Business Excellence: Quality Award Programs’ Analysis

Summary

Business excellence is dependent on the strategic application of quality management tools and criteria to the overall management of a business based on different aspects generally applicable in various countries individually and regionally. Quality management is a vital aspect in the management of businesses as it ensures competitiveness in business without compromising on consumer satisfaction and the production of quality goods and services. Consumer expectations have led to the evolution of quality management and performance improvement initiatives, thus compelling some countries to create award programs that recognize the inventiveness and effectiveness of these initiatives.

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This paper takes an analytical look at the programs with a comparison of five different programs from five countries that greatly influence the world’s gross national product. These awards include the Malcolm Baldrige National Quality award in the United States, Deming Price in Japan, European Quality ward in Europe, Canadian Quality Award in Canada, and Australian Quality Award in Australia. The main text for this paper is the article A Comparative Analysis of National and Regional Quality Award, by Robert K. Vokurka, Gary L. Stading, and Jason Brazeal. The paper provides support for the award program initiatives as well as stating perceivable shortfalls and possible solutions.

Key learning points

  1. The award program system started in Japan in 1951, and other countries implemented it after evaluating its benefits to businesses.
  2. The main aim of the award programs is to encourage quality improvement.
  3. There are similarities and differences in the award programs’ criteria based on the issues that countries give preference.
  4. An analysis of the programs reveals general shortcomings in the awards.
  5. Examples of different award programs can be used to improve the award system in the United Arab Emirates.
  6. Institutions responsible for the programs should implement oversight measures to avoid market manipulation and corruption.

Relevant to session

Although quality management awards vary in principle from one country or region to another, various aspects are common in most of them. For instance, it is a generally accepted principle that the criteria the programs use in selection need periodical updating and improvement. The principles that most of the programs use also bear similarities. For instance, the awards featured in this paper have several objectives in common. One such objective is the continuous improvement and analysis of the programs.

The justification for this aspect is to ensure that the programs incorporate changes in the evolving consumer demands as time passes, which also ensures the continuous innovation of ideas that result from competition. Another principle that these programs have in common is the insistence of organizational quality and management. This aspect incorporates the processes used in the creation of quality management strategies and the implementation of the strategies. For instance, the Australian Quality Award (AQA) uses measures quality performance based on aspects such as strategy, planning, information, and analysis.

The Malcolm Baldrige National Quality Award (MBNQA) has design quality, company responsibility and citizenship, and responsibility and continuous improvement and learning as some of its core principles. The European Quality Award (EQA) insists on policy and strategy and people management as some of the quality improvement enablers that it looks at in its operations. However, the Deming Price from Japan is mainly concerned with the companies’ quality control for product manufacturers. It looks at the policies, organization, standardization, maintenance, and plans in its criteria to determine the organizations that deserve the award and subsequent recognition for excellence (Vokurka, Stading & Brazeal, 2000).

Another notable similarity in the five awards is the focus on customer-driven quality, which is an important aspect as it prevents the production of goods and services of low standards at competitive prices, at the detriment of the consumer. Although Milton Friedman’s ideology states that the social responsibility of a business to increase profits, businesses also have a moral responsibility towards consumers and the community, an aspect that these awards enforce (Friedman, 1970).

The EQA places particular emphasis on this concept by using an impact on society as one of its criteria. The MBNQA also states consumer and market focus as one of the criteria it uses as a guide in the assessment of the performance of applicants. This element encourages organizations to produce quality goods as well as develop strategic ideas that benefit both the company and the consumer. The awards also focus on the measures put in place by companies to cater to human resource management, product design, and leadership.

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Critical analysis

There exist some significant differences in the award programs, depending on the country or region. For instance, the EQA is a regional institution, governing sixteen different countries in the European region. In contrast, the MBNQA, the CQA, and the Deming price are national institutions, thus having jurisdiction only in the various countries in which they are established. Other than territorial differences, there exist differences in the criteria and principles that the award programs give preference. There are also significant differences in the models of a selection of principles used. For instance, the Deming award places equal significance to all its principles, and it lacks a specific model dictating the criteria applicable. In contrast, the MBNQA possesses seven core principles set out in a model with two triads focusing on the interconnection of principles. The EQA uses a criterion that comprises enablers and results (Vokurka, Stading & Brazeal, 2000).

