Business Excellence: Advantages and Criticisms

In a previous post here, I discussed the different definitions for the Business Excellence concept and the different approaches and frameworks that can be used to start and sustain this journey. In this article, the term, business excellence, will be further critically evaluated in order to understand the benefits that can be generated from achieving it and the critiques in this area.

Advantages of Achieving Business Excellence

The value of embracing the business excellence thinking in companies has been verified by different empirical studies. The results have shown that the benefits can be reaped in different industries, with different company sizes and, more importantly, various geographical locations where culture can be a barrier to achieving and sustaining excellent performance. For example, Porter and Tanner (2004, pp.17–60) analyzed 19 studies from the period 1983 to 2002, covering companies who implemented Deming Prize, Malcolm Baldrige Award and EFQM model in the USA, Europe, Taiwan and Japan. They concluded that these frameworks resulted in many positive returns for these companies. The advantages can be grouped into two categories; tangible and non-tangible benefits.

On the tangible side, working towards achieving excellence in manufacturing companies means reducing the costs through implementing productivity initiatives such as minimizing product defects, scrap and rework. These initiatives also help in improving other manufacturing KPIs (Key Performance Indicators) such as manufacturing yield, cycle time and on-time deliveries (Porter & Tanner 2004, p.20; Bolboli & Reiche 2013).

Additionally, adopting business excellence frameworks has helped the organizations to increase sales volume and revenues (Porter & Tanner 2004, p.20), and hence the return on equity, assets and capital (Porter & Tanner 2004, p.31; Dahlgaard & Dahlgaard 2013) which naturally results in improving shareholder’s returns (Bolboli & Reiche 2013).

On the non-tangible side, business excellence thinking facilitates communication by providing a common language about the expected performance (Porter & Tanner 2004, p.21). Moreover, business excellence frameworks improve top management involvement (Porter & Tanner 2004, p.20; Dahlgaard & Dahlgaard 2013), employees’ engagement and satisfaction and hence decreasing employee turnover (Porter & Tanner 2004, p.21).

On a wider perspective, business excellence helps in increasing customers’ satisfaction and market share (Porter & Tanner 2004, p.30) and even can be a distinctive competitive advantage for the company (Costantini & Zanin 2015).

Criticisms against Business Excellence

Despite the above advantages, business excellence frameworks and awards have been criticized due to different limitations.

The first set of critiques was related to the frameworks’ criteria that are used to assess and evaluate the current performance level. Although some scholars argued that the score in the self-assessment in the excellence framework can be used as an indicator for the ‘quality maturity’ of the company (Bauer et al. 2005), others argued that the self-assessment does not have that power. The assessment criteria were grouped under categories and sub-categories judgmentally and based on experts’ opinions only, and that layout was not verified via empirical researches (Porter & Tanner 2004, p.289). This qualitative nature of the assessment process does not only carry a certain degree of bias (Sîrb 2013; Ezzabadi et al. 2015), but also led to a confusion when amending the framework and shifting the criteria between different categories and sub-categories (Porter & Tanner 2004, p.289).

More importantly, the comparison between the consecutive self-assessments becomes meaningless when the criteria and the categories are changed (Porter & Tanner 2004, p.289).

Finally, the criteria by themselves are sophisticated and difficult to understand (Dahlgaard & Dahlgaard 2013) and do not come with a clear road map for implementation (Bolboli & Reiche 2013).

The second set of critiques was related to the barriers to the implementation such as the need to obtain a huge commitment from the top management within limited corporate resources (Porter & Tanner 2004, p.289) and people being resistant to change (Dahlgaard & Dahlgaard 2013; Bolboli & Reiche 2014). Equally important, the excellence frameworks can create bureaucracy due to the need for a massive amount of paperwork and documented procedures (Dahlgaard & Dahlgaard 2013), and conducting the self-assessment is a time-consuming task (Rusjan 2005). Finally, and due to the above barriers and the lack of clear understanding of the value of achieving business excellence, some companies focus on improving the score itself and the getting of the award rather than working to achieve the long term advantages of business excellence (Rusjan 2005).

The final set of critiques was related to the applicability of these models in today’s rapidly changing business environment. Scholars argued that the original thinking that shaped business excellence is no longer applicable because it was developed based on a relatively well-predicted business environment, where lessons learned from the past can be used for continuous improvement (van der Wiele et al. 2011; Dahlgaard & Dahlgaard 2013; Dervitsiotis 2014)  The long-term planning opportunity has frequently disappeared and now more nonlinear strategic thinking is required (Srivastava 2016). Hence, business excellence models should be ‘generic’ and applicable to all types of business, yet ‘flexible’ and ‘dynamic’ to be accommodated in different future situations (Dawei et al. 2011).

These limitations were the drivers to amend and update the business excellence thinking by many parties. I will discuss this new shift in a different article.

References

Bauer, J., Falshaw, R. & Oakland, J.S., 2005. Implementing business excellence. Total Quality Management & Business Excellence, 16(4), pp.543–553.

Bolboli, S.A. & Reiche, M., 2013. A model for sustainable business excellence: implementation and the roadmap. The TQM Journal, 25(4), pp.331–346.

Bolboli, S.A. & Reiche, M., 2014. Culture-based design and implementation of business excellence. The TQM Journal, 26(4), pp.329–347.

Costantini, A. & Zanin, F., 2015. The influence of total quality management on risk identification and non-financial performance measures: An Italian-based empirical analysis. International Journal of Management Cases, 17(4), pp.73–87.

Dahlgaard, J.J. & Dahlgaard, S., 2013. Business excellence models: limitations, reflections and further development. Total Quality Management & Business Excellence, 24(July 2015), pp.519–538.

Dawei, L., Betts, A. & Croom, S., 2011. Re-investigating business excellence : values, measures and a framework. Toatal Quality Management & Business excellence, 22(12), pp.1263–1276.

Dervitsiotis, K., 2014. Cultivating total innovation for operational and adaptation excellence. Sinergie Italian Journal of Management, pp.19–31.

Ezzabadi, J., Saryazdi, M. & Mostafaeipour, A., 2015. Implementing fuzzy logic and AHP into the EFQM model for performance improvement: A case study. Applied Soft Computing, 36, pp.165–176.

Porter, L. & Tanner, S., 2004. Assessing business excellence: a guide to business excellence and self-assessment 2nd ed., Oxford: Elsevier.

Rusjan, B., 2005. Usefulness of the EFQM excellence model: Theoretical explanation of some conceptual and methodological issues. Total Quality Management, 16(3), pp.363–380.

Sîrb, L., 2013. The strategic diagnosis in terms of fuzzy logic of a corporative model of excellence that integrates sustainable development. Managerial Challenges of the Contemporary Society. Proceedings, (6), pp.105–112.

Srivastava, P., 2016. Flexible HR to cater to VUCA times. Global Journal of Flexible Systems Management, 17(1), pp.105–108.

van der Wiele, T. et al., 2011. A new foundation for quality management in the business environment of the twenty-first century. Total Quality Management & Business Excellence, 22(5), pp.587–598.

 

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