TQM Case Studies

C a s e S t u d y 1 䊏䊏䊏
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䊏 TQM in BT Retail
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䊏 Company background
BT was created in 1981 when the telecommunications arm of the British Post Office was
reformed as a separate entity in preparation for privatization in 1984. Since then BT has
operated in one of the most open telecomunications markets in the world. BT faces
competition within the UK for local services from cable TV companies, while other
network operators vie for its long haul national and international traffic. BTs day-to-day
operations are subject to regulation by OFTEL, a government appointed regulatory body
which has major impact on key aspects of BTs business. For example, in a number of key
markets BT is required to keep price increases significantly below the level of retail price
inflation. BTs very survival has depended on successful performance in this highly
competitive yet tightly regulated environment. Following privatization BT faced the
imperative of transforming itself from bureaucratic monopoly to customer-centric service
provider, while growing income, reducing costs and minimizing loss of market share.
Increasing competition in its UK home market encouraged BT to embark on a major
international expansion program in the 1990s by developing a family of overseas joint
ventures and alliances.
In 2000 after a decade of international expansion, BT decided to refocus on the UK and

Europe and carried out a major corporate reorganization which resulted in the formation
of BT Group and the demerger of mobile (MO2) and the directory publishing (Yell)
businesses. The BT Group consists of BT Wholesale, responsible for BT’s telecomunications
network, BT Retail, providing communications solutions services to 21 million UK
residential and business customers, BT Ignite, delivering sophisticated IT solutions for
large businesses across Europe, and BT Openworld, specializing in the internet mass
market.
3 5 4 To t a l Q u a l i t y M a n a g e m e n t
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䊏 BT and quality – a brief history
As BT emerged from the public sector it was realized that to be successful, a significant
cultural change would have to be stimulated and managed within the organization.
Accordingly in 1986 BT embraced enthusiastically the philosophy of total quality
management (TQM) to drive continuous improvement through a focus on customer
requirements, team working and problem solving. Led personally by the chairman, TQM
was implemented through a series of workshops involving all managers and their teams.
At the same time BT launched the BT Values to define the desired culture of the organization.
Despite many organizational changes the five BT Values remain unaltered and continue to
guide behaviors within the company. The BT Values are:
䊏 We put our customers first.

䊏 We are professional.
䊏 We respect each other.
䊏 We work as one team.
䊏 We are committed to continuous improvement.
BT is imbued with a strong management by objectives climate and this was refined in 1995
with the adoption of a balanced corporate scorecard approach to translate BT’s strategy into
action through a set of key objectives, measures and targets. Underpinning all of BT’s
operations is BT’s management system. First registered to ISO 9001 in 1994, this is one of the
largest single corporate-wide registrations in the world. The management system was later
refined and improved to take account of environmental and people management standards
and BT is also registered to ISO 14001 and accredited as an Investor in People (IiP).
Achievement of ISO 9001 registration was not seen as an end in itself and after considering
the Malcolm Baldrige National Quality Award framework, BT adopted the EFQM Business
Excellence Model as a driver of organizational improvement. Since 1995 many BT business
units have used the Business Excellence Model to identify strengths and areas for
improvement as input to their business planning process. The extensive use of self-
assessment against the Business Excellence Model has ensured that BT has a rigorous and
structured approach to organizational improvement. That this approach was effective is
demonstrated by the success of BT business units in national and international quality
awards in the late 1990s. BT’s Yellow Pages, National Business Communications and
Northern Ireland units all won the British Quality Award. BT Northern Ireland won
European quality prizes in 1998 and 1999 with Yellow Pages winning the European Quality
Award in 1999. Following Yellow Pages’ success BT ceased entering external quality awards;
however, business excellence principles remain in everyday use, particularly for the periodic
comprehensive reviews of business unit performance known in BT as health checks.
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䊏 The relaunch of quality in BT Retail
Formed in October 2000, BT Retail is the largest unit in BT Group with almost 60 000
employees. Its role is to provide communications solutions to 21 million customers in the UK
TQM in BT Retail 355
– from consumers to the largest businesses and its vision is ‘Connecting your World,
Completely’. BT Retail’s first CEO, Pierre Danon, possessed a strong personal commitment
to quality improvement that stemmed from his experiences at a previous European Quality
Award winner, Xerox Europe. Pierre and a new leadership team were building a ‘new’
customer centric distribution business with a remit to ‘deliver a superb experience to a huge
customer base’. They recognized the benefits and necessity of taking a quality approach to
support achievement of some very challenging goals. It was also acknowledged that the
major business and organizational changes that took place in 1999 and the early part of 2000
had inevitably meant that many people in BT Retail had not been focusing on quality quite
as much as in previous years. Within a few months of BT Retail’s inception the Revitalizing
Quality program was launched to drive an unremitting focus on improvement. The ongoing
drive and commitment of the CEO and the leadership team has been pivotal in driving the
success of this quality program.
The approach to ‘Revitalizing Quality’ is based on seven steps to ‘real’ quality:
䊏 put customers at the heart of what we do;

䊏 reduce the cost of failure;
䊏 develop and deploy strategy;
䊏 get the basics right – quality for everyone;
䊏 quality approach to major change;
䊏 get the workforce involved;
䊏 innovation.
A brief summary of how each of these steps has been approached is described below.
Put customers at the heart of what we do

All quality programs have to have, at their center, a very clear focus on customers.
Delivering customer satisfaction is the primary goal for BT Retail and the approach is
inherently simple – listen to customers and respond to what they say. BT Retail has a wide
range of methods for listening to their customers, ranging from market research to asking
thousands of customers detailed questions about how they felt about a specific transaction
with BT. From this data BT Retail has built quantitative models of the drivers of customer
satisfaction (Figure C1.1) which enable them to ensure that internal measures are aligned
with what customers really want.
One major shift in approach made early in the life of BT Retail was to change which senior
managers were targeted (and bonused) against a customer satisfaction measure. Tradition-
ally customer satisfaction had been the responsibility of the customer service manager with
revenue being the responsibility of the channel managers. Now, everyone who deals with
customers has a customer satisfaction target, normally with the same importance as financial
targets. BT Retail also changed their primary customer satisfaction measure from ‘overall
satisfaction’ to ‘satisfaction compared with competitors’ so that benchmarking is built in to
this key measure.
As well as this fundamental shift in measurement methodology a number of strategic change

programs were introduced to enable process and system improvement. In addition there was
䊏 Figure C1.1 The drivers of customer satisfaction
a massive increase in focus on the behaviors that support customers having a great
experience with BT. BT Retail have introduced ‘10 Golden Rules for Customer Satisfaction’
and developed new approaches to recruiting, training and coaching people to ensure that
everything that delivers customer satisfaction is aligned and focused
Reduce the cost of failure

One of BT Retail’s strategic objectives has been to reduce the cost of failure in their
operations. This delivers three benefits, it is good for customers as they experience fewer
things going wrong, it is good for BT’s people as they do not have to deal with the hassle of
fixing problems, and it saves BT money. In 2001/02 BT Retail saved £47 m (c. $70 m) from
specific cost of failure reduction programs.
The approach to the reduction of cost of failure is based on clear analysis of where BT spends
money on doing things wrong or fixing things that have gone wrong. However, this often
simply highlights those operations and processes that are managing failure. Having
identified where failure occurred, effort was then put into properly establishing the root
cause of the failure. For example, BT engineers sometimes find that they cannot easily get
access to customers’ premises to carry out work, this can be caused by call centers not taking
all the right details when taking the initial customer order.
Develop and deploy strategy

Quality improvement is embedded in BT Retail‘s strategy. BT Retail’s strategic goals are to
‘Delight our customers, motivate our people and increase shareholder value’. This is being
achieved by setting seven very clear strategic objectives for: improving the customer
experience; optimizing transaction economics; achieving operational excellence; reducing
the cost of failure; defending core revenues; creating new revenue streams; and creating the
place to work for our employees. The leadership team has placed considerable emphasis on
communication of the strategy and objectives to both employees and the City.
The strategy is deployed through two key mechanisms. All senior managers have a balanced
scorecard, which reflects their key objectives, and all managers have objectives aligned to
these scorecards. BT Retail has also established a clear set of key change programs which
drives the major change required to deliver BT’s longer-term strategic objectives. Delivery of
key programs is also included in senior manager’s scorecards and the benefits from the
programs form an integral part of the budget process.
Get the basics right – quality for ever yone

The emphasis on quality is now on how BT Retail people work, not on unthinking
compliance to standards. People are encouraged to participate in the Revitalizing Quality
program and there is no company-wide ‘sheep dip’ training. Quality is integrated with other
established approaches, e.g. key strategic programs, recognition, management training, and
is deliberately not seen as a separate initiative. ‘Management by fact’ is in evidence at all
levels and decisions are based on the relevant data rather than on instinct or ‘gut feel’.
The BT Retail Quality Charter, explaining key aspects of quality, has been issued to the entire
workforce and supported by ongoing communication. The basic quality improvement tools
and techniques used by BT since the original TQM campaign launch have been reviewed
and updated to provide an increased focus on root cause analysis. Computer-based training
for these basic tools plus statistical process control and an advanced quality tool set are
available to all employees via BT’s intranet.
To demonstrate their continued commitment to TQM, the BT Retail leadership team has
drawn up a set of guiding principles to place the BT Values in context for BT Retail employees.
Known as the ‘BT Retail Way’ these six simple principles are intended to capture the spirit of
BT Retail and help guide the company in the twenty-first century. The BT Retail Way:
䊏 Customers are at our heart – we must listen to the customer.

䊏 We aim high – we want to be the best, not simply ‘good enough’.
䊏 Our goals are clear – based on facts not anecdotes.
䊏 We deliver – accountability not excuses.
䊏 We are one team – engage not tell.
䊏 We tackle issues – honestly but sensitively.
Quality approach to major change
A highlight of the quality program in BT Retail has been the development of the
‘Performance Accelerator’ ‘a clear systematic ten step framework for complex change
management (Figure C1.2). Developed specifically for BT Retail, Performance Accelerator is
a unique methodology drawing on BT’s deep understanding of business excellence and
supports this by integrating elements of other proven effective change methodologies such
as six sigma. A suite of quality tools underpins each of the ten steps.
1. Define activities
2. Define the desired state
3. Define in-process and result measures
4. Performance benchmarking and set overall goal
5. Set interim goal
6. Gap analysis and identify root cause
7. Review interim goals and set targets
8. Define transformation projects and other relevant improvement process
9. Implement projects
䊏 Figure C1.2
BT’s ‘Performance 10. Monitor and review
Accelerator’
The ten steps require a high degree of rigor with a clear, fact-based approach that ensures the
program thoroughly takes account of customer, business and employee views (together with
benchmarks) in defining its goals. A comprehensive analysis of root cause is also required.
The approach is used on all of BT Retail’s key programs.
Involving the workforce

