The Philippine Quality Challenge

2012-2016 Criteria Handbook

manufacturing
services
nonprofit

Contents
i

About the Philippine Quality Challenge (PQC)

The PQC Criteria empower your organization to reach your goals, improve results, and become more
competitive by aligning your plans, processes, decisions, people actions, and results.

iii

How to Use This Handbook

You can use the material in this handbook as a reference, for self-assessment, or as the basis of an award
assessment. Your experience with the PQC Criteria will help you decide where to begin.

The PQC Criteria for Performance Excellence Framework and

Structure
The PQC Criteria are embodied in seven integrated, interconnected categories. The categories are
subdivided into items and areas to address.

The PQC Criteria for Performance Excellence Items and Point

Values

4
4
7
10
13
15
17
20
22

The PQC Criteria for Performance Excellence

27

Scoring System

28

Responses to Criteria items are scored on two evaluation dimensions, process and results
Process Scoring Guidelines

29
30

Preface: Company Profile

1
Management
2
Planning
3
Customer Focus
4
Measurement and Data Management
5
Workforce Focus
6
Operations Focus
7
Business Results

Results Scoring Guidelines

How to Respond to the PQC Criteria

These guidelines explain how to respond most effective to the PQC Criteria item requirements.

33

The PQC Core Values and Concepts

The core values and concepts are a set of embedded beliefs and behaviors found in high performing
organizations.

38

Glossary of Key Terms

The glossary includes definitions of terms presented in SMALL CAPS in the Criteria and scoring guidelines.

47

Applying for the PQC

Procedures, requirements contact information for applying for the PQC are explained in this section.

About the Philippine Quality Challenge

Is your organization doing as well as it could? How do you know? What and how should your organization
improve or change?
The Philippine Quality Challenge (PQC) is a performance excellence framework created to encourage various
organizations in the country, whether small, medium and those at the beginnings of their quality journey to
pursue organizational improvement and performance excellence. It is also a self-assessment and recognition
program under the wing of the Philippine Quality Award (PQA) program that is managed by the Department of
Trade and Industry.
The PQC provides local companies with an integrated approach to managing the organizations business
processes and system by using a simplified version of the criteria of the PQA, the highest standard for
performance excellence based on the Baldrige Performance Excellence Program. Organizations that adopt the
criteria and go through the assessment process benchmark its own management systems and practices against
the criteria requirements of an internationally recognized business excellence framework.

Benefits of the PQC

The PQC Criteria for Performance Excellence empower your organizationno matter the size or industryto
reach your goals, improve results, and become more competitive by aligning your plans, processes, decisions,
people, actions, and results. Using the Criteria gives you a holistic assessment of where your organization is
and where it needs to be. The Criteria give you the tools you need to examine all parts of your management
system and improve processes and results while keeping the whole organization in mind.
The Criteria are a set of questions about seven critical aspects of managing and performing as an organization:
1. Management
2. Planning
3. Customer focus
4. Measurement and Data Management
5. Workforce focus
6. Operations focus
7. Business Results
These questions work together as a unique, integrated performance management framework. Answering the
questions helps you align your resources; identify strengths and opportunities for improvement; improve
communication, productivity, and effectiveness; and achieve your strategic goals. As a result, you progress
toward performance excellence:
You deliver ever-improving value to your customers and stakeholders, which contributes to
organizational sustainability.
You improve your organizations overall effectiveness and capability.
Your organization improves and learns.
Your workforce members learn and grow.

Organizations applying for the award receive a feedback report prepared by third-party experts that delineates
its strengths and opportunities for improvement, thereby providing the company with the basis for a roadmap
to performance excellence.
Specific benefits of participation by companies include:
An objective assessment of the company's strengths and opportunities for improvement based on a
simplified version of the criteria for the PQA, the highest quality award given by the Philippine
government. The applicant will gain an outside perspective on its company performance based on an
assessment by at least 2 business experts and quality practitioners.

 Use of the Challenge logo in its advertising and letterhead for a period of two years after receipt of
the Citation signifying participation in the Challenge.
Access to free training programs that will give its employees keen insights into how best-in-class
companies work.
Awarding ceremonies at an annual conference and public relations exposure for successfully
completing the rigorous process, excellence and quality service.
Accelerated change, growth, and improvement in the company.

Award levels
The PQC has two levels of award known as Challenge 1 and Challenge 2. The company will receive the
Challenge 1 award once it is assessed and receives a minimum score of 120 to 280 points. Challenge 2 award
shall be awarded to companies that receive 250 to 400 points.
A team of two to four (2-4) Assessors will evaluate and score the application reports and produce a feedback
report that documents the following:
(a) Strengths or practices that the company should continue doing and opportunities for improvement that the
company should address per criteria category and
(b) Category score.

Challenge 1
Challenge 1 seeks to encourage participating companies to adopt systematic approaches to the six (6)
Approach/Deployment Categories. To encourage its development of a continuous improvement orientation,
the participating company must also identify its key performance measures/indicators. This requirement
forces the participating company to plan for continuous improvement to start closing Approach Deployment
Results sequence into a cycle.

Challenge 2
Challenge 2 seeks to encourage participating companies to deploy the systematic approaches described in
Challenge 1 to the relevant and critical areas. In addition, the participating company must show current results
for its key measures. The idea is to promote the expansion of the systematic approaches to principal areas of
the company.

How to Use this Handbook

Whether your organization is large or small or is in the manufacturing, service, or nonprofit sector, if you are
in the beginning stages of your quality journey or if you just want to take a first step towards an ultimate goal
of applying for the Philippine Quality Award, you can use the PQC Criteria for Performance Excellence for
improvement.

If you are just learning about the PQC Criteria . . .

Scan the questions in the Company Profile (page 4), and see if you can answer them. Discussing the answers
to these questions might be your first PQC self-assessment.

Study the 11 Criteria core values and concepts (page 33). They are a set of beliefs and behaviors that are
embedded in the PQC Criteria and are found in high-performing organizations. Consider how your
organization measures up in relation to the core values. Are there any improvements you should be making?
Answer the questions in the titles of the 17 Criteria items to reach a basic understanding of the Criteria and
your organizations performance.
Look at the Criteria category titles, item titles, and areas-to-address to see a holistic performance
management system. See if you are considering all of these dimensions in establishing your management
system and measuring performance. If you need more explanation, read the notes that follow the criteria.
Use the Criteria and their supporting material as a general resource on organizational performance
improvement. Use the content in this booklet and online (http://www.pqa.org.ph) as a source of ideas about
improving your organization. The material may help you think in a different way or give you a fresh frame of
reference.
Attend the PQC or PQA Conferences. These events highlight the role-model approaches of the PQC and PQA
Award recipients, which have used the Criteria to improve performance, innovate, and achieve excellent
results. Workshops on Baldrige self-assessment are often offered in conjunction with these conferences.
Consider becoming a PQC or PQA Assessor. Assessors receive valuable training and gain experience in
understanding and applying the Criteria that they can use within their own organizations. See the PQA
website (http://www.pqa.org.ph) for additional information and contact information.

If you are ready to assess your organization with a PQC-based approach . . .

Complete the Company Profile (page 4). Have the members of your management team answer the questions.
If you identify topics for which you have conflicting, little, or no information, you can use these topics for
action planning. For many organizations, this approach serves as a first PQC self-assessment.
Use the full set of Criteria questions as a personal guide to everything that is important in leading your
organization. You may discover blind spots that you have not considered or areas where you should place
additional emphasis.
Review the scoring guidelines (pages 2729). They help you assess your organizational maturity.
Do a self-assessment of one Criteria category in which you know you need improvement. Answer the
individual questions in the category yourself or with management team colleagues, referring to the item notes
to guide your thoughts. Then assess your strengths and opportunities for improvement, and develop action
plans. Remember to build on your strengths as well as tackle your improvement opportunities. Be aware,
though, that this kind of assessment does not reveal key linkages between your chosen category and the
other Criteria items, and you may lose the systems perspective embodied in the seven integrated Criteria
categories.
Have your management team assess your organization. At a retreat, have your management team develop
responses to the seven Criteria categories, and record the responses. Then assess your strengths and
opportunities for improvement, and develop action plans.

iii

Conduct a full PQC self-assessment. Have your organization develop responses to the individual questions in
the seven Criteria categories.
1. Identify the scope of the assessment: will it cover the entire organization, a subunit, a division, or a
department?
2. Select seven champions, one for each Criteria category, to lead a team in preparing responses to the
questions in the category. Have the champions write your Organizational Profile.
3. Form category teams. Have the members collect data and information to answer the questions in their
respective categories, referring to the notes after each item as guides.
4. Have the teams share their answers to the Criteria questions and identify common themes and missing
linkages.
5. Have each category team create and communicate an action plan for improvement based on their
answers.
6. Have the seven champions and other senior leaders build an overall action plan based on overall
organizational priorities.
7. Evaluate the self-assessment process, and identify possible improvements. Involve senior leaders,
champions, and teams. The teams will need to collaborate to address questions that link the categories to
each other.

If you are ready to apply for the Philippine Quality Challenge . . .

Contact the Competitiveness Bureau of the Department of Trade and Industry. The PQC evaluation process
is one of the best, most cost-effective, and most comprehensive performance assessments you can find.
Submitting an application is an opportunity to have a team of experts examine your organization objectively
and identify strengths and opportunities to improve. Use the feedback report you receive as a way to
prioritize opportunities for building on strengths and addressing improvement needs. Use the feedback in
your strategic planning process. And if you receive the Philippine Quality Challenge Award, it is a validation of
the progress that you have achieved in your journey to performance excellence. For a description of the
process, benefits and requirements in applying for the PQC, please see the section Applying for the Philippine
Quality Challenge starting on page 44.

iv

The PQC Criteria for Performance Excellence Framework

A Systems Perspective
The performance system consists of the six categories in the center of the figure. These categories
define your processes and the results you achieve.
The center horizontal arrow shows the critical linkage between the leadership triad (categories 1, 2,
and 3) and the results triad (categories 5, 6, and 7) and the central relationship between the
Leadership and Results categories.
The two-headed arrows show the importance of feedback in an effective performance management
system.
The leadership triad (Management,
Planning, and Customer Focus)
emphasizes the importance of a
management focus on planning and
customers. Leaders set the direction
and seek future opportunities for
your organization.

The Company Profile sets the

context for the way your
organization operates. It serves
as an overarching guide for your
performance management
system.

The results triad (Workforce

Focus, Operations Focus, and
Business Results) includes your
workforce-focused processes,
your key operational processes,
and the performance results
they yield.

Company Profile

Workforce
Focus

Planning

Management

Business
Results

Customer
Focus

Operations
Focus

4
Measurement and Data Management
The system foundation (Measurement and Data
Management) is critical to effective management and
to a fact-based, knowledge-driven system for
improving performance and competitiveness.

All actions point toward Business Resultsa

composite of customer and product, operations,
workforce, management, and financial and market
results.
1

The PQC Criteria for Performance Excellence Structure

The seven Baldrige Criteria for Performance Excellence categories are subdivided into items and areas to address.

Items

Requirements

There are 15 Criteria items, each with a particular

focus. These items are divided into two groups
according to the kinds of information they ask for:
Process items (categories 16) ask you to define
your organizations processes.
Results items (category 7) ask you to report
results for your organizations processes.

Item requirements are expressed as questions

or statements in two levels:
Overall category requirements are
expressed as a statement below the category
title (e.g., The Management Category looks
at how your management guides and
improves ).

Areas to Address

Areas to address are the individual

questions in the shaded box (e.g., How does
your management set and share your goals
and values with the workforce?)

Each item includes three or four areas to address

(labeled a, b, c, and d).

Overall category
requirements

Category title and

point value
Category
number

Item
title and
point value

Item
number

Type of
information
to provide in
response to
this item
Notes serve
three purposes:
1. Clarify key
terms and/or
requirements
2. Give
instructions
3. Indicate or
clarify
important
linkages

Item
notes

The PQC Criteria for Performance Excellence

Items and Point Values
See pages 2729 for the scoring system used with the Criteria items in a PQC assessment.

Preface: Company Profile

Categories and Items

1

Point Values

Management

45

1.1 Management

25

1.2 Legal and Community Responsibilities

20

Planning

35

2.1 Plan Development

17

2.2 Plan Implementation

18

Customer Focus

35

3.1 Customer Requirements

17

3.2 Customer Relationships

18

Measurement and Data Management

4.1 Measurement, Analysis, and Improvement of

35
17

Company Performance
4.2 Management of Information Systems

18

Workforce Focus

35

5.1 Workforce Environment

17

5.2 Workforce Engagement

18

Operations Focus

35

6.1 Value Creation Processes

18

6.2 Support Processes

17

Business Results

180

7.1 Customer and Product Results

50

7.2 Operations Results

40

7.3 Workforce Results

30

7.4 Management Results

30

7.5

30

Financial and Market Results

TOTAL POINTS

400
3

P PREFACE: COMPANY PROFILE

The COMPANY PROFILE is a snapshot of your company, the key influences on how you operate, and the
key challenges you face.
1.
2.

What are your companys products?

Who are your companys CUSTOMERS and what are their requirements?

3.

a. Who are your companys KEY competitors?

b. What makes you perform better than your KEY competitors?
What is your WORKFORCE profile?
Show your companys organizational chart.
What are your companys facilities?

4.
5.
6.
7.
8.
9.

What legal and regulatory requirements apply to your company?

Who are your companys suppliers and PARTNERS?
a. What is your companys PURPOSE?
b. What are your companys GOALS?
c. What are your company VALUES?
10. What difficulties does your company face?
Notes:

P.1 What are your companys products?

The Company Profile provides an overview of your

organization. The profile addresses your operating
environment, your key organizational
relationships, and your competitive environment.
Your Company Profile provides a framework for
understanding your organization and delineates
the organizational key factors that are important.
Knowing the key factors helps the PQC assessors
and judges to understand what you consider
important when reviewing your application. It also
helps you to guide and prioritize the information
you will present in response to the Criteria items
in categories 17.

Products refer to the goods and services that your

organization offers in the marketplace. Nonprofit
organizations might refer to their product offerings as
programs, projects, or services.

The Company Profile provides your organization

with critical insight into the key internal and
external factors that shape your operating
environment. These factors, such as the purpose,
goals, values, competitive environment, and
company difficulties, impact the way your
organization is run and the decisions you make. As
such, the Company Profile helps your organization
better understand the context in which it
operates; the key requirements for current and
future business success and organizational
sustainability; and the needs, opportunities, and
constraints placed on your organizations
management systems.

P.2 Who are your companys customers and

what are their requirements?
Customers are the users and potential users of your
products, programs, and services. Customers include the
end-users of your products, as well as others who might
be the immediate purchasers of your products, such as
wholesale distributors, agents, or companies that further
process your products as components for their own
products. In some nonprofit organizations, customers
might include members, taxpayers, citizens, recipients,
clients, and beneficiaries.
It may be helpful to group customers based on common
expectations, behaviors, preferences, or profiles. Within
a group there may be customer segments based on
differences and commonalities within the group.
Market segments might be based on product or service
lines or features, geography, distribution channels,
business volume, or other factors that are important to
your organization to define related market
characteristics. Market segments might be referred to as
constituencies.
Customer group and market segment requirements
might include on-time delivery, low defect levels, safety,

security, ongoing price reductions, electronic

communication, rapid response, after-sales service, and
multilingual services. Stakeholder group requirements
might include socially responsible behavior and
community service.

