When the concept of performance excellence was first introduced, it was widely perceived as prescriptive by the American Contractors Insurance Group (ACIG), a group-captive insurance company that is owned by the policyholders it insures. "The executive team at ACIG were skeptical that performance excellence—and the Baldrige Criteria for Performance Excellence in which it was defined—could be meaningfully translated into construction-industry terminology," said Larry Owen, Quality Division manager at ACIG.
Then, a small group of employees began breaking down concepts from the Baldrige Criteria and turning them into questions related to construction, and a new, beneficial understanding emerged.
“Once we established the [Baldrige Criteria’s] applicability to our industry, the benefits became apparent,” said Owen. “We began to see buy-in on the concepts of business improvement, sustainability, and succession planning of current and future leaders.”
Owen said that because ACIG’s mission includes reducing the overall cost of risk for its Members, the company created a Quality Management Department focusing on the narrow discipline of quality in construction. Now, however, those quality-specific initiatives sit within the overall context of performance excellence. According to Owen, the refreshed focus of the Quality Department includes each aspect of the performance excellence business model while continuing to provide management guidance on basic quality controls, quality assurance, quality risk management, and proactive construction-defect mitigation. This strategy more clearly aligns the business results of ACIG and its Members, said Owen.
“The more our Members improve their risk mitigation/prevention, the better our underwriting results,” said Owen. “Members have an incentive to continuously improve as it relates to risk reduction.” He added that ACIG individually supports each Member in its performance excellence journey.
Owen said that some Members had initial challenges with their performance excellence strategies due to the lack of dedicated internal resources to capture best practices. In response to this challenge, ACIG established the Performance Excellence Peer Group (PEPG).
“Initially, we convinced a few Members to take the [Baldrige Criteria] self-assessment written by Ph.D. Denis Leonard, which helped as a catalyst,” said Owen.
The PEPG shares specific best-in-class practices guided by the Baldrige Criteria for Performance Excellence categories: 1. Leadership; 2. Strategic Planning; 3. Customers; 4. Measurement, Analysis, and Knowledge Management; 5. Workforce; 6. Operations; and 7. Results. ACIG Members also discuss best practices related to change-culture management and exchange ideas on how to manage continuous improvement initiatives.
“We believe that our Members who continuously improve in these principles will improve the value to their customers and ultimately reduce the overall cost of risk with their operations,” Owen said.
Currently, ACIG conducts a half-day, semi-annual PEPG meeting in conjunction with its semi-annual shareholders’ meeting. PEPG, which started in 2017 with the involvement of two company presidents, now has achieved a 73% participation rate among its Members. Typical attendees include principals, chief executive officers, chief operation officers, chief financial officers, executive vice presidents, senior vice presidents, and vice presidents of construction companies.
Prior to each meeting, the 54 participating executives answer 15–20 adapted, Criteria questions developed by the ACIG staff. Each participant is required to complete the assignment before the meeting. The ACIG staff, which consists of one national Baldrige examiner and two state examiners, analyzes the responses and identifies gaps. New questions are then generated and discussed during break-out sessions and report-outs during the half-day meeting.
“The ensuing discussions, interactions, and exchange of ideas are energizing, and everyone leaves with a sense of accomplishment and yearning to do more,” said Owen. “Our ultimate goal is to promote business improvement, continuity, sustainability, and a robust self-sustaining culture of continued learning and improvement. Achieving these goals helps to reduce the overall cost of risk for each Member. As they become more aware of the advantages, members may also consider engaging their state Alliance for Performance Excellence program.”
To date, five companies (including ACIG) have begun Baldrige Criteria performance excellence assessments by writing Organizational Profiles, and the company encourages all group Members to write profiles within the first year of joining the peer group. Four companies have sent employees to Baldrige-based training at an Alliance state program.
“I think any industry would find value in the Baldrige Criteria for Performance Excellence,” said Owen. “If you lead with industry-specific knowledge, you are able to develop your own vocabulary.”
He added that the Criteria can help industries and organizations focus on four things:
ACIG provides insurance and related services to Members of the construction industry. Its major insurance offerings include workers’ compensation, general liability, automobile liability, subcontractor default insurance, and contractor-controlled insurance programs. Its services include underwriting, claims management, policy issuance and compliance, safety, quality assurance and quality control, performance excellence, and risk management services. The company is charged with providing a long-term stable insurance market to its Members who desire very broad coverage and specialized services for the construction industry.
The Baldrige Excellence Framework has empowered organizations to accomplish their missions, improve results, and become more competitive. It includes the Criteria for Performance Excellence, core values and concepts, and guidelines for evaluating your processes and results.
You may want to link them up with Freese & Nichols, the former recipient. As a full-service innovative consulting firm offering engineering, architecture, environmental science, construction, and planning services, I'll bet F&N worked through many of the same issues related to risk and insurance planning in the construction industry and are certainly most likely the knowledgeable company in the world about how to apply Baldrige to construction projects.
Thanks for the suggestion, Barry. Take care.