At local operational level employees are encouraged to be innovative in their approach to
day-to-day problem solving and put forward reasoned ideas based on their own insight of
the business, to improve elements of BT Retail’s operations. One simple example of how this
can work comes from the conferencing team in BT Retail. A group of front-line employees
are brought together monthly in a forum called the ‘customer listening post’. Ideas and
issues that are stimulated by day-to-day contact with customers are discussed and then
actions agreed. In the last year, this team initiated 72 improvements ranging from product
enhancements to training in recently launched products.
In addition a number of approaches have been introduced to ensure that employees are fully
involved in the design and development of major change. For example, a program which is
transforming call-center operations successfully involved about 1500 people in the design
stage. This input was combined with data from customers and internal performance
measures to produce a design that reflected the views of all key stakeholders.
BT Retail places a high value on involvement and experience suggests that it has to be
deployed in a way that meets local requirements. An organization of 50 000 people can
benefit massively from involvement of its people, but that number of people also represents
a major challenge in continually maintaining their involvement.
Innovation
BT Retail places a high value on product and process innovation. To support this, in a
business regarded by many as traditional and conservative, required specific action, and a
detailed innovation strategy was developed in 2001. At a strategic level a number of
approaches have been introduced to focus on delivering an innovative strategy. These
include a much broader involvement of people in strategy development workshops
specifically focused on coming up with innovative business and process proposals together
with the senior management team investing more time on strategy with increased external
stimulus.
A Corporate Venturing unit has also been formed to generate, select and exploit radical
business concepts throughout BT Retail. The Venturing unit delivers significant value by
rapidly developing innovations that provide new revenue opportunities but which would be
difficult and diverting for mainstream units to evolve. In its first year the venturing approach
established over six new businesses each of which has the potential to generate significant
revenue (at least £10 m – c. $15 m).
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䊏 Summary
The beginning of the twenty-first century proved to be a testing time for telecommunications
companies throughout the world. However, BT continued to prosper by focusing on the
fundamentals of satisfying customers, seeking out new sources of revenue and constantly
reducing the cost of failure. At the time of writing BT Retail has turned the corner on
customer satisfaction with ongoing improvement and performance placing it consistently
ahead of its competitors in the UK. It is on course to reduce its cost base by £750 million
(c. $1 bn) over three years and consistently meets its EBIT targets. BT Retail has benefited
from an active and engaged leadership team who continue to demonstrate an unwavering
commitment to improvement.
BT has been following classic TQM principles and approaches for almost 20 years. It has
learnt that success only comes from truly embedding these into ‘business as usual’. Despite
the significant changes to BT’s market place and operating environment that have occurred
during this time, TQM has proved to be a sound basis to drive continuous improvement
within a large complex organization.
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䊏 Questions
1 Explain in detail the role customer satisfaction played in BT’s total quality journey.
2 Evaluate the deployment of TQM in BT, paying particular attention to the commitment
displayed by the management of the company.
3 Discuss the approach to ‘Revitalizing Quality’ and explain why this might have been
needed within a few months of BT Retail’s inception.
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䊏 Acknowledgement
The author is grateful to the authors of this case study: Russell Simpson, Quality Partner for
BT Regions and HR, and Stuart Jones, Head of Business Excellence & Quality, BT Retail, for
their permission to include it in the book.
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䊏 Sustainable business improvement in
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䊏 a global corporation – Shell Services
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䊏 Background
Setting up a new global organization is a challenge in itself. To do this by harmonizing

existing but different business operations across the world into a single, global organization
adds another level of complexity. This case study describes how Shell Services enabled such
a transformation by developing and putting in place a set of tools, processes and systems
that became known as the Shell Services Quality Framework, or SQF. To put the organization
into context, Shell Services comprised several companies across the globe employing some
6500 staff with a turnover in excess of $1 bn.
With a clear focus on becoming a customer-centric organization, there was a need to look at
the core processes required to sustain improved business performance as perceived by
customers. Many of these processes were broken. At the same time, it was recognized that
without helping the people in the organization to embrace the values, behaviors and
competencies necessary to become customer-centric, the vision could not be achieved.
Finally, both people and process improvements had to be underpinned by a quality
framework that could be used to define standards, targets and metrics as well as tracking
performance improvements over time (Figure C2.1).
With such a diverse and complex organization, no one existing quality model was seen as
offering a suitable basis for harmonization and inclusivity. Although some proprietary
models were favored locally, there was seen to be benefit in seeking to bring together the best
of these into a Shell specific product. Criteria such as simplicity with completeness, inclusion
of best practice, availability of supporting tools and suitability for self-assessment were
chosen and several well-known quality improvement approaches were researched to arrive
at the SQF (Figure C2.2). Each model contributed attributes and strengths, but no single
model offered the power, simplicity and completeness of the SQF.
Processes
People
Customer
䊏 Figure C2.1
Components of a customer-
Quality
centric strategy
Process classification ISO 9000

framework
End-to-end viewpoint Capability and control
Processes SQF Process control
Customers Excellence
Baldrige Business excellence

model
Market/customer focus Drive to excellence
䊏 Figure C2.2
SQF heritage
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䊏 Structure of the SQF
At the top level, the SQF is a simple but powerful construct consisting of five key chevrons.
Four of these are enablers – namely Purpose, People, Resources and Process. The fifth is the
Results chevron, which focuses on tracking performance improvement as a result of
implementing the framework (Figure C2.3).
Although this may seem a simple construct it has proved tremendously valuable, even at the
top level, to ask a simple question about each of the five chevrons. A satisfactory answer is
somewhat more difficult to provide than a business leader might expect.
Each of the chevrons is broken down into level 2 and level 3 components in order to define
key descriptors, for which tiers of practice, including best practice, can be defined at level
Sustainable business improvement in a global corporation – Shell Services 363
Enabling activities (enablers) Results
People
Purpose Processes Performance

Resource
䊏 Figure C2.3 The SQF – a simple but powerful construct
䊏 Figure C2.4 Cascading the SQF down to best practice
four. This is best illustrated in Figure C2.4, where the Process chevron is taken down to level
4 of the framework.
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䊏 Getting started with the SQF
As part of the validation process for the SQF a baseline assessment was carried out across the
organization to determine the starting point for performance improvement and to ‘prove’ the
SQF in practice. This yielded valuable data which served both objectives. Some 80 managers
and leaders were interviewed and asked to assess where they thought their part of the
organization was in comparison to the tiers of practice in level 4 of the SQF. A fundamental
finding was confirmation of virtually no performance measurement in many areas – indeed
the organization did not rate at all against this component. Other key findings were: good
articulation of aspirations and purpose, but limited cascade and execution through the line;
The majority of the scores fell below tier 2

Best practice
Purpose People Resource Process
Tier 3
Average score
Tier 2
Tier 1
䊏 Figure C2.5 Average baseline findings
Purpose elements dealing with issues of strategy and leadership

GAP
Demonstrating role Best in class
0 Tier 1 Tier 2 Tier 3
model behaviour
Using external info
sources to develop 0 Tier 1 Tier 2 Tier 3 Best in class
policy/strategy
Developing policy 0 Tier 1 Tier 2 Tier 3 Best in class
and strategy
Reviewing continuing
relevance and effectiveness 0 Tier 1 Tier 2 Tier 3 Best in class
of policy and strategy
Translate policy into
0 Tier 1 Tier 2 Tier 3 Best in class
operational plans
Tracking performance vs.
benchmarks and targets 0 Tier 1 Tier 2 Tier 3 Best in class
Reviewing continuing
relevance of operational
plans and targets 0 Tier 1 Tier 2 Tier 3 Best in class
Unit A Unit B Unit C Unit D
䊏 Figure C2.6 Purpose elements dealing with issues of strategy and leadership
very few common processes implemented across the organization; supplier relationships not
effectively managed; lots of initiatives activity around knowledge management and virtual
team working but little collection of institutional knowledge and intellectual capital; many
valuable initiatives in place to improve overall performance but signs of initiative overload
and limited capacity to follow-through.
Although a sobering exercise it proved invaluable in demonstrating the need for a systematic
approach to improving the business, and in all areas. Figures C2.5 and C2.6 illustrate some
of the findings from the baseline activity.
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䊏 SQF tools and techniques
In order to achieve a sustained and consistent approach in using the SQF it was recognized
that a set of supporting tools and techniques was required, which together would allow the
full benefits of the SQF to be realized in achieving improved business performance. This had
to be in place in order to begin to address complex, outdated and broken processes across the
organization. This was the genesis of the Business Improvement System shown in Figure
C2.7.
1. 2.
Improvement Process mapping
tools and techniques guidelines
Improve Define
SQF
5. Review Operate 3.
Self Process
assessment management
capability guide
Measure
4.
Performance
䊏 Figure C2.7 measurement
framework
Business Improvement
System (BIS)
Improvement tools and techniques
In order to operationalize this system a structured approach to process improvement was

developed around the DRIVER methodology. This provided the tools and techniques to
analyze business problems in detail. It also provided a systematic way of identifying and
implementing solutions and supported the use of tools such as affinity diagrams, cause and
effect analysis, force field analysis, metaplanning, and Pareto analysis. The six steps within
DRIVER are outlined in Table C2.1 (see also Chapter 13).
䊏 Table C2.1
Stage Output
D Define scope of process improvement Purpose, scope and success criteria

R Review ‘as is’ process Defined process, problems and performance
I Identify ‘should be’ process Defined improvement (process, problem prevention and performance)
V Verify improvements Prioritized and verified improvements to deliver benefit
E Execute improvement delivery Deployed improvements
R Review implementation Measure of improvement benefit
Process mapping guidelines

This provided the ability to understand a process by graphical analysis. This was seen as
necessary to build a common understanding of issues affecting the process in question, as well
as a way of dealing with purpose, inputs, ouputs, resources, controls and interfaces. Such
maps were invaluable to understand the ‘as is’ position when process redesign is
appropriate.
Process management guide

This is where the SQF really came into its own. At level 4 (see Figure C2.4) it provided a clear
definition of process operation reflecting best practice, and essentially provided the bedrock
on which new processes were defined. This forced issues to be considered such as the
operation of processes under controlled conditions, the concept of process ownership, and
starting to think about performance measurement.
Per formance measurement framework

This was probably the most difficult aspect of the whole Business Improvement System to
implement. A set of project templates were developed that allowed the selection of outcome
metrics for any standard business process. Properly assembled this provided, for the first
time, a regime of measurement and tracking for key processes, aimed at achieving the
‘perfect transaction’ in spirit if not in practice. Considering the results of the original baseline
study referred to above, this was the area most in need of improvement.
Self-assessment capability
The intention of this component was twofold: first, to provide an ongoing self-assessment
capability where templates, questionnaires, scoring sheets and action plans were provided,
based on the SQF; second, to allow those parts of the organization for whom accreditation
and recognition was important to use the SQF and the Business Improvement System to test
their readiness for achieving their goals.
Once these tools and techniques had been developed and integrated into the Business
Improvement System, two pilots were undertaken to validate and fine tune the approach.
The first was improving the accounting processes around joint ventures in Exploration &
Production. The result here was a simplified and shortened end-to end process, resources
released for more value-added tasks and higher customer satisfaction levels. The second
pilot addressed problem management in the IS service delivery organization. Again, by
looking afresh at the process, particularly at performance tracking, the end result was a
global, stable process with defined service levels and performance tracking – and happier
customers.
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䊏 SQF and business improvement
Once the SQF had been developed, proven in pilots and supported by a Business
Improvement System, the task then became one of deploying the SQF such that priority
areas were addressed, improvements could be sustained and the whole approach could
begin to permeate the organization. There is no doubt the SQF and supporting tools can be
䊏 Table C2.2
Business focus Applied to Purpose Examples to date
Alignment Plans, To ensure alignment with business Communication strategy, leadership team
projects, strategy and priorities priorities, strategy renewal, HSE strategy
options
Choice Initiatives To help prioritize by considering purpose, Business Improvement Program, HR

impact, resources, capacity, etc. agenda, stress management strategy, cost
reduction process FIRST
Improvement Process To improve or redesign core processes, Contract to billing process, account
with a focus on best practice management process, property sales, joint
venture accounting, service delivery
Assessment Organization To self-assess for continuous Customer service teams, customer

improvement satisfaction with HR
Recognition Business To achieve accreditation/recognition

against best in class standards
used wherever business problems exist and several areas were targeted. Perhaps one of the
most powerful was in helping the whole organization come together around key
management thrusts for the year – FIRST: Focus on customers, Improve billing, Reduce cost,
Service excellence, Talent development. Work was carried out with the executive team to
arrive at these top five thrusts by using the SQF to distil the really important strategies from
a much longer ‘wish list’, again forcing clarity around real purpose, business impact and
performance measures. Using the SQF to help with choices in this way it was possible to
reinforce important aspects of organization and culture, so critical when aligning and
mobilizing support from across the whole organization.
As a summary, progress in the area of business improvement is highlighted in Table C2.2.
It is worth mentioning here another area of SQF deployment in a little more detail:
discretionary expenditure – The ‘Business Improvement Program’ in Table C2.2. Every
organization spends time and money on undertaking projects, hopefully to improve key
processes, market standing, profitability, reputation, etc. Faced with a wide array of some 35
IT-related projects, all seemingly justified in their own right and amounting to some
$80 million, the question was – ‘how do we ensure we are working on those projects that will
provide best value for money and clear alignment with our business objectives?’
Furthermore, ‘how do we exercise some degree of control over such a disparate set of
projects ranging from billing improvement, through knowledge management to hardware
renewal?’ And finally, ‘how do we ensure a first class strategy ends up in a first class
implementation?’ The answers lay in using the SQF as a ‘filter’ to address what may appear
to be 20 simple questions, but ones that were to prove to be worth their weight in gold
(Figure C2.8).
Taking just one question as an example from Figure C2.8 – the second one under People –
‘what is our capacity to implement the degree of change required for successful
䊏 Figure C2.8 SQF 20 questions to ensure a structured approach to any improvement opportunity
implementation of this project?’ This was a powerful question often overlooked in the rush
to deliver improvements across the organization. Every organization has a limited capacity
for major changes at any one time. Is it feasible to ask people to implement a new billing
system while a global helpdesk is being implemented and a major office move is under
way?
Through this process of using the SQF to ensure discretionary expenditure was being
properly considered, the leadership team found they were able to make better decisions,
generate 100 percent support for priority projects and provide an environment for the best
possible chance of successful implementation. Even more than this, some parts of the
organization started to ask the question at every management team meeting – ‘has this idea
been SQF’d?’
On an even more simple scale, value was derived by asking just five key ‘acid test’ questions
about any initiative under way in the organization. Sometimes these proved quite difficult
to answer for even the most well-understood projects! These are shown in Figure C2.9.
What do you really

