Does Baldrige Benefit the Economy?

01/17/2012
Posted by Harry Hertz, the Baldrige Cheermudgeon

A decade ago, in 2001, the Baldrige Program commissioned a study to evaluate the net social value of the Program. In 2011, the Baldrige Foundation asked the same economists to take a new look and see if the benefit still existed and to quantify it based on actual applicant data, rather than the more general ASQ member data used in 2001.
An impressive benefit-to-cost ratio of 820-to-1 is the conclusion arrived at in the new study. The ratio is derived from the implementation of cost savings, gains from consumer satisfaction, and gains from increased value of sales in excess of resource costs of those organizations that have applied for the Malcolm Baldrige National Quality Award.
Three specific categories of social benefits were quantified from the responses of 45 Award applicants to a Web-based survey, with each category separately compared to the entire operating cost of the Baldrige Performance Excellence Program. The evaluation findings are achieved from:
· the cost savings of the applicants because it was not necessary for them to incur the investment costs to achieve on their own the same level of benefits from their performance excellence strategies as they realized from the availability of the publicly funded Baldrige Performance Excellence Program
· the gains to consumers from greater satisfaction from higher quality products because the Baldrige Criteria were available and used
· the gains to the economy from saving scarce resources (because successful performance excellence strategies not only enable higher quality products or services but also lower the costs of providing them) because the Baldrige Criteria were available and used
The report summarizes, “The Baldrige Performance Excellence Program, with the imprimatur of national leadership and a prominent national award . . . , creates great value that could not be replicated by private sector actions alone.”
The economists even explain that a conservative method, a cluster approach, was used to estimate this ratio. “If the social costs were compared to the benefits for the economy as a whole, the benefit-to-cost ratio would be considerably higher,” they write.
The study, conducted by economists Albert N. Link of the University of North Carolina at Greensboro and John T. Scott of Dartmouth College, focuses specifically on a survey population of the 273 applicants for the Malcolm Baldrige National Quality Award since 2006. It permits a more direct analysis of benefit than the earlier 2001 study and does, again, document the value of the Baldrige Program.

Posted by Harry “The Baldrige Cheermudgeon” on 01/17/2012