A workforce profile identifies the number or

percentage of your workforce in each workforce or
employee group and segment (including organized
bargaining units, if applicable) according to
employment status (e.g. regular, contractual, projectbased, collaborator, consultant, etc.), age, gender,
educational attainment, special skills, location, tour of
duty, work environment, family-friendly policies, or
other factors of importance to your organization.

For some nonprofit organizations, requirements also

might include administrative cost reductions, at-home
services, and rapid response to emergencies.

P.3a Who are your companys key

competitors?

Diversity can be in cultural, religion, regional, blue

collar v/s white collar, gender, etc. If diversity is a major
workforce profiling factor, then it has to be declared
and explained accordingly.

Understanding who your competitors are, how many

you have, and their key characteristics is essential for
determining what your competitive advantage is in
your industry and marketplace. Leading organizations
have an in-depth understanding of their current
competitive environment, including key changes taking
place.

P.5 Show your companys organizational

chart.
Leading organizations have clear and well-defined
reporting relationships that are shown in the
organizational chart. The organizational chart to be
shown in P.5 must be complete, including the Board of
Directors or owners, as the case may be. Subsidiaries
of larger corporations must show the reporting
relationships between the applicant-company and its
parent company.

Nonprofit organizations frequently believe they are not

in a competitive environment. However, they often
must compete with other organizations and with
alternative sources for similar services to secure
financial and volunteer resources, membership,
visibility in appropriate communities, and media
attention.

P.6 What are your companys facilities?

P.3b What makes you perform better than

your key competitors?

Capital-intensive organizations requiring significant

investments in physical assets will operate differently
from organizations, for example, that are laborintensive. Hence, a companys facilities affects how an
organization is managed. Facilities may include offices,
stores, warehouses, factories, equipment, laboratories,
company clinics or hospitals, etc.

A thorough understanding and clear identification of

what makes you perform better than your key
competitors are central to organizational sustainability
and competitive performance. Executing your core
competencies well is frequently a marketplace
differentiator.

P.7 What legal and regulatory requirements

apply to your company?

Principal factors might include differentiators such as

your price leadership, design services, innovation rate,
geographic proximity, accessibility, and warranty and
product options.

The regulatory environment in which you operate

places requirements on your organization and impacts
how you run your orgnization. Understanding this
environment is key to making effective operational and
strategic decisions. Further, it allows you to identify
whether you are merely complying with the minimum
requirements of applicable laws, regulations, and
standards of practice or exceeding them, a hallmark of
leading organizations.

For some nonprofit organizations, differentiators also

might include your relative influence with decision
makers, ratio of administrative costs to programmatic
contributions, reputation for program or service
delivery, and wait times for service.

P.4 What is your workforce profile?

List down the regulatory agencies governing your

operations. Examples include business permits, SEC,
BIR, DOLE, SEC, DTI, DOH, IC, BFAD, CHED, BPS, DENR,
LLDA, SSS/GSIS, and others.

Workforce refers to the people actively involved in

accomplishing the work of your organization. It
includes your organizations permanent, temporary,
and part-time personnel, as well as any contract
employees supervised by your organization. It includes
team leaders, supervisors, and managers at all levels.

For non-profit organizations, relevant industry

standards might include industry-wide codes of conduct
and policy guidance.

Many non-profit organizations rely heavily on

volunteers to supplement the work of their employees.
These organizations should interpret employees to
mean employees and volunteers.

P.8 Who are your companys suppliers and

PARTNERS?

reinforce the desired culture of an organization.

Values support and guide the decision making of
every workforce member, helping the organization
accomplish its mission and attain its vision in an
appropriate manner. Examples of values might
include demonstrating integrity and fairness in all
interactions, exceeding customer expectations,
valuing individuals and diversity, protecting the
environment, and striving for performance
excellence every day.

Suppliers may include those who provide your company

with raw materials, services, equipment, packaging
materials, etc.
Partners are organizations that have equity (e.g. shares
of stocks, investments) in your organization. Partners
may include your typical business partners, dealers,
contractors, principals, toll processors/manufacturers.
Collaborators help your organization but may not
necessarily benefit from such help nor have equity in
your organization.

P.10 What difficulties does your company

face?

For some non-profit organizations, key suppliers and

distributors might include collaborators and
collaborating organizations.

P.9a What is your companys

Difficulties refer to those pressures that exert a decisive

influence on an organizations likelihood of future
success. These challenges may be driven by an
organizations future competitive position relative to
other providers of similar products. In dealing with
these externally driven difficulties, an organization may
face internal strategic challenges. External difficulties
may relate to customer or market needs or
expectations; product, or technological changes; or
financial, societal, and other risks or needs. Internal
difficulties may relate to an organizations capabilities
or its human and other resources. Difficulties can come
in many forms, such as funding, sourcing, staffing,
regulations, market saturation, competition, logistics,
competencies, etc.

PURPOSE?

The term purpose refers to the fundamental reason

that an organization exists. The primary role of purpose
is to inspire an organization and guide its setting of
values. Purpose is generally broad and enduring. Two
organizations in different businesses could have similar
purposes, and two organizations in the same business
could have different purposes.
Sometimes, the purpose is referred to as the
mission. The mission answers the question, What is
this organization attempting to accomplish? The
mission might define customers or markets served,
distinctive competencies, or technologies used.

Operating your organization in todays highly

competitive marketplace means you are facing strategic
challenges that can affect your ability to sustain
performance and maintain your competitive position.
These challenges might include your operational costs
(e.g., materials, labor, or geographic location);
expanding or decreasing markets; mergers or
acquisitions by your organization and by your
competitors; economic conditions, including fluctuating
demand and local and global economic downturns; the
cyclical nature of your industry; the introduction of new
or substitute products; rapid technological changes; or
new competitors entering the market. In addition, your
organization may face challenges related to the
recruitment, hiring, and retention of a qualified
workforce.

P.9b. What are your companys GOALS?

Goals are the results that a company needs/wants to
achieve within a given time frame. Goals enable your
organization to have a clear understanding of where
your senior leaders want to take the organization in the
future. This clarity enables you to make and implement
strategic decisions affecting the future of your
organization.

P.9c. What are your company VALUES?

The term values refers to the guiding principles and
behaviors that embody how your organization and its
people are expected to operate. Values reflect and

1 MANAGEMENT (45 pts)

The MANAGEMENT Category looks at HOW your MANAGEMENT guides and improves your company
PERFORMANCE and HOW it addresses legal and community responsibilities.

1.1 Management (25 pts)

Areas to Address:

Process

(a) HOW does your MANAGEMENT set and share your GOALS and VALUES with the WORKFORCE?
(b) HOW does your MANAGEMENT communicate with and get feedback from the WORKFORCE?
(c) HOW does your MANAGEMENT MEASURE and recognize good PERFORMANCE and encourage continuous
improvement?
(d) HOW does your MANAGEMENT evaluate and improve its own EFFECTIVENESS?
Notes:
(a) How does your management set and share
your goals and values with the workforce?
Management refers to the companys highest
ranking officials, your senior leaders. Responses to
1.1(a) should show how management sets the
goals that are presented in the company profile
(P.9b) and the values presented under P.9c.
Attention is given to how your management share
these goals and values with the workforce
including volunteers for nonprofit organizations.
(b) How does your management communicate
with and get feedback from the workforce?
This item also refers to how leadership is
exercised, formally and informally, throughout the
organization - the basis for and the way key
decisions are made, communicated, and carried
out. It includes structures and mechanisms for
decision-making; communicating and translating
such decisions to specific tasks down the line; and
tracking performance of the entire company in
achieving the goals and objectives.
How often does management go down to the shop
floor to personally observe operations and coach
the workforce? Do they use the local
language/dialect to communicate and obtain
feedback from the workforce?
For non-profit organizations that rely on
volunteers to accomplish their work, responses
should also discuss efforts to communicate with
and engage the volunteer workforce.

(c) How does your management measure and recognize

good performance and encourage continuous
improvement?
Apart from the companys performance appraisal system,
this item asks for personal actions manifested by the
management to positively and proactively recognize good
performance and encourage the workforce to think of
new ways of doing work. Do they personally recognize
good performers? How do they do it? How does
management encourage the workforce to work better
and smarter today than yesterday? Is there a
recognition/reward system for new ideas implemented in
the workplace?
(d) How does your management evaluate and improve
its own effectiveness?
In highly respected organizations, senior leaders are
committed to setting high expectations for performance
and performance improvement by enhancing their own
personal leadership skills.
Management evaluation refers to the performance
evaluation of the highest ranking officials including
managing directors or owners and the board of directors.
Evaluation might be supported by third-party
assessments of the leaders effectiveness, peer reviews,
and formal or informal workforce and other stakeholder
feedback and surveys. For some nonprofit and
government organizations, external advisory boards
might evaluate the performance of senior leaders and
the board.
Improvement of managements own effectiveness may
be through personal coaching and mentoring or
participation in leadership development courses.

1.2 Legal and Community Responsibilities (20 pts)

Process

Areas to Address:

(a) HOW does your company comply with legal and regulatory requirements, including impact on the
environment?
(b) HOW does your company promote and ensure ETHICAL BEHAVIOR in doing business?
(c) 1. HOW does your company help/support your KEY communities?
2. HOW is your WORKFORCE involved in these activities?
Notes:

of organizational ethics, ethics hotline use, and

results of ethics reviews and audits. They also might
include evidence that policies, workforce training,
and monitoring systems are in place with respect to
conflicts of interest and proper use of funds.

(a) How does your company comply with legal and

regulatory requirements, including impact on
the environment?
An integral part of performance management and
improvement is proactively addressing all legal and
regulatory requirements. Ensuring high
performance in this area requires establishing
appropriate measures or indicators that senior
leaders track. Role-model organizations look for
opportunities to exceed requirements and to excel
in areas of legal and regulatory behavior.

Apart from having a Code of Conduct within the

company, how are the provisions of this Code
implemented, complied with, and monitored in a
systematic manner?
Your organization should be sensitive to issues of
public concern, whether or not these issues currently
are embodied in laws and regulations.

Based on the applicable legal and regulatory

requirements reported in P.7, describe the key
compliance processes, measures, and goals for
achieving and surpassing the legal and regulatory
requirements. Non-profit organizations should
report, as appropriate, how they address the legal
and regulatory requirements and standards that
govern fund-raising and lobbying activities.

Transparency in operations of your governance

system (1.2a[1]) should include your internal controls
on governance processes.
For some nonprofit organizations, an external
advisory board may provide some or all of the
governance board functions. For those nonprofit
organizations that serve as stewards of public funds,
stewardship of those funds and transparency in
operations are areas of emphasis.

Do not report key results of regulatory and legal

compliance in 1.2(a); results should be reported as
Management Results under Item 7.4.

(c) 1. How does your company help/support your

key communities?

(b) How does your company promote and ensure

ethical behavior in doing business?

Key communities refer to groups and organizations

that the company supports as part of its social
responsibilities.

Ethical behavior refers to how your company

ensures that all decisions and actions conform to
the companys moral and professional principles of
conduct.

Areas of societal contributions and community

support might include your efforts to improve the
environment (e.g., collaboration to conserve the
environment or natural resources); strengthen local
community services, education, and health; and
improve the practices of trade, business, or
professional associations.

Measures or indicators of ethical behavior might

include the percentage of independent board
members, measures of relationships with
stockholder and non-stockholder constituencies,
instances of ethical conduct breaches and
responses, survey results on workforce perceptions

Examples of organizational community involvement

include partnering with schools and school boards to

improve education; partnering with health care

providers to improve health in the local community
by providing education and volunteer services to
address public health issues; and partnering to
influence trade, business, and professional
associations to engage in beneficial, cooperative
activities, such as sharing best practices to improve
overall national global competitiveness and the
environment.

(c) 2. How is your workforce involved in these

activities?
Citizenship implies going beyond a compliance
orientation. Good citizenship opportunities are
available to organizations of all sizes. These
opportunities include encouraging and supporting
your employees community service.
Cite the community programs and activities
participated in by your workforce, as well as the
extent of their participation. Time and funds spent on
these should be reported in Management Results
(Item 7.4).

For some charitable organizations, support for key

communities may occur totally through the missionrelated activities of the organization. In such cases, it
is appropriate to respond with any extra efforts you
devote to support of these communities.

2 PLANNING (35 pts)

The PLANNING Category looks at HOW the company develops and implements its plans.

2.1 Plan Development (17 pts)

Areas to Address:

Process

(a) WHAT steps do you follow when you plan for the future?

(b) HOW does your company identify and analyze your strengths, weaknesses, opportunities, and
threats?
(c) HOW does your company develop plans to overcome difficulties and CHALLENGES?
(d) HOW does your company develop plans to become or remain better than your competitors?
Notes:
(a) What steps do you follow when you plan for
the future?
Planning refers to your organizations approach
(formal or informal) to preparing for the future. It
might utilize various types of forecasts,
projections, options, scenarios, knowledge, or
other approaches to envisioning the future for
purposes of decision-making and resource
allocation. Planning involves participation by key
suppliers, distributors, partners, and customers.
For some nonprofit organizations, planning might
involve participation by organizations providing
similar services or drawing from the same donor
population or volunteer workforce.
This item is intended to cover all types of
businesses, competitive situations, strategic issues,
planning approaches, and plans. The requirements
explicitly calls for a future-oriented basis for action
but do not imply formalized planning, planning
departments, planning cycles, or a specified way
of visualizing the future. Even if your organization
is seeking to create an entirely new business
situation, it is still necessary to set and to test the
objectives that define and guide critical actions
and performance.
Item 2.1 addresses your overall organizational
planning, which might include changes in product
offerings and customer engagement processes.
However, the Item does not address product
design or customer engagement strategies; you
should address these factors in Items 6.1 and 3.2,
as appropriate.

(b) How does your company identify and analyze your

strengths, weaknesses, opportunities, and threats?
Knowledge of an organizations strengths, vulnerabilities,
and opportunities for improvement and growth is
essential to the success and sustainability of the
organization. With this knowledge, you can identify those
products, processes, competencies, and performance
attributes that are unique to your organization; those
that set you apart from other organizations; those that
help you to preserve your competitive advantage; and
those that you must develop to sustain or build your
market position.

Today, organizations need to be scanning the

environment inside and outside their immediate industry
to detect such challenges at the earliest possible point in
time. The SWOT analysis methodology should be able to
address this requirement.
(c) How does your company develop plans to overcome
difficulties and challenges?
Plans that address difficulties and challenges might
include rapid response, customization, co-location with
major customers or partners, workforce capability and
capacity, specific joint ventures, virtual manufacturing,
rapid innovation, ISO quality or environmental systems
registration, Web-based supplier and customer
relationship management, and product and service
quality enhancements. Responses should focus on your
specific challenges - those most important to your
ongoing success and to strengthening your organizations
overall performance.

