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Return on “Investing in Quality”Return on “Investing in Quality”
Problem
– Data and evidence are available that using the Baldrige Criteria and investing in Quality improves the performance of organizations, but apparently these data are not compelling!
Objective
– To develop compelling “Return on Investment” evidence that demonstrate that investment in “Quality” and using the Malcolm Baldrige Criteria is worthwhile
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Pearl RiverPearl River
3
Pearl RiverSchool District 1989
1992
1994
1995
1997
1999
2001
School Reform MissionMore Effective Schools
NYS Governor’s Excelsior Award
Excelsior Award WinnerPalisades Institute Award Winner
Baldrige Education Pilot
USA Today/RIT Quality Cup
Baldrige Applicant
2000 Baldrige Applicant
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Pearl RiverSchool District
Student Achievement, Market Share, Stakeholder Satisfaction
42%
90%
71%
93%
55%
63%
35%
45%
55%
65%
75%
85%
95%
1991 2004
Regents Diploma Rate Market Share Budget Vote Plurality
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Pearl RiverSchool District
Cost EfficiencyR
ES
UL
TS Annual Per Pupil Expenditure
vs. Consumer Price Index
0.0
19
2.35.2
8 10.111.9 13.7
16.117.8
16.7
-3.3
-4.3
-4 -1
4.4
8.912.6
-10
-5
0
5
10
15
20
25
CPI 2.3 5.2 8 10.1 11.9 13.7 16.1 17.8 19
PPE 0.0 -3.3 -4.3 -4 -1 4.4 8.9 12.6 16.7
1995 1996 1997 1998 1999 2000 2001 2002 2003
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ChugachChugach
7
* *
* Benchmark
High School Graduation Qualifying Exam 2000
Chugach vs Comparable Districts
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Chugach Wrangell Haines LowerYukon
Yupiit
Sophomores Who Passed
Reading Writing Math
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Consolidated District 15 Fast Facts
• Our 20 schools:– 15 elementary, 4 junior high,
1 alternative school
• Our enrollment:– 12,956 students
• 37.5% minority• 24.0% low-income• 32.0% limited English proficiency
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Lessons Learned
ITBS Second-Grade Reading
0%10%20%30%40%50%60%70%80%90%
100%
1999-00 2000-01 2001-02 2002-03 2003-04
Me
et/
Ex
cee
d G
rad
e L
eve
l
Reading Target National Avg
100% target
Good
State Top 3%
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Results
ITBS Cohort Data
50%55%60%65%70%75%80%85%90%95%
100%
Math Reading Core Total
Me
et/
Exc
ee
d G
rad
e L
ev
el
1998-99 (Grade 2) 2000-01 (Grade 4)
2002-03 (Grade 6) Target
Good
90% target
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Measurement/Results
Market Performance
Operating Cost Per Student
Overall ISAT Student Performance
Cost PerPercentage Point
Performance
D15 $9,358 83.6 $111.93
District A $9,240 77.5 $119.23
District B $9,118 76.9 $118.57
District C $8,406 68.7 $122.36
State $8,195 62.7 $130.70
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Pal’s Fast FoodPal’s Fast Food
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Higher is Better
Pal’s Fast Food - Customer CountsPal’s Fast Food - Customer Counts
1996 1997 1998 1999 2000 2001
Cu
stom
ers
PalsBest Competitor
14
Pal’s Fast Food Complaints per 1000 Customers
Lower is Better
14
1995 1996 1997 1998 1999 2000 2001
Pal's
BestCompetitor
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BoeingBoeing
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Before BaldrigeBefore Baldrige After BaldrigeAfter Baldrige
1992 1993
1994 1995 1996 1997 1998
$ in
Mill
ion
s
PLAN ACTUALS
C-17 Earnings Performance
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WHAT’S THE CORRELATION?WHAT’S THE CORRELATION?
200
400
450
500550
600
0
1
2
3
4
5
6
7
1992 1993 1994 1995 1996 1997 1998 1999
0
5
15
20
25
10
300
Assessment Score
RONA
Cost Of Quality ($M/unit)
It appears to correlate!
ROS
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Boeing Aerospace Support’sRevenue Performance
2000 2001 2002 2003
PLAN ACTUALS AVG GROWTH
Started Baldrige
19
Boeing Aerospace Support’sEarnings Performance
2000 2001 2002 2003
PLAN ACTUALS
Started Baldrige
20
50%
50
54
58
62
66
1999 2000 2002 20032001
EI
ESIStarted Baldrige
Boeing Aerospace Support’sBoeing Aerospace Support’semployees are more motivatedemployees are more motivated
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Baldrige Stock IndexBaldrige Stock Index
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THE BALDRIGE STOCK INDEXTHE BALDRIGE STOCK INDEX
Percent ReturnOn Shareholder
Investment
Whole CompanyRecipients 1991-01
Sites Visited 1991-01
Award Recipients
S&P 500
Baldrige Index Outperforms S&P 500by 2.94 to 1 for the Same Period
0
100
200
300
400
500
600
All Recipients 1991-01
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Georgia Tech StudyGeorgia Tech Study
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91%
43%
69%
32%
79%
37%
23%
7% 8%
0%
9% 6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
OperatingIncome
Sales TotalAssets
Employees Return onSales
Return onAssets
Award Winners
Control Firms
Performance Measures
Per
cen
tag
e C
han
ge
GEORGIA TECH STUDY ON USE OF MBGEORGIA TECH STUDY ON USE OF MB
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So let’s Brainstorm on what else we So let’s Brainstorm on what else we can try!can try!