profit health care organization with a service area of 50,000 square miles in northern Colorado, Nebraska, and Wyoming. PVHS has some of the highest clinical outcomes in the country for mortality rates, complication, and infection rates, and patient satisfaction and financial performance well within the top 10% of all organizations nationally.

• Iredell-Statesville Schools, a K-12 public school system serving nearly 21,000 students in southwestern North Carolina. Its per-pupil operations expenditures are among the lowest in the state at the same time that it is ranked academically in the state’s top 10 school systems.

• Cargill Corn Milling North America, a business unit of Cargill Inc. that manufactures corn- and sugar-based food in nine manufacturing facilities throughout the U.S. CCM’s earnings after tax nearly tripled from 2003 to 2007. From 2006 to 2008, CCM saved more than $15 million from ideas generated by employees.

You can learn more about these Baldrige Award recipients and the winners in previous years at the Baldrige program’s Web site here.

To find out more about the 2008 winners, read:

• Baldrige Saves Lives
• Baldrige and Magnet Recognition
• First Steps on the Baldrige Journey
• What Employees Want
• Reinventing Education with Baldrige
• The Value of Baldrige Expertise
• 83 Points
• Baldrige and K-12: Not for the Faint-Hearted
• Sophisticated Information Sharing
• Blessed with OFIs
• The Power of Process

The first order of business, then, is to make sure you know exactly what your customers require. Most organizations don’t. They think they know. After all, they interact with customers every day. They may even be able to produce a list of customer requirements, which should really be called a list of assumptions about customer requirements because few organizations take a systematic approach to identifying, validating, and communicating key customer requirements.

I once worked with a manufacturer that was the worldwide leader in its industry. After completing its award application, I was asked to share my feedback on the application with the senior leadership team. My first bullet said: You do not have rock-solid understanding of customer requirements.

Boy, did they lay into me! “We’re the market leader,” one said, “of course we know what our customers want.” “We have thousands of customer contacts every day,” said another, “and we capture and share information about them daily.” When the initial backlash died down I explained that they did not have any processes for identifying the requirements of their customer groups, validating those requirements, and communicating them throughout the company. They still pushed back until the CEO said, “I think he’s got a point,” after which they discussed what they could do about it. To their credit, they took a systematic approach to identifying, validating, and sharing customer requirements, and customer satisfaction and retention improved.

The Baldrige Criteria ask: “How do you use customer, market, and product offering information to identify and anticipate key customer requirements and changing expectations and their relative importance to customers’ purchasing or relationship decisions?” The question is slightly different in the Healthcare and Education Criteria but the focus is the same. The 2008 Baldrige Award recipients describe systematic responses to this question in their award application summaries:

• Poudre Valley Health System (PVHS) uses patient satisfaction survey and community health survey data, with verification from other Voice of the Customer information, to determine key customer requirements. The patient survey ranks items by their relative importance to customers’ healthcare purchasing or relationship decisions. PVHS reviews its customer information monthly to identify changing expectations.
• Iredell-Statesville Schools identifies student needs through a number of methods including state and federal mandates, diagnostic assessment surveys of students, staff, and parents, and interaction with the business and at-large community. It uses stakeholder advisory boards and task forces to better understand the requirements of district stakeholders. Senior leaders and administrators meet monthly to discuss student needs and make service and programming determinations and recommendations.
• Cargill Corn Milling grew from a corn syrup business to a sophisticated corn and sugar processor by linking its customer listening and learning methods to its strategy process, translating the voice of the customer into strategies and actions that will create distinctive value. It uses a variety of methods to determine the relative importance of key customer requirements and expectations. It has defined how to deploy these requirements, who uses the information, and how the data from customer contacts is used.

To acquire customer knowledge, organizations must deploy sound approaches to listening to and learning from each of their customer groups. They need processes for gathering information from customers and reporting it internally. They need processes for collecting and analyzing the information to identify key customer requirements. They need to validate those requirements with members of each customer group to make sure the list is correct. And they need to communicate the validated list to everyone in the organization.

Customer knowledge is a keystone of a high-performing organization. With this knowledge, an organization can confidently focus its key processes on meeting and exceeding its customers’ requirements.

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