Quality Fuels Results

In this, the strongest bull market ever and the longest peacetime expansion in history, many observers are wondering just what is driving this extraordinary economy of ours. There are some obvious answers, like low interest rates, but I would argue that there is another factor at work, what you might call the Q Factor--Q for quality.

The definition of quality in 1999 has grown to something much bigger than what it meant when I started in industry 30 years ago. Quality, for many, now means performance excellence and is based on a systems approach that encompasses leadership, strategic planning, customer and market focus, information and analysis, employee satisfaction, process management, and business results--elements that are the core of the Malcolm Baldrige National Quality Award.

What is the evidence that quality can translate into outstanding financial results? Take a look at page 45, where you'll see an article describing how Baldrige Award winners are outperforming the S&P 500 by a factor of three. Another endorsement of quality comes from Jack Welch, CEO of General Electric. In 1998 GE's operating income margins jumped to almost 17%, and Welch credits quality, in the form of the six sigma initiative, as the major reason for the gain.

More evidence of the value of quality programs comes from Fortune magazine, which puts together surveys of America's Most Admired Companies and of the 100 Best Companies to Work For. Firms that make such lists, including Dell Computer, Wal-Mart, and Southwest Airlines, are known for their focus on customer and employee satisfaction and business results.

This issue of Quality Progress will help you make the case for quality. Inside you'll find quantitative studies of the impact of quality plus tips from recent Baldrige winners about how to get top management to focus on quality. Undoubtedly the best salesperson for quality would be one of the CEOs at the companies listed above, where quality has already proven its worth. If you asked them what had made the greatest impact on their firm, I doubt they would cite cost cutting, mergers and acquisitions, or reengineering.

They know that quality--a systems approach to satisfying customers, employees, and shareholders--is what pays off. It is not a mistake that the first element in the Baldrige criteria for performance excellence is leader  ship, and just maybe it is more about the quality of management than the management of quality.

Ronald G. Kingen
ASQ President

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