want to achieve How will you know
with this project, Purpose when the purpose Performance
initiative or has been achieved?
opportunity?
What numbers, People

capacity and What financial
competencies and other assets
are required? are required?
Resource
What are the

processes, steps Processes
or deliverables to
achieve success?
䊏 Figure C2.9 Five easy questions!
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䊏 My SQF
Once the SQF had been introduced for organizational improvements and it was accepted as
a tool for improved decision making, there was another, perhaps more important aspect yet
to be developed – using the SQF as a tool to help people in their own personal work
planning, and maybe even to start to address the issues of work/life balance.
Putting the SQF into a small leaflet format (Figure C2.10) that could be distributed to each
member of staff proved immensely valuable. It helped in discussions between staff and
supervisors, where real issues around their workload, priorities and challenges could be
discussed in a way that took the heat and emotion out of the debate. For an individual
䊏 Figure 2.10
‘MySQF’ leaflet
reviewing work priorities, it was important to be absolutely clear about the purpose of a task
or project, as well as having a good understanding of what was required to achieve success
in implementation. It also meant having the confidence and a fair basis for saying No! to
some activities.
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䊏 Next steps
During the two years of development, testing and implementation of the SQF, it was never
found wanting in terms of an area of the business where it could not be applied. One of the
most difficult aspects was getting people to accept the simplicity of the construct, and not to
look for complexity – as if it were perhaps a test of intellectual rigor. The SQF was
deliberately predicated around the fact that it would outlast business fads and theories –
keeping it down to earth meant that it was bound to be successful over time and not thrown
away when the next idea came along. Managers will keep using the SQF to provide an
anchor to business improvement – it costs little, is difficult to argue against and helps the
most important asset in the organization – the people!
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䊏 Questions
1 List and discuss the advantages and disadvantages of developing an organization specific
quality framework, such as the SQF, in comparison with adopting an existing framework
such as the Baldrige or the EFQM Excellence Model.
2 Critique the high-level SQF against the EFQM Excellence Model showing the overlaps and
‘underlaps’, and provide advice to the management of Shell Services on how their
framework could be developed and improved.
3 Public sector organizations could adopt the SQF. Compare and contrast the SQF with other
initiatives and standards that have been adopted recently in government agencies and
discuss the merits of each.
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䊏 Acknowledgement
The author is grateful to the author of this case study, Roger Wotton of Shell, for permission
to include it in this book.
䊏
䊏 Texas Instruments Europe –
䊏
䊏 leadership and commitment to total
䊏
䊏 quality and business excellence
Texas Instruments Incorporated is a global semiconductor company and the world’s leading
designer and supplier of digital signal processing and analog technologies, the engines
driving the digitalization of electronics. Headquartered in Dallas, Texas, the company’s
products and services also include material and controls, education and productivity
solutions, and digital imaging. The company has manufacturing or sales operations in more
than 25 countries. Texas Instruments Incorporated employs more than 35 000 people
worldwide and has net revenues in excess of $8bn.
䊏
䊏 Innovation – a driving force for the growth of the company
The ‘chip’ has revolutionized our everyday lives. It has increased what we are able to do, the
speed at which we can do it, and has created profound benefits for society.
The integrated circuit was invented at Texas Instruments (TI) in 1958, one of many significant
inventions contributing both to the growth of TI and the electronics industry worldwide – an
industry destined to grow to $2 trillion by the year 2000. TI’s technological innovations, in
addition to the integrated circuit, include the first hand-held calculator, the single chip
microcomputer, forward-looking infrared vision systems and the first quantum-effect
transistor. These innovations have been the catalyst for the different businesses of TI, their
growth, contributions to society and the way we all live, learn, work and play.
䊏
䊏 Texas instruments – global resources serving European customers
TI began in Europe in Bedford, England, back in 1956, the first US-based company to
manufacture semiconductors in Europe. Today TI Europe, a wholly owned subsidiary of TI
Incorporated, has responsibility to manage all operations in the European region in 15
different countries and employs more than 2300 people. The semiconductor business
Te x a s I n s t r u m e n t s E u r o p e – l e a d e r s h i p a n d c o m m i t m e n t t o t o t a l q u a l i t y a n d b u s i n e s s e x c e l l e n c e 3 7 3
accounts for over 90 percent of TI Europe’s revenue and over 90 percent of its people in
Europe.
Each of TI’s businesses is organized on a worldwide basis, with regional managers in

Europe, Japan and Asia Pacific reporting back to a worldwide manager. The responsibility of
the regional organizations is to be close to their customers, understanding their require-
ments, cultures and languages. Operations include application, research, design develop-
ment, engineering, manufacturing, marketing, sales, order fulfillment and support.
In short, TI’s objective is a ‘transnational’ company, combining global efficiency with the
highest degree of regional and national responsiveness. Over more than 35 years, strong
local presence has earned TI a reputation as a truly European partner, satisfying the needs
of its customers.
The majority of TI products and services provided to its customers in Europe are sold to end
equipment manufacturers, who incorporate the products into their own systems for resale.
This entails many parallel channels to market for TI’s products, from direct sales to indirect
distributors and agents. For example, out of the 100 000 users of semiconductors, TI Europe
serve around 500 customers directly, through market segment dedicated account managers
and technical specialists. Other customers are served through independent third party
distributors.
The semiconductor industry has over 300 suppliers competing for market share through
product innovation, excellence of execution and lowest operating costs. Its customers expect
price reductions on an ongoing basis, as they are also operating in fiercely competitive global
markets. TI’s objective is to help them produce world class products, enabled by TI
technology. This requires very close partner relationships to achieve the benefits of a ‘virtual
vertical integration’ between the organizations.
TI Europe is strategically well placed, since it researches, designs and manufactures much of
its own raw materials and uses the creativity of engineering innovation to continue to bring
application solutions to its customers.
䊏
䊏 Total quality culture – a cornerstone of TI’s philosophy
During the 1990s it became clear to TI that, while technological innovation was vital to future
success, it was insufficient on its own. The company had to find a way to enable its
customers to gain access to the innovations and be supported and satisfied in that process.
The adoption of total quality was TI’s chosen route to becoming more customer oriented,
while retaining technological excellence.
The journey began in the 1980s with the first concepts and has developed over time into the
way TI people do business with customers and each other. Total quality has permeated all
TI companies, thousands of people having received continuous training, and it has become
the TI way of life. The TQ journey took a major step forward in 1993 when the EFQM model
was adopted for TI Europe.
Quality is now manifest in everything TI do, from original design to manufacturing and
after-sales service. It is based on a rigorous approach comprising teamwork, people
involvement and continuous improvement through understanding customer needs and
ensuring products and services fully meet them.
In Europe, TI developed, very rapidly, a total quality process – ‘total quality culture’ (TQC)
– and learned fast.
To support the program and priorities of its worldwide businesses, each organization
developed a total quality facilitation unit (TQ Promotion Center) and quality steering team,
as well as training and communication processes to advance the total quality journey. Several
of the roadmaps have now been in place for ten years.
More recently, the European dimensions of TI business have strengthened and many core
business processes now extend across businesses and country borders. Cross-fertilization,
transfer of expertise becoming a ‘learning organization’, and harmonization of the TQC
processes have become paramount.
䊏
䊏 Use of the EFQM business excellence criteria
The approach was refined by adopting a common program of continuous improvement

against the EFQM criteria, under the banner of ‘Total Customer Satisfaction Through
Business Excellence’. As part of this program, all of TI Europe’s business and support
organizations’ self-assessment were to fundamentally transform the company and shape the
organization for the future.
TI Europe had performed unsatisfactorily for several years, the European market and its
customers had changed fast, and Europe had become more a part of the global market.
Customers wanted fewer suppliers, but closer relationships, together with competitive costs
for products and services, including advanced technologies that would help them win in the
new global market place. For companies to succeed they had to understand these changes and
proactively adapt to ever-changing customer needs. The past approach of cost reductions in TI
Europe had not been enough to make a real impact and put the company back on the road to
growth and sustained profitability. They needed a substantially different approach.
The 12-month assessment using the EFQM criteria showed clearly the radical changes
needed in the company’s processes and structure. There was also a need for a tool to drive
the efforts towards excellence and competitiveness, a tool that would provide a common
language and the ‘glue’ between the diversified businesses. The EFQM methodology was
chosen to help completely rethink the structure and execute a major re-engineering plan
across the region that included five key tactics:
䊏 Disengage from non-strategic, labor-intensive and uncompetitive manufacturing activities

– to be able to invest in strategic, high value adding activities with focus on core
competencies.
䊏 Obtain better synergy and rationalization through business organization consolidation
into business centres (Figure C3.1).
䊏 Figure C3.1
TI Europe business centers
䊏 Refocus marketing on sustainable, profitable growth and penetration gain.

䊏 Operate as one single ‘virtual’ European entity across Europe to the extent allowable by
legislation.
䊏 Align support and infrastructure functions to the business center needs.
A key element of the new TI Europe was its management structure, entirely based on the
EFQM criteria so as to ensure maximum synergy between its component teams, a clear,
common focus on TQ business excellence and a common purpose and direction with a clear,
shared vision (Figure C3.2). The TI Europe Strategic Leadership Team (ESLT) is comprised of
all the business managers and the chairmen of eight quality steering teams (QSTs), each of
which is responsible for one or more of the EFQM criteria. The ESLT is led by the European
President who is part of the worldwide Strategic Leadership Team.
Adopting the EFQM model has not only changed the way TI Europe are structured and
operate – more importantly, it has helped to turn the company around significantly. TI are
once more gaining market share, have substantially reduced overhead costs, have reduced
the number of business units, created a ‘Virtual Europe Team’, invested $500 m in value-
䊏 Figure C3.2
TI Europe organization chart.
TI Europe Strategic
Leadership Team (ESLT)
based on the EFQM criteria
added technology and achieved significant growth and profitability levels that position the
company well for a competitive future.
䊏
䊏 Leadership and the quality policy
TI’s management understanding of the quality approach dates back to 1964, when TI
founder Patrick Haggerty publicized the mission statement alongside the TI principles and
values (Figure C3.3.). Sometime later, following their awareness training by recognized
leaders of the quality movement (Crosby, Juran, Deming) in the late 1970s and early 1980s,
and visits to role model companies, TI management recognized the need for a major change
to the company’s culture. The technology-driven approaches that apparently served the
electronics industry well during its infancy (1960s and early 1970s) needed to be replaced by
a customer-led, process-focused culture for the 1980s and 1990s. Such a significant cultural
change, while eventually destined to involve everyone in the corporation, needed clear
leadership to set the objectives, define the strategies and nurture its initial development and
tactics of execution. This resulted in a substantial change of the behavior of managers in
inspiring and driving the organization towards total quality.
The measure of success of these leadership efforts is the extent to which TI have managed to
develop its culture and achieve the desired level of ‘Business excellence’, a total quality
approach to the execution of business strategy.
TI require its managers to lead the total quality process ‘from the front’, since they believe
that management by example is the most effective technique for achieving significant
cultural change and that strong leadership is pivotal to the pace of improvement.
Texas Instruments has a worldwide quality policy (Figure C3.4) which has been in place
since the early 1980s. Quality steering teams (QSTs) throughout the corporation continue to
‘cascade’ the requirements of this policy to all employees. Through the European QST
structure (Figure C3.2) higher-level statements are made relevant to staff by creating
The TI Commitment
Mission
Texas Instruments Exists To Create, Make, And Market Useful Products
And Services To Satisfy The Needs Of Customers Throughout The World.
Principles
We Will Accomplish This With ‘Excellence In Everything We Do’
G Perform With Unquestionable Ethics And Integrity
G Achieve Customer Satisfaction Through Total Quality
G Be A World-Class Technology/Manufacturing Leader
G Provide Profitable Growth/Fair Return On Assets
G Achieve Continuous Improvement With Measurable Progress
G Be a Good Corporate Citizen
Values
We Expect The Highest Levels Of Performance And Integrity From Our
People. We Will Create An Environment Where People Are Valued As
Individuals And Treated With Respect And Dignity, Fairness And Equality.
We Will Strive To Create Opportunities For Them To Develop And Reach
Their Full Potential And To Achieve Their Professional And Personal Goals.
䊏 Figure C3.3
Texas Instruments Quality Policy
We will achieve business excellence by:

