Business excellence models: a comparison

DOI: 10.2478/picbe-2018-0086

Sorin-George TOMA

University of Bucharest, Bucharest, Romania

[email protected]

Paul MARINESCU

University of Bucharest, Bucharest, Romania

Abstract. A new approach, called “business excellence”, has emerged in the business world and

scientific literature in the past decades. Facing an increasingly turbulent and chaotic environment,

more and more companies have implemented business excellence strategies and made quality a key

element of their business philosophy. Modern measurement frameworks were created and developed

by national or international bodies such as the excellence business models. These models provide

guidelines and criteria for evaluation and are used by companies across the world as groundwork for

continuous improvement. The paper aims to present and compare three well-known business

excellence models in the world: Malcolm Baldrige National Quality Award, the Australian Business

Excellence Framework and the European Foundation for Quality Management Excellence Model. In

this respect, the authors have displayed the key elements of each business excellence model, followed by

their comparison. In order to achieve the previous goals, the paper uses two methods: analysis and

comparison. The information were obtained from multiple secondary sources of data- books and

academic journal articles from the domains of total quality management and production economics

found in libraries and electronic databases- through a desk research based on a significant literature

review. The paper contributes to a better understanding of the business excellence models and may

help managers to design and implement business excellence strategies. The paper shows that business

excellence models provide a holistic approach to continuous improvement for any type of organization.

These models are based on sound values, concepts and principles and have proved their viability during

the time. Consequently, they gave birth to frameworks that allow organizations to benchmark their

performances and demonstrate best practices in their field of activity. Also, the research findings

indicate that the American model constituted a landmark for other business excellence models around

the world.

Keywords: business excellence model, Malcolm Baldrige National Quality Award, European

Foundation for Quality Management Excellence Model, Australian Business Excellence Framework,

company

Introduction

In the past decades a new approach called “business excellence” has emerged both in the

business world and literature. Facing an increasingly turbulent and chaotic environment,

more and more companies have implemented business excellence strategies and made

quality a key element of their business philosophy (Cobb, 2003) as quality leads to

improved business performance (Dale et al., 2016). The design, formulation,

implementation and evaluation of these strategies have required the rethinking of the way

businesses are organized and managed (e.g., continuous improvement). In this respect, the

growing adoption of various methods and techniques, such as business process re-

engineering (BPR), balanced scorecard, enterprise resource planning (ERP), lean

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management or Six Sigma, has shown the need to implement an integrated approach to

business excellence at the organizational level (Porter and Tanner, 2004).

As the global business environment is changing at an unprecedented pace, the

scientific research has tried to provide a new understanding to companies around the

world of how to better perform in the twenty-first century (Laihonen, 2015). This is why

new business models and tools has been designed and used in order to make the adaptation

easier to this continuous change and to supply relevant performance measurements for any

company. On the other hand, modern measurement frameworks were created and

developed by national or international bodies such as the Malcolm Baldrige National

Quality Award, the Singapore Business Excellence Framework, the Australian Business

Excellence Framework or the European Foundation for Quality Management Excellence

Model. These excellence business models provide guidelines and criteria for evaluation and

are used by companies across the world as groundwork for continuous improvement

(Sampaio et al., 2012). Moreover, last years have witnessed the emergence of several

initiatives to design a specific approach of business excellence for small and medium

enterprises (Sternad et al., 2017).

The purposes of the paper are to present and compare three of the main worldwide

business excellence models. To achieve these objectives, the following two research

questions were identified:

 What are the frameworks of the three business excellence models?

 What are the common criteria used by these business excellence models?

The paper is organized into five sections. In the second section, a literature review

explores the nature and structure of business excellence models. The third section deals

with the research methodology. Results and discussion are presented in the fourth section.

The paper ends with conclusions.

Literature review

This section briefly describes three well-known business excellence models, namely the

Malcolm Baldrige National Quality Award (MBNQA), the Australian Business Excellence

Framework (ABEF) and the European Foundation for Quality Management Excellence

Model (EFQMEM). As performance measurement has constituted a topic of interest in the

business literature in the last decades (Kanji, 2006), business excellence has become a

major concern for any company (Boys et al., 2004). Implementing business excellence at the

organizational level is easier in the case of companies that have already built simple and

informal organizational structures (Bauer et al., 2005). In their famous book In Search of

Excellence- Lessons from America’s Best-Run Companies, Peters and Waterman

(1982)asserted that the success criteria behind excellence are both software (systems,

shared values, skills, staff and style) and hardware criteria (strategy and structure).

