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‘Baldrige Index’ Outperforms S&P 500 for Fifth Year

The "Baldrige Index" once again has outperformed the Standard & Poor’s 500 by more than 200 percent, according to the Commerce Department’s National Institute of Standards and Technology.

The "Baldrige Index," a fictitious stock fund, is made up of publicly traded U.S. companies that have received the Malcolm Baldrige National Quality Award during the years 1988 to 1997. NIST "invested" a hypothetical $1,000 in each of the six whole company winners—ADAC Laboratories, Eastman Chemical Co., Federal Express Corp., Motorola Inc., and Solectron Corp. (a winner in 1991 and 1997). The investments were tracked from the first business day of the month following the announcement of award recipients through Dec. 1, 1998. Adjustments were made for stock splits. Another $1,000 was hypothetically invested in the S&P 500 for the same time period.

NIST found that the group of six whole company winners outperformed the S&P 500 by 2.6 to 1, achieving a 460 percent return on investment compared to a 175 percent return for the S&P 500.

NIST also tracked a similar hypothetical investment in a group made up of the six whole company winners and the parent companies of 17 subsidiary winners. The group of 23 outperformed the S&P 500 by about 2.5 to 1, achieving a 426 percent return on investment compared to a 173 percent return for the S&P 500.

The Baldrige award is presented to U.S. organizations in recognition of their achievements in quality and business performance. The Baldrige Index study is just one measure of the success of companies that receive the Baldrige Award. While receiving a Baldrige award or any other quality award is not a guarantee of success, typically, Baldrige award winners show improvements in all aspects of their business, including customer satisfaction and retention, financial and marketplace performance, productivity, product and service quality, and human resource performance and development.

Other studies also are finding that organizations receiving quality awards show long-lasting improvements in their bottom-line results. For example, Professors Vinod Singhal of the Georgia Institute of Technology and Kevin Hendricks of the College of William and Mary studied 600 publicly traded firms that have won quality awards including the Baldrige, state and private awards, as well as those given out by major corporations to suppliers. The five-year study showed that, as a whole, these companies had significant improvements in the value of their stock, operating income, sales, return on sales, employment and asset growth.

While only several hundred companies have applied for the Baldrige award, thousands of U.S. organizations use the Award’s performance excellence criteria to assess and improve their overall performance. But, going through the application process brings additional benefits. All organizations that apply will receive from 300 to 1,000 hours of review by at least six experts on the award's private-sector board of examiners. All applicants receive a detailed feedback report from these experts on their strengths and opportunities for improvement.

Named after a former Secretary of Commerce, the Malcolm Baldrige National Quality Award and the Baldrige National Quality Program are helping to improve the competitiveness and performance of U.S. businesses and other organizations by promoting performance excellence, recognizing achievements of U.S. organizations and publicizing their successful strategies. The award is not given for specific products or services. Since 1988, 34 companies have received the Baldrige award. Baldrige awards are given in manufacturing, service, small business, and, starting in 1999, education and health care.

As a non-regulatory agency of the U.S. Department of Commerce's Technology Administration, NIST promotes economic growth by working with industry to develop and apply technology, measurements and standards through four partnerships: the Measurement and Standards Laboratories, the Advanced Technology Program, the Manufacturing Extension Partnership and the Baldrige National Quality Program.

NOTE: For a copy of the Baldrige Index stock study, see the World Wide Web at or call (301) 975-2762.

Dr. Vinod Singhal can be reached at (404) 894-4908 or email: vinod.singhal [at] (vinod[dot]singhal[at]mgt[dot]gatech[dot]edu)

Released February 4, 1999, Updated November 27, 2017