Most countries use institutions that oversee the training and selection of experts as well as the overall process. The National Institute of Standards and Technology (NIST) is the institution that administers the MBNQA in the US, with the aim of promoting awareness, identifying requirements for quality awareness, and sharing information about the successful quality and strategy benefits. The Japanese equivalent for the NIST is the Union of Japanese Scientists and Engineers. The establishment of such institutions is important as they provide transparency, accountability, and contribute to the credibility of the entire process subsequent outcome.

However, although it is important to use experts in the process, I disagree with the procedure of using the same experts every time for the use of these experts to present a loophole. Usually, the participant businesses send their participants to a panel of individual assessors who evaluate the submissions and organize for site visits to the highest-scoring participants. The scores from the visits and the initial assessments are examined by a separate group of examiners in a process that results in the awarding of the best-performing companies (Evans & Lindsay, 2004).

The loophole in the process is that examiners in the first and second phases remain constant, thus providing an opportunity for corruption. Although the criteria for examination changes periodically, it is my opinion that the use of the same outfits for examination provides room for corruption. In addition, the use of these award programs may not always be objective. The dynamics of these systems create the opportunity for administrators of the programs to manipulate the market forces of demand and supply. Another issue of concern is that there is a possibility for program administrators to sway the direction in which businesses strategize and make policies. This aspect, in turn, causes businesses to strategize in favor of the intended evaluation results.

The exposure of the best-performing companies to the public also affects the way the market reacts in terms of demand. There is usually a higher demand for products and services that are produced and offered by companies certified as the best in quality performance. For instance, in a bid to make the public focus more on banking services, the programs would award more businesses in the banking sector than in the hotel industry, thus shifting the market’s focus and subsequently affecting demand and, in turn, supply and demand.

One of the main advantages that these programs provide for the applicant organizations is that they provide an avenue for self-evaluation, whereby the organizations can continuously gauge their competition as well as work on the improvement of their policies and strategies (Vokurka, Stading & Brazeal, 2000). However, I would disagree with this criterion, as it is my opinion is that the provision of standard criteria for the selection of businesses exuding quality performance makes it possible for participant businesses to fake their performances.

Ideally, the results of the evaluations are supposed to indicate the true nature of the businesses as opposed to acts put up by the participant companies to facilitate favorable results. Although the criteria that the programs use vary, the selected criterion plays a big role in the facilitation of companies to strategize in a bid to get favorable results. Consequently, the outcome of such evaluation processes can sometimes give the public a false perception of a company’s stability and profitability. The second advantage is that the award programs also provide public exposure to the best performing businesses (Porter & Tanner, 2011).

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The exposure has the effect of marketing these businesses based on their merits as well as providing the public with information on organizations that are most reliable, especially for investment purposes. This strategy makes it easier for well-performing businesses to obtain capital through the sale of shares due to public confidence (Evans & Lindsay, 2004). The demand for products and services from such companies also have the tendency of rising, increasing profitability. The combination of these factors acts as incentives for similar companies to apply in their operations in the quest to improve their performance. In my opinion, the institutions concerned with the exposure of this information to the public should also exercise control on its distribution and ensure its validity because of the possible effect a false image of a company may have. A company that turns out to use a false image of itself in the process is likely to ruin the credibility of the award program, leading to a lack of confidence from the public and subsequent extermination of the programme.

As a possible solution to the problem of corruption, the institutions involved in evaluations in the process of establishing quality performance should work in random rotation, and thus eliminate the possibility of predictability and corruption. Alternatively, public surveys are applicable as the evaluation mode of choice, especially for programs like the EQA, which places significant focus on consumer satisfaction. In remedying the possibility of fake presentations, the use of discretion on the usable criteria may be helpful. In addition, subsequent follow-ups on the awarded companies may go a long way in ensuring that the programs remain credible and that the companies provide genuine information, for the safety of public investments. Although the programs’ management may not be the proper authority to deal with such matters, I think it is a possibility to have the management work with audit firms and other relevant authorities.

Practical implications

The similarities and differences of the award programs in this article provide a roadmap for the formulation and implementation of award programs in other countries, as well as the improvement of award programs that already exist. For instance, the United Arab Emirates, which is a confederation of cities under different sheikhs, applies the Dubai Quality Award, formulated in Dubai, the business centre for the entire region (Stapenhurst, 2009). The department of economic development in Dubai introduced the Dubai Quality Award in 1994, with the aim of improving the standards of business and boosting local and international trade.

