Ten Reasons Small Businesses Benefit from the Baldrige Criteria, Part II

Note: As the second in a three-part series, this blog continues the examples of how small businesses are benefiting from using the Baldrige Criteria. See part I.

Alignment using a Systems Approach

The Criteria provide a systems perspective, meaning they look at alignment and integration across an organization.

Don Chalmers uses the Baldrige Criteria to align all of its critical elements, creating what it calls its Organizational Excellence System (OES), said Butler. Aligned with the Criteria categories, the OES encompasses work systems that guide every workforce interaction. The OES also includes a systematic flow of input from stakeholders into Don Chalmers sales and repairs departments, and this input is segmented and analyzed to become part of key work processes.

The Criteria have also led the small business to identify its eight key success drivers that are aligned with action plans and reviewed monthly with senior leaders and teams, with feedback for improvement flowing back to the key systems and processes. Such alignment of its operations using the Criteria has led the small business—a 12-time winner of Ford’s President’s award—to increase its sales customer satisfaction by 42% (vs. 23% benchmark); increase its service customer satisfaction by 84% (vs. 69% benchmark); increase its market share by 40% in used vehicle sales; demonstrate shareholder return on investment 58% higher than the benchmark for Ford dealers; and demonstrate employee retention of 86% (vs. the 50% automotive dealer average).

According to Milrany, Freese and Nichols also manages its business using the Criteria. A staff member takes the lead for each category of the Criteria that corresponds with his/her area of responsibility; for example, the CEO takes the lead for Criteria category 1, the human resource manager for category 5, and the chief financial officer for category 2. Their assignments are to understand their respective Criteria categories and look for operational gaps—the things that the small business needs to be working on.

“The beauty of the Baldrige Criteria . . . [is to] get people to start thinking about the interrelationships between each component [of their operations], starting with leadership and looking from the leader perspective to results and then the processes in between,” said Douglas. “Once you start looking at the Criteria . . . , you understand that embracing the Criteria allows you [flexibility] because you are monitoring your progress as you go along.”

Dr. Rona Shapiro, a veterinarian and small business owner, realized the power of an aligned workforce after writing her first Baldrige Organizational Profile, the preface of the Baldrige Criteria, and ensuring that the entire workforce was in agreement with the mission, vision, and values.

“Now that we have alignment in the workforce, it makes it really easy to use our mission, vision, and values in everything we do. Identifying how they relate to every aspect of our work, how we interact with each other, how we care for each other, even when we are doing evaluations, every statement ties back to our mission, vision, and values.”

Using Criteria principles to build alignment and consistency in the small business has also led to clarity for Shapiro as a leader. Because every decision is aligned with the organization’s mission, vision, and values, she said she finds it easier to manage the workforce. “Every decision I make, I go back to the Organizational Profile,” said Shapiro. “It gives me clarity. . . . It helps me identify how we can become excellent, what are our stumbling blocks to that.”

Growth and Job Creation

In 1986, Freese and Nichols was a $20 million company, with “good clients and happy employees”—but Milrany said the small business stayed a $20 million, good company until 1996 when it started using the Baldrige Criteria. The small business ended 2013 as a $125 million company.

“The Baldrige Criteria questions . . . make you realize that if you’re not growing, you’re not providing opportunities for your employees . . . and [adapting to] things that your clients want you to do,” Milrany said.

The small business now keeps a timeline for sales, profitability, and employee satisfaction and uses that timeline of improvements to talk to employees and show them what the Baldrige journey has meant to the business.

Since 2011, the Puerto Rico Small Business and Technology Development Center (PR-SBTDC) has been teaching the Criteria to small businesses on the island, with the intention to increase their competitiveness and help them succeed in a global marketplace. According to PR-SBTDC Director Carmen Martí, participants who have implemented the Baldrige Criteria report “high-impact results,” especially in the areas of leadership, sales, metrics, operations, human resources, workplace environment, financial results, and client satisfaction.

“[Learning the Criteria] has been an extraordinary experience to identify areas of opportunities for improvements in their own business models . . . ‘put the house in order prior to growing and exporting your business,'” she said.

Maximo Torres, president of Maximo Solar Industries, said that his biggest learning from the Criteria has been how to restructure his company for growth. He said his small business is rebranding itself and using the management framework of the Criteria as a guide, resulting in a new focus on customer relationship management, knowledge management, training, and process efficiency.

“In all areas of the business, we’ve seen areas of improvement and will continue to do so,” said Torres. “Business growth is double to what we have had last year. . . . Growth can be a pain, a dangerous path. Having that knowledge from Baldrige and getting everyone in the company on the same page have helped us to be more focused on what we need to do. . . . We are familiar with ISO, Lean, but there has to be something more specific to manage the business and that’s Baldrige. It connects all of the parts of the business to quality. . . . We don’t want to be good; we want to be great, excellent. . . . Truly Baldrige is a key aspect to our success.”

See part III of this series.