10

(d) How does your company develop plans to

become or remain better than your
competitors?

This requirement implies that you have a clear

knowledge and understanding of how your
competitors perform.

An increasingly important part of planning is

projecting the future competitive environment. Such
projections help to detect and reduce competitive
threats, to shorten reaction time, and to identify
opportunities. Depending on the size and type of
business, maturity of markets, pace of change, and
competitive parameters (such as price or innovation
rate), organizations might use a variety of modeling,
scenarios, or other techniques and judgments to
anticipate the competitive environment.

This is related to Category 4 in terms of how you are

able to systematically obtain data and information
about your competition.

11

2.2 Plan Implementation (18 pts)

Process

Areas to Address:

(a) HOW does your company develop, share, and implement activities to achieve its GOALS?
(b) HOW does your company ensure that financial and other resources are available to implement
your activities and accomplish your GOALS?
(c) WHAT are your short and long-term plans?
(d) HOW does your company MEASURE progress of your plans implementation?

Notes:

Action plan development and deployment are closely

linked to other Items in the Criteria. The following are
examples of key linkages:

(a) How does your company develop, share, and

implement activities to achieve its goals?

Item 1.1 for how your management sets and

communicates organizational direction;

This item asks how your action plans are

developed and deployed. Accomplishment of
action plans requires resources and performance
measures, as well as the alignment of work unit
and supplier and partner plans. Of central
importance is how you achieve alignment and
consistency - for example, via key processes and
key measurements. Also, alignment and
consistency are intended to provide a basis for
setting and communicating priorities for ongoing
improvement activities - part of the daily work of
all work units. In addition, performance measures
are critical for tracking performance. Action plans
include human resource plans that support your
overall business plans.

Category 3 for gathering customer knowledge as inputs

to your plans and for deploying action plans;

Category 4 for measurement and data management to

support your key information needs, to support your
development of plans, to provide an effective basis for
your performance measurements, and to track progress
relative to your plans;
Category 5 for meeting your workforce capability and
capacity needs, for workforce development and learning
system design and needs, and for implementing
workforce-related changes resulting from action plans;
Category 6 for changes to your value-creation and
support process requirements resulting from your action
plans; and

The term action plans refers to specific actions

that respond to short- and longer-term strategic
objectives. Action plans include details of resource
commitments and time horizons for
accomplishment. Action plan development
represents the critical stage in planning when
objectives and goals are made specific so that
effective, organization-wide understanding and
deployment are possible. In the Criteria,
deployment of action plans includes creation of
aligned measures for work units. Deployment
might also require specialized training for some
employees or recruitment of personnel.

Category 7 for specific accomplishments relative to

your organizational strategy and action plans.
(b) How does your company ensure that financial and
other resources are available to implement your
activities and accomplish your goals?
Examine how your organization optimizes the use of
resources, ensures the availability of trained employees
and bridges short- and longer-term requirements that
may entail capital expenditures, technology development
or acquisition, and supplier development. A budgetary
system is an example of how resources are allocated.

Deployment of action plans might include key

partners, collaborators, and suppliers.

(c) What are your short and long-term plans?

Ensure that deployment will be effective -that

there are mechanisms to communicate
requirements and achieve alignment on three
levels: (1) the organization and the management
level, (2) the key process level, and (3) the work
unit and the individual job level.

Plans
(d) How does your company measure progress of your
plans implementation?
A project management methodology may be useful in
addressing this requirement.
12

3 CUSTOMER FOCUS (35 pts)

The CUSTOMER FOCUS Category examines HOW the company identifies CUSTOMERS, determines their
requirements, builds relationships with them, and determines their satisfaction.

3.1 Customer Requirements (17 pts)

Areas to Address:

Process

(a) HOW does your company target new or potential CUSTOMERS?

(b) HOW does your company determine CUSTOMERS needs and expectations?
(c) HOW does your company gather information and feedback from its CUSTOMERS?
(d) HOW does your company MEASURE and analyze CUSTOMER satisfaction?
Notes:
(a) How does your company target new or
potential customers?
Typically, this requirement can be addressed via
market surveys which are analyzed to determine
product niches which the company can venture
into, considering its competencies, capabilities,
and capacities.
Customer listening information could include
marketing and sales information, customer
engagement data, win/loss analysis, and complaint
data.
Listening might include gathering and integrating
survey data, focused group findings, and Webbased data, and other data and information that
affect customers purchasing and relationship
decisions.
(b) How does your company determine
customers needs and expectations?
Product offerings should consider all the important
characteristics of products and services and their
performance throughout their full life cycle and
the full consumption chain. The focus should be
on features that affect customer preference and
loyalty - for example, those features that
differentiate your products from competing
offerings or other organizations services. Those
features might include price, reliability, value,
delivery, timeliness, ease of use, requirements for
the use and disposal of hazardous materials,
customer or technical support, and the sales
relationship.

Key product features also might take into account how

transactions occur and factors such as customer data
privacy and security.

(c) How does your company gather information and

feedback from its customers?
Selection of listening strategies depends on your
organizations key business factors. Increasingly,
companies interact with customers via multiple modes.
Some frequently used modes include focus groups with
key customers; close integration with key customers;
interviews with lost customers about their purchase
decisions; use of the customer complaint process to
understand key product and service attributes; win/loss
analysis relative to competitors; and survey or feedback
information, including information collected on the
Internet.
(d) How does your company measure and analyze
customer satisfaction?
Determining customer satisfaction might include the use
of any or all of the following: surveys, formal and
informal feedback, customer account histories,
complaints, field reports, win/loss analysis, customer
referral rates, and transaction completion rates.
Information might be gathered on the Web, through
personal contact or a third party, or by mail.
Customer satisfaction measurements might include both
a numerical rating scale and descriptors for each unit in
the scale. Actionable customer satisfaction
measurements provide useful information about specific
product and service features, delivery, relationships, and
transactions that affect customers future actions - repeat
business and positive referrals.

13

3.2 Customer Relationships (18 pts)

Process

Areas to Address:
(a) HOW does your company handle feedback and complaints from CUSTOMERS?

(b) HOW does your company ensure that your responses to CUSTOMER feedback and complaints lead
to their satisfaction?
(c) HOW does your company determine and ensure that your CUSTOMERS are more satisfied with your
company than with your KEY competitors?
Notes:
(a) How does your company handle feedback
and complaints from customers?

(c) How does your company determine and ensure that

your customers are more satisfied with your
company than with your key competitors?

A very useful complaint handling model can be

lifted from call centers/BPOs. A systematic
approach might include documented procedures
for receiving complaints, handling/processing
them, and resolving them to the satisfaction of the
complaining party. These procedures might also
include approaches for escalating complaints, as
may be required.

In determining customers satisfaction, a key aspect is

their comparative satisfaction with competitors and
competing or alternative offerings. Such information
might be derived from your own comparative studies or
from independent studies. The factors that lead to
customer preference are of critical importance in
understanding factors that drive markets and potentially
affect longer-term competitiveness.

(b) How does your company ensure that your

responses to customer feedback and
complaints lead to their satisfaction?

Other organizations providing similar products might

include organizations that are not competitors but
provide similar products in other geographic areas or to
different populations.

A regular follow-through call to the complainant to

assess their satisfaction with the way their
complaint was handled is the simplest way of
addressing this requirement.

In a rapidly changing competitive environment, many

factors may affect customer preference and loyalty and
your interface with customers in the marketplace. This
makes it necessary to listen on a continuous basis. To be
effective, listening needs to be closely linked with your
organizations overall business strategy.

14

4 MEASUREMENT AND DATA MANAGEMENT (35 pts)

The MEASUREMENT AND DATA MANAGEMENT Category looks at HOW your company manages and uses
data and information to support decision-making and improvement of company PERFORMANCE.

4.1 Measurement, Analysis and Improvement of

Company Performance (17 pts)
Process

Areas to Address:

(a) HOW does your company select and collect data and information for tracking daily operations,
and overall company PERFORMANCE?
(b) HOW does your company ANALYZE and review your PERFORMANCE data and information to determine
if the plans are being achieved?
(c) HOW does your company compare your PERFORMANCE with your KEY competitors?
(d) HOW does your company use PERFORMANCE reviews to develop plans for continuous improvement?
Notes:
(a) How does your company select and collect
data and information for tracking daily
operations, and overall company
performance?

You can describe your management information

system (MIS) here.
(b) How does your company analyze and review
your performance data and information to
determine if the plans are being achieved?
Analysis includes examining trends;
organizational, industry, and technology
projections; and comparisons, cause-effect
relationships, and correlations. Analysis should
support your performance reviews, help
determine root causes, and help set priorities for
resource use. Accordingly, analysis draws on all
types of data: customer-related, financial and
market, operational, and competitive.
The results of organizational performance analysis
should contribute to your organizational planning.
Individual facts and data do not usually provide an
effective bases for setting organizational priorities.
This Item emphasizes that close alignment is
needed between your analysis and your
organizational performance review and between
your analysis and your organizational planning.
This ensures that analysis is relevant to decisionmaking and that decision-making is based on
relevant data and information.

Analyses that your organization conducts to gain an

understanding of performance and needed actions may
vary widely depending on your type of organization, size,
competitive environment, and other factors.
(c) How does your company compare your
performance with your key competitors?
Apart from the companys performance appraisal system,
this item asks for personal actions manifested by the
management to positively and proactively recognize good
performance and encourage the workforce to think of
new ways of doing work. Do they personally recognize
good performers? How do they do it? How does
management encourage the workforce to work better
and smarter today than yesterday? Is there a
recognition/reward system for new ideas implemented in
the workplace?
(d) How does your company use performance reviews
to develop plans for continuous improvement?
In relation to the outcomes in 4.1b above, what
methodologies do you now use to improve on your
current plans?
A generic Plan/Do/Check/Act (PDCA) approach is used by
many organizations.

15

4.2 Management of Information Systems (18 pts)

Process

Areas to Address:

(a) HOW does your company manage data and information to ensure: accuracy, integrity, timeliness,
and confidentiality?
(b) HOW does your company make needed data and information available to those concerned?
(c) HOW does your company ensure the continued availability of data and information in the event
of an emergency?
Notes:
(a) How does your company manage data and
information to ensure: accuracy, integrity,
timeliness, and confidentiality?
Accuracy refers to conformity to standards.
Integrity would refer to data and information that
are complete, consistent, transparent, and
reliable. Timeliness refers to up-to-date data and
information valid for a given period of time.
Confidentiality refers to proprietary data and
information that are kept exclusive and safe from
unauthorized access.

(c) How does your company ensure the continued

availability of data and information in the event of
an emergency?
Typical approaches would touch on the aspects of backup systems. Critical here is the element of time how
fast can a company resume operation (of its ICT systems)
after an emergency situation.

(b) How does your company make needed data

and information available to those
concerned?
Data and information availability are of growing
importance as the Internet, e-business, and ecommerce are used increasingly for business-tobusiness, organization-to-organization, and
business-to-consumer interactions and as
intranets become more important as a major
source of organization-wide communications.
Data and information are especially important in
business networks, alliances, and supply chains.
Your responses to this Item should take into
account this use of data and information and
should recognize the need for rapid data
validation and reliability assurance, given the
increasing use of electronic data transfer.
Data and information access might be via
electronic or other means.

16

5 WORKFORCE FOCUS (35 pts)

The WORKFORCE FOCUS Category looks at HOW the company enables the WORKFORCE to realize their full
potential and achieve high PERFORMANCE.

5.1 Workforce Environment (17 pts)

Areas to Address:

Process

(a) HOW does your company determine your manpower requirements (e.g. skills, staffing level,
organization)?
(b) HOW does your company recruit, hire, and retain your WORKFORCE?
(c) HOW does your company develop a work environment that promotes WORKFORCE health, safety,
and security?
(d) HOW does your company support your WORKFORCE via policies, benefits, and services?
Notes:
(a) How does your company determine your
manpower requirements (e.g. skills, staffing
level, organization)?
Determination of manpower requirements would
consider both capability and capacity.
Capability refers to your organizations ability to
accomplish its work processes through the
knowledge, skills, abilities, and competencies of its
people. Capability may include the ability to build
and sustain relationships with your customers; to
innovate and transition to new technologies; to
develop new products, services, and work
processes; and to meet changing business, market,
and regulatory demands.
Capacity refers to your organizations ability to
ensure sufficient staffing levels to accomplish its
work processes and successfully deliver your
products to your customers, including the ability
to meet seasonal or varying demand levels.
Capability and capacity should consider not only
current needs but also future requirements based
on your plans reported in Category 2.

(c) How does your company develop a work

environment that promotes workforce health,
safety, and security?
Some of the considerations with regard to security may
include the following: prevention of theft and fraud;
prevention of violence, and restricting access to various
parts of the physical facilities to authorized personnel
only, etc.
Safety is covered by regulatory standards for buildings
and structures, fire related requirements of the Bureau of
Fire Protection, and other related standards by the Safety
Organization of the Philippines (SOPI) and OHSAS.
(d) How does your company support your workforce via
policies, benefits, and services?
List down all policies that support your workforce (e.g.
policy on paternal leaves, policy on tenure-based salary
adjustments, policy on seniority, etc.) including benefits
and services.

(b) How does your company recruit, hire, and

retain your workforce?

This addresses only new workforce members. The

retention of existing workforce members is
considered in Item 5.2, Workforce Engagement.

17

5.2 Workforce Engagement (18 pts)

Process

Areas to Address:
(a) HOW does your company determine what motivates and satisfies your WORKFORCE?
(b) HOW does your company recognize or reward good WORKFORCE PERFORMANCE?

(c) HOW does your company identify and address the training and development needs of your
WORKFORCE?
(d) HOW does your company MEASURE and improve your overall WORKFORCE ENGAGEMENT and
satisfaction?
Notes:
(a) How does your company determine what
motivates and satisfies your workforce?
Workforce motivation and satisfaction (which is
sometimes referred to as engagement) reflects
the extent of workforce commitment, both
emotional and intellectual, to accomplishing the
work, mission, and vision of the organization.
Organizations with high levels of workforce
engagement are often characterized by highperforming work environments in which people
are motivated to do their utmost for the benefit of
their customers and for the success of the
organization.
Specific factors that might affect workforce
satisfaction include effective workforce problem
or grievance resolution; safety factors; workforce
views of management; workforce training,
development, and career opportunities; workforce
preparation for changes in technology or the work
organization; the work environment and other
work conditions; managements empowerment of
the workforce; information sharing by
management; workload; cooperation and
teamwork; recognition; services and benefits;
communications; job security; compensation; and
equal opportunity.
Although satisfaction with pay and satisfaction
with promotion are important, these two factors
generally are not sufficient to ensure overall
workforce satisfaction. Some examples of other
factors to consider are effective workforce
problem and grievance resolution; workforce
development and career opportunities; work
environment and management support;
workplace safety and security; workload;
communication, cooperation, and teamwork; job

security; appreciation of the differing needs of diverse

work groups; and organizational support for serving
customers.