G
Encouraging and expecting the creative involvement of every tier.
G Listening to our customers and meeting their needs.
G Continuously improving our processes, products and services.
Chairman, President and CEO
䊏 Figure C3.4
individual business and regional vision statements (Figures C3.5 and C3.6). Specific business
excellence goals are further deployed through a policy deployment process.
Communication to staff has always been a high priority for TI managers at all levels. More
recently this communication has been reviewed through surveys and refined by increasing
the focus on total quality culture (TQC) priorities and processes. The main mechanism for
communication is via business/department meetings, addressed by senior executives and
managers from corporate and group organizations (2 per year), European organizations (4
per year), individual business (4 per year) and departments (4–12 per year). In addition,
TI Europe Vision Statement
We Will Excel In Our Business By Providing

Our Customers With Innovation Solutions
And Becoming The Preferred Supplier
In Those Markets We Target
䊏 Figure C3.5
Texas Instruments Vision
Semiconductor Group WW Vision
Semiconductor Europe Vision
WW MSP Vision WW ALP Vision
䊏 Figure C3.6 European MSP/ALP Vision

Cascading vision statements
ongoing awareness and communications programs are run using posters, newsletters, in-
house TQC magazines, badge stickers, pocket reminders, and satellite broadcasts to reaffirm
the core messages.
䊏
䊏 Questions
1 What are the particular features of implementing TQM/business excellence in a large

company in the IT sector?
2 Evaluate the leadership, commitment and policy aspects of the approach used in Texas
Instruments.
3 How might the cascading vision statements approach be applied in an organization in the
public service sector, such as higher education, health or armed forces?
䊏
䊏
䊏
䊏 TQM implementation and policy
䊏
䊏 deployment at ST Microelectronics
䊏
䊏 Company background and TQM
ST Microelectronics (formerly SGS-Thomson Microelectronics) is a global, independent
semiconductor company which designs, develops, manufactures and markets a broad range
of integrated circuits and discrete devices for a wide variety of microelectronic applications
including telecommunications and computer systems, consumer equipment, automotive
products, industrial automation and control systems.
In 1997 the company won the European Quality Award. This marked the progress made in
developing as a world class organization and also coincided with the tenth anniversary of
the formation of the company created by the merger of Thomson Semiconducteur and SGS
Microellecttronica.
In order to fully appreciate the achievement of the company since 1987, it is first necessary
to describe some of the dynamics of the semiconductor industry since these dynamics
shaped STM’s TQM program. Microelectronics is one of the most competitive industries in
the world with more that 200 merchant suppliers, over 100 of them being global players,
servicing a market of $155 bn that has long-term CAGR of about 16percent. Three European
companies are left in the top 10 worldwide ranking. The economic law of microelectronics
is ‘when the demand goes up – prices fall; when the demand goes down – prices fall’.
Technological advance is very rapid, capital intensity is high. Spending on R&D runs at
about 14 to 16 percent of sales, two to four times higher than most other industries. Every
dollar of incremental sales requires a dollar of incremental investment, with the investment
usually one year ahead of the sales.
In this environment companies tend to polarize into two groups: the broad line, global
companies with market shares in the range of 4 to 7 percent; narrow niche companies with
market shares of less than 1 percent. A notable exception to this group structure is, of course,
Intel, which has a narrow product base but a high market share.
In 1987 the two founder companies of ST saw themselves in a difficult position since neither
were large enough to become truly global world class players and yet both had a reasonably
broad product and technology base. Therefore, the decision was taken to merge the two
bodies into one creating a company which, in 1987, had:
Sales $851 m
Headcount 17 300 people
Profit/loss after tax ($203 m)
While this achieved a critical mass the financial results were not encouraging and much work
was clearly needed to transform the company into the organization which was the vision of the
senior management team. The first years of the program were devoted to rationalization and
consolidation. At the same time, however, advantage was taken of the complementarity of the
product and technology portfolios, customers, market strengths and production capacities.
Attention was focused on eliminating the weakness and exploiting the strengths. Two of the
early key goals were defined as being a rapid increase in sales and market share together with
a slimming down of production sites and the number of employees.
Unfortunately as the program developed the market suddenly hit one of the down cycles
which the industry experiences and, in 1990, the improvements in financial results halted
and, in fact, worsened. Immediately the ‘traditional’ management action program was
brought into play. There was a rapid ‘downsizing’ program which hit people, product
portfolio and, ultimately, market share. By examining this process in action, both within ST
and other companies, the relationship rapidly dawned of the danger of it developing into a
‘vicious spiral’. This brought about a review of the focus of the company and the
determination to find a new way of proceeding which would give rise to the term ‘a virtuous
spiral’.
In 1991 ST launched a TQM initiative based on the European Foundation for Quality
Management (EFQM) model. In launching this program there was total commitment from
the CEO and all his executive staff. In fact in December 1991 Pasquale Pistorio, CEO, stated
that: ‘TQM is a mandatory way of life in the corporation. SGS-Thomson will become a
champion of this culture in the Western world.’ These words needed to be backed by action
and resource – both financial and people. Very quickly there was a framework put in place,
based on an analysis, which determined that the key components of successful implementa-
tion of TQM should be:
䊏 Organization
䊏 Common framework
䊏 Local initiatives
䊏 Culture change
䊏 Mechanisms
䊏 Policy deployment
Also the program needed to be driven from the top down, not by dictate, but by
example.
There was already in existence a corporate mission statement but it was not closely linked
in the minds of the staff with their day-to-day activities. Furthermore it had been written
TQM implementation and policy deployment at ST Microelectronics 381
shortly after the merger and did not totally reflect the needs of the company, the
shareholders, the employees or the customers. It was, therefore, revised and became the key
launching point for all the decisions which affect the future of the corporation.
The mission statement is both short and clear reading:
To offer strategic independence to our partners worldwide, as a profitable and

viable broad range semiconductor supplier.
This statement had implications regarding the size and dynamics of the corporation,
resulting directly from the structure and investment needs of the semiconductor industry.
Following the revitalization of the mission statement there quickly followed publication of
the corporations:
䊏 Objectives
䊏 Strategic guidelines
䊏 Guiding principles
䊏 TQM principles
䊏 Statement of the future
All of these were published in a leaflet titled ‘Shared Values’ which was circulated to all
employees worldwide.
These initial efforts by the corporate management team would have been in vain if the
necessary resources had not been provided to support the implementation of TQM. A
corporate TQM support group was established, budgets were allocated and the executive
management, including the CEO, allocated significant time to TQM implementation. In the
initial phase most of the time and effort went into training and communications with regular
bulletins, emails, and brochures.
The policy deployment process allowed the corporate goals to be cascaded into local goals
which were both realistic and challenging. The training programs, targeted at 50 hours per
employee per year, ensured that people had the skills to accept the goals and translate them
into local action plans. The management were encouraged to recognize achievements at
local, national and international level. Finally strong efforts were made to break down the
walls between the various parts of the organization and create an atmosphere in which cross-
fertilization was not only accepted but actively encouraged, until it became a way of life.
These changes were not easily or readily accepted in all parts of the corporation. While the
benefits could be seen on an intellectual plane at a cultural level some groups found it easier
to move faster than others. The corporate TQM Vice President described the process as
‘pulling down the walls and using the bricks to build bridges’. The difficulty of achieving
success cannot be underestimated. STM started with the advantage that many of its
European staff had a fundamentally Latin culture and many of the managers had been
exposed to American culture, either as a result of working in American companies or
interfacing with American customers. Also the semiconductor industry had its own culture
which was and still is very strong. Nonetheless cultural barriers still existed and STM had to
find ways of working with many different cultures while trying to overlay a common STM
culture, ways of working and vision of the future.
䊏
䊏 Policy deployment at STM
Policy deployment (PD) is the primary method used in STM to make TQM ‘the way we
manage’ rather than something added to operational management. In order to make it
effective, STM have simplified the approach, combining as many existing initiatives as
possible, to leave only one set of key improvement goals deriving from both internal and
external identified needs. In this process the management of STM also provided a mechanism
for ‘real time’ visual follow-up of breakthrough priorities to support very rapid progress.
In STM policy deployment is regarded as:
䊏 The ‘backbone’ of TQM.

䊏 The way to translate the corporate vision, objectives and strategies into concrete specific
goals, plans and actions at the operative level.
䊏 A means to focus everyone’s contributions in support of employee empowerment.
䊏 The mechanism for jointly identifying objectives and the actions required to obtain the
expected results.
䊏 A vehicle to ensure that the corporate quality, service and cost goals are given
superordinate importance in annual operational planning and performance evaluation.
䊏 The method to integrate the entire organization’s daily priority activities with its long-
term goals.
䊏 A process to focus attention on managing STM’s future, rather than the past.
Policy deployment’s place in STM’s overall TQM scheme of continuous improvement is

illustrated in Table C4.1.
A policy deployment manual, addressed to all managers at any level of ST Microelectronics,

was developed as a methodological and operative user guide for those charged with
planning and achieving significant improvement goals. Examples, detailed explanations,
and descriptions of tools/forms were included in the manual.
Policy deployment operates at two levels: continuous focused improvement and strategic
breakthrough – referred to as Level 1 and Level 2.
The yearly plan is designed by assembling the budget and improvement plan, but also
taking into account the investment plan.
All these elements must be consistent and coherent. Current year business result goals are
defined in the budget and the underlying operations and capability improvement goals have
to be approached using policy deployment. Among all the improvement goals, a very few
(one to three per year) are then selected for a more intensive management. These are the
breakthrough goals and must be managed using special attention and techniques. Policy
deployment goals have to be consistent with long-term policies, and finally, everything must
be consistent with and must be supported by the investment plan.
Continuously improving performance and capabilities, and especially achieving ‘break-

throughs’, i.e. dramatic improvements in short times, was the main task that each manager
was asked to face and carry out in his/her activities. Once the importance of achieving
dramatic goals was clear, the problem arose of how to identify and prioritize them. To assist,
STM fixed four long-term policies (broad and generic objectives):
䊏 Table C4.1
Concern Vehicle Focus Responsible Frequency
Current year business Budget and The past/results Operations Monthly/Quarterly

year operations reviews, (mainly ‘What’) management
accounting control
Prioritize operating Policy deployment The future/processes Steering committees Monthly/Quarterly

results and total Level 1 (mainly ‘How’) Action owners
capabilities All involved personnel
improvement
Breakthrough Policy deployment The near future Steering committees Daily/Weekly

improvements Level 2 and all levels of
involved personnel
Ad-hoc improvements QIT/PST/NWT Past, present and Steering committee As necessary

and problem solving future and team members
Continuous Next operation as The internal customer All department As necessary
improvement at customer (NOAC). The work product managers and
departmental level Defects per million personnel
opportunities (DPMO)
䊏 become number one in service;

䊏 be among the top three suppliers in quality;
䊏 have world class manufacturing capabilities;
䊏 become a leader in TQM in the Western business world.
These long-term policies reflected the need to improve strategic capabilities. They were
implemented progressively by achieving sequential sets of shorter-term goals focused on
operational capabilities, operational performance, and urgent requirements, as illustrated
in Figure C4.1. STM recognized that a successful enterprise ensures consistency between its
short-term efforts and long-term goals.
䊏 Figure C4.1 STM 1 Example of objectives by different horizon

䊏
䊏 Policy deployment flow in STM
Figure C4.2 is a high-level schematic of the yearly planning flow, relating budgeting and
policy deployment in STM.
Figure C4.3 shows the sequential deployment at different levels of policy deployment goals
and action plans, linked to the STM TQM ‘Management Amplifier’. This illustrates four key
requirements for good policy deployment:
䊏 Figure C4.2 Policy deployment management process in STM

