Posted by Dawn Marie Bailey
The Recession and U.S. Manufacturing
When the recession hit in the early 2000s, Michael Garvey left his fast-paced life trading equities on the floor of the New York Stock Exchange to help save the “family farm,” a bronze foundry in Youngstown, Ohio.
Garvey said his parents and many other manufacturers got caught in the “the perfect storm” that led to the implosion of the former heavy industrial belt, or “rust belt,” in the Cleveland/Pittsburgh corridor. He worked hard to restore the manufacturing base that had been his family’s business for almost 100 years but never forgot the pressures that his dad had internalized as he struggled to save the business. “I committed to myself that I would never get myself into that situation,” he said.
Garvey spearheaded a 15-year “phoenix activity” to build a new manufacturing company, M-7 Technologies, an engineering, manufacturing, and research organization. “I wanted to make sure that I created as sustainable a business model as possible,” he said, reading more than 30 books and 100 articles in Harvard Business Review, Industry Week, and the Wall Street Journal, among other journals and industry research.
“All roads kept leading back to the Baldrige process,” Garvey said; “I wanted to learn the Baldrige Criteria from the inside out so that I could really begin to understand how to build performance excellence in a corporation, in a small business. . . . I became convinced that to create a sustainable business model, I had to aspire to performance excellence. That aspiration was realized through the learning process I went through on the Baldrige Criteria. I became so convinced that [Baldrige] was a very powerful program that . . . I signed up to become a [Baldrige] examiner.”
In Vadnais Heights, Minnesota, Robert Du Fresne had the Baldrige Criteria in mind when he started Du Fresne Manufacturing, a precision sheet metal fabricator, in 1991; however, in the early days of the business, the company was in survival mode, chasing opportunities to increase revenue and Du Fresne performing many company roles himself, from sales to human resources to manager on the shop floor.
“I didn’t know the real value of [the Criteria] until 2008–2011,” he said, when the recession hit. “We were looking for a cure to help sustain stronger financial security and job security . . . because of what happened to us in the recession. . . . [Leaders realized that the Baldrige Framework] has to be our cure to raise us to higher performance and make the competition irrelevant.”
How Manufacturers Use the Baldrige Criteria to Focus on the Future
For both Garvey and Du Fresne, the Baldrige Excellence Framework, which includes the Criteria for Performance Excellence, serves as a road map for performance excellence and a focus on the future.
“[The Baldrige Criteria] bring a sense of stability,” said Garvey. “They build a foundation that gives you a well-organized road map to performance excellence.”
Garvey said the “whole package” of the Criteria support his business, starting with the leadership category that helped him understand the roles and responsibilities of true, visionary leaders; the Criteria outline a leader’s responsibilities not only for the workforce but for customers, stakeholders, the supply chain, and shareholders. “How you create your working philosophy, how you fulfill your responsibilities to your community. Just everything [is outlined in the Criteria],” said Garvey.
Garvey said he learned a lot from the Baldrige Criteria; “As a result of that [learning], we are now one of the highest-performing small businesses in the state of Ohio, complete with having been recognized as the Ohio employer of the year in 2010, that goes back to the workforce component of the Criteria. We outperform our peer group, an average of 2:1 on all key metrics in small machine shops.” And those key metrics include revenue dollars per employee, net income before taxes, and customer complaints.
For Du Fresne Manufacturing, which recently received the Baldrige-based Performance Excellence Network (formerly the Minnesota Council for Quality) Award, the Baldrige Excellence framework has been a “cure for many business strategies and critical sustainability decisions.”
According to Kris Diemer, Du Fresne Manufacturing’s vice president of human development, “The Criteria have provided a structure for us. When a company is doing well, you concentrate on different things, but when you experienced a recession like many manufacturing companies have, you realize that there are things that need to be in place to assure the security of what we call our members as well as our company. And that experience . . . brought us to realize that the Baldrige Criteria are the cure for the stability of our organization.”
Part of that cure has been alignment, which is key to the systems perspective in the Criteria. For example, in 2007 alone, the 25-year old company received more than 16,000 ideas from employees on how to improve processes. “But what Baldrige gave us was the alignment that all of these ideas coming from the employees are now going to be linked to our balanced scorecard,” said Du Fresne. “That was a real advantage we had as an organization. . . . [The Baldrige framework also] helped us align our processes into four key systems. Some of the systems had been around for a while, but it’s the alignment that really woke us up. . . . We realized that they weren’t aligned; that they weren’t always matching up to the balanced scorecard. And they wouldn’t drive us to the human development that we needed. . . . The alignment we’ve got from the Criteria has had a real critical and positive effect on our organization.”
The Criteria helped reinforce the company’s workforce engagement, too, where 7 out of 10 employees were submitting ideas not just to make their jobs easier but to make it easier for the next person to do the job. “That type of engagement, once we get it aligned because of the Criteria, there was no stopping us at that point,” said Du Fresne, citing a company theme of employees’ mettle–facing demanding situations in spirited and resilient ways.
Du Fresne said Baldrige also inspired the moral and ethical responsibility of business owners and leadership teams. The manufacturer now considers human development one of its product offerings—”that’s the whole essence of developing meaningful work that leads to meaningful life,” he said; this focus on development has led to gains in marketshare, gains in the strength of the organization, more ideas submitted, and a very low turnover rate.
Du Fresne is particularly proud of the manufacturer’s business performance model, inspired by the Baldrige Criteria and lessons learned from the recession, that replaces performance reviews with reviews that look to the future. “It’s the first time each employee knows exactly what he/she has to do within the job to advance, get better, reach higher performance, and make more money,” said Du Fresne. To assist with this, the company has developed 900 knowledge, skills, and abilities (KSAs) outlines for each job, in addition to team targets aligned with the balanced scorecard, personal targets determined in collaboration with the manager and team member, and behavioral competencies most important to the culture.