(b) How does your company recognize or reward good

workforce performance?
Describe here your performance evaluation or appraisal
system and how good performers are duly
recognized/rewarded, particularly by management.
(c) How does your company identify and address the
training and development needs of your workforce?
Training and development refers to the improvement of
employees knowledge and skills to support the
companys objectives and goals. Development occurs
inside or outside the company and might involve on-thejob, cross-posting, classroom, computer-based learning,
or other types of delivery (formal or informal).

Aside from approving budgets for training and education,

do senior leaders personally encourage employees to
avail of learning opportunities offered by the company?
Do they personally conduct at least part of the training?
Do they provide adequate and conducive facilities for
learning?
Depending on the nature of your organizations work,
employees responsibilities, and the stage of
organizational and personal development, education and
training needs might vary greatly. These needs might
include gaining skills for knowledge sharing,
communication, teamwork, and problem solving;
interpreting and using data; meeting customer
requirements; process analysis and simplification; waste
and cycle time reduction; and setting priorities based on
strategic alignment or cost/benefit analysis. Education
needs also might include basic skills, such as reading,
writing, language, arithmetic, and, increasingly, computer
skills.

18

Although this Item does not specifically ask you about

training for customer contact employees, such
training is important and common. It frequently
includes learning critical knowledge and skills in the
following areas: your products, services, and
customers; how to listen to customers; recovery from
problems or failures; and how to effectively manage
customer expectations.

rate for customer contact employees; employees

charitable contributions; grievances, strikes, and
other job actions; insurance costs; workers
compensation claims; and results of surveys. Survey
indicators of satisfaction might include employee
knowledge of job roles, employee knowledge of
organizational direction, and employee perception of
empowerment and information sharing. Your results
relative to such measures and indicators should be
reported in Item 7.3.

(d) How does your company measure and improve

your overall workforce engagement and
satisfaction?

In addition to direct measures of employee

satisfaction and well-being through formal or
informal surveys, some other indicators include
absenteeism, turnover, grievances, strikes,
Occupational Safety and Health Administration
(OSHA) reportables, and workers compensation
claims.

Workforce engagement is when people are

motivated to do their best for the success of the
company.
Measures and indicators of well-being, satisfaction,
and motivation might include data on safety and
absenteeism; the overall turnover rate; the turnover

19

6 OPERATIONS FOCUS (35 pts)

The OPERATIONS FOCUS Category looks at HOW your company manages its KEY VALUE CREATION and
support PROCESSESS to meet CUSTOMER requirements.

6.1 Value Creation Processes (18 pts)

Areas to Address:

Process

(a) 1. HOW does your company design, produce, and deliver your products to create value for
customers?
2. HOW do you use inputs from CUSTOMERS and suppliers?
(b) HOW does your company manage and improve its production operations and delivery of
products considering costs, efficiency, PRODUCTIVITY, and CYCLE TIME?
Notes:
(a) 1. How does your company design, produce,
and deliver your products to create value for
customers?
Key value creation processes refer to activities
that increase the products worth and usefulness
to the customers.
(a) 2. How do you use inputs from customers
and suppliers?

Your response here should describe how the

inputs from Category 3 are used to design,
produce, and deliver your products.

(b) How does your company manage and improve ts

production operations and delivery of products
considering costs, efficiency, productivity, and cycle
time?
Costs refer to the total cost of resources spent for
products; including money, time and labor
Efficiency, in general, describes the extent to which time
or effort is well used for the intended task or purpose.
Productivity is a ratio of what is produced to what is
required to produce it.
Cycle time refers to the period required to complete one
cycle of an operation; or to complete a function, job,
or task from start to finish.

As you describe the process for product design,

indicate how customer inputs are considered.
As the product is produced, describe how you
ensure that relevant customer inputs included in
the design stage remain in effect throughout the
production process.
Customer delivery parameters/expectations (e.g.
packaging, colors, temperature, size, etc.) must
also be included in your processes for delivery.

20

6.2 Support Processes (17 pts)

Process

Areas to Address:

(a) WHAT are your support PROCESSES (e.g. finance, accounting, administration, human resources,
purchasing, maintenance, laboratory, etc.)?
(b) HOW does your company design, manage, and improve your support PROCESSES?
(c) HOW does your company prepare for and deal with emergencies?
Notes:
(a) What are your support processes (e.g.
finance, accounting, administration, human
resources, purchasing, maintenance,
laboratory, etc.)?
Examples: finance, accounting, administration,
human resources, purchasing, maintenance,
laboratory, etc.

(b) How does your company design, manage, and

improve your support processes?
Support processes are typically documented via systems
documentation.
(c) How does your company prepare for and deal with
emergencies?
Describe here your emergency response system (for fire,
earthquake, typhoon, floods, sabotage, etc.).

21

7 BUSINESS RESULTS (180 pts)

The BUSINESS RESULTS Category looks at your companys PERFORMANCE and improvement in all KEY
areas: CUSTOMER and product RESULTS, operations RESULTS, WORKFORCE RESULTS, MANAGEMENT RESULTS, and
financial and market RESULTS. Include comparative/competitive RESULTS, as appropriate.

7.1 Customer and Product Results (50 pts)

Results

Areas to Address:
(a) WHAT are your RESULTS for CUSTOMER satisfaction? (Reference 3.1d)

(b) WHAT are your product PERFORMANCE RESULTS that are important to your CUSTOMERS? (Reference P.2
and 3.1b)
(c) WHAT are your RESULTS for CUSTOMER relationship building? (Reference 3.2)
Notes:
(a) What are your results for customer
satisfaction? (Reference 3.1d)
The correlation between product performance
and customer indicators is a critical management
tool with multiple uses: (1) defining and focusing
on key quality and customer requirements; (2)
identifying product and service differentiators in
the marketplace; and (3) determining cause-effect
relationships between your product and service
attributes and evidence of customer satisfaction
and loyalty, as well as positive referrals.
The correlation might reveal emerging or changing
market segments, the changing importance of
requirements, or even the potential obsolescence
of offerings.
(b) What are your product performance results
that are important to your customers?
(Reference P.2 and 3.1b)

Product performance measures appropriate for inclusion

might be based upon the following: internal quality
measurements, field performance of products, defect
levels, response times, data collected from your
customers by other organizations on ease of use or other
attributes, and customer surveys on product and service
performance.
For some non-profit organizations, product or service
performance measures might be mandated by your
funding sources. These measures should be identified
and reported in your response to this item.
(c) What are your results for customer relationship
building? (Reference 3.2)
Results for customer relationship building might include
response times in handling customer feedback and
customer complaints.

Product performance results should relate to the

key customer requirements based on information
gathered in P.2 and Item 3.1.

22

7.2 Operations Results (40 pts)

Results

Areas to Address:
(a) WHAT are your RESULTS for KEY operations (e.g. production efficiencies, inspection RESULTS,
acceptance RESULTS of externally provided products, RESULTS of emergency drills and exercises,
etc.)? (Reference 6.1a & b, 6.2b & c)
(b) WHAT are your RESULTS for the accomplishment of your plans? (Reference 2.2)
Notes:
(a) What are your results for key operations (e.g.
production efficiencies, inspection results,
acceptance results of externally provided
results, results of emergency drills and
exercises, etc.)? (Reference 6.1a & b, 6.2b &
c)

(b) What are your results for the accomplishment of

your plans? (Reference 2.2)
This assumes that you have prepared a Gantt chart for
your plans in Item 2.2. This Gantt chart should include
planned schedules as well as actual achievements (e.g.
time-based, % completion).

Results for key operations might include:

production efficiencies, inspection RESULTS,
acceptance RESULTS of externally provided
products, RESULTS of emergency drills and
exercises, etc.

23

7.3 Workforce Results (30 pts)

Areas to Address:

Results

(a) WHAT are your RESULTS for fulfilling your manpower requirements? (Reference 5.1a & b)
(b) WHAT are your RESULTS for WORKFORCE health, safety, and security? (Reference 5.1c & d)
(c) WHAT are your RESULTS for WORKFORCE training and development? (Reference 5.2c)
(d) WHAT are your RESULTS for WORKFORCE ENGAGEMENT and satisfaction? (Reference 5.2d)
Notes:
(a) What are your results for fulfilling your
manpower requirements? (Reference 5.1a &
b)
Results should relate to processes described in
Category 5. Your results should be responsive to
key work process needs described in category 6
and to your organizations action plans and human
resource or workforce plans described in Item 2.2.
Nonprofit organizations that rely on volunteers
should include results for their volunteer
workforce, as appropriate.
(b) What are your results for workforce health,
safety, and security? (Reference 5.1c & d)

time accidents. Health results are more complex. Some

companies report on % of employees with specific health
parameters (e.g. cholesterol levels, uric acid, diabetes,
high-blood pressure, etc.). Some have developed
integrated well-being measures.
(c) What are your results for workforce training and
development? (Reference 5.2c)
Appropriate measures and indicators of employee
learning and development might include innovation and
suggestion rates, courses completed, learning, on-the-job
performance improvements, and cross-training rates.
(d) What are your results for workforce engagement
and satisfaction? (Reference 5.2d)

The results might be in terms of number of

incidents, man-hours lost, man-hours without lost-

24

7.4 Management Results (30 pts)

Results

Areas to Address:

(a) WHAT are your RESULTS that pertain to MANAGEMENTS communication and ENGAGEMENT with the
WORKFORCE? (Reference 1.1)
(b) WHAT are your RESULTS for compliance with legal and regulatory requirements? (Reference 1.2a)
(c) WHAT are your RESULTS for promoting and ensuring ETHICAL BEHAVIOR? (Reference 1.2b)
(d) WHAT are your RESULTS for the companys support of and involvement with KEY communities?
(Reference 1.2c)
Notes:
(a) What are your results that pertain to
managements communication and
engagement with the workforce? (Reference
1.1)
Responses should address communication
processes identified in Item 1.1.
(b) What are your results for compliance with
legal and regulatory requirements?
(Reference 1.2a)
Responses might include financial statement
issues and risks, important internal and external
auditor recommendations, and the managements
responses to these matters. For some nonprofit
organizations, results of BIR/COA audits also might
be included.
Regulatory and legal results should address
requirements described in 1.2b. Workforcerelated occupational health and safety results
(e.g., Occupational Safety and Health
Administration [OSHA] reportable incidents)
should be reported in 7.3a(2).
Measures should include environmental and
regulatory compliance and noteworthy
achievements in these areas, as appropriate.
If your organization has received sanctions or
adverse actions under law, regulation, or contract
during the past three years, the incidents and their
current status should be summarized.

(c) What are your results for promoting and ensuring

ethical behavior? (Reference 1.2b)
Independent of an increased focus on issues of
governance, ethics, and board and leadership
accountability, it is important for organizations to
practice and demonstrate high standards of overall
conduct. Boards and senior leaders should track relevant
performance measures on a regular basis and emphasize
this performance in stakeholder communications.
Measures or indicators of ethical behavior might include
the percentage of independent board members,
measures of relationships with stockholder and nonstockholder constituencies, instances of ethical conduct
breaches and responses, survey results on workforce
perceptions.
(d) What are your results for the companys support of
and involvement with key communities? (Reference
1.2c)
Responses should address your organizations societal
responsibilities as well as support of the key communities
described in 1.2c. Measures of contributions to societal
well-being might include reduced energy consumption;
the use of renewable energy resources, recycled water,
and alternative approaches to conserving resources (e.g.,
increased audio and video conferencing); and the global
use of enlightened labor practices.

25

7.5 Financial and Market Results (30 pts)

Results

Areas to Address:
(a) WHAT are your RESULTS for financial PERFORMANCE?
(b) WHAT are your RESULTS for market PERFORMANCE?
Notes:
(a) What are your results for financial
performance?
Financial and marketplace performance refers to
performance relative to measures of cost,
revenue, and market position, including asset
utilization, asset growth, and market share.
Measures reported in this Item are those usually
tracked by senior leadership on an ongoing basis
to assess your organizations performance.
Results for financial performance might include
cash flow, sales, net income, operating margins,
profitability, budget performance, and return-oninvestment, etc.

Responses should include aggregate measures of

financial return, such as return on investment
(ROI), operating margins, profitability, or
profitability by market segment or customer

group. Responses also should include measures of

financial viability, such as liquidity, debt-to-equity ratio,
days cash on hand, asset utilization, and cash flow.
For nonprofit organizations, additional measures might
include performance to budget, reserve funds, cost
avoidance or savings, administrative expenditures as a
percentage of budget, and the cost of fundraising versus
funds raised.
(b) What are your results for market performance?
Results for market performance might include market
share, measures of business growth, new customers,
products, and markets entered (including e-markets and
exports), and the percentage of sales derived from new
products.
For nonprofit organizations, responses might include
measures of charitable donations or grants and the
number of new programs or services offered.

26

Scoring System
The scoring of responses to the PQC Criteria for Performance Excellence items is based on two
evaluation dimensions: process (categories 16) and results (category 7).
To score Criteria responses, consider the following
information relative to the item requirements and the
scoring guidelines (pages 3233):

results item is a composite based on overall

performance, taking into account the four results
factors.

The key business factors presented in the

Organizational Profile

Levels are
your current performance on a meaningful
measurement scale.

The maturity of the approaches, the breadth of their

deployment, and of the results presented

Trends comprise
your rate of performance improvement or
continuation of good performance (i.e., the
slope of data points over time) and

Scoring Dimensions
Process

the breadth (i.e., the extent of deployment) of

your performance results.

Process refers to the methods your organization uses

and improves to address the requirements in categories
16. The two factors used to evaluate process are
approach and deployment (AD). PQC-based feedback
reflects strengths and opportunities for improvement in
these factors. A score for a process item is a composite
based on overall performance, taking into account the
two process factors.

Comparisons comprise
your performance relative to that of other,
appropriate organizations, such as competitors
or organizations similar to yours, and
your performance relative to benchmarks or
industry leaders

Approach comprises

Linkage is the extent to which

your results measures address important
performance requirements relating to
customers, products, markets, processes, and
action plans identified in your Company Profile
and in process items;
your results are harmonized across processes
and work units to support organization-wide
goals.

the methods used to carry out the process,

the appropriateness of these methods to the item
requirements and your operating environment,

the effectiveness of your use of the methods, and

the degree to which the approach is repeatable and
based on reliable data and information (i.e.,
systematic).
Deployment is the extent to which
your approach is applied in addressing item
requirements that are relevant and important to your
organization,
your approach is applied consistently, and
your approach is used by all appropriate work units.
In scoring process items, keep in mind that approach
and deployment are linked. Descriptions of approach
should always indicate the deploymentconsistent with
the specific requirements of the item and your
organization.

Results
Results are the outputs and outcomes your organization
achieves in meeting the requirements in category 7.
The four factors used to evaluate results are levels,
trends, comparisons, and linkage (LeTCLi). A score for a

27

In the scoring of results items, look for data on

performance levels, trends, and relevant
comparisons for key measures and indicators of
your organizations performance, as well as
integration with your organizations key
requirements.
Importance as a Scoring Consideration
A critical consideration in a PQC evaluation and
feedback is the importance of your reported
process and results to your key business factors.
The areas of greatest importance should be
identified in your Company Profile and in items
such as 2.1, 2.2, 3.2, 5.1, 5.2, and 6.1. Your key
customer requirements, competitive environment,
workforce needs, key strategic objectives, and
action plans are particularly important.