䊏 Figure C4.3 The elements and practice of policy development in STM
䊏 a negotiation at each level to agree means and goals or targets, illustrated by the ‘catch
ball’ in the diagram;
䊏 the creation of action plans to achieve goals or targets;
䊏 review of action plan progress, and adjustment as necessary;
䊏 standardization of improvement to ‘hold the gains’.
Figure C4.4 illustrates some of the policy deployment tools used to help with means analysis,
ownership assignments and progress assurance. These tools were explained in detail in the
manual for managers.
䊏
䊏 Approaches to manage and achieve the STM goals
The yearly plan comprised all the goals and the performances the company had to reach
during the year. Goals related to sales volume, profit and loss, inventories, standard costs,
expenses, etc. were generally managed by management control through the budget. In order
to be more and more competitive, however, more challenging goals had to be identified each
year and these goals – the ones that constitute the improvement plan – need ‘special
management’ through a specific approach. This approach is policy deployment, in which a
policy can be fully defined as the combination of goals/targets and means (Figure C4.5). The
characteristics of the different approaches to manage the different goals (budget level and
policy deployment level) are illustrated in Table C4.2.
Policy deployment applies both to ‘What’ goals, i.e. mainly results oriented, and ‘How’ goals
that are more related to operational, technological, organizational and behavioral aspects,
mainly process oriented (Figure C4.6).
䊏 Figure C4.4 Policy deployment tools (VMB, Virtual Management for Breakthrough)
‘How’ is mainly concerned with improving capabilities and ‘What’ is mainly concerned with
improving results, deriving from improved capabilities.
Drivers for ‘What’ goals are mainly corporate standards, prior results and vision
statements.
Drivers for ‘How’ goals are mainly vision statement, climate survey, self-assessment,
customer feedback and strategic plans.
Policy
GOAL MEANS
Executive Control Check
management
Points Points
GOAL MEANS
Senior Control Check Improvement
management areas
Points Points
GOAL MEANS
Middle Control Check Improvement
management areas
Points Points
GOAL MEANS
Operative Control Check Action plans
management
Points Points
䊏 Figure C4.5 Policy deployment terminology illustrated
䊏 Table C4.2
Improvement goal Improvement Drivers

approach
冦
Budget 䊐 Business as usual 䊐 Maintenance 䊐 Budgets
level growth 䊐 Competition
sporadic or 䊐 Customers
undefined 䊐 Stops routine
䊐 Tactical opportunities
冦
2 levels 䊐 Focused 䊐 Kaizen 䊐 Shared values
of policy improvement 䊐 Corporate standards
deployment (policy 䊐 Strategic focus
deployment) 䊐 Self-assessment
䊐 Benchmarking
䊐 Breakthrough
(Policy 䊐 Quantum 䊐 Vital priorities
deployment 䊐 Benchmarking
and visual
management)
䊏 Figure C4.6 ‘What’ and ‘How’ goals (examples)
Each level of the company (corporate, group, division) must perform its own ‘Whats’
deployment and ‘Hows’ deployment.
‘Whats’ deployment means both targets and means deployment, where means deployment
must be supported and must be coherent with ‘Hows’ deployment, that is generally related
to a longer-term vision.
In ST Microelectronics they believe that to be a total quality company, strategy, philosophy,

values and goals must be transmitted down the organization, from level to level in a
systematic way, to provide focus, clarity direction and alignment. For them policy
deployment is the process through which goals, and the action plans to achieve them, in
support of and consistent with the top-level corporate mission, strategic guidelines and
objectives, are cascaded to all levels of the organization. Effective policy deployment ensures
that STM’s goals and actions are aligned ‘from top floor to shop floor’.
The goal cascade involves a decomposition at each level to get to detailed goals that are
readily obtainable. The x-matrix is a tool to aid this decomposition and fix ownership for the
detailed goals.
䊏
䊏 Questions
1 Discuss the TQM implementation framework developed in this case and its application to
other organizations, including those in the service sector.
2 How does the ‘goal translation’ approach relate to TQM – what are the linking factors?
3 Show how the approach used by STM could be applied to any change management
problem.
䊏
䊏 Acknowledgement
The author is grateful for the contribution made by Georges Auguste, Corporate Vice-
President Total Quality and Environment, in the preparation of this case study.
䊏
䊏
䊏
䊏
䊏
䊏 DRIVER for change in
BBC Resources
䊏
䊏 Background
London Operations, part of BBC Resources Ltd, provides studio, outside broadcast and post-
production facilities to customers both within and outside the BBC. It was hemorrhaging
money at the rate of over £7 m (c. $10 m) a year. It was overstaffed and locked into inefficient,
outmoded work practices. Under ‘Producer Choice’, it was being increasingly ignored by
BBC program-makers who were going outside the corporation to obtain better terms for
production facilities. Under political pressure, the Corporation was so concerned that it was
considering selling off all or part of BBC Resources. The company’s management required
insight and plans to determine whether Resources Ltd could become competitive, and how
it could rapidly implement the changes needed to transform the business from its current
loss-making situation.
Resources management carried out a program of improvement that began with a review of
the London Operations to assess current performance, recommend the necessary steps to
achieve profitability and to plan and implement the changes.
A rigorous analysis of key drivers and levers for cost and performance was carried out. Core
processes were identified and mapped and an approach to improvement was adopted,
bringing together changes in people, technology and processes. Delivery and support
processes were appraised and simplified, current rules and assumptions governing these
processes were challenged and opportunities for radical re-engineering highlighted. The
review suggested ways in which the situation could be completely turned around.
Resources management used these findings to support its case that the facilities should be
kept in public ownership, and began a program of implementation of its recommendations
to make the operation viable.
D R I V E R f o r c h a n g e i n B B C R e s o u rc e s 3 9 1
Define the Review Identify Verify the Evaluate Review

project the business opportunities opportunities and plan and
baseline implementation report
䊏 Figure C5.1 DRIVER methodology
䊏
䊏 The approach
The approach taken was based around the DRIVER methodology (Figure C5.1).
The review suggested a number of improvements, for example reduced process waste, more
efficient staffing, supplier rationalization, improved seasonal management of facilities and
customer billing accuracy. The recommendations were supported by a rigorous benchmark-
ing exercise within the industry.
The review highlighted that many of the ways of doing business had simply grown up and
turned into traditions. The approach taken showed that it was often valid to take a
completely fresh look at the way work could be undertaken. This was all the more important
since in some of London Operations, major jobs came round on a regular basis, and if a big
saving could be made on Wimbledon coverage for example, that saving would be repeated
in future years.
The opportunities to improve were clear. Reduced staffing, modified work practices and a
general focus by managers on the ‘bottom line’.
䊏
䊏 Maintaining the new ways of working
One of the organization’s key concerns was that, although the proposals might be
implemented initially, there would be a gradual – or indeed not so gradual – return to old
ways with inefficiencies returning and staffing levels rising again, especially through the
employment of outside freelance staff.
To combat this, a management structure was created that supported the new processes,
defined the necessary roles and responsibilities to successfully operate the new processes
and developed a framework of balanced performance measures, to ensure that the overall
performance of London Operations was visible to senior managers.
As improvements and changes were being implemented and as the senior management
became more aware of commercial pressures it was recognized that, for these changes to
have any durability and long-lasting impact on the business, it was vitally important that
everyone in the organization understood the part that they had to play in helping turn the
business around. Furthermore the management team needed to have a clear understanding
of what they were doing, why they were doing it and how they needed to do it. To this end
the senior management team identified the need to understand and further develop the
mission and vision for the business. Then to be able to cascade these down through the
organization, focused around a small number of factors that were deemed critical to the
achievement of the mission and vision.
䊏
䊏 Mission and vision
䊏 Vision – turning ideas into reality.

䊏 Mission – we will enrich the BBC creatively and financially by helping customers create
the sounds and vision of the future. Relied upon for innovation, efficiency and service,
working with us will be inspirational and fun.
䊏
䊏 Defining measurable objectives
From the mission statement the key words were identified to form the basis for the
development of a strategic framework:
䊏 Cash
䊏 Creativity
䊏 Innovation
䊏 Service
䊏 Efficiency
Using these key words eight factors critical to the achievement of the mission were
identified
1 Skilled, motivated and flexible people.

2 Key talent that is industry recognized.
3 Focused investment in products and services.
4 Profitable revenue growth.
5 Efficient and effective processes.
6 Effective customer relationships.
7 Strong leadership, clarity of direction and co-operation.
8 Industry recognized customer base.
To help the business to remain focused on the achievement of the eight critical factors a set
of guiding principles were defined (Figure C5.2).
Through a series of senior management workshops the eight factors were further developed
to identify their key activities and performance measures. These performance indicators
were then arranged into a balanced set of measures and appropriate targets for the coming
year defined for each (Figure C5.3).
To assist in the development of these key activities the senior management team used a CSF
planning document (Figure C5.4). One planning sheet is detailed for every measure for each
CSF.
Sharing
S + We will all share in the success of our business

+ Our success will be built on teamwork and cooperation
Partnerships
P + We will develop mutually profitable partnerships with our customers based on trust
+ We will foster external relationships
Equal Opportunities
E + We will promote our role as an Equal Opportunity employer to all communities
Communication
C + We encourage open and regular communication throughout the business
䊏 Figure C5.2 Guiding principles
䊏 Figure C5.3 Balanced Scorecard of Measures
The CSF itself defines what must be achieved. In the example Resources ‘must have skilled,
motivated and flexible people’. This is linked to one of the performance measures (KPI) and
an appropriate description of what that KPI represents is provided. In addition the current
performance is given, where applicable, together with its target.
The bottom section of the document identifies how the KPI will be achieved. By doing
this the business identifies a lower level of specific actions that should help to achieve the
䊏 Figure C5.4 CSF planning document
specific success factor. Each of these actions is allocated an owner and a date for
completion.
As the ‘whats’ are cascaded down to the ‘hows’, responsibility is likely to be cascaded down
to the most appropriate level within the organization. For example, the KPI is owned by a
member of the senior management team, as are the four identified actions. However, these
four actions, if cascaded to the next level of detail, would become the ‘whats’ that would
require their own series of ‘hows’ to be defined and probably be owned functionally by a
department or business unit.
Implementation of this process allowed for a link to be created from the highest level of
critical success factor right down to individual or team objectives and goals. Furthermore, it
provides a means of feedback through the chain to the CSFs and enables performance to be
monitored and aligned to corporate objectives.
䊏
䊏 Achievements
The project helped London Operations to dramatically enhance its understanding of the
business and its performance and identified opportunities to reduce costs by nearly 20
percent, while maintaining levels of customer satisfaction and market share. Furthermore,
the approach has led to these changes being locked into the future working of the business.
Many attitudes have changed and barriers broken down to secure the future of Resources
Ltd. The schedule for implementation was less than 18 months and the transformation in
operations has made Resources Ltd an attractive commercial proposition.
Satisfaction with the approach towards the project can be measured by a number of
yardsticks.
BBC managers have acknowledged that the savings proposed are far greater than they had
anticipated, even in their optimistic moments. One senior BBC manager commented that as
a ‘rule of thumb’ a restructuring exercise costing £12 m (c. $18 m) would be expected to yield
savings of around £6 m (c. $9 m) a year – in other words it should pay for itself within two
years. The £12 m (c. $18 m) resructuring for London Operations, however, is set to impact the
bottom line by over £13 m (c. $20 m) per year. This reflects the innovative and creative way
in which the project was progressed.
Direct feedback has been very positive. The project team were praised particularly for their
interpersonal skills in working with and involving staff, and for the continuously high levels
of communication with management on the progress of the work. Senior management
recognized and appreciated the ‘hardsoft’ approach that blends a rigorous establishment of
the hard facts of the situation with a positive effort to communicate details to staff, involve
them in the changes and generally build good relationships.
Resources staff viewed this as the ‘most inclusive project’ they had experienced. Managers
regarded the project as creative, innovative and practical, achieving the support of
employees and achieving benefits that other approaches had failed to do.
䊏
䊏 Questions
1 Evaluate the approach used by BBC Resources for general application in the public sector
– health, education, armed services, social services, tax collection, etc.
2 Discuss the issues of measurement in an organization such as this one, and evaluate the
approach taken by BBC Resources.
3 How should the senior team in BBC Resources develop the thinking to sustain the
momentum of the achievements.
䊏
䊏 Acknowledgements
The author is grateful for the contribution made by his colleagues Nigel Kippax, Mike Turner
and John Forrester in the preparation of this case study.
䊏
䊏
䊏
䊏 Best Value in Harrogate Borough
䊏
䊏 Council
‘Best Value’ is a UK Government initiative which places a duty on all local councils and
authorities to deliver the most economic and efficient services possible. Councils must report
to their public and the Government each year on their performance, in addition to reviewing
all their services to identify and achieve continual improvements. In this way the
Government has challenged local councils to look at the way they deliver services and raise
their quality at a reasonable cost.
This case study looks at the way Harrogate Borough Council in North Yorkshire – the
author’s own district – has addressed the needs and challenges of Best Value through a five-
year review program of:
䊏 Culture and community safety.

