Economic Evaluation of the Baldrige Performance Excellence Program
"The benefit-to-cost ratio of 820 to 1 . . . certainly supports the belief that the Baldrige Program creates great value for the U.S. economy."
In this study, Albert N. Link and John T. Scott report that the Baldrige Program's benefit-to-cost ratio is 820 to 1. To arrive at this ratio, they compared the benefits received by the 273 Malcolm Baldrige National Quality Award applicants from 2007 to 2010 with the cost of operating the Baldrige Program.
The 820-to-1 ratio represents only the benefits for the surveyed applicants, but it represents all of the Baldrige Program's social costs. Link and Scott note that the benefit-to-cost ratio would be much higher if program costs were compared with the benefits for the entire U.S. economy.
The conclusion: the Baldrige Program, with the imprimatur of national leadership and a prominent national award presented by the President, creates great value that private sector actions alone could not replicate.
Three types of social benefit were measured:
- the applicants’ cost savings from using the freely available Baldrige Criteria instead of a higher-priced alternative
- gains to U.S. consumers, who had greater satisfaction with higher-quality products
- gains to the U.S. economy from saving scarce resources, since the Baldrige Criteria were used instead of a higher-cost alternative
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