How Quality Plays on Wall Street

Quality Pays

We were in a recession; we weren't in a recession. Economic recovery is slow; the recovery is full steam ahead.

The current state of the economy seems to depend on which day's reports you choose to follow. Regardless, it's no secret the combined effects of the downturn and Sept. 11 have had a profound impact on the careers and lives of many ASQ members and quality professionals in general. But how have "quality companies" fared?

Quality companies are those organizations known--through reputation, satisfaction surveys or media buzz--for their quality programs and how those programs manifest in products and services. According to Steve George, author, consultant and Malcolm Baldrige National Quality Award examiner trainer, such companies have done well--or usually better than the rest of the stock market, at least.

In "Bull or Bear?" (p. 32) George discusses the Q-100, a fictitious stock index composed of S&P 500 companies. Q-100 organizations are chosen on evidence of quality improvement in areas aligning with the first six categories of the Baldrige criteria. Then, like the Baldrige, the Q-100 blends that evidence with proof of strong financial performance (category seven of the criteria).

Quality Progress gives a quarterly update of the index's performance. The most recent one in the March issue (p. 18) showed, as does George's article, that since the Q-100's creation in 1998 by Robinson Capital Management, the index has returned 26.97%, compared with the S&P 500's 17.59%. Of the 13 quarters since the Q-100's inception, it has outperformed the S&P 500 in nine. During 2001, while the S&P 500 registered an overall decline of 0.89%, the Q-100 experienced a decline of only 0.63%.

You may want to check out the latest list of companies comprising the Q-100 (see the table on p. 34). While you might expect to see some listed--General Electric, Honeywell, Wal-Mart, to name a few--others may be a surprise because of recent quality questions (for example, Ford) or serious concerns about financial health (Motorola, Nordstrom, Rockwell). No matter what you might think of the organizations chosen--and indeed, you may even work for one--they're worth tracking for both their quality and financial records.

Tell us if you'd like more information on the financial performance of organizations known for their quality by going to p. 97.

Debbie Phillips-Donaldson

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