The Dubai quality Award Model emphasises on results, which is a similarity shared with the European Quality Award. It also possesses a similarity to the Deming Price in Japan, with its characteristic of awarding the best practices in different fields (Aguayo, 1991). This criterion ensures that the aspects set out as guidelines for evaluation are flexible and can therefore evolve with time, as and when necessary. A notable difference in this model in comparison with the other models is that it places the same amount of concentration on enabler as it does on results. Enablers, in this case, are actions and policies that the businesses apply, while results are the outcomes of these actions.

The model takes a non-prescriptive approach, enabling it to maintain objectivity on evaluation as well as provide a true picture of the company to the public. One prominent aspect in the model is that it seems to focus more on the business than it does on the consumer (Aguayo, 1991). The danger in this aspect is that the companies may portray reluctance on matters relating to consumer demand on quality of products and service delivery in order to concentrate on the profit margin and management policies. The model would therefore benefit from principles in the different models mentioned in the article.

The EQA model is best applicable to fields that emphasize on results such as the manufacturing industry (Vokurka, Stading & Brazeal, 2000). Consumers judge products such as vehicles using the resultant quality and sophistication. This would therefore work well in Dubai, where the products that are mostly in demand are high quality luxury products. The banking sector is also result-based as people judge the performance of banking institutions more based on resultant financial gain than financial policy management. However, a criterion that includes public relations would also provide a better picture in terms of how the institutions treat their clients and employees.

Dubai’s award program would also benefit from the application of people-based criteria, as is the case with the MBNQA and the AQA in evaluating businesses in the hospitality industry such as hotels and airlines. The reason for this assertion is that unlike the manufacturing industry, the sale product in this industry is quality service, which mainly involves interaction with people (Stapenhurst, 2009). It would therefore not be appropriate to judge companies from the two different fields using the same criteria. Although the DQA is non-prescriptive in its criteria analysis, it would be more convenient either to eliminate the standard model criteria and apply the Deming Price formula, or provide different models for different fields of the economy.

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It is also worth noting that the United Arab Emirates, as earlier mentioned, consists of different cities with different economies and thus selection and application of different criteria to suit the entire region is likely to prove problematic. The MBQNA is however helpful in determining what is essential in the evaluation, as the program applies equally to different states that form the United States of America. The Dubai Quality award program would benefit immensely from borrowing ideas presented in the article, picking criteria that best represent the entire region from the different programs and replacing those that do not function as adequately as expected.

Learning reflections

Award systems are important in the establishment of standards of quality in a country and various sectors of the economy as they encourage the innovation and improvement of policies that result in consumer satisfaction and company responsibility (Porter & Tanner, 2011). The benefits that these initiatives present to businesses ensure that the businesses do their best to ensure consumer satisfaction as well as improvement of company policies and subsequent returns. These incentives include ratings that provide the companies with a picture of what their competition is like and what is they need in the creation of a competitive niche. Another major benefit that the programs provide to businesses is free reliable advertising as the programs expose the best performing companies to the public, attracting better sales and more investments that consequently result in an increase in capital.

The criteria the programs provide in the evaluation on the performance of participating businesses is also applicable as a guide to the improvement of policies and production, for companies that perform the best as well as those that do not make the cut (Evans & Lindsay, 2004). As an advantage to the consumer, the programs enable the public access information on the best companies to get involved with, providing the best value to a consumer’s money. The continuous review and improvement of the criteria used in the programs ensure that they remain relevant and flexible to accommodate changing trends.

However, various loopholes in the programs should be resolved in order to ensure that they maintain their efficiency and credibility. These include the limitation or total elimination of the model-based criteria, the constant and random rotation of evaluating institutions, the provision of follow-up consultations on the awarded businesses and the institution of firms that ensure the smooth management of the evaluating institutions, in order to avoid scenarios consisting abuse of power. It is also possible for countries to borrow and learn from other programs in other countries to provide for constant improvement and increase the possibility of having an efficient global system.

Reference List

Aguayo, R. (1991). Dr. Deming: The American who taught the Japanese about quality. New York, NY: Fireside.

Evans, J., & Lindsay, M. (2004). The Management and Control of Quality. Mason, OH: South-Western Cengage Learning.

Friedman, M. (1970). The social responsibility of business is to increase profits. The New York Times Magazine, p.24.

Porter, L., & Tanner, J. (2011). Assessing Business Excellence. London, UK: Taylor & Francis.

Stapenhurst, T. (2009). The Benchmarking Book: A How-to-Guide to Best Practice for Managers and practitioners. Oxford, UK: Butterworth-Heinemann.

Vokurka, R., Stading, G., & Brazeal, J. (2000). A Comparative Analysis of National and Regional Quality Award. Quality Progress, 33(8), 41-49.

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