Scoring System
The scoring of responses to the PQC Criteria for Performance Excellence items is based on two
evaluation dimensions: process (categories 16) and results (category 7).
How to Score an Item Response
Follow these steps in assigning a score to an item response.
Look at the scoring guidelines (see Process Scoring Guideline below). Decide which scoring range (e.g., 50
65%) is most descriptive of the organizations achievement level as presented in the item response.
Choose this range based on a holistic view of either the two process factors (AD) or the four results factors
(LeTCLi) in aggregate; do not tally or average independent assessments of each of the four factors. The most
descriptive range can reflect some gaps between the response and the description of one or more of the
factors in the chosen scoring range.
Read the next higher and the next lower scoring ranges. Assign a score (e.g., 55%) within the chosen range
by evaluating whether the item response is closer to the statements in the next higher or the next lower
scoring range.
As you assign scores, keep in mind these descriptions of the midpoint of the scoring continuum.
A process item score of 50% represents an approach that meets the overall requirements of the item, is
deployed consistently and to most work units, and addresses key organizational needs. Higher scores reflect
greater achievement, demonstrated by broader deployment.
A results item score of 50% represents a clear indication of good performance levels, beneficial trends, and
appropriate comparative data for the results areas that are covered in the item and that are important to the
organizations business or mission. Higher scores reflect better performance levels and trends, stronger
comparative performance, and strong linkage with the organizations requirements or mission.

Process Scoring Guidelines (For Use with Categories 16)

SCORE

A PPROACH
MOST: an effective,

100%,,95%, or 90%

systematic/orderly approach to
about 86-100% of the Item
requirements is evident.

D EPLOYMENT
MOST: reported
systematic/orderly approaches are
deployed to about 86-100% of
appropriate work units.

85%, 80%, 75%, or 70%

MANY: an effective,
systematic/orderly approach to
about 66-85% of the Item
requirements is evident.

MANY: reported
systematic/orderly approaches are
deployed to about 66-85% of
appropriate work units.

65%, 60%, 55%, or 50%

SOME: an effective,
systematic/orderly approach to
about 46-65% of the Item
requirements is evident.

SOME: reported
systematic/orderly approaches are
deployed to about 46-65% of
appropriate work units.

45%. 40%, 35%, 30%, or 30%

FEW: an effective,
systematic/orderly approach to
about 26-45% of the Item
requirements is evident.

FEW: reported systematic/orderly

approaches are deployed to about
26-45% of appropriate work units.

25%, 20%, 15%, or 10%

MINIMAL: the beginnings of a

systematic/orderly approach to
about 6-25% of the Item
requirements are evident.

MINIMAL: reported
systematic/orderly approaches are
deployed to about 6-25% of
appropriate work units.

No systematic/orderly approach to
Item requirements is evident.

The reported systematic/orderly

approaches to Item requirements
are not deployed.

5% or 0%

28

Scoring System
The scoring of responses to the PQC Criteria for Performance Excellence items is based on two
evaluation dimensions: process (categories 16) and results (category 7).

Results Scoring Guidelines (For Use with Category 7)

SCORE

LE VELS

T RENDS

C OMPARISONS

LI NKAGEs

MOST: about 86-100%

of the levels reported are
favorable.

MOST: of the levels

reported, about 86-100%
have trends, with MOST
(86-100%) trends
reported improving.

MOST: of the results

reported, about 86-100%
have comparative
information, with MOST
(86-100%) of the
reported results better
than comparator.

MOST: about 86-100%

of expected results for
areas of importance to
the accomplishment of
the companys goals are
reported.

MANY: about 66-85% of

the levels reported are
favorable.

MANY: of the levels

reported, about 66-85%
have trends, with MANY
(66-85%) trends reported
improving.

MANY: of the results

reported, about 66-85%
have comparative
information, with MANY
(66-85%) of the reported
results better than
comparator.

MANY: about 66-85% of

expected results for
areas of importance to
the accomplishment of
the companys goals are
reported.

SOME: about 46-65% of

the levels reported are
favorable.

SOME: of the levels

reported, about 46-65%
have trends, with SOME
(46-65%) trends reported
improving.

SOME: of the results

reported, about 46-65%
have comparative
information, with SOME
(46-65%) of the reported
results better than
comparator.

SOME: about 46-65% of

expected results for
areas of importance to
the accomplishment of
the companys goals are
reported.

FEW: about 26-45% of

the levels reported are
favorable.

FEW: of the levels

reported, about 26-45%
have trends, with FEW
(26-45%) of the trends
reported improving.

FEW: of the results

reported, about 26-45%
have comparative
information, with FEW
(26-45%) of the reported
results better than
comparator.

FEW: only about 26-45%

of expected results for
areas of importance to
the accomplishment of
the companys goals are
reported.

MINIMAL: about 6-25%

of the levels reported are
favorable.

MINIMAL: of the levels

reported, about 6-25%
have trends, with
MINIMAL (6%-25%) of
the trends reported
improving.

MINIMAL: of the results

reported, about 6-25%
have comparative
information, with
MINIMAL (6-25%) of the
reported results better
than comparator.

MINIMAL: only about 625% of expected results

for areas of importance
to the accomplishment of
the companys goals are
reported.

NO levels reported.

There are NO trends

reported.

Comparative information
is NOT reported.

Results of importance to
the accomplishment of
the companys goals are
NOT reported.

100%,,95%, or 90%

85%, 80%, 75%, or 70%

65%, 60%, 55%, or 50%

45%. 40%, 35%, 30%, or 30%

25%, 20%, 15%, or 10%

5% or 0%

29

How to Respond to the Criteria

These guidelines explain how to respond most effectively to the requirements of the 17 process and
results Criteria items. See also the Scoring System, including the scoring guidelines (pages 2729),
which describe how to assess responses and determine your organizations performance
accomplishments.

First Steps

5. Start with the Company Profile.

1. Learn about the Criteria.

The Company Profile (pages 46) is the most

appropriate starting point. Whether you are using
the Criteria for self-assessment, writing an
application, or reviewing either of these, the
Company Profile helps you understand what is
most relevant and important to your organizations
business, mission, and performance.

Become thoroughly familiar with the following sections,

which provide a full orientation to the Criteria:

Criteria for Performance Excellence (pages 426)

Scoring System (pages 2729)
Glossary of Key Terms (pages 3843)

Responding to Process Items

2. Understand how to read and respond to a Criteria

item.
Review the Criteria for Performance Excellence
Structure (page 2), which shows the types of items, the
different parts of the items, and the role of each part.
Pay particular attention to the areas to address and the
corresponding notes.
Item requirements are presented as questions. Respond
fully to the questions, as missing information will be
interpreted as a gap in your performance management
system.
3. Review the scoring guidelines.
Consider both the Criteria and the scoring guidelines
(pages 2729) as you prepare your responses. As a
complement to the requirements of the process items
(categories 16), the process scoring guidelines address
the maturity of your approaches and the extent of their
deployment.

Similarly, as a complement to the requirements of the

results items (category 7), the results scoring guidelines
focus on the actual performance levels, the significance
of the results trends, relevant comparative data, and
linkage with important elements of your performance
management system.
4. Understand the meaning of key terms.

Many terms in the Criteria have meanings that may

differ somewhat from your perceived meanings. Terms
printed in small caps are defined in the Glossary of Key
Terms (pages 3843). Understanding these terms can
help you accurately self-assess your organization and
communicate your processes and results to those
reviewing your responses and planning your
improvement efforts.

30

Although the Criteria focus on key organizational

performance results, these results by themselves
offer little diagnostic value. For example, if some
results are poor or are improving at rates slower
than your competitors or comparable
organizations results, you need to understand why
this is so and what you might do to accelerate
improvement.
Your responses to process items (categories 16)
permit you or those who are reviewing your
responses to diagnose your organizations most
important processesthe ones that contribute
most to organizational performance improvement
and result in key outcomes or performance results.
This diagnosis and the quality of the feedback you
receive depend heavily on the content and
completeness of your responses. For this reason,
respond to these items by providing information
on your key processes. Guidelines for organizing
and reviewing such information follow.
1. Understand the meaning of how.
In responding to questions in process items that
begin with how, give information on your key
processes with regard to approach and
deployment (AD; see the Scoring System, page 27).
Responses lacking such information, or merely
providing an example, are referred to as anecdotal
information.

How to Respond to the Criteria

Responding to Results Items

Show that approaches are systematic. Systematic

approaches are repeatable and use data and
information to enable learning. In other words,
approaches are systematic if they build in the
opportunity for evaluation, improvement, innovation,
and knowledge sharing, thereby enabling a gain in
maturity.

1. Focus on your organizations most critical

performance results.
Report results that cover the most important
requirements for your organizations success, as
highlighted in the Company Profile and in the
Management, Planning, Customer Focus,
Workforce Focus, and Operations Focus categories.

Show deployment. In your responses, summarize how

your approaches are implemented in different parts of
your organization.

2. Report levels, trends, and comparisons, and

show integration.

2. Understand the meaning of what.

Two types of questions in process items begin with
what. The first requests basic information on key
processes and how they work. Although it is helpful to
state who performs the work, diagnosis or feedback also
requires a description of how the process works.
The second type of what question asks you to report key
findings, plans, objectives, goals, or measures. These
questions set the context for showing alignment and
integration in your performance management system.
For example, when you identify key strategic objectives,
your action plans, some performance measures, and
some results in category 7 are expected to relate to
those strategic objectives.
3. Show focus and consistency.
Showing focus and consistency in the process items and
tracking corresponding measures in the results items
should improve organizational performance. In your
responses, show focus and consistency in four areas:
In the Company Profile, make clear what is important
to your organization.
In Planning (category 2), including the objectives,
action plans and core competencies, highlight your
organizations areas of greatest focus and describe how
you deploy your plan.
In describing organizational-level analysis and review
(item 4.1), show how you analyze and review
performance information as a basis for setting priorities.
In Planning (category 2) and Operations Focus
(category 6), highlight the value creation and support
processes that are key to your organizations overall
performance.

31

Report performance levels on a meaningful

measurement scale.
Report trends to show the directions of results,
rates of change, and extent of deployment. A
minimum of three historical data points is
generally needed to ascertain a trend. Trends
should represent historic and current performance
and not rely on projected (future) performance.
There is no minimum period for trend data; time
intervals between data points should be
meaningful for the measure(s) you report. Trends
might span five or more years for some results. For
important results, include new data even if trends
are not yet well established. Explain trends that
show a significant beneficial or adverse change.
Report comparisons to show how your results
compare with those of other, appropriately
selected organizations.
Show linkage by including all important results,
and segment them appropriately (e.g., by
important customer, workforce, process, and
product-line groups) as necessary.

Responding Efficiently
1. Cross-reference when appropriate.
Ensure that each item response is as self-contained
as possible and that responses to different items
are mutually reinforcing. To accomplish this, refer
to other responses rather than repeat information.
In such cases, give key process information in the
item requesting that information. For example, you
would describe workforce development and
learning systems in item 5.2. Discussions about

How to Respond to the Criteria

workforce development and learning elsewhere in
your application would then reference but not repeat
details given in item 5.2.

The company shows, using a single graph, that

its three divisions separately track on-time
delivery.

2. Use a compact format.

An arrow indicates that an upward trend is

good for this measure.

To make the best use of space, use flowcharts, tables,

and bullets to present information concisely. Page
limits are designed to force your organization to
consider what is most important in managing your
enterprise and reporting your results.
3. Use graphs and tables.

You can report many results compactly by using graphs

and tables. When you report results over time or
compare them with others, normalize them (i.e.,
present them in a wayfor example, as ratiosthat
takes size factors into account). For example, if the
number of employees has varied over the period or if
you are comparing your results to those of
organizations differing in size, safety trends will be
more meaningful if you report them as lost workdays
per 100 employees rather than as total lost workdays.
Discussion of results and the graphs and tables
themselves should be close together in an Award
application. Trends that show a significant positive or
negative change should be explained. Use figure
numbers that correspond to Items. For example, the
third figure for Item 7.1 would be Figure 7.1-3. (See
the example in the figure that follows.)

To help interpret the Scoring Guidelines (page 29),

the following comments on the graphed results
would be appropriate:
The current overall company performance level
is excellent. This conclusion is supported by the
comparison with competitors and with a
world-class level.
The company shows excellent improvement
trends.
Division A is the current performance leader
showing sustained high performance and a
slightly positive trend. Division B shows rapid
improvement.
Its current performance is near that of the best
industry competitor but trails the world-class
level.
Division C a new division is having early
problems with on-time delivery. (The company
briefly should explain these early problems.)

The following graph illustrates data an organization

might present as part of a response to Item 7.1,
Customer and Product Results. In the Company Profile,
the organization has indicated on-time delivery as a
key customer requirement.
Using the graph, the following characteristics of clear
and effective data reporting are illustrated:
A figure number is provided for reference to the
graph in the text.

Good

Both axes and units of measure are clearly labeled.

Trend lines report data for a key customer
requirement on-time delivery.
Results are presented for several years.
Appropriate comparisons are clearly shown.

2009

32

2010

2011

2012

2013

Core Values and Concepts

These beliefs and behaviors are embedded in high-performing organizations. They are the foundation for
integrating key performance and operational requirements within a results-oriented framework that creates a
basis for action, feedback, and sustainability.
while building leadership, commitment, and initiative
throughout your organization.

The Baldrige Criteria are built on the following set of

interrelated core values and concepts:
Visionary leadership

Customer-Driven Excellence

Customer-driven excellence

Your customers are the ultimate judges of

performance and quality. Thus, your organization
must take into account all product and service
features and characteristics and all modes of
customer access and support that contribute value to
your customers. Such behavior leads to customer
acquisition, satisfaction, preference, and loyalty;
positive referrals; and, ultimately, the sustainability
of your business. Customer-driven excellence has
both current and future components: understanding
todays customer desires and anticipating future
customer desires and marketplace potential.