䊏 The local economy; local taxation and benefits.
䊏 Managing the council; access to services.
䊏 Public health and protection; the local built and natural environment.
䊏 Highways and traffic management; housing.
䊏
䊏 The vision, objectives, etc.
The council’s vision is to ‘provide civic leadership and high quality, cost-effective services to
fulfil the aspirations of the community, local people and visitors’. In working towards
achieving its long-term vision, the council has identified three broad aims and nine key
objectives (Table C6.1)
䊏
䊏 Core values
The council’s vision and nine corporate objectives are supported by the following core
values:
B e s t Va l u e i n H a r r o g a t e B o r o u g h C o u n c i l 3 9 7
䊏 Table C6.1 Harrogate Borough Council’s three broad aims and nine objectives
Aims Objectives
A sustainable To contribute to a transport infrastructure that ensures that people and businesses can travel safely
environment and conveniently.
To work in partnership with the health agencies to protect and improve the general health of people
in the district by providing a range of environmental health services and promoting individual
well-being.
To protect and improve the natural and built environment and to promote sustainable development
across the district.
Building local To work with others to build a prosperous and robust local economy.
communities
To work in partnership with the police and other agencies to reduce crime and the fear of crime in
the district.
To seek the views of local people, to respond to them and to keep them informed through timely
and well-presented information.
To facilitate the provision of a range of good quality housing appropriate to all ages and income
levels in our community.
To ensure the provision of a range of leisure, cultural and amenity services which meets the needs
of all individuals and communities in the borough and benefits both residents and visitors.
Delivering services Continue to be a well-managed, responsive authority that meets the needs of all its customers.
for all
Involvement: We will involve local people in the council’s decision-making process through
consultation, discussion and engagement initiatives, both corporately and at a service
level.
Fairness: We will work towards fairness and equality of opportunity for all people
regardless of age, culture, disability, economic status, gender, race, religion or sexuality.
Openness: We will ensure that the decisions we make are clear, open and honest; that we
will listen to people and ensure that people have the right to challenge our decisions.
Respect: We will treat people with dignity and courtesy in providing services which reflect
and celebrate local diversity, local need and provide choice.
Sustainability: We are committed to giving people a better quality of life now, without
leaving problems for future generations either here or elsewhere.
䊏
䊏 Principals
The council is committed to seven key long-term principles:
Quality services: Providing responsive, customer-focused and efficient quality services,

accessible to all, which try to meet the needs of all our customers, including vulnerable
groups.
Effective management: Managing the authority’s financial and other resources effectively to
achieve its service commitments within agreed budget limits.
Integrity and accountability: Maintaining the highest standards of honesty, integrity and
accountability and demonstrating fairness and equity in dealing with customers, employees
and specific interests.
Employee development: Developing employees’ potential, their commitment to public

services and the contribution they can make to improve the services that the council
provides.
A prosperous economy: Working to support the development of a balanced local economy

with rising prosperity shared by all.
A quality environment: Preserving and improving the health and the quality of life by
protecting and enhancing the natural and built environment of the district.
Community leadership: Providing community leadership and focus so that the commu-
nity’s views and opinions are taken into account by the council’s actions whilst working to
sustain and enhance pride in the Harrogate district.
䊏
䊏 Quality of life
Working together – councils, voluntary sector, businesses, health agencies, Police, etc. – to
achieve a sustainable society which has, at its core, the national quality of life agenda.
(Department of the Environment, Transport and the Regions – ‘A Better Quality of
Life’).
That agenda has the following characteristics:
Economic
䊏 Combating unemployment.
䊏 Encouraging economic regeneration.
Social
䊏 Tackling poverty and social exclusion.
䊏 Developing people’s skills.
䊏 Improving people’s health.
䊏 Improving housing opportunities.
䊏 Tackling community safety.
䊏 Strengthening community involvement.
Environmental
䊏 Reducing pollution.
䊏 Improving the management of the environment.
䊏 Improving the local environment.
䊏 Improving transport.
䊏 Protecting the diversity of nature.
Harrogate Council has incorporated the above agenda into its priorities, plans, budgets and
targets. As both an employer and a provider of services, it monitors and reviews the quality
of life agenda both as part of its Best Value reviews and in its approach to everyday
management.
䊏
䊏 The Corporate Action Plan and Best Value Performance Plan
The Corporate Action Plan sets out the planned actions and targets which deliver the
council’s corporate objectives and priorities. It enables the authority to look beyond
immediate issues and problems and to plan ahead for the longer-term future of the district.
The Corporate Action Plan links into both the Best Value Performance Plan and the service
and business plans prepared by the council departments to deliver their part of the council’s
corporate plans and targets.
Some of the actions in the Corporate Action Plan are designed to meet a local need or policy
issue while others are to address the council’s current performance. All of them are agreed
by the council for implementation, following consultation with local communities and
partners in the district. The council reviews the Corporate Action Plan twice a year to
measure the progress being made in meeting the council’s longer-term vision and strategy
through the achievement (or not) of service actions and targets each year.
The Corporate Action Plan is divided into action tables – one for each of the council’s
corporate objectives. The council agrees a number of key priority areas for action to help
deliver each of its corporate objectives and these are set out in detail in the plan, together
with the actions and targets planned under each priority area, and the links into the relevant
service and other council plans. An example part of the plan’s details under ‘Sustainable
Environment’ – Highways and Traffic is given in Table C6.2.
Details of the council’s longer-term priorities and targets are set out in a separate ‘corporate
strategy’ document.
䊏 Table C6.2 Part of the ‘Sustainable Environment’ Corporate Plan: Highways and Traffic
Objective No. 1 – To contribute to a transport infrastructure that ensures that people and business can travel safely and conveniently.
Action Target Responsible Revenue Service Other

officer budget ref. ref no. plan refs
Priority No. 1.1 – Encouraged use of sustainable forms of transport.
1.1.1 Phase in the use of cleaner fuels in Acquire four council vans, which use liquid Name 1 RB3 DH21 HH1,HH10
council vehicles petroleum gas (LPG) fuel
1.1.2 Continue to develop the North 䊏 Review the first year of operation of the scheme Name 2 RB8 DT12 TS1, TS2
Yorkshire Concessionary Fares by September
scheme in the Harrogate District. 䊏 Issue travel tokens to eligible residents by June
1.1.3 Influence the draft North Yorkshire Work with other agencies to influence the guidance Name 3 RB4 DT03 TS1, TS2
guidance on parking, transport
assessments and travel plans
1.1.4 Input into the local transport plan Make representations by 31st March next year. Name 4 RB4 DT03 TS1, TS2
1.1.5 Encourage more people to make use 䊏 Work with others to complete the Harrogate bus Name 5 RB8 DT10 TS1, TS2
of public transport and encourage station
more walking and cycling 䊏 Undertake further studies into providing more Name 4
rail halts
䊏 Implement the Harrogate and Knaresborough
Cycling Strategy
The council’s budget for the financial year is explained in detail in a separate ‘Budget’
document and each year, the council allocates funding in its General Fund Revenue Budget
to enable it to deliver its annual corporate priorities and targets. Details of the council’s
funding of corporate priorities is set out in the Best Value Performance Plan.
A Best Value Performance Plan is generated for each coming financial year. This provides a
snapshot of the council’s performance and achievements for the previous year – what
worked/what did not – and looks forward to what the council needs to do to meet its
commitment to provide high-quality, cost-effective services which meet the needs of the
people of the Harrogate District.
The objectives and priorities are stated together with the long-term issues facing the district.
The council’s performance has improved in a number of areas and, where it has not
improved, the council has taken action to address this. On the Government’s national top 11
indicators for District Councils, Harrogate’s performance in the year of the case study
preparation was in the top quartile on five indicators, average performance on three
indicators and below average performance on three indicators. Over 70 percent of people
living in the district were satisfied with the overall service provided and the council met over
two-thirds of its performance targets and ‘almost met’ a further 7 percent.
䊏
䊏 Performance indicator support pack
A document on ‘Best practice guidance for staff working with performance indicators (PIs)’
has been issued to address the users and uses of performance information. This contains the
following information:
Performance indicators
䊏 What they are for.

䊏 What they do.
䊏 What makes good PIs.
Developing new PIs
䊏 Who the PI is for.

䊏 How the PI will be used.
䊏 The importance of PI focus and balance with the ‘bigger picture’.
䊏 Robust PIs.
Documenting PI calculations
䊏 Audit trail.
䊏 Support/guidance.
䊏 Evidence-based.
䊏 Transparent/replicable.
䊏 Sign posts to evidence.
This excellent document points out that PIs indicate how well an organization is performing
against its aims and objectives, they are not a means to an end but:
䊏 Measure progress towards achieving corporate objectives and targets.

䊏 Promote accountability of the service providers to the public and other stakeholders.
䊏 Allow comparisons of performance to identify opportunities for improvement.
䊏 Promote service improvement by publicizing performance levels.
The council recognize that good performance information helps identify which processes/
policies work, and why they work, and is the key to effective management including service
planning, monitoring and evaluation. Clearly in this public sector environment performance
information is important externally as it permits greater accountability and allows members
of the public and stakeholders to have a better understanding of relevant issues and to press
for improvements.
The Audit Commission in the UK has a set of five-point guidelines on good practice for
performance information: ‘Councils should try to develop and use a range of performance
indicators that measure five aspects of their service’:
䊏 Its aims and objectives (why the service exists and what it wants to achieve).
䊏 Its inputs and outputs (the resources committed to a service and the efficiency with which
they are turned into outputs – cost and efficiency).
䊏 Its outcomes (how well the service is being operated).
䊏 Its quality (the quality of the service delivered explicitly reflecting users’ experience of the
service).
䊏 Its accessibility (the ease and equality of access to services).
Services will need to consider over time the set of the PIs that they have in operation
(national PIs, local PIs and management information) and judge whether they need to adopt
new PIs to fill in gaps or cover any new work areas. This can only be done once councils
consider what they currently monitor and its usefulness, the department/service aims and
objectives and where they want to take the service in the future.
䊏
䊏 Performance management corporate arrangements
Harrogate Borough Council has prepared information and advice on the authority’s
corporate performance management arrangements.
Each department has its own performance monitoring arrangements which cover, at a
service level, setting objectives and targets together with the reporting of performance to
both officers and members. The Business Unit Manager’s Handbook issued to the
Authority’s managers sets out the council’s policy on the management of a monitoring/
reporting at a service level. The focus of this document is on the arrangements to manage the
authority’s performance corporately through both the Corporate Management Team (CMT)
and the cabinet.
The leader’s annual statement
The leader produces an Annual Statement of the Political Administration’s key aims and
objectives, policy targets, etc., for the next financial year and coming years. The Annual
Statement is the key outcome of discussions in the spring each year between CMT and the
cabinet.
Corporate action plan (CAP)
The Corporate Action Plan is part of the Best Value Performance Plan (BVPP). Its purpose is
to summarize how the council intends to deliver its long-term corporate objectives in the
coming year. The BVPP and CAP are adopted by council in early March and published by
the 31st March each year. A separate summary BVPP is printed and distributed to every
household, to local businesses, to the voluntary sector, etc., in early March each year. The
CAP is reviewed mid-year and at the end of the financial year and the results are reported
to CMT and the cabinet.
Business units
The Business Unit Manager’s Handbook requires all council service managers to prepare a
Business and/or service Plan each year, setting out the planned actions, targets and
accountability arrangements for the coming year. The handbook also requires all council
service managers to agree with their relevant chief officer and cabinet member the frequency
of reporting of service or business performance. (The minimum reporting requirement is
twice a year.) In addition, each service manager must prepare and agree a work plan to
deliver the agreed business and/or service plans.
Each business unit’s performance monitoring report is based on the agreed business and/or
service plan and includes links to the relevant corporate objective and action in the BVPP
and CAP. Chief Officers and senior managers meet regularly to review the performance of
their services including benchmarking with other providers (public, private sector, etc.),
comparing performance over time, etc. Service-related performance is reported to CMT only
where there is a corporate issue to address.
Per formance appraisal
At their annual appraisal interview, conducted by the Chief Executive, the Chief Officer is
required to account for their own performance and that of their Department. Their main
service and departmental objectives are reviewed during the Chief Officer’s performance
appraisal.
A Chief Officer’s performance is reviewed half-yearly with each Chief Officer reporting to
the Chief Executive on progress and changes in their objectives over the last six months.
Performance appraisal looks back, looks forward and sets objectives which reflect the chief
officer’s priorities and the Chief Executive’s priorities. The relevant committee cabinet
members are present at a Chief Officer’s performance appraisal. They are also present where
appropriate at the appraisal of executive officers. In order to report effectively to the Chief
Executive on their policy priorities and performance, each Chief Officer must review the
performance, each of their own services through ad hoc reviews, department management
team meetings and individual performance appraisals of senior departmental managers. The
Chief Executive’s performance appraisal is a report back to members on the Council’s
priorities and a look ahead to set policy priorities for the coming year. Within each
department, the Chief Officer conducts regular performance reviews with their senior
officers. Once a year, the performance of each employee is appraised by their line manager
as part of the Council’s Staff Appraisal Scheme.
Corporate planning process
The corporate planning process requires stakeholder consultation to take place, at both
corporate and service levels, as part of the development of plans, targets and performance
indicators. This requirement is set out in the Business Unit Manager’s Corporate
Handbook.
The corporate planning process and the departmental/service planning processes are linked
requirements for the administration’s Annual Statement of Objectives to inform service and
business planning and for draft Service Plans to be summarized in the BVPP. Service and
business plans must explain, in deail, how service actions will deliver the council’s corporate
objectives and priorities each year. They also explain, in detail, how each Business Unit
Manager will monitor the delivery of corporate objectives and priorities at a service level,
what targets they will use, etc.
Monitoring per formance