Business excellence is:

 ”a long-term process, concerned with key strategic issues such as developing core

functional processes, to be the best, to get people performing better, and to develop

a quality framework in order to provide excellent customer service” (Ritchie and

Dale, 2000, p. 244).

 “an evolution of total quality management (TQM) since it is built on the same values”

(Kanji, 2002, p. 4).

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 “some superiority achieved by the enterprise towards the market where it operates

” (Mele and Colurcio, 2006, p. 481).

 “about developing and strengthening the management systems and processes of an

organization to improve performance and create value for stakeholders ” (Mann et

al., 2012, p. 1)

In sum, business excellence can be seen not only as the next step after TQM or a new quality

understanding (Zink, 1998) but also as an umbrella term that takes into consideration a

wider spectrum of issues such as the social and environmental outcomes of a company

(Boys et al., 2005).

The last two decades have witnessed the increasing application of business

excellence models as more companies have learned how to use them and to obtain superior

performances (Dahlgaard et al., 2013). Several business excellence models have been

created and developed since the end of the Second World War.

In 1951, the Union of Japanese Scientists and Engineers (JUSE) launched the Deming

Prize (Union of Japanese Scientists and Engineers, 2017), the first globally known model

(Talwar, 2011). W. E. Deming, one of the American quality guru, was invited by JUSE in

1950 to conduct quality control seminars for Japanese engineers and top management

(Ishikawa, 1993). He taught the basics of statistic quality control and provided the basis for

the development of quality control in Japan. As his lectures made a deep impression on the

Japanese participants, K. Koyanagi, the managing director of JUSE, decided to fund a prize in

his honor. Finally, the first Deming Prize was awarded in 1951 (Ishikawa, 1985).

Later, the Canada Awards for Excellence (CAE) was introduced in 1984 (Excellence

Canada, 2017), followed by the establishment of MBNQA in the United States of America

(USA) in 1987 (American Society for Quality, 2017), the Australian Quality Award in 1988

(SAI Global, 2017), the National Quality and Excellence Prize in Israel in 1989 (Standards

Institution of Israel, 2017), the National Quality Award in Mexico in 1989 (Qualtop Mexico,

2017), and the European Quality Award in 1992 (European Foundation for Quality

Management, 2017a). Other countries, especially from Asia, instituted their own awards in

the 1990s, such as the Rajiv Gandhi National Quality Award in India in 1991 (Bureau of

Indian Standards, 2017), the National Quality Award in Brazil in 1992 (National Quality

Foundation, 2017), the United Kingdom Excellence Award in 1994 (British Quality

Foundation, 2018), the Singapore Quality Award in 1995 (SPRING Singapore, 2018) or the

Philippine Quality Award in 1997 (PQA, 2018).

Established by the U.S. Congress to raise awareness of quality management, the

MBNQA is awarded annually to organizations that prove passion for quality and obtain

performance excellence. The Baldrige framework aims to help organizations to achieve

excellence. It is based on several core values and concepts, and provides the Baldrige

Criteria for Performance Excellence that comprises seven critical areas (Table 1). During

the time these criteria have proved to constitute a “powerful set of guidelines for running

an effective organization” (Brown, 2008, p. ix).

On its turn, the ABEF represents a framework for leadership and helps organizations

to achieve and maintain high levels of performance. It was tailored to correspond to the

specific business and cultural context of Australia (Grigg and Mann, 2008). The ABEF

consists on nine Principles of Business Excellence (e.g., lead by example, continuously

improve the system, understand what markets and customers value etc.) and uses seven

main categories as follows (SAI Global, 2017):

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 Leadership.

 Customers and Stakeholders.

 Strategy and Planning.

 People.

 Information and Knowledge.

 Process Management, Improvement and Innovation.

 Results and Sustainable Performance.

