Achieving excellence and quality criteria brings business benefits

Research by ADA Assessment Solutions Ltd. and many other organisations shows that achieving the concepts of excellence and the criteria of quality standards reduces cost, increases customer satisfaction and contributes to improving organisation performance. There are measurable benefits.

In practice many large organisations have required their major suppliers to achieve the ISO 9001:2000 standard to demonstrate effective process management.

In the US, the National Institute of Standards and Technology (NIST) has investigated the relationship between corporate excellence and market value. Since 1988 the Baldrige Award has been won by a number of companies whose stock is publicly traded. A hypothetical sum of $1,000 was invested in each company in the month after the Award. This portfolio has outperformed the Standard and Poor’s 500 Index (equivalent to the FTSE 100 in the UK) by 2½ times.

Other studies have been carried out in Europe and the US which clearly shows that those companies using Total Quality Management/ Business Excellence principles have substantially better results.

A key measure for those companies who are striving for excellence is the Added Value per unit of employment cost, or the added value per employee. In the UK research on the accounts of the FTSE 350 companies has been carried out to establish the relationship between this measure, return on capital and market valuation.

This research showed that those companies which have above average growth in market value and an above average return on capital also have an above average return on added value per employee.

It is not surprising that when you harness, effectively, the talents of all who are connected to an organisation that significant additional wealth is created.

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