Every week the Chief Executive meets the authority’s political leadership (the leader
meeting) and every month has a joint meeting with the leader and the leader of the
opposition group. Reports on progress and performance form part of the discussions. Chief
Officers and senior Officers attend the leader meeting as necessary to discuss service and
corporate performance.
The Corporate Management Team (CMT), comprising the authority’s seven Chief Officers,
meets fortnightly. The team’s composition is:
䊏 Chief Executive.
䊏 Director of Finance.
䊏 Director of Administration.
䊏 Director of Leisure and Amenity Services.
䊏 Director, Harrogate International Centre.
䊏 Director of Technical Services.
䊏 Director of Health and Housing.
The CMT’s agenda includes reports from corporate projects and groups on a pre-agreed
frequency (the minimum reporting frequency for a project or group is once a year). CMT also
receives reports on corporate performance or issues (as necessary), either through the
standing CMT agenda item ‘Information Exchange’ or specific agenda items/reports. The
CMT receives regular financial monitoring reports on the authority’s revenue and capital
budgets. It also receives regular monitoring reports on the authority’s corporate performance
against national and local performance indicators, the district audit’s BVPP action plan,
etc.
The Chief Executive carries out a variety of reviews during the year. Some are ad hoc, asking
for information, and some are planned as part of an annual review program, including
regular meetings with the Director of Administration, the Head of Environment (on
environmental health issues), the Audit Manager, the Head of Human Resources (on
training), the Borough Administrator (on political management), the Assistant Director of
Technical Services (on community safety), the Head of Museums and Arts, the Director of
Health and Housing (on housing issues), the Chief Estates Surveyor (on property issues) and
the Head of Planning Services.
The Chief Executive attends a Departmental Management Team (DMT) meeting in each
department twice a year to explain the council’s approach to budgeting and other major
issues such as the New Political Framework. It is also an opportunity for Senior Officers in
departments to raise issues or ask questions.
Each Chief Officer is responsible for monitoring and reviewing the performance of their
services. A Chief Officer will report on service performance to the Chief Executive or CMT
(or both) on an exceptional basis.
Each Chief Officer is responsible for reviewing the performance of their services and budgets
during the year using Best Value Performance Indicators (BVPIs), local performance
indicators and targets. Chief Officers need to ensure that they compare and benchmark their
services with other providers (public and private sector) on a regular basis. Each Chief
Officer is responsible for reporting the performance of their services and budgets to the
relevant cabinet member on a regular basis.
The cabinet meets once a month and comprises eight members:
䊏 Leader of the Council.

䊏 Deputy Leader of the Council.
䊏 Cabinet Member (Planning Portfolio).
䊏 Cabinet Member (Housing Portfolio).
䊏 Cabinet Member (Leisure and Amenity Services Portfolio).
䊏 Cabinet Member (Environmental Health Portfolio).
䊏 Cabinet Member (Public Works Portfolio).
䊏 Cabinet Member (Opposition Member without Portfolio).
The cabinet receives regular financial monitoring reports on the authority’s revenue and
capital budgets. It also receives regular monitoring reports on the authority’s corporate
performance against national and local performance indicators, the District Audit’s BVPP
Action Plan, etc.
In addition to this each Chief Officer is responsible for reporting the performance of their
services and budgets to the relevant cabinet member on a regular basis.
Cross-cutting issues
The Council’s budget has its own annual process which involves central corporate analysis
and review by CMT and an established corporate timetable and reporting program,
including a budget seminar for members.
Economic indicators
Information is picked up through the council’s Economic Development Strategy. It includes

consultation with other organizations such as major local employers and the Chambers of
Trade. The information on economic indicators is fed back through the political leadership
into the authority’s policy-making process.
The authority’s Medium-Term Financial Plan is rolled forward each year. The roll-forward
involves extensive consultation.
The authority’s Capital Initiatives Strategy is rolled forward each year. The roll-forward
involves a corporate review of need and resources. The review, etc., will form part of the
authority’s Asset Management Plan.
The authority has carried out several Risk Assessment exercises in recent years, relating to
risk management on revenue budgets, on capital budgets, forward planning and on
planning for high percentage budget reductions.
The Strategic Management Officer is responsible to the Corporate Management Team for
reviewing the authority’s Corporate Performance, on a six-monthly basis, in six key areas of
corporate management:
1 The council’s Corporate Action Plan.

2 The implementation of the council’s agreed Service Improvement Plans and/or Best Value
Inspection reports.
3 The implementation of the District Auditor’s BVPP Action Plan.
4 The authority’s audited performance against the national BVPIs and targets.
5 The overall performance of council services against last year’s targets and the current
year’s targets.
6 The preparation of draft service and business plans for next year.
There is an annual corporate performance monitoring timetable to meet the above corporate
performance requirements. The outcomes of each of the six corporate performance reviews
are reported to CMT and the cabinet for each to challenge and agree. In addition each Chief
Officer is responsible for comparing, monitoring, reviewing and reporting the performance
of their services and functions.
Each Chief Officer is responsible for their department’s performance management

arrangements through their line management structures and processes. These arrangements
must enable the Chief Officer to monitor each year whether the corporate objectives and
targets set out in the BVPP are being delivered by service actions and expenditure in their
department. The annual work programs of the authority’s corporate groups are discussed
and agreed by CMT in advance of the start of the year to which they apply.
䊏
䊏 Conclusions
Harrogate Borough Council’s performance management arrangements reflect the devolved

service culture in the authority. They are supported by a management culture of delegation
and accountability at a service level.
The developed management culture includes appropriate checks and balances, together with
‘incentives’ which encourage effective business unit management. The incentives are set out
in the Business Unit Manager’s Handbook and cover the treatment of budget surpluses and
losses, virement and internal trading relationships.
The authority’s approach to performance management is ‘hands on’, whether at a service or

corporate level. This provides an open management environment in the authority where
problems, failings and successes are reported upwards on a regular basis.
In a value for money study on the authority’s service and financial planning arrangements,
the main conclusion was ‘The council has a well-developed corporate, service and financial
planning process.’
䊏
䊏 Questions
1 Explain the principles behind ‘Best Value’ giving clear statements of what it is trying to
achieve in the delivery of public services. What sort of organizations may usefully adopt
these ideas and how may the deployment have to change to accommodate a particular
situation?
2 Evaluate Harrogate Borough Council’s approach to ‘Best Value’, indicating strengths and
areas for improvement.
3 In terms of performance measurement and management, how does this approach compare
with other perhaps simpler arrangements and what could be done to streamline and
improve the application?
䊏
䊏 Acknowledgement
The author is grateful for the contribution made by Rose Johnston and Ben Grabham in the
preparation of this case study.
䊏
䊏
䊏
䊏 Unilever HPCE – the self-assessment
䊏
䊏 journey
䊏
䊏 Introduction
This case study describes the Unilever business, Home and Personal Care – Europe (HPCE)
self-assessment journey from when it was formed in 1996, when it set itself the aim of being
‘world class’ in the new millennium. In this case study we cover a six-year period up until
2001 and give some indication of Unilever’s plans from 2002 and beyond.
Over 100 years ago, the founder, William Hesketh Lever, stated the following mission for his
soap company:
䊏 To make cleanliness commonplace.

