Who was Malcolm Baldrige?

Malcolm Baldrige was Secretary of Commerce from 1981 until his death in a rodeo accident in
July 1987. Baldrige was a proponent of quality management as a key to this country's prosperity
and long-term strength. He took a personal interest in the quality improvement act that was
eventually named after him and helped draft one of the early versions. In recognition of his
contributions, Congress named the award in his honor.

What is the Malcolm Baldrige National Quality Award?
Congress established the award program in 1987 to recognize U.S. companies for their
achievements in quality and business performance and to raise awareness about the importance
of quality and performance excellence as a competitive edge. The award is not given for specific
products or services. Two awards may be given annually in each of three categories:
manufacturing, service, and small business. 

While the Baldrige Award and the Baldrige winners are the very visible centerpiece of the U.S.
quality movement, a broader national quality program has evolved around the award and its
criteria. A report, Building on Baldrige: American Quality for the 21st Century, by the private
Council on Competitiveness, said, More than any other program, the Baldrige Quality Award is
responsible for making quality a national priority and disseminating best practices across the
United States.

The U.S. Commerce Department's National Institute of Standards and Technology (NIST)
manages the award in close cooperation with the private sector.


Why was the award established?

In the early and mid-1980s, many industry and government leaders saw that a renewed emphasis
on quality was no longer an option for American companies but a necessity for doing business in
an ever expanding, and more demanding, competitive world market. But many American
businesses either did not believe quality mattered for them or did not know where to begin. The
Baldrige Award was envisioned as a standard of excellence that would help U.S. companies
achieve world-class quality.

How is the Baldrige Award achieving its goals?

The criteria for the Baldrige Award have played a major role in achieving the goals established
by Congress. They now are accepted widely, not only in the United States but also around the
world, as the standard for performance excellence. The criteria are designed to help companies
enhance their competitiveness by focusing on two goals: delivering ever improving value to
customers and improving overall company performance.

The award program has proven to be a remarkably successful government and industry team
effort. The annual government investment of about $3 million is leveraged by a contribution of
over $100 million from private sector and state and local organizations, including $10 million
raised by private industry to help launch the program and the time and efforts of hundreds of
largely private-sector volunteers. 

The cooperative nature of this joint government/private-sector team is perhaps best captured by
the award's Board of Examiners. Each year, more than 300 experts from industry, as well as
universities, governments at all levels, and non-profit organizations, volunteer many hours
reviewing applications for the award, conducting site visits, and providing each applicant with an
extensive feedback report citing strengths and opportunities to improve. In addition, board
members have given thousands of presentations on quality management, performance
improvement, and the Baldrige award. 

The 32 award-winning companies also have taken seriously their charge to be quality advocates.
Their efforts to educate and inform other companies and organizations on the benefits of using
the Baldrige Award framework and criteria have far exceeded expectations. To date, the winners
have given approximately 30,000 presentations reaching thousands of organizations. 

What are the Baldrige criteria?

The Baldrige performance excellence criteria are a framework that any organization can use to
improve overall performance. Seven categories make up the award criteria:  

Leadership
Examines how senior executives guide the company and how the company addresses its
responsibilities to the public and practices good citizenship.

Strategic planning
Examines how the company sets strategic directions and how it determines key action plans.

Customer and market focus
Examines how the company determines requirements and expectations of customers and
markets.

Information and analysis
Examines the management, effective use, and analysis of data and information to support key
company processes and the company's performance management system.

Human resource development and management
Examines how the company enables its workforce to develop its full potential and how the
workforce is aligned with the company's objectives.

Process management
Examines aspects of how key production/delivery and support processes are designed, managed,
and improved.

Business results
Examines the company's performance and improvement in its key business areas: customer
satisfaction, financial and marketplace performance, human resources, supplier and partner
performance, and operational performance. The category also examines how the company
performs relative to competitors.

The criteria are used by thousands of organizations of all kinds for self-assessment and training
and as a tool to develop performance and business processes. More than a million and a half
copies have been distributed since the first edition in 1988, and heavy reproduction by companies
and electronic access multiply that number many times. 

For many companies, using the criteria results in better employee relations, higher productivity,
greater customer satisfaction, increased market share, and improved profitability. According to a
report by the Conference Board, a business membership organization, A majority of large U.S.
firms have used the criteria of the Malcolm Baldrige National Quality Award for
self-improvement, and the evidence suggests a long-term link between use of 
the Baldrige criteria and improved business performance.