Organizational and personal learning

Valuing workforce members and partners
Agility
Focus on the future
Managing for innovation
Management by fact

Societal responsibility
Focus on results and creating value
Systems perspective

Visionary Leadership
Your organizations senior leaders should set a vision for
the organization, create a customer focus, demonstrate
clear and visible organizational values and ethics, and set
high expectations for the workforce. The vision, values,
and expectations should balance the needs of all your
stakeholders. Your leaders should also ensure the creation
of strategies, systems, and methods for achieving
performance excellence, stimulating innovation, building
knowledge and capabilities, and ensuring organizational
sustainability.
The values and strategies leaders define should help guide
all of your organizations activities and decisions. Senior
leaders should inspire and encourage your entire
workforce to contribute, to develop and learn, to be
innovative, and to embrace meaningful change. Senior
leaders should be responsible to your organizations
governance body for their actions and performance, and
the governance body should be responsible ultimately to
all your stakeholders for your organizations and its senior
leaders ethics, actions, and performance.
Senior leaders should serve as role models through their
ethical behavior and their personal involvement in
planning, providing a supportive environment for taking
intelligent risks, communicating, coaching and motivating
the workforce, developing future leaders, reviewing
organizational performance, and recognizing workforce
members. As role models, they can reinforce ethics,
values, and expectations

Many factors may influence value and satisfaction

over the course of your customers experience with
your organization. These factors include your
organizations customer relationship management,
which helps build trust, confidence, and loyalty.
Customer-driven excellence means much more than
reducing defects and errors, merely meeting
specifications, or reducing complaints. Nevertheless,
these factors contribute to your customers view of
your organization and thus are also important parts
of customer-driven excellence. In addition, your
success in recovering from defects, service errors,
and mistakes is crucial for retaining customers and
engaging them for the long term.
A customer-driven organization addresses not only
the product and service characteristics that meet
basic customer requirements but also those features
and characteristics that differentiate the organization
from competitors. This differentiation may be based
on innovative offerings, combinations of product and
service offerings, customized offerings, multiple
access and outward communication mechanisms,
rapid response, or special relationships.

Customer-driven excellence is thus a strategic

concept. It is directed toward customer retention and
loyalty, market share gain, and growth. It demands
constant sensitivity to changing and emerging
customer and market requirements and to the
factors that drive customer engagement. It demands
close attention to the voice of the customer. It
demands anticipating changes in the marketplace.
Therefore, customer-driven excellence demands a
33 customer-focused culture and organizational agility.

Organizational and Personal Learning

Achieving the highest levels of organizational performance
requires a well-executed approach to organizational and
personal learning that includes sharing knowledge via
systematic processes.
Organizational learning. Organizational learning includes
both continuous improvement of existing approaches and
significant change or innovation, leading to new goals,
approaches, products, and markets.
Learning needs to be embedded in the way your
organization operates. This means that learning (1) is a
regular part of daily work; (2) is practiced at the personal,
work unit, and organizational levels; (3) results in solving
problems at their source (root cause); (4) is focused on
building and sharing knowledge throughout your
organization; and (5) is driven by opportunities to effect
significant, meaningful change and to innovate. Sources
for learning include employees and volunteers ideas,
research and development, customers input, bestpractice sharing, and benchmarking.
Organizational learning can result in (1) enhanced value to
customers through new and improved products and
customer services; (2) the development of new business
opportunities; (3) the development of new and improved
processes or business models; (4) reduced errors, defects,
waste, and related costs; (5) improved responsiveness and
cycle time performance; (6) increased productivity and
effectiveness in the use of all your resources; and (7)
enhanced performance in fulfilling your organizations
societal responsibilities.
Personal learning. The success of your workforce
membersincluding your leadersdepends increasingly
on their having opportunities to learn and to practice new
skills. If your organization relies on volunteers, their
personal learning is also important, and you should
consider their learning and skill development.
Organizations invest in personal learning through
education, training, and other opportunities for continuing
growth and development. It includes preparing people for
future organizational core competencies. On-the-job
training offers a cost-effective way to cross-train and to
link training more closely to your organizations capacity
needs and priorities. Education and training programs may
have multiple modes, including computer, Web-based,
and distance learning.
Personal learning can result in (1) a more engaged,
satisfied, and versatile workforce that stays with your
organization; (2) cross-functional learning for your
organization; (3) the building of your organizations
knowledge assets; and (4) an improved environment for
innovation.
Thus, learning is directed not only toward better products
but also toward being more responsive, adaptive,
innovative, and efficientgiving your organization
marketplace sustainability and performance advantages
and engaging your workforce to increase satisfaction and
the motivation to excel.
34

Valuing Workforce
Members and Partners
An organizations success depends increasingly on an
engaged workforce that benefits from meaningful
work, clear organizational direction, and accountability
for performance. That engaged workforce must also
have a safe, trusting, and cooperative environment.
Additionally, the successful organization capitalizes on
the diverse backgrounds, knowledge, skills, creativity,
and motivation of its workforce and partners.
Valuing workforce members. Valuing the people in
your workforce means committing to their
engagement, satisfaction, development, and wellbeing. Increasingly, this involves offering more flexible,
high-performance work practices that are tailored to
varying workplace and home life needs. Major
challenges in valuing your workforce members include
(1) demonstrating your leaders commitment to their
success, (2) providing motivation and recognition that
go beyond the regular compensation system, (3)
offering development and progression within your
organization, (4) sharing your organizations
knowledge so your workforce can better serve your
customers and contribute to achieving your strategic
objectives, (5) creating an environment that
encourages intelligent risk taking to achieve
innovation, and (6) creating a supportive environment
for a diverse workforce.
Valuing partners. To accomplish their overall goals,
organizations need to build internal and external
partnerships. Internal partnerships might include
cooperation between labor and management. Forming
internal partnerships might also involve creating
network relationships among your work units and
locations or between employees and volunteers to
improve flexibility, responsiveness, and knowledge
sharing.
External partners might be customers, suppliers, and
education or community organizations. Strategic
partnerships or alliances, which are increasingly
important kinds of external partnerships, might offer
complementary core competencies that allow entry
into new markets or a basis for new products or
customer support services. Partnerships might also
permit you to address common issues by blending
your organizations core competencies or leadership
capabilities with partners complementary strengths
and capabilities. Thus, partnerships may be a source of
strategic advantage for your organization.
In successful internal and external partnerships, the
partners develop longer-term objectives, thereby
creating a basis for mutual investments and respect.
Partners should establish the key requirements for
success, means for regular communication,
approaches to evaluating progress, and means for
adapting to changing conditions. In some cases, joint
education and training could be a cost-effective
method of workforce development.

Agility
Success in todays ever-changing, globally competitive
environment demands agilitya capacity for rapid change
and for flexibility in operations. Organizations face evershorter cycles for introducing new/improved products and
services, and nonprofit and government organizations are
increasingly being asked to respond rapidly to new or
emerging social issues. Disruptive events are occurring
more frequently. They can be triggered by innovative
technologies or product introductions, economic upheaval
or stress, or social or societal demands. Organizations
must be capable of making transformational changes on
an ever-shorter cycle time. Major improvements in
response times often require new work systems, the
simplification of work processes, or the ability for rapid
changeover from one process to another. A cross-trained
and empowered workforce is a vital asset in such a
demanding environment.
A major success factor in meeting competitive challenges
is design-to-introduction time (the time it takes to initiate
a product or service feature) or innovation cycle time. To
meet the demands of rapidly changing markets, your
organization needs to carry out stage-to-stage integration

35

of activities from research or concept to

commercialization or implementation.
All aspects of time performance are now more critical,
and cycle time is a key process measure. Other
important benefits can be derived from this focus on
time; time improvements often drive simultaneous
improvements or changes in your work systems,
organization, quality, cost, supply-chain integration,
productivity, and sustainability in a challenging
economy.

Focus on the Future

Ensuring an organizations sustainability requires an
understanding of the short- and longer-term factors
that affect the organization and its marketplace.
Identification of key external environmental factors is
important even though their outcomes may be less
predictable. The pursuit of sustained growth and
performance leadership requires a strong future
orientation and a willingness to make long-term
commitments to key stakeholdersyour customers,
workforce, suppliers, partners, and stockholders; the
public; and your community. It also requires the agility
to modify plans when circumstances warrant.

Your organizations planning should anticipate many

factors, such as customers expectations; new business
and partnering opportunities; unexpected crises, including
changing economic conditions; workforce capacity and
capability needs; the competitive global marketplace;
technological developments; changes in customer and
market segments; new business models; evolving
regulatory requirements; changes in community and
societal expectations and needs; and strategic moves by
competitors. Your strategic objectives and your resource
allocations need to accommodate these influences. A
focus on the future includes developing your leaders,
workforce, and suppliers; accomplishing effective
succession planning; creating a supportive environment
for taking intelligent risks and encouraging innovation; and
anticipating societal responsibilities and concerns.

Managing for Innovation

Innovation means making meaningful change to improve
your organizations products, services, programs,
processes, operations, and business model, with the
purpose of creating new value for stakeholders.
Innovation should lead your organization to new
dimensions of performance. Innovation requires a
supportive environment, a process for identifying strategic
opportunities, and the pursuit of intelligent risks.
Innovation is no longer strictly the purview of research
and development departments; innovation is important
for all aspects of your operations and all work systems and
work processes. Your organization should be led and
managed so that taking intelligent risks becomes part of
the learning culture. Innovation should be integrated into
daily work and be supported by your performance
improvement system. Systematic processes for identifying
strategic opportunities should reach across your entire
organization.
Innovation builds on the accumulated knowledge of your
organization and its people. Therefore, the ability to
rapidly disseminate and capitalize on this knowledge is
critical to driving organizational innovation.

Management by Fact
Organizations depend on the measurement and analysis
of performance. Measurements should derive from
business needs and strategy, and they should provide
critical data and information about key processes, outputs,
results, and outcomes. Organizations need many types of
data and information for performance management.
Performance measurement should include measurement
of customer, product, and process performance;
comparisons of operational, market, and competitive
performance; supplier, workforce, partner, cost, and
financial performance; governance and compliance
results; and accomplishment of strategic objectives.
To facilitate analysis, data should be segmented by, for

36

example, markets, product lines, and workforce groups.

Analysis means extracting larger meaning from data and
information to support evaluation, decision making,
improvement, and innovation. It entails using data to
determine trends, projections, and cause-and-effect
relationships that might not otherwise be evident.
Analysis supports a variety of purposes, such as
planning, reviewing your overall performance,
improving operations, accomplishing change
management, and comparing your performance with
competitors or with best-practice benchmarks.
A major consideration in performance improvement and
change management is the selection and use of
performance measures or indicators. The measures or
indicators you select should best represent the factors
that lead to improved customer, operational, financial,
and societal performance. A comprehensive set of
measures or indicators tied to customer and
organizational performance requirements provides a
clear basis for aligning all processes with your
organizations goals. You may need measures and
indicators to support you in making decisions in a rapidly
changing environment. By analyzing data from your
tracking processes, you can evaluate the measures or
indicators themselves and change them to better
support your goals.

Societal Responsibility
Your organizations leaders should stress ethical
behavior, responsibilities to the public, and the
consideration of societal well-being and benefit. Leaders
should be role models for your organization and its
workforce in focusing on ethics and the protection of
public health, safety, and the environment. This
protection applies to any impact of your organizations
operations, as well as the life cycles of your products.
Also, your organization should emphasize resource
conservation and waste reduction at the source.
Planning should anticipate adverse impacts from the
production, distribution, transportation, use, and
disposal of your products. Effective planning should
prevent problems, provide for a forthright response if
problems occur, and make available the information and
support needed to maintain public awareness, safety,
and confidence.
Your organization should not only meet all local, state,
and federal laws and regulatory requirements but
should also treat these and related requirements as
opportunities to excel beyond mere compliance. Your
organization should stress ethical behavior in all
stakeholder transactions and interactions. Your
organizations governance body should require highly
ethical conduct and monitor all conduct accordingly.
Considering societal well-being and benefit means
leading and supportingwithin the limits of your
resourcesthe environmental, social, and economic

Systems Perspective

systems in your organizations sphere of influence. Such

leadership and support might include improving
education, health care, and other services in your
community; pursuing environmental excellence; being a
role model for socially important issues; practicing
resource conservation; reducing your carbon footprint;
performing community service and charity; improving
industry and business practices; and sharing
nonproprietary information.
For a role-model organization, leadership also entails
influencing other organizations, private and public, to
partner for these purposes.
Managing societal responsibilities requires your
organization to use appropriate measures and your
leaders to assume responsibility for those measures.

Focus on Results and Creating Value

Your organizations performance measurements need to
focus on key results. Results should be used to create and
balance value for your key stakeholdersyour customers,
workforce, stockholders, suppliers, and partners; the
public; and the community.
By creating value for key stakeholders, your organization
builds loyalty, contributes to growing the economy, and
contributes to society. To meet the sometimes conflicting
and changing aims that balancing value implies, your
organizational strategy should explicitly include key
stakeholder requirements. This will help ensure that plans
and actions meet differing stakeholder needs and avoid
adverse impacts on any stakeholders. A balanced
composite of leading and lagging performance measures is
an effective means to communicate short- and longerterm priorities, monitor actual performance, and provide a
clear basis for improving results.

37

The Baldrige Criteria provide a systems perspective for

managing your organization and its key processes to
achieve and to strive for performance excellence. The
seven Criteria categories, the core values and concepts,
and the scoring guidelines form the systems building
blocks and integrating mechanism. However,
successfully managing overall performance requires
organization-specific synthesis, alignment, and
integration. Synthesis means looking at your
organization as a whole and builds on key business
attributes, including your core competencies, strategic
objectives, action plans, and work systems. Alignment
means using the key linkages among the requirements
in the Criteria categories to ensure consistency of plans,
processes, measures, and actions. Integration builds on
alignment, so that the individual components of your
performance management system operate in a fully
interconnected manner and deliver anticipated results.
These concepts are depicted in the Baldrige Criteria
framework (page 1). When your organization takes a
systems perspective, your senior leaders focus on
strategic directions and customers. Your senior leaders
monitor, respond to, and manage performance based
on your results. With a systems perspective, you use
your measures, indicators, core competencies, and
organizational knowledge to build your key strategies,
link these strategies with your work systems and key
processes, and align your resources to improve your
overall performance and your focus on customers and
stakeholders.
Thus, a systems perspective means managing your
whole organization, as well as its components, to
achieve sustainability.

Glossary of Key Terms

Each term is followed by a definition. Subsequent sentences in the first paragraph elaborate on this definition.
The paragraphs that follow provide examples, descriptive information, or key linkages to other Criteria
information. The terms included here are those presented in small caps in the PQC Criteria for Performance
Excellence and scoring guidelines.
ACTION PLANS. The term action plans refers to
specific actions that respond to short- and longer-term
strategic objectives. Action plans include details of
resource commitments and time horizons for
accomplishment. Action plan development represents the
critical stage in planning when strategic objectives and
goals are made specific so that effective, organizationwide understanding and deployment are possible. In the
Criteria, deployment of action plans includes creating
aligned measures for all departments and work units.
Deployment also might require specialized training for
some employees or recruitment of personnel.
An example of a strategic objective for a supplier in a
highly competitive industry might be to develop and
maintain a price leadership position. Action plans could
entail designing efficient processes and creating an
accounting system that tracks activity-level costs, aligned
for the organization as a whole. Deployment requirements
might include work unit and team training in setting
priorities based on costs and benefits. Organizational-level
analysis and review likely would emphasize productivity
growth, cost control, and quality.
ALIGNMENT. The term alignment refers to consistency
of plans, processes, information, resource decisions,
actions, results, and analyses to support key organizationwide goals. Effective alignment requires a common
understanding of purposes and goals. It also requires the
use of complementary measures and information for
planning, tracking, analysis, and improvement at three
levels: the organizational level, the key process level, and
the work unit level.
ANALYSIS. The term analysis refers to an examination
of facts and data to provide a basis for effective decisions.
Analysis often involves the determination of cause-effect
relationships. Overall organizational analysis guides the
management of work systems and work processes toward
achieving key business results and toward attaining
strategic objectives.
Despite their importance, individual facts and data do not
usually provide an effective basis for actions or setting
priorities. Effective actions depend on an understanding of
relationships, derived from analysis of facts and data.
APPROACH. The term approach refers to the methods
used by an organization to address the PQC Criteria item
requirements. Approach includes the appropriateness of
the methods to the item requirements and to the
organizations operating environment, as well as how
effectively the methods are used.
38

Approach is one of the dimensions considered in

evaluating process items. For further description, see
the scoring system on pages 2729.
BENCHMARKS. The term benchmarks refers to
processes and results that represent best practices and
performance for similar activities, inside or outside an
organizations industry. Organizations engage in
benchmarking to understand the current dimensions of
world-class performance and to achieve discontinuous
(non-incremental) or breakthrough improvement.

