How to get $820 for each $1 spent using a Business Excellence Programme

February 8, 2012 by admin
One of the repeated questions in quality management is, what is the cost of quality? is quality free?
Well, my personal opinion is, it is and it is not. According to quality guru Philip Crosby “Quality is free. But it is not a gift”

In other words, the organisation needs to “pay” for establishing a quality system in order to get the rewards, it’s like paying for someone to fix the leaks in a system.

Therefore, with any  improvement initiative there will be some cost associated with the programme but at the end the organisation should gain much more than what they have paid.

In Dec 2011, the National Institute of Standards and Technology (NIST) published the results of a research study aimed to evaluate the net social benefits of the Baldrige Performance Excellence Programme.

The researchers compared the benefits received by the 273 Malcolm Baldrige National Quality Award applicants from 2007 to 2010 with the cost of operating the Baldrige Program.

According to the research, the benefit-to-cost ratio of Malcolm Baldrige National Quality Award is 820-to-1, which means for every $1 spent to implement the programme the economy will get $820 in form of social value, which is categorized into 3 categories:

  • The applicants’ cost savings from using the freely available Baldrige Criteria instead of a higher-priced alternative
  • Gains to U.S. consumers, who had greater satisfaction with higher-quality products
  • Gains to U.S. economy resources saved by using the Baldrige Criteria
The researchers noted  that the benefit-to-cost ratio would be much higher  for the US economy but the research only focussed on the benefits stemming from the award applicants (in respect to the social costs of running the whole Baldrige programme). In reality, 1000’s more organisations will have benefited from the programme.

You can read the full research from here.

Ahmed
BPIR.com

 

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