Which companies have won the award?
1997
3M Dental Products Division, Solectron Corp., Merrill Lynch Credit Corp., and Xerox Business
Services

1996
ADAC Laboratories, Dana Commercial Credit Corporation, Custom Research Inc., and Trident
Precision Manufacturing Inc.

1995
Armstrong World Industries Building Products Operation and Corning Telecommunications
Products Division

1994
AT&T Consumer Communications Services, GTE Directories Corp., and Wainwright Industries
Inc.

1993
Eastman Chemical Co. and Ames Rubber Corp.

1992
AT&T Network Systems Group/Transmission Systems Business Unit, Texas Instruments Inc.
Defense Systems & Electronics Group, AT&T Universal Card Services, The Ritz-Carlton Hotel
Co., and Granite Rock Co.

1991
Solectron Corp., Zytec Corp., and Marlow Industries
1990
Cadillac Motor Car Division, IBM Rochester, Federal Express Corp., and Wallace Co. Inc.
     
1989 
Milliken & Company and Xerox Corp. Business Products and Systems

1988
Motorola Inc., Commercial Nuclear Fuel Division of Westinghouse Electric Corp., and Globe
Metallurgical Inc.

How are winning companies selected?

Businesses headquartered in the United States may apply for the award. Applications for the
award are evaluated by an independent Board of Examiners composed of primarily 
private-sector experts in quality and business. Examiners look for achievements and
improvements in all seven categories. Companies that pass an initial screening are visited by
teams of examiners to verify information in the application and to clarify questions that come up
during the review. Each applicant receives a written summary of strengths and areas for
improvement in each area addressed by the criteria. 

The application and review process for the Baldrige Award is the best, most cost-effective and
comprehensive business health audit you can get, says Arnold Weimerskirch, former chair of the
Baldrige Award panel of judges and vice president of quality, Honeywell, Inc. 

Does quality pay?

While quality management cannot guarantee success, the Baldrige Award winning companies
and many others believe that investing in quality can lead to outstanding returns. "Since
Solectron adopted the Baldrige criteria, progress has come in a very accelerated fashion.
Improvements are deployed much more efficiently as measured by recognition by our customers
and bottom line financial results," says Ko Nishimura, president and CEO, Solectron Corp.
Studies by NIST, universities, business organizations, and the U.S. General Accounting Office
have found that investing in quality management pays off in increased productivity, satisfied
employees and customers, and improved profitability--both for customers and investors. For
example, NIST has tracked a hypothetical stock investment in Baldrige Award winners and
applicants receiving site visits. The studies have shown that these companies soundly outperform
the Standard & Poor's 500.

Is it tougher for small companies to win the award?

The Baldrige Award's eight small business winners--service and manufacturing 
companies--have proven that any U.S. company can improve by using the criteria's performance
excellence framework. But, given the importance of smaller businesses to the U.S. economy,
NIST is mapping out ways to put a special emphasis on strengthening awareness of the award
program and criteria among these companies.
One promising vehicle for tapping into the nation's small and mid-sized companies is through
the Manufacturing Extension Partnership, another NIST-managed program. Offering services in
all 50 states and Puerto Rico, the MEP now is a nationwide system of services and support for
smaller manufacturers giving them unprecedented access to new technologies, resources, and
expertise. In surveys of MEP clients, quality management and improvement is one of the most
requested areas for assistance. A Baldrige expert is working with directors of the locally managed
MEP centers to inform and educate them about the benefits of quality for smaller manufacturers.

Can only U.S. companies win the award?

Any for-profit business headquartered in the United States or its territories may apply for the
award, including U.S. subunits of foreign companies.

Do the award criteria take into account a company's financial performance?

Yes. The criteria include many factors that contribute to financial performance, including
business decisions and strategies that lead to better market performance, gains in market share,
and customer retention and satisfaction. Companies are urged to use financial information,
including profit trends, in analyzing and reporting on improved overall performance and to look
for the connection between the two.     

Does the award amount to a product or service endorsement for the winners?

No. The award is given because a company has shown it has an outstanding system for managing
its products, services, human resources, and customer relationships. As part of the evaluation, a
company is asked to describe its system for assuring the quality of its goods and services. It also
must supply information on quality improvement and customer satisfaction efforts and results.
That does not mean that a winner's products or services are endorsed.