Table 1. The Baldrige framework

Core values and

concepts

Critical areas

 Systems

perspective

 Visionary

leadership

 Customer-

focused

excellence

 Valuing people

 Organizational

learning and

agility

 Focus on

success

 Managing for

innovation

 Management

by fact

 Societal

responsibility

 Ethics and

transparency

 Delivering

value and

results

1. Leadership: Senior leadership (the role of senior leaders, role-model senior

leaders), Governance and societal responsibilities (organizational

governance; legal compliance, ethics and risks, public concerns,

conservation of natural resources, societal responsibility, community

support).

2. Strategy: Strategy development (a context for strategy development, a

future oriented-basis for action, competitive leadership, work systems),

Strategy implementation (developing and deploying action plans,

performing analyses to support resource allocation, creating workforce

plans, projecting your future environment, projecting and comparing your

performance).

3. Customers: Voice of the customer (customer listening, actionable

information, listening/learning and business strategy, social media,

customer and market knowledge, customers’ satisfaction with

competitors), Customer engagement (engagement as a strategic action,

customer relationship strategies, brand management, complaint

management).

4. Measurement, Analysis, and Knowledge Management: Measurement,

analysis, and improvement of organizational performance (aligning and

integrating your performance management system; the case for

comparative data; selecting and using comparative data; reviewing

performance; analyzing performance; aligning analysis, performance

review, and planning; understanding causality), Information and

knowledge management (information management, data and information

availability, knowledge management, organizational learning).

5. Workforce: Workforce environment (workforce capability and capacity,

workforce support), Workforce engagement (high performance, workforce

engagement and performance, drivers of workforce engagement, factors

inhibiting engagement, compensation and recognition, others indicators of

workforce engagement, workforce development needs, learning and

development locations and formats, individual learning and development

needs, customer contact training, learning and development effectiveness).

6. Operations: Work processes (work process requirements, key product-

related and business processes, work process design, in-process measures,

process performance, key support processes, process improvement,

supply-chain management, innovation management), Operational

effectiveness (cost control, managing cybersecurity, workplace safety,

business continuity).

7. Results: Product and process results (measures of product performance,

examples of product measures, product performance and customer

indicators, process effectiveness and efficiency measures, measures of

organizational and operational performance), Customer-focused results

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(your performance as viewed by your customers, results that go beyond

satisfaction), Workforce-focused results (workforce results factors,

workforce capacity and capability, workforce engagement), Leadership and

governance results (importance of high ethical standards, results to report,

sanctions or adverse actions, measures of strategy implementation),

Financial and market results (senior leaders’ role, appropriate measures to

report).

Source: American Society for Quality, 2017; National Institute of Standards and Technology, 2017.

The EFQMEM also provides a framework that stimulates continuous improvement

and represents the foundation for obtaining excellence in any type of organization. It

comprises eight fundamental concepts and nine criteria (Table 2).

Table 2. The EFQMEM framework

Core concepts

Criteria

 Adding value for

customers

 Creating a sustainable

future

 Developing

organizational capability

 Harnessing creativity &

innovation

 Leading with vision,

inspiration & integrity

 Managing with agility

 Succeeding through the

talent of people

 Sustaining outstanding

results

1. Enablers:

 Leadership: leaders, type of leaders, empowerment to lead,

what leaders do and how they put leadership into practice

(role models, clear vision, good at communicating, ethical

behavior, agents of change, set the mission, instill values

etc.), reviewing and improving leadership etc.

 Strategy: identifying and understanding the needs and

expectations of stakeholders, understanding internal

performance and capabilities, setting clear goals and

objectives, using specific tools and techniques (e.g., surveys,

focus groups, benchmarking, balanced scorecard, SWOT

analysis) etc.

 People: employees, knowledge and competencies, skills,

personal development and training, empowering people,

rewarding, reviewing and improving people management

etc.

 Partnerships & resources: partnerships with suppliers,

customers, educational institutions, non-governmental

organizations etc.; management of finances, using specific

tools (e.g., risk management, sensitivity analysis, cost

benefit analysis, internal rate of return); management of

buildings, equipment and material; management of

technology etc.