Benchmarks are one form of comparative data. Other

comparative data organizations might use include
industry data collected by a third party (frequently
industry averages), data on competitors performance,
and comparisons with similar organizations that are in
the same geographic area or that provide similar products
and services in other geographic areas.
CONTINUOUS IMPROVEMENT. The term continuous
improvement refers to the progressive value-adding to a
product, process or services, which helps the company to
achieve better standards and results as compared to the
past.
CUSTOMER. The term customer refers to actual and
potential users of your organizations products, programs,
or services (referred to as products in the Criteria).
Customers include the end users of your products, as well
as others who might be their immediate purchasers or
users. These others might include distributors, agents, or
organizations that further process your product as a
component of their product. The Criteria address
customers broadly, referencing current and future
customers, as well as the customers of your competitors.
Customer-driven excellence is a PQC core value embedded
in the beliefs and behaviors of high-performing
organizations. Customer focus impacts and should
integrate an organizations strategic directions, its work
systems and work processes, and its business results.
See the definition of stakeholders on page 41 for the
relationship between customers and others who might be
affected by your products.
CUSTOMER. The term customer refers to client, buyer,
purchasers, actual and potential users of an organizations
products, programs, or services. Customers will include the
end-users and the immediate purchasers such as
distributors, agents, or others who need the products or
services as a component of their products or services. They
are the recipients or beneficiaries of the organizations
output.

CUSTOMER RELATIONSHIP. The term customer

relationship refers to the process of acquiring new
customers, retaining existing customers, and developing
new markets. This can also include the development of
partnerships and alliances with customers. Customer
relationship also involves the setting of service standards
to ensure quality of service and success outcomes that
require effective deployment of the service standards
throughout the organization.
CYCLE TIME. The term cycle time refers to the time
required to fulfill commitments or to complete tasks. Time
measurements play a major role in the Criteria because of
the great importance of time performance to improving
competitiveness and overall performance. Cycle time
refers to all aspects of time performance. Cycle time
improvement might include time to market, order
fulfillment time, delivery time, changeover time, customer
response time, and other key measures of time.
DEPLOYMENT. The term deployment refers to the
extent to which an approach is applied in addressing the
requirements of a PQC Criteria item. Deployment is
evaluated on the basis of the breadth and depth of
application of the approach to relevant work units
throughout the organization.
Deployment is one of the dimensions considered in
evaluating process items. For further description, see the
scoring system on pages 2729.
EFFECTIVE. The term effective refers to how well a
process or a measure addresses its intended purpose.
Determining effectiveness requires (1) the evaluation of
how well the process is aligned with the organizations
needs and how well the process is deployed or (2) the
evaluation of the outcome of the measure used.

great confidence. Some organizations also may view

their ethical principles as boundary conditions
restricting behavior that otherwise could have adverse
impacts on their organizations and/or society.
GOALS. The term goals refers to a future condition
or performance level that one intends or desires to
attain. Goals can be both short- and longer-term. Goals
are ends that guide actions. Quantitative goals,
frequently referred to as targets, include a numerical
point or range. Targets might be projections based on
comparative or competitive data. The term stretch
goals refers to desired major, discontinuous (nonincremental) or breakthrough improvements, usually
in areas most critical to your organizations future
success.
Goals can serve many purposes, including
clarifying strategic objectives and action plans to
indicate how you will measure success
fostering teamwork by focusing on a common end
encouraging out-of-the-box thinking (innovation) to
achieve a stretch goal
providing a basis for measuring and accelerating
progress
HOW. The term how refers to the systems and
processes that an organization uses to accomplish its
mission requirements. In responding to how
questions in the process item requirements, process
descriptions should include information such as
approach (methods and measures), deployment,
learning, and integration factors. Indicators
See measures and indicators on page 40.

ETHICAL BEHAVIOR. The term ethical behavior refers

to how an organization ensures that all its decisions,
actions, and stakeholder interactions conform to the
organizations moral and professional principles of
conduct. These principles should support all applicable
laws and regulations and are the foundation for the
organizations culture and values. They distinguish right
from wrong.

KEY. The term key refers to the major or most

important elements or factors, those that are critical to
achieving your intended outcome. The PQC Criteria, for
example, refer to key challenges, key plans, key work
processes, and key measures those that are most
important to your organizations success. They are the
essential elements for pursuing or monitoring a desired
outcome.

Senior leaders should act as role models for these

principles of behavior. The principles apply to all people
involved in the organization, from temporary members of
the workforce to members of the board of directors, and
they need to be communicated and reinforced on a
regular basis. Although the PQC Criteria do not prescribe
that all organizations use the same model for ensuring
ethical behavior, senior leaders should ensure that the
organizations mission and vision are aligned with its
ethical principles. Ethical behavior should be practiced
with all stakeholders, including the workforce,
shareholders, customers, partners, suppliers, and the
organizations local community.

LEVELS. The term levels refers to numerical

information that places or positions an organizations
results and performance on a meaningful measurement
scale. Performance levels permit evaluation relative to
past performance, projections, goals, and appropriate
comparisons.

LINKAGES. The term linkages refers to the

connection and relatedness of the results to the
purpose, goals, objectives, plans, and processes in the
Company Profile and Process Items (categories 1-6).
Linkages enable a company to go beyond alignment so
that individual components of a performance
management system operate as an interconnected unit.
Well-designed and clearly articulated ethical principles
Linkages is one of the dimensions considered in
should empower people to make effective decisions with
39 evaluating results items. For further description, see the
scoring system on pages 2729.

MEASURES AND INDICATORS. The term measures

and indicators refers to numerical information that
quantifies input, output, and performance dimensions of
processes, products, programs, projects, services, and the
overall organization (outcomes). Measures and indicators
might be simple (derived from one measurement) or
composite.

characteristics important to customers. Examples

include product reliability, on-time delivery, customerexperienced defect levels, and service response time.
For nonprofit organizations, product performance
examples might include program and project
performance in the areas of rapid response to
emergencies, at-home services, or multilingual services.

The Criteria do not make a distinction between measures

and indicators. However, some users of these terms prefer
indicator (1) when the measurement relates to
performance but is not a direct measure of such
performance (e.g., the number of complaints is an
indicator of dissatisfaction but not a direct measure of it)
and (2) when the measurement is a predictor (leading
indicator) of some more significant performance (e.g.,
increased customer satisfaction might be a leading
indicator of market share gain).

Customer-focused performance refers to

performance relative to measures and indicators of
customers perceptions, reactions, and behaviors.
Examples include customer retention, complaints, and
customer survey results.

MISSION. The term mission refers to the overall

function of an organization. The mission answers the
question, What is this organization attempting to
accomplish? The mission might define customers or
markets served, distinctive or core competencies, or
technologies used.
OVERALL CATEGORY REQUIREMENTS. The term
overall category requirements refers to the topics
Criteria users need to address when responding to the
central theme of a category. Overall requirements address
the most significant features of a category. In the Criteria,
the overall requirements of each category are presented
in one or more introductory sentences below the category
title. This presentation is illustrated in the item format
shown on page 2.
PARTNERS. The term partners refers to those key
organizations or individuals who are working in concert
with your organization to achieve a common goal or to
improve performance. Typically, partnerships are formal
arrangements for a specific aim or purpose, such as to
achieve a strategic objective or to deliver a specific
product.
Formal partnerships are usually for an extended period of
time and involve a clear understanding of the individual
and mutual roles and benefits for the partners.

PERFORMANCE. The term performance refers to

outputs and their outcomes obtained from processes,
products, and customers that permit the organization to
evaluate and compare its results relative to performance
projections, standards, past results, goals, and the results
of other organizations. Performance can be expressed in
nonfinancial and financial terms.
The PQC Criteria address four types of performance:
(1) product, (2) customer-focused, (3) operational, and (4)
financial and marketplace.
Product performance refers to performance relative to
measures and indicators of product and service

40

Operational performance refers to workforce,

leadership, organizational, and ethical performance
relative to effectiveness, efficiency, and accountability
measures and indicators. Examples include cycle time,
productivity, waste reduction, workforce turnover,
workforce cross-training rates, regulatory compliance,
fiscal accountability, strategy accomplishment, and
community involvement. Operational performance
might be measured at the work unit level, key work
process level, and organizational level.
Financial and marketplace performance refers to
performance relative to measures of cost, revenue, and
market position, including asset utilization, asset
growth, and market share. Examples include returns on
investments, value added per employee, debt-to-equity
ratio, returns on assets, operating margins,
performance to budget, the amount in reserve funds,
cash-to-cash cycle time, other profitability and liquidity
measures, and market gains.
PERFORMANCE EXCELLENCE. The term
performance excellence refers to an integrated
approach to organizational performance management
that results in (1) delivery of ever-improving value to
customers and stakeholders, contributing to
organizational sustainability; (2) improvement of
overall organizational effectiveness and capabilities;
and (3) organizational and personal learning. The PQC
Criteria for Performance Excellence provide a
framework and an assessment tool for understanding
organizational strengths and opportunities for
improvement and thus for guiding planning efforts.
PROCESS. The term process refers to linked activities
with the purpose of producing a product (or service) for
a customer (user) within or outside the organization.
Generally, processes involve combinations of people,
machines, tools, techniques, materials, and
improvements in a defined series of steps or actions.
Processes rarely operate in isolation and must be
considered in relation to other processes that impact
them. In some situations, processes might require
adherence to a specific sequence of steps, with
documentation (sometimes formal) of procedures and
requirements, including well-defined measurement and
control steps.

In many service situations, particularly when customers

are directly involved in the service, process is used in a
more general way (i.e., to spell out what must be done,
possibly including a preferred or expected sequence). If a
sequence is critical, the service needs to include
information to help customers understand and follow the
sequence. Such service processes also require guidance to
the providers of those services on handling contingencies
related to the possible actions or behaviors of those
served.
In knowledge work, such as strategic planning, research,
development, and analysis, process does not necessarily
imply formal sequences of steps. Rather, process implies
general understandings regarding competent
performance, such as timing, options to be included,
evaluation, and reporting. Sequences might arise as part
of these understandings.

meaningful analysis of an organizations performance. It

is up to each organization to determine the specific
factors that it uses to segment its customers, markets,
products, and workforce.
Understanding segments is critical to identifying the
distinct needs and expectations of different customer,
market, and workforce groups and to tailoring product
offerings to meet their needs and expectations. As an
example, market segmentation might be based on
distribution channels, business volume, geography, or
technologies employed. Workforce segmentation might
be based on geography, skills, needs, work assignments,
or job classifications.
SENIOR LEADERS. The term senior leaders refers to
an organizations senior management group or team. In
many organizations, this consists of the head of the
organization and his or her direct reports.

In the PQC scoring system, your process achievement level

is assessed. This achievement level is based on four factors
that can be evaluated for each of an organizations key
processes: approach, deployment, learning, and
integration. For further description, see the scoring system
on pages 2729.

STAFFING LEVEL. The term staffing level refers to

your organizations ability to ensure a sufficient number
of employees to accomplish its work processes and
successfully deliver your products to your customers,
including the ability to meet seasonal or varying
demand levels.

PRODUCTIVITY. The term productivity refers to

measures of the efficiency of resource use.

STAKEHOLDERS. The term stakeholders refers to all

groups that are or might be affected by an
organizations actions and success. Examples of key
stakeholders might include customers, the workforce,
partners, collaborators, governing boards, stockholders,
donors, suppliers, taxpayers, regulatory bodies, policy
makers, funders, and local and professional
communities.

Although the term often is applied to single factors, such

as the workforce (labor productivity), machines, materials,
energy, and capital, the productivity concept applies as
well to the total resources used in producing outputs. The
use of an aggregate measure of overall productivity allows
a determination of whether the net effect of overall
changes in a processpossibly involving resource tradeoffsis beneficial.
PURPOSE. The term purpose refers to the fundamental
reason that an organization exists. The primary role of
purpose is to inspire an organization and guide its setting
of values. Purpose is generally broad and enduring. Two
organizations in different businesses could have similar
purposes, and two organizations in the same business
could have different purposes.
RESULTS. The term results refers to outputs and
outcomes achieved by an organization in addressing the
requirements of a PQC Criteria item. Results are evaluated
on the basis of current performance; performance relative
to appropriate comparisons; the rate, breadth, and
importance of performance improvements; and the
relationship of results measures to key organizational
performance requirements. For further description, see
the scoring system on pages 2729.
SEGMENT. The term segment refers to a part of an
organizations overall customer, market, product offering,
or workforce base.
Segments typically have common characteristics that can
be grouped logically. In results items, the term refers to
disaggregating results data in a way that allows for

41

See also the definition of customer on page 38.

STRATEGIC CHALLENGES. The term strategic
challenges refers to those pressures that exert a
decisive influence on an organizations likelihood of
future success. These challenges frequently are driven
by an organizations future competitive position relative
to other providers of similar products. While not
exclusively so, strategic challenges generally are
externally driven. However, in responding to externally
driven strategic challenges, an organization may face
internal strategic challenges.
External strategic challenges may relate to customer or
market needs or expectations; product or technological
changes; or financial, societal, and other risks or needs.
Internal strategic challenges may relate to an
organizations capabilities or its human and other
resources.
See the definitions of strategic advantages and
strategic objectives on this page for the relationship
among strategic challenges, strategic advantages, and
the strategic objectives an organization articulates to
address its challenges and advantages.

STRATEGIC OBJECTIVES. The term strategic

objectives refers to an organizations articulated aims or
responses to address major change or improvement,
competitiveness or social issues, and business advantages.
Strategic objectives generally are focused both externally
and internally and relate to significant customer, market,
product, or technological opportunities and challenges
(strategic challenges).

SYSTEMATIC. The term systematic refers to

approaches that are well-ordered, are repeatable, and
use data and information so learning is possible. In
other words, approaches are systematic if they build in
the opportunity for evaluation, improvement, and
sharing, thereby permitting a gain in maturity. For use
of the term, see the scoring guidelines for process items
on page 28.

Broadly stated, they are what an organization must

achieve to remain or become competitive and ensure
long-term sustainability. Strategic objectives set an
organizations longer-term directions and guide resource
allocations and redistributions.