Why are the Baldrige Award winners asked to share their successful strategies?

One of the main purposes of the award is to pass on information about the winners' quality
programs that other companies can tailor for their own needs. Representatives from the winning
companies willingly have shared their companies' performance strategies and methods with
thousands of other firms.   

To what extent are they asked to share their strategies?

The managers of each winning company must decide how much time and effort to devote to
activities such as speaking engagements and tours of facilities. The requirements of the award
program are minimal. Winners are asked to participate in the award's annual conference and
several co-sponsored regional conferences, to provide basic materials to those who request it on
their company's performance strategies and methods, and to answer news media inquiries. 


Do advertising and publicity diminish the image and prestige of the award?

The law establishing the award states that a winner may publicize its receipt of such award and
use the award in its advertising. Promoting public and business awareness of quality
improvement is one of the prime goals of the program, and advertising is one way to meet this
goal. Guidelines help companies assure their advertising is appropriate in representing their
Baldrige Award recognition.

Are companies simply chasing after the award and ignoring the lessons of performance
improvement?

The perception by some that winning the award is the goal of U.S. companies is not supported by
the facts. Says Earnest Deavenport, chairman and chief executive officer of Eastman Chemical
Company, "Eastman, like other Baldrige Award winners, didn't apply the concepts of total
quality management to win an award. We did it to win customers. We did it to grow. We did it to
prosper and to remain competitive in a world marketplace."  Thousands of organizations are
using the Baldrige Award performance excellence criteria to assess their company and to
improve. The program has helped to stimulate an amazing movement to improve U.S.
organizations, including companies; academic institutions; and federal, state, and local
government agencies.

If this is a federal government program, why are companies charged a fee to apply?

Federal funding for this program is about $3 million annually and is used by NIST to manage the
program. The application fees are charged to cover expenses associated with distribution and
review of applications and development of feedback reports. The application and review process
are considered widely to be a very cost-effective and comprehensive business health audit. For an
application fee of $4,500 for large businesses and $1,500 for small firms, companies receive at
least 300 hours of review by a minimum of eight business and quality experts. Site-visited
companies receive over 1,000 hours of in-depth review. Every applicant receives an extensive
feedback report highlighting strengths and areas to improve. An article in the Journal for Quality
and Participation said, "The Baldrige feedback report is arguably the best bargain in consulting in
America."

May a company hire a consultant to help prepare answers for the Baldrige application?

Applicants for the award are asked to supply facts and data to substantiate their claims
concerning their business management practices. Consultants, including members of the Board of
Examiners, may provide services on performance management issues as well as the Baldrige
award process. However, since there are no secret answers or even right or wrong answers to the
Baldrige application, the award cannot be won by hiring someone to fill in the blanks.

A company must show through facts and data that it has a world-class business management
system in place and that it is continually looking for ways to improve. 

As a final check before recommending winners, members of the Board of Examiners visit the
more outstanding candidates for the award. During these site visits, examiners interview
employees and review pertinent records and data. The objective is to verify the information
provided in the application and to answer questions raised during the board’s review. A
company that hired someone to fill out its application would never make it through this rigorous
review if its performance management system was not supported by facts and data.

Is it a conflict of interest for members of the Board of Examiners to work as consultants?  

No. Members of the Board of Examiners are experts in evaluating performance management
systems. They are in demand as speakers, as information resources, and as consultants. These
activities serve as a way to make more people aware of performance improvement techniques
and the Baldrige Award. 

However, since the examiners and judges on the board review applications for the award and are
involved in recommending winners, precautions are taken to prevent a conflict of interest or even
the appearance of conflict. Rigorous rules are followed at every stage of the review.

Primarily, this means all members of the board must abide by a code of ethics requiring, among
other things, that they disclose all business affiliations that might create a conflict. In such cases,
they cannot review an application, comment on it, or make any judgments that could affect it. It
is a violation of the code for board members even to ask for information on applications other
than those to which they are assigned.

Other safeguards and checks also are built into the four-step review process. For example, during
the first step, each application is evaluated independently by at least eight different examiners. By
the time the review is over, some applicants will have gone through over 1,000 hours of
evaluation. 

Does a decline in applications for the award indicate a decline in interest about quality and the
Baldrige Award?

