Posted by Christine Schaefer
How is a company to decide whether to use the Baldrige Criteria for Performance Excellence, the International Organization for Standardization (ISO) 9001: 2008 Quality Management System (QMS), or both? To explore some key distinctions between the comprehensive business model provided by the Baldrige framework and the quality management system provided by ISO, I recently talked to someone who has used both in his work. He also has taught and presented on the value of each and the relationship between them.
Ron Schulingkamp, ScD, MQM, MBA, has taught business leaders and MBA students alike about the Baldrige Criteria. As the senior strategic consultant for DM Petroleum Operations Company for more than a decade, Schulingkamp helped senior leaders transform the company into a high-performing organization that earned the Baldrige Award in 2005. As a visiting assistant professor in the College of Business of Loyola University in New Orleans, Schulingkamp has taught graduate business students how to use the Baldrige Criteria—which he describes as a “holistic, systems-based, high-performance business model”—to assess the performance of organizations, including local government organizations and companies where his students are employed.
Schulingkamp also has conducted quality audits in the petro-chemical industry using ISO standards. He keeps abreast of revisions to both the Baldrige framework (updated every two years) and the ISO 9001: QMS standard (last issued in 2008, with a revision coming out in 2015).
The body of ISO 9000 standards includes ISO 9001: Quality Management System (QMS), which focuses on product and service quality for the customer. Schulingkamp noted recently that the ISO 9001: QMS is a systems approach based on systems thinking about management and that it encompasses all the processes and interconnections between the supplier and the customer. He also noted, however, that it doesn’t address the rest of the organization (e.g., health and safety, risk, financial, innovation, and environment—although there are separate ISO standards for those areas).
He said he often recommends organizations start with the ISO 9001: QMS because “if properly implemented, it will provide the CEO and senior leadership team with a mental model for management based on an organizational system, not a functional silo.” He added, “Often when senior leaders first read the [Baldrige Criteria], their response is, ‘Where does it tell me what to do?’ The concept of a nonprescriptive, interrelated, systems-based business model is contrary to teaching in most business schools.” Why so? Schulingkamp explained, “The typical professor in business school is an expert in a very specific field of study. Business leaders usually have studied with brilliant professors in accounting, economics, marketing, management, statistics, etc. But it is rare for a business professor to be an expert on the interrelationship, alignment, and integration of business systems. In fact, few business schools teach ‘quality management’ beyond the level of an overview course.”
To highlight differences between the Baldrige business model and the ISO 9001: QMS, Schulingkamp starts with a comparison of the Leadership category of the Baldrige Criteria and the Management Commitment clause of ISO:9001 QMS. He explained that senior leaders (in particular, the CEO), are responsible for developing management systems and creating value. “We know from ancient philosophers such as Aristotle to modern management gurus such as W. Edwards Deming—plus hundreds of contemporary practitioners, researchers, and authors—that leadership is the key to improving organizational performance,” said Schulingkamp. “Deming wrote and often spoke about the role of senior leadership and the importance of leaders’ understanding of systems thinking. For example, in his 1993 book The New Economics for Industry, Government, and Education, he described his “System of Profound Knowledge,” a powerful construct that consists of four important concepts: (1) an appreciation of a system, (2) understanding of variation, (3) psychology and (4) epistemology, or a theory of knowledge.”
As Schulingkamp sees it, the ISO 9001: QMS “provides the structure and prescription for senior leaders to begin the process of understanding the organization as it relates to the customer.” Schulingkamp pointed out that, in comparison to the Baldrige framework, the more prescriptive nature of the ISO 9001: QMS is demonstrated in the “shall” statements of its requirements. “The Baldrige framework provides a holistic, systems-based business model that builds alignment across the organization by making connections between and reinforcing organizational systems, processes, strategy, and results,” he noted.
To underline one difference, Schulingkamp raised the question, “How does ISO help you with strategic planning?” He pointed out that the ISO QMS standard asks about quality plans, but not strategic plans. In contrast, the Baldrige Criteria ask about strategy development and strategy implementation, which encompass systematic approaches for developing strategic objectives and action plans, implementing them, changing them as needed, and measuring progress. ISO also doesn’t ask about development of your workforce or leaders, Schulingkamp added.
“If you fully implement the ISO 9001 QMS, you may be getting at less than half of what Baldrige asks about,” he said. Illustrating the point, he described his experience in conducting ISO audits for petro-chemical companies; in particular, when he asked about customer complaints, businesses asked him what that has to do with ISO. “Although ISO requires the measurement of the quality management system processes and analyzes conformity to customer requirements and customer satisfaction, it is not unusual for an organization to focus on the customer requirements and miss the opportunity to manage the customer relationship,” he said. In contrast, the Baldrige Criteria in effect ask for the organization to have a holistic approach to building long-term customer relationships, which is part of a customer relationship management system. Specifically, the Baldrige Criteria ask “how your organization engages its customers for long-term marketplace success, including how your organization listens to the voice of the customer, builds customer relationships, and uses customer information to improve and to identify opportunities for innovation.”
Another difference from the Baldrige framework, according to Schulingkamp, is that ISO does not specifically address learning or integration. “ISO addresses continual improvement as it relates to the QMS, which may infer learning, but is not really learning,” he said. In contrast, he pointed out that the Baldrige Criteria address learning by asking about new knowledge or skills acquired through evaluation, study, experience, and innovation. The Baldrige Criteria also refer to two distinct kinds of learning: organizational and personal, he added. “The Criteria refer to organizational learning as learning achieved through research and development, evaluation and improvement cycles, ideas and input from the workforce and stakeholders, the sharing of best practices, and benchmarking; the Criteria refer to personal learning as learning achieved through education, training, and developmental opportunities that further individual growth.”
Based on such differences, Schulingkamp values ISO as a “first step” toward a systems perspective and toward stimulating systems thinking by a senior leadership team. He sees in the tiered bands of the Baldrige scoring system a way to view the relationship between ISO 9001: QMS and the Baldrige Criteria; in this context, Schulingkamp sees use of QMS as a beginning approach in the lower bands. “The value of ISO [QMS] is that it teaches you about organizational systems, which is helpful to understanding Baldrige,” he said.
To depict the complementary way a business can use both the Baldrige Criteria and ISO standards to ensure product quality and overall performance excellence, Schulingkamp suggested this analogy: “the Baldrige framework is like the blueprint of a building, with ISO used for specific systems within the building such as electrical and air conditioning systems.”