 Processes, products & services: identifying key processes,

building a process model of the organization, managing and

reviewing processes etc.

2. Results:

 Customer results: customers’ perceptions of the

organization etc.

 People results: people’s satisfaction, leadership

performance etc.

 Society results: society’s perception of the organization etc.

 Business results: revenue growth etc.

Source: European Foundation for Quality Management, 2017b.

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Research methodology

The paper aims to present and compare three well-known business excellence models in

the world: MBNQA, ABEF and EFQMEM. In this respect, the authors have displayed the key

elements of each business excellence model, followed by their comparison. In order to

achieve the previous goals, the paper uses three methods: analysis, synthesis and

comparison (Cooper and Schindler, 2006; Lapan and Quartaroli, 2009). The information

were obtained from multiple secondary sources of data- books and academic journal

articles from the domains of total quality management and production economics- through

a desk research based on a significant literature review. The literature review was carried

on especially in libraries where numerous electronic databases (e.g., Taylor and Francis,

Springer) were found and consulted.

Results and discussion

In this section the authors perform a comparative analysis of the frameworks of the

previous three business excellence models by taking into account their evaluation criteria.

In order to identify similarities and differences among these models each criterion was

analyzed as follows:

(1) Leadership. All three models address this issue.

(2) Strategy. The MBNQA and EFQMEM include this item. The ABEF also include it, but

adds the word “planning”.

(3) Customers. Only the MBNQA and ABEF include this item, but the ABEF adds the word

“stakeholders”.

(4) Measurement, Analysis, and Knowledge Management. The MBNQA is the single model

that concentrates on this issue. On its turn, the ABEF deals with “Information and

knowledge”.

(5) Workforce. All three models address this issue- the ABEF and EFQMEM use the name

“People”.

(6) Operations. All three models address this issue- the EFQMEM uses the name

“Processes, products & services” while the ABEF utilizes the name “Process

Management, Improvement and Innovation”.

(7) Results. All three models address this issue- the ABEF adds the syntagma “sustainable

performance”.

The vast majority of criteria are to be found in all three business excellence models.

All the models start with the criterion “Leadership” and end with the criterion “Results”.

In spite of the fact that the three business models have evolved during the time their

core values, concepts and principles remained the same. The criteria used by these models

underline their commitment to business excellence. They provide the key elements that

constitute the bedrock of a successful organization.

The appearance of the MBNQA in the USA gave an impetus to other countries to

design and implement their own business excellence models. However, the ABEF and

EFQMEM were deeply inspired by the American model. It is worth to emphasize that these

models are managed by different bodies as follows:

 The MBNQA is administered by the National Institute of Science and Technology, an

agency of US Department of Commerce.

 The ABEF is managed by SAI Global, an Australian public company founded in 2003.

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 The EFQMEM is administered by the European Foundation for Quality Management,

a non-for-profit foundation established by several CEO/Presidents of European

companies in 1989.

During the time, the MBNQA and EFQMEM have become the business excellence

models with the largest spread in the world. They have been adapted and improved to face

the new realities of the 21

century society, in general, and of the business environment, in

particular. In spite of the fact that the Deming Prize was the first globally recognized quality

management model, the Baldrige framework constituted the starting point for the design

and development of business excellence models all over the world. Thus, the MBNQA has

remained the oldest and most popular business excellence model worldwide.

Conclusion

The paper shows that business excellence models provide a holistic approach to continuous

improvement for any type of organization. These models are based on sound values,

concepts and principles and have proved their viability during the time. Consequently, they

gave birth to frameworks that allow organizations to benchmark their performances and

demonstrate best practices in their field of activity. In the beginning, the business

excellence models were adapted to the needs of big businesses, but in time, new attempts

have been made in order to create and develop these models for small and medium

enterprises.

Also, the research findings indicate that the MBNQA constituted a landmark for

other business excellence models around the world. The comparative analysis the authors

have conducted among three business excellence models reveals that these models

encompass in a high proportion the same critical areas and criteria.

The paper contributes to a better understanding of the business excellence models

and may help managers to design and implement business excellence strategies. As the

paper analyzes only three business excellence models, future research may focus on

expanding their number by taking into account other models.

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