The number of applicants for the national Baldrige Award is not an indicator of overall interest in
quality or the award program. Interest continues to grow both nationwide and internationally.

For example, participation in state and local award programs has increased steadily. In 1991,
fewer than 10 states had award programs. Now, more than 40 states have or are establishing
award programs. Most are modeled after the Baldrige Award, and many companies opt to
compete for them first before considering a Baldrige Award application. All four of the 1996
Baldrige Award winners also won state quality awards. In 1996, more than 800 organizations
applied for state and local quality awards. 

Internationally, about 25 quality awards are in place. Most have been established within the past
several years, and many are based on the Baldrige Award. In Japan, home of the Deming Prize,
an award that more closely resembles the Baldrige Award has been established.
Interest in the Baldrige Award program also is picking up in other sectors of the U.S. economy
including the healthcare and education communities. 

Also, it is important to remember the award program is much more than a contest. While
recognizing companies that have successful performance management systems is the most visible
part of the program, its intent is much broader. Equally important is the award's role in raising
awareness about quality by encouraging all U.S. businesses and organizations to set up
performance improvement programs whether or not they intend, or are even eligible, to apply for
the award.

Will the Baldrige Award categories be expanded to include education and healthcare
organizations?

NIST is working with the business, education, and healthcare communities in an effort to
establish a full-fledged award program in these two sectors. In conjunction with experts from
these two areas, NIST tailored the Baldrige Award criteria and framework for businesses to suit
more readily the needs of healthcare and education organizations. Drawing greater interest than
expected, 46 healthcare and 19 education organizations submitted applications for a pilot award
program in 1995. NIST distributed more than 30,000 copies of the criteria for the pilot.

NIST is working with the Malcolm Baldrige National Quality Award Foundation to establish a
base of long-term, private-sector funding to complement funding being proposed by the
Administration to support an award program. 

How does the Baldrige Award differ from ISO 9000?

The purpose, content, and focus of the Baldrige Award and ISO 9000 are very different. The
Baldrige Award was created by Congress in 1987 to enhance U.S. competitiveness. The award
program promotes quality awareness, recognizes quality achievements of U.S. companies, and
provides a vehicle for sharing successful strategies. The Baldrige Award criteria focus on results
and continuous improvement. They provide a framework for designing, implementing, and
assessing a process for managing all business operations. 

ISO 9000 is a series of five international standards published in 1987 by the International
Organization for Standardization (ISO), Geneva, Switzerland. Companies can use the standards
to help determine what is needed to maintain an efficient quality conformance system. For
example, the standards describe the need for an effective quality system, for ensuring that
measuring and testing equipment is calibrated regularly and for maintaining an adequate
record-keeping system. ISO 9000 registration determines whether a company complies with its
own quality system.

Overall, ISO 9000 registration covers less than 10 percent of the Baldrige Award criteria. 




Is the Baldrige Award a U.S. version of Japan's Deming award?

The basic purposes of both awards are the same: to promote recognition of quality achievements
and to raise awareness of the importance and techniques of quality improvement. However, the
Baldrige Award:

focuses more on results and service,
relies upon the involvement of many different professional and trade groups,
provides special credits for innovative approaches to quality,
includes a strong customer and human resource focus, and 
stresses the importance of sharing information. 

An award that resembles the Baldrige Award has been established in Japan.

Why was NIST selected by Congress to manage the award and what is the role of ASQC?

NIST is a non-regulatory agency of the Commerce Department's Technology Administration. Its
mission is to promote U.S. economic growth by working with industry to develop and apply
technology, measurements, and standards. NIST was selected by Congress to design and manage
the award program because of its role in helping U.S. companies compete, its world-renowned
expertise in quality control and assurance, and its reputation as an impartial third party. 

ASQC assists NIST with the application review process, preparation of award documents,
publicity, and information transfer. ASQC is a professional, non-profit association serving more
than 80,000 individual and 700 corporate members in the United States and 62 other nations.

For further information, reporters should contact Jan Kosko, NIST Public and Business Affairs,
(301) 975-2767, e-mail at janice.kosko@nist.gov. Others should write or call the Malcolm
Baldrige National Quality Award Office, A537 Administration Building, NIST, Gaithersburg,
Md. 20899-0001, phone: (301) 975-2036, fax: (301) 948-3716, or check the World Wide Web
site at http://www.quality.nist.gov.