TRENDS. The term trends refers to numerical

information that shows the direction and rate of change
for an organizations results or the consistency of its
performance over time. Trends provide a time
sequence of organizational performance.

See the definition of action plans on page 56 for the

relationship between strategic objectives and action plans
and for an example of each.

A minimum of three historical (not projected) data

points generally is needed to begin to ascertain a trend.
More data points are needed to define a statistically
valid trend. The time period for a trend is determined
by the cycle time of the process being measured.
Shorter cycle times demand more frequent
measurement, while longer cycle times might require
longer time periods before meaningful trends can be
determined.

SUSTAINABILITY/SUSTAINABLE. The term

sustainability refers to your organizations ability to
address current business needs and to have the agility and
strategic management to prepare successfully for your
future business, market, and operating environment. Both
external and internal factors need to be considered. The
specific combination of factors might include industrywide
and organization-specific components.
Sustainability considerations might include workforce
capability and capacity, resource availability, technology,
knowledge, core competencies, work systems, facilities,
and equipment. Sustainability might be affected by
changes in the marketplace and customer preferences,
changes in the financial markets, and changes in the legal
and regulatory environment. In addition, sustainability has
a component related to day-to-day preparedness for realtime or short-term emergencies.
In the context of the PQC Criteria, the impact of your
organizations products and operations on society and the
contributions you make to the well-being of
environmental, social, and economic systems are part of
your organizations overall societal responsibilities.
Whether and how your organization addresses such
considerations also may affect its sustainability.
SUPPLIERS. The term suppliers refers to external
parties that provide goods and services to the
organization.
SUPPORT PROCESSES. Your support processes are
those that support your daily operations and your product
and service delivery but are not usually designed in detail
with the products and services. The support process
requirements usually do not depend significantly on
product and service characteristics.
Support process design requirements usually depend
significantly on your internal requirements, and they must
be coordinated and integrated to ensure efficient,
effective linkage and performance. Support processes
might include finance and accounting, facilities
management, legal services, human resource services,
public relations, and other administrative services.
42

Examples of trends called for by the Criteria include

data related to product performance, customer and
workforce satisfaction and dissatisfaction results,
financial performance, marketplace performance, and
operational performance, such as cycle time and
productivity.
VALUE. The term value refers to the perceived worth
of a product, process, asset, or function relative to cost
and to possible alternatives.

Organizations frequently use value considerations to

determine the benefits of various options relative to
their costs, such as the value of various product and
service combinations to customers. Organizations need
to understand what different stakeholder groups value
and then deliver value to each group. This frequently
requires balancing value for customers and other
stakeholders, such as your workforce and the
community.
VALUE CREATION. The term value creation refers
to processes that produce benefit for your customers
and for your business. They are the processes most
important to running your business those that
involve the majority of your employees and generate
your products, your services, and positive business
results for your stockholders and other key
stakeholders.
VALUE CREATION PROCESS. Value creation
processes refer to activities that increase the products
worth and usefulness to the customers.
VALUES. The term values refers to the guiding
principles and behaviors that embody how your
organization and its people are expected to operate.
Values reflect and reinforce the desired culture of an
organization. Values support and guide the decision

making of every workforce member, helping the

organization accomplish its mission and attain its vision in
an appropriate manner. Examples of values might include
demonstrating integrity and fairness in all interactions,
exceeding customer expectations, valuing individuals and
diversity, protecting the environment, and striving for
performance excellence every day.

part-time, temporary, and telecommuting employees, as

well as contract employees supervised by the
organization) and volunteers, as appropriate. The
workforce includes team leaders, supervisors, and
managers at all levels.

VISION. The term vision refers to the desired future

state of your organization. The vision describes where the
organization is headed, what it intends to be, or how it
wishes to be perceived in the future.

WORK PROCESSES. The term work processes refers to

your most important internal value creation processes.
They might include product design and delivery, customer
support, supply chain management, business, and support
processes. They are the processes that involve the
majority of your organizations workforce and produce
customer, stakeholder, and stockholder value.
Your key work processes frequently relate to your core
competencies, to the factors that determine your success
relative to competitors, and to the factors considered
important for business growth by your senior leaders.
WORKFORCE. The term workforce refers to all people
actively involved in accomplishing the work of your
organization, including paid employees (e.g., permanent,

43

WORKFORCE ENGAGEMENT. The term workforce

engagement refers to the extent of workforce
commitment, both emotional and intellectual, to
accomplishing the work, mission, and vision of the
organization. Organizations with high levels of workforce
engagement are often characterized by high-performing
work environments in which people are motivated to do
their utmost for the benefit of their customers and for the
success of the organization.
In general, members of the workforce feel engaged when
they find personal meaning and motivation in their work
and when they receive positive interpersonal and
workplace support. An engaged workforce benefits from
trusting relationships, a safe and cooperative
environment, good communication and information flow,
empowerment, and performance accountability. Key
factors contributing to engagement include training and
career development, effective recognition and reward
systems, equal opportunity and fair treatment, and familyfriendliness.

Applying for the Philippine Quality Challenge Award

How does PQC relate to the PQA?

What are the benefits gained from

applying?

In the interest of rationalizing all existing

quality/productivity awards for organizations in
both private and public sectors, the PQA
represents the apex of all awards, the highest
level of recognition for exemplary organizational
performance.

Each applicant organization gains an outside

perspective on its organizational performance based
on 200-250 hours of review by at least two business
experts and quality practitioners from industry,
academe and government. The results of this review
are contained in a Feedback Report, outlining
strengths and areas for improvement based on the
Criteria. Feedback reports are used by organizations
as inputs in strategic planning, in improving
productivity, and in sustaining their organizational
improvement programs and activities.

Considering that there are different levels of

recognition, previous winners of other award
programs such as the Department of Interior and
Local Government (DILG) Gawad Pamana ng Lahi,
Department of Trade and Industry (DTI) Golden
Shell, DTI-Center for Industrial Competitiveness
Pro-Active Program Achievement Award, BishopsBusinessmen Conference's (BBC) Sikap-Gawa

How are Award recipients selected?

Award applications are reviewed and evaluated by a
Team of Assessors. After the report-based
assessment, applicants are site visited. The Board of
Judges reviews the assessments and decides the
award recipients and corresponding award levels.
Decisions made by the Board of Judges are final and
are not subject to appeal.

Industrial Peace Award, Asian Institute of

Management and the Philippine Society for
Qualitys Outstanding Quality Company of the
Year, among others, are all qualified to apply for
the Commitment, Proficiency, Mastery or even
the Performance

What does an organization receive if it

is an Award recipient?

Excellence Levels of the Awards Program. Figure 1

above shows the relationship of the other qualityrelated awards with the different levels of the
PQA.

The PQC is given annually to qualified organizations in

the private and public sectors which have
demonstrated any of the following levels of
performance:

The rationale behind the ladderized approach is to

encourage organizations to strive for excellence
through continuous improvement.

Philippine Quality Challenge 2

Achieved progress in building sound process
Demonstrated good results

Philippine Quality Challenge 1

Just beginning quality journey
Planted seeds of quality and productivity
Award recipients shall receive a trophy bearing the
Seal of the President of the Philippines and the PQC
Logo. The Award shall be given by the Secretary of
the Department of Trade and Industry in appropriate
ceremonies held in a hotel.

44

Applying for the Philippine Quality Challenge Award

Other Requirements for all
Applicants

Organizational Chart (if a subsidiary or a sub-unit

company/agency, attach also another
organizational chart that shows the applicant
companys relationship to the parents highest
management level, including all intervening levels.

Must comply with relevant statutory and

regulatory requirements; and
Must have employee(s) trained in PQC Application
Development Course either in a public run
organized by the Secretariat or in-house training
conducted by accredited resource person.

Deadline for submission of the application form and

attachments is the last working day of November.
After receiving a notification of acceptance from the
PQC Secretariat, applicant companies may prepare
and submit the required Application Report on or
before end of January in the appropriate award cycle.

Application Fees
For large companies/agencies
with 200 or more regular and
contractual employees

P 20,000.00

For medium-sized
companies/agencies with less
than 200 regular and
contractual employees

P 15,000.00

For small companies/agencies

with less than 100 regular and
contractual employ-ees

P 10,000.00

Application Report
No. of Pages
1. Application Report : 30 (maximum)
2. Company Profile : 5 (maximum)
35 pages (total)
Typing Instructions
1.
2.
3.
4.
5.
6.

These fees cover all expenses associated with

distribution and review of applications and
development of feedback reports.

7.

Note: Payment of the Application Fee will be upon

submission of the Application Report. These fees
shall be reviewed and may be adjusted annually.

8.
9.

Site Visit Review Fees

There are no site visit review fees. However, all
site visit related expenses such as transportation
(air, land or sea), meals and accommodations, if
necessary, of the assessors shall be borne by the
applicant companies/agencies.

10

Font Type : Times New Roman

Font Size : 12
Paper : A4 Size
Format : 2 Columns
Spacing : Single
Include page number (Roman numerals for
company profile and other documents prior to
the responses that should begin with page 1.
For figures and tables, please put appropriate
title and include a list of figures.
Include a glossary of key terms.
Include Application Number and copy no. at the
cover page or in a separate blank sheet before
the cover page at the lower right portion.
Cover page (name of the company; may include
logo and picture; there is no strict format for the
cover page)

Table of Contents
1. Eligibility Determination Form
2. Application Form
3. Glossary of Key Terms and Abbreviations
4. List of Figures
5. Company Profile
6. Criteria Responses:

Schedule of Submission of Forms

Applicant companies are required to submit the
accomplished Application Form with the following
attachments:
Securities and Exchange Commission (SEC)
Certificate of Incorporation

No. of Copies
10 hard copies (all originals) and email soft copy in
PDF format
Back to back copies with spiral

Department of Trade and Industry (DTI)

Business Name Registration and
City/Municipality Business Permit
45

Applying for the Philippine Quality Challenge Award

Eligibility Rules and Restrictions

Eligibility Rules and Restrictions

Private companies (corporations and single

proprietorship) and public sector agencies and
organizations are eligible to apply for the PQC. Private
companies applying for the Award must be registered,
must have business operations located in the
Philippines which can be assessed by a panel of quality
professionals, and must been in existence for three
years or more at the time of application. All
subordinate elements of the applicants organization
must be included in the application.

The following are the eligibility rules and

restrictions:

Eligible public sector organizations include national line

agencies, government-owned or controlled
corporations, government financial institutions, and
local government units.

Charitable, trade and industry, fraternal and

sports organizations, associations and institutions
are not eligible.
An application is eligible only if it is self-sufficient
to be examined in all seven criteria categories and
can be inspected in the Philippines. If an
applicant has some activities performed outside
the applicants immediate organizations (e.g. by a
parent organization or its other subsidiaries, or
overseas components of the applicant), it must
ensure that:
- In the event of site visit, the appropriate
people and materials will be available for
examination in the Philippines to document its
operational practices in all major business
functions, and

Eligibility Categories
Private Sector
1. Small and Medium Enterprises

- In the event the applicant becomes a recipient

of the PQC Award, it must share its practices in
the PQC Conference and the benchmarking
network, as well as open its facilities for visits.

2. Large Enterprises

Public Sector
1. Departments, Bureaus, and Attached Agencies

Subsidiaries

2. Government-Owned and/or Controlled

Corporations and Government Financial
Institutions

In the manufacturing and service categories,

subsidiaries of a company may be eligible for the
Award subject to the following conditions:

3. State Universities and Colleges

- It must be self-sufficient

4. Local Government Units

- It must have a clear definition of its own

organization and be recognized by its
customers as a distinct business entity

5. Other Government Agencies

- It cannot apply for the PQC at the same time

with its parent organization in the same year

46

Applying for the Philippine Quality Challenge Award

What is expected for award recipients?

2. a completed Application Form; and

Award recipients are required to share information

on their successful performance and quality
strategies with other organizations in the Philippines.
However, they are not expected to share proprietary
information, even if such information was part of
their Award application.

3. an application report consisting of a Business

Overview and responses to the requirements of
the criteria.

Where to apply?
Applicant organizations may get application forms
from and submit the application package to:

An annual conference featuring PQC awardees will be

the venue for sharing information aside from hosting
observational tours by the awardee organization and
printing of abstracts, application summaries and
other materials by said awardees.

Award Manager
Department of Trade and Industry (DTI)
Attn.: Center for Industrial Competitiveness
3rd Floor, Tara Building
389 Sen. Gil Puyat Avenue, Makati City
Telephone Numbers: (632) 895.3198 / 890.4889
Telefax Number: (632) 890-4861
E-mail Address: pqa.org.ph@gmail.com
Web Site: www.dti.gov.ph / www.pqa.org.ph

Award recipients may publicize and advertise receipt

of Award. They are allowed to use the PQC Logo on
the organizations stationery, in advertisements and
materials used for advertising and promotion,
provided that these follow certain guidelines among
which are:

Award Administrator for Public Sector

Development Academy of the Philippines (DAP)
Attn: Center for Quality and Competitiveness
5th Floor, DAP Bldg., San Miguel Avenue
Ortigas Center, Pasig City
Tel. No.: 631-2156
Fax No.: 631-2137
Email: pqa@dap.edu.ph
URL: http://www.dap.edu.ph

1. The PQC Logo shall be used only by the

organization and shall always be used together with
the name of the organization, the Award Level and
year the Award was conferred.
2. The PQC Logo shall not be directly applied on the
organizations products, programs or services, and its
packaging, in such a way as to imply that the product,
program or service itself is certified by the Award
Manager.

Award Administrator for Private Sector

Philippine Society for Quality, Inc. (PSQ)
Suite 3-2, Sunshine Condominium
9633 Kamagong St., Makati City
Tel. No.: 899-5925
Fax No.: 899-5925
E-mail: psqualityinc@yahoo.com
URL: http://www.psq.org.ph

How does an organization apply?

An applicant organization needs to submit an
application package that consists of three parts:

1. an Eligibility Determination Form showing that

eligibility has been approved;

47

AWARD IMPLEMENTING AGENCY

Department of Trade and Industry - Competitiveness Bureau
3/F, Tara Building
389 Sen. Gil Puyat Avenue, Makati City
Telephone Numbers: (632) 895.3198 / 890.4889
Telefax Number: (632) 890-4861
E-mail Address: pqa.org.ph@gmail.com
Web Site: www.dti.gov.ph / www.pqa.org.ph

AWARD ADMINISTRATOR FOR PUBLIC SECTOR

Center for Quality and Competitiveness
Development Academy of the Philippines
5/F, DAP Building, San Miguel Avenue, Pasig City
Telephone Number: (632) 631-2137 / (632) 631-0921 to 30 loc. 171
Fax Number: (632) 631-2137 / (632) 631-2123
E-mail Address: pqa@dap.edu.ph
Web Site: www.dap.edu.ph/cqc

AWARD ADMINISTRATOR FOR PRIVATE SECTOR

Philippine Society for Quality, Inc.
Suite 3-2, Sunshine Condominium
9633 Kamagong Street, Makati City
Telefax Number:(632) 899-5925
E-mail Address: psqualityinc@yahoo.com
Website: www.psq.org.ph