What is organizational excellence? | ASQ

What Is Organizational Excellence?

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Organizational excellence refers to ongoing efforts to establish an internal framework of standards and processes intended to engage and motivate employees to deliver products and services that fulfill customer requirements within business expectations.

Component definitions

An organization is a group aggregated and combined under specific leadership to function as a single entity for a particular purpose.

Excellence is a measure of consistently superior performance that surpasses requirements and expectations without demonstrating significant flaws or waste.

Organizational excellence continues the progress established by a foundation such as total quality management, in which all levels of the organization participate in continual improvement. 

Well-known approaches to organizational excellence

One program highlighting the traits and attributes of organizational excellence is the Malcolm Baldrige  National Quality Award. In the Baldrige Excellence Framework, the attributes of organizational excellence include:

  1. Leadership
  2. Strategic planning
  3. Customer and market focus
  4. Information and analysis
  5. Human resources focus
  6. Process management
  7. Business results

A similar protocol, the European Foundation for Quality Management (EFQM) Excellence Model, includes the following items:

  • Leadership
  • People
  • Strategy
  • Partnerships and resources
  • Processes, products, and services
  • People results
  • Customer results
  • Society results
  • Business results

The Union of Japanese Scientists and Engineers (JUSE) created the Deming Prize, with specific awards for individuals and for organizations and operating divisions. From a definition of “company-wide quality control” (CWQC), the Deming Prize identified multiple levels and categories of organizational excellence that include organization and its management, education, quality information, planning, analysis, standardization, control, quality assurance, and results.

These different perspectives suggest that the common traits of organizational excellence are consistent across different cultures and nations.

Managing for organizational excellence

Another perspective is to view organizational excellence as the successful integration of technology, infrastructure, and personnel.

Organizational excellence is often the result of transitional and transformational activities. Successful organizational outcomes require deliberate management and improvement in six key areas:

  1. Information: Metrics, measures, and decision support
  2. Structure: Roles, responsibilities, and accountabilities of each functional area
  3. People: Total human capital within the organization
  4. Rewards: Compensation and incentives
  5. Learning systems: Knowledge and training
  6. Work processes: Interaction and linkage of workflows

Organizational excellence is dependent upon gaining sufficient commitment to embrace and apply positive changes in the above areas. Organizational change management is necessary to effectively communicate the changes to those affected, in order to minimize uncertainty and obstructions.  Collaboration is critical, and the evidence of organizational excellence can be demonstrated across the organization with a balanced scorecard that covers the following perspectives:

  • Financial
  • Customer
  • Internal business processes
  • Learning and growth

Organizational excellence is not absolute, but incremental. Different tiers or “maturity levels” should be identified as interim targets for each of the organizational excellence characteristics. By focusing on the performance expectations of an accessible maturity level, instead of an unreachable ideal, employees and stakeholders will be more inclined to make the necessary modifications within their control and capabilities. As maturity levels are reached, participants within the organization should be recognized for their constructive success.

Benefits of pursuing organizational excellence

The pursuit of organizational excellence can strengthen the overall appeal and prestige of an organization both internally and externally. Any additional costs to infrastructure and overhead have the potential to be repaid with greater returns resulting from engaged employees, satisfied customers, and efficient operations. This was demonstrated by tracking organizations profiled in the bestselling book In Search Of Excellence, by Thomas J. Peters and Robert H. Waterman. Over a twenty-year period, companies that applied the practices of organizational excellence outperformed the Dow Jones Industrial Average and the S&P 500.

Additionally, as detailed in The Impact of Baldrige on Organizational Performance, a survey of 273 Baldrige Performance Excellence program applicants showed a benefit-to-cost ratio of 3.0 to 1 associated with using the Baldrige Excellence Framework, a 107 to 1 benefit-to-cost ratio when considering financial gains associated with increased customer satisfaction, and a ratio of 820 to 1 when also considering financial gains associated with increased value of sales in excess of resource costs.

See a list of case studies detailing more results organizations have achieved with their approaches to organizational excellence.

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Organization-Wide Approaches