䊏 To lessen work for women.
䊏 To foster health and contribute to personal attractiveness, that life may be more enjoyable
and rewarding for the people who use our products.
Unilever’s mission today is not fundamentally different but better reflects the social and
economic climate and the wider scope of its operations.
The HPCE Business Group was established in 1996 as one of the 12 Unilever Business
Groups with its headquarters in Brussels, Belgium. At that time HPCE comprised 15 local
companies in 18 European countries, although these numbers have increased over recent
years. Within Europe there are 18 factories and eight innovation centers. Unilever HPCE has
10 000 employees, of whom 1600 are managers.
HPCE’s first president was John Sharpe, who had been an active supporter of both total
quality management and later business excellence in his previous senior roles in other
Unilever companies in the UK – Birds Eye Wall’s (frozen foods) and Elida Fabergé (personal
products). The latter was one of the two businesses that became part of HPCE.
Unilever HPCE – the self-assessment journey 409
HPCE used self-assessment as it formed an integral part of the management framework. This
leadership and management framework applies the well-known Deming Plan, Do, Check,
Act cycle. Implemented at the outset, it creates a learning and improvement ethos across the
organization and has the objective of supporting sustainable profitable growth.
A key element of the framework is the use of annual self-assessment, which has the objective of
reviewing the progress from the previous year, not just from a financial point of view but also
in a holistic way. It reviews both the enablers and the results across a number of stakeholders.
The framework is applied in all the business units as well as at the HPCE board level. The
other types of business units are:
䊏 Categories – which are the units that manage the various ranges of products across
Europe.
䊏 Local companies – which are the representatives in each of the countries that HPCE trades
in across Europe.
䊏 Processes – such as supply chain, product development, IT and HR management.
The way that the self-assessments have been conducted has evolved over the years, as has the
way that the outputs from the self-assessments have been used. The purpose of this case study
is to explore this evolution together with some of the support needs and cultural aspects.
䊏
䊏 The start of self-assessment in HPCE
HPCE started to use the EFQM Excellence Model from the end of 1995 and carried out the
first round of self-assessment in 1996. The intention to conduct self-assessments was
announced during the first annual OBJ!* to the top 150 managers.
It was decided to carry out the assessments at country level, category level, factory level as
well as at HPCE board level. Each unit nominated a facilitator and a first ‘Business
Excellence Conference’ was held attended by the excellence manager from Texas Instru-
ments, award winner in 1995. The conference was organized with the support of the Birds
Eye Wall’s business excellence manager, who was a highly experienced award assessor.
During the conference, syndicate groups were used to select the key results at the country,
category and factory levels.
It was decided to use the simplified Unilever checklist developed three years before by
representatives from three UK companies, Birds Eye Wall’s, Van Den Bergh Foods and Elida
Fabergé. The simplified checklist provided a way for areas to commence self-assessment that
was easy for everyone to relate to, which was especially important for the top team in order
to gain their commitment. Much of the management understanding of the longer-term self-
assessment process was gained at this stage.
Board members were not trained in the detail behind the EFQM Excellence Model, but only
in the concepts of excellence and in the use of the Unilever checklist and process. The main
* OBJ! is a Unilever wide annual communication event. OBJ! stands for ‘Oh be Joyful!’
idea behind this was to demonstrate that self-assessment was simple, not time consuming
and that it is worth doing.
John Sharpe insisted on the fact that the top team should perform the self-assessment:
The shared understanding and commitment gained by the top team from doing the
Self Assessment themselves is an essential ingredient for real understanding of the
process and its benefits. The commitment gained from ‘doing it oneself’ greatly
increases the chance of long term success.
The simple checklist approach consists of a number of questions that have to be answered.
Ten questions were identified for each enabler criterion part of the model. For each question
there is a need to record some evidence. A typical question would be ‘Do the leaders act as
role models? Give three examples’.
A score out of ten points is given for each question and the total for all ten questions calculated.
A weighting is then applied to the total for all the questions to give the criterion score.
For the results a list of measures is given together for each criterion with a simple scoring
system. For each result listed, if there is no data, then the score will be 0. If a result shows a
positive trend over a three-year period, plus a target and external comparison, then the score
will be 10. For each result criterion the average score is calculated across the measures, and in a
similar fashion to the enablers, a weighting is applied to arrive at the number of points.
As a simple scoring system is used there is only limited alignment between the self-
assessment score achieved and that which would be obtained through an external
assessment. In addition to the score, the self-assessment leads to lists of strengths and areas
for improvement (AFIs) being identified for each criterion part, plus the top three Strengths
and AFIs overall. An improvement plan is generated from the analysis.
The HPCE board assessment was conducted by consolidating the output from the unit
assessments and agreeing a score, plus strengths and AFIs. The first opportunities for
improvement were quite major and included both enabler and results issues.
On the enabler side the need for a policy deployment approach was identified and so
‘Strategy into Action’ was introduced. This was based on an approach used in Unilever
Australia and the transfer of the approach to HPCE is an early example of ‘external’ learning.
At the same time, although not as a direct consequence of self-assessment, a new strategy
formulation approach based on the ‘Hax methodology’ was introduced. The timely
introduction of this approach enhanced the benefit from self-assessment over the following
years, as it provided direction and reinforced the value of self-assessment.
In 1996 Unilever already had many soundly based practices in place. Examples included the
‘Integrated Approach’, which combines objective setting, development planning and
remuneration, and the approach to product development, which has been benchmarked on
several occasions. However, many of the major strategic improvements for HPCE stemmed
from the first self-assessment. Improvements were identified in the areas of communication,
process management and goal deployment, which led to the ‘Strategy into Action’ approach
being deployed. Self-assessment also identified gaps in the results areas such as employee
satisfaction, with limited measurement systems and, with the exception of the financial area,
there were few targets and external comparisons.
An early improvement action was to install such measurement systems and in 1996 the first
HPCE-wide employee survey was carried out. Customer surveys measuring the satisfaction
of the retail outlets where HPCE products are sold had been introduced in 1994 but the real
value of these surveys was brought home during the first self-assessments. Measuring
customer satisfaction in a systematic way was a first step towards managing customers at a
time when consolidation of retailers and the growth retail chains, such as Tesco, were leading
to the customers having more power and influence.
Marketing conducted consumer research on a regular basis, as part of the need to develop
products that grow or maintain market share, but consumer awareness was not particularly
high in other units of HPCE. One of the early benefits from self-assessment was the increase
in consumer awareness, as the need to ‘reconnect to the consumer’ was realized.
The declaration that HPCE would be world class had the effect of putting self-assessment
onto the agenda. HPCE was to go through a major change as it moved from a country-based
organization to a regional organization. Self-assessment became an agent of change to
facilitate this transition.
Despite this point it took time before the full benefits of the activity were accepted. As units
commenced self-assessment the focus was on improvement but there was a competing
interest in the score. The objectives were often seen to be conducting the self-assessment
itself and/or getting a score to show how well the unit was performing. It must be
remembered that this was at a time when there were limited measures, other than financial
measures.
A key activity contributing to the success during this start-up period was the support given
by the central business excellence function to the facilitators. A number of guideline
documents were produced and each year new facilitators were trained and experienced
facilitators ‘refreshed’.
Although many units did demonstrate commitment, there were others that saw the need to
conduct an annual self-assessment as an unnecessary distraction from normal business
activities. But as time progressed and the understanding of the benefits increased the level
of deployment steadily increased throughout all parts of the organization. Scores were on the
increase and many units were returning scores that would put HPCE in the upper quartile
in business excellence terms. It was at this point that the need to change the way that self-
assessments were conducted was recognized, as HPCE moved into the next stage of its
journey.
䊏
䊏 Two years into the journey
The value of the simple questionnaire route into self-assessment should not be understated.
Without such an approach an organization increases the difficulty to take the decision to
experiment with or start the process. They get the impression that very soon in the process
they will have to put in place a complex support system and the self-assessment becomes too
heavy a process. This need not be the case.
It is not a difficult decision to start in a simple way and much can be gained from it. The later
decision to have a more advanced self-assessment system can be taken later if there is a need,
as in the case of HPCE. As HPCE moved into the third round of self-assessment it faced
several issues. These included:
䊏 The deployment of self-assessment had grown and there were units that had differing
needs. Some were just getting going whereas others were making more progress trying to
implement the improvement actions.
䊏 Despite the increased deployment, the main benefits had been cultural and there was only
limited evidence that self-assessment had led to the achievement of the business objectives.
䊏 The improvement plan was the main output of the self-assessment process and not the
score. There was a need, however, to bring the self-assessment activity and business
planning activity into closer alignment. For this to happen the focus of the potential
improvement actions had to evolve from ‘compliance to the model’ type actions to more
business-focused action.
䊏 Despite the point above regarding the score, as is natural in any organization, some units
set themselves the task of increasing the score in a competitive way. The score was an
overall measure of progress but HPCE were trying to improve the business and its results
and not the score. For a considerable period HPCE resisted any idea of an overall points
target but it was agreed that companies could make an estimate of the overall points
outcome. This might have been seen as a target but this was not the intention. The result
was that in some areas, due to a lack of people with external experience, this led to a
concern that the scores were unrealistic. This was especially true when the limitations of
the simple checklist approach, which were well known to the experienced practitioners,
were taken into account.
There was also the need to review the first two years’ experience and improve the self-
assessment approach. Hence, the central team established a strategy for Business Excellence
in HPCE. The mission was:
䊏 To provide the philosophy, the structure and the means for continuous improvement so
that the organization can realize its goals.
There was also a set of aims:
䊏 Create an understanding of the process of business improvement.

䊏 Create cross-functional working based around key business processes.
䊏 Establish self-assessment as the performance measure within the integrating business
frameworks.
It was also recognized that the various units of HPCE were at potentially different levels of
maturity, which led to the definition of the maturity model shown in Figure C7.1.
The phases have the features outlined in Table C7.1.
As feedback from the business units indicated that there was the requirement to maintain
the way that the self-assessments were conducted, only four changes were made to the 1998
1000
900
Phase 3 – World class
800
700
600
500 Phase 2 – User
400
300
200 Phase 1 – Entry

100
0
Time
䊏 Figure C7.1 Self-assessment maturity model
䊏 Table C7.1 Features of the maturity grid phases
Entry
䊏 Introduces awareness of the self-assessment process, which is facilitated by the use of a simple ‘What’
checklist
䊏 Introduces top team to the complete management agenda, which must be covered
䊏 Limited data collection (a benefit at this stage)
䊏 Identifies strategic areas for improvement
䊏 Limited operational improvement activity
䊏 Works well for the first 2–3 years
䊏 Covers self-assessment scores up to 350 points, using an external scale
User
䊏 Recognized benefit of self-assessment
䊏 Data will be readily available
䊏 Improvement actions will be well supported by allocation of appropriate resource
䊏 Early self-assessments will take advantage of simplified ‘How’ checklists
䊏 More rigorous self-assessment in later stages
䊏 Fundamental building blocks of business excellence put into place
䊏 Typical score 350 to 600 points, using an external scale
World class
䊏 Understanding of business excellence fully developed
䊏 Business unit is a ‘learning organization’ reviewing and refining its approaches
䊏 Performance will be ‘best in class’ in several areas
䊏 ‘Award style’ self-assessment
䊏 Typical self-assessment score between 600 and 750 points, using an external scale
self-assessment approach. The first change, which was small but extremely significant, was
a change to the way that the enabler questions were presented. In the simple checklist most
of the questions were phrased ‘What do you . . .?’ and this was changed to ‘How do you
. . .?’. Answering ‘How’ questions tends to be much more probing than answering ‘What’
questions.
The second change was to the checklist format and the inclusion of a question relating to
review and improvement for each enabler. This made the checklist more rigorous and closer
to an external assessment approach.
The third change related to scoring was that some facilitators were exposed to the external
scoring or EFQM ‘Blue Card’ technique, based on assessing a number of factors. This
approach had not been used in the past as the view was held that training was required
before the technique could be used properly. However, with limited training use of the Blue
Card led to more valuable feedback.
The final change was the introduction of improved support materials to aid planning and
improvement activity. Improvement activity will be covered below and here we focus on the
advice given regarding planning.
During the planning phase facilitators were advised to consider the level of involvement of
staff in the process. This is shown in Figure C7.2.
䊏 Figure C7.2
Level of involvement in self-
assessment process
The way that the consensus meeting was managed was seen as being critical to the way that
the self-assessment was conducted. Two options were proposed for consideration and these
are described in Table C7.2.
The view from the central business excellence team was that most units were still at the
‘Entry’ level but the units considered themselves to be ‘Users’. The central team had this
view as most units were still concerned about the investment in resource required to conduct
the self-assessment and the feedback suggested that the units wanted limited changes, as
opposed to seeking the opportunity to improve the approach.
䊏 Table C7.2 Consensus Meeting Options
Type Type 1 – Show and go Type 2 – Share and go
Features 䊏 The team arrives with all the evidence and 䊏 The team circulates their evidence and data.
data, each part of the model is discussed, This allows the team members to prepare for
and then the consensus is reached. discussion.
䊏 There is little preparation for the consensus 䊏 This process requires more preparation but
meeting but it takes time to reach the consequently requires less time for the
consensus. consensus meeting.
䊏 This could be a necessary step if many new
people are involved.
Benefits 䊏 This approach helps the team to understand 䊏 This is a good approach when people have a
the model and also acts as training. good understanding of the model.
䊏 This allows a better overview of the data and an
appreciation of the balance between the criteria
The main benefit from the introduction of this maturity model was that it opened a
discussion on the use of the output of the self-assessment. It was stated that a unit in the
Entry phase would:
䊏 Be using self-assessment to increase awareness.

䊏 Be selling the need to change.
䊏 Focus on high-level areas for improvement.
Most units agreed that they meet all these requirements but acknowledged that they did not
meet all the User phase requirements, which were defined as all the above plus:
䊏 Have an improvement plan detailing specific actions to be taken.

䊏 Will know that the improvement activity is linked to business need.
䊏 Will be actively seeking best practice from external organizations.
To help with improvement planning two options were tabled. These were either to have a
separate improvement plan or to integrate the output of the self-assessment with business
planning activities. It was suggested that with a separate improvement plan approach there
was a need to have:
䊏 SMART objectives.
䊏 Actionable steps breaking the improvement action down.
䊏 Responsibilities assigned to specific people.
䊏 Achievement date set.
For units that chose to integrate their improvement planning with their business planning,
advice was given to screen each of their areas of improvement with the following
questions:
䊏 Will it:
– Deliver a measurable benefit to the business?
– Support the achievement of one or more KPIs on the unit’s scorecard?
– Close a significant gap in performance, where the unit’s performance is compared with
an external benchmark?
To address the concern over the realism of the score and to promote the exchange of good
practice, a special project was established, known as the Calibration Project, in which five
high scoring units were selected covering all types of unit. These were site visited by a team
of experienced assessors and a total of 44 good practices was identified.
The assessment team also looked at the accuracy of the checklist, as an instrument for
giving a self-assessment score that was representative of an external award assessment. As
feared, it was concluded that the checklist was not reliable, especially with high scoring
units, and that more rigorous self-assessment approaches would be appropriate for these
units.
Based on their experience of assessing organizations for quality awards, the team examined
the progress that HPCE had made over the previous two years. It was concluded that HPCE
would be placed in the band of organizations that may have achieved a site visit, but would
not have been short-listed for an award. The main improvement opportunities identified
were:
䊏 Consistent deployment of HPCE-wide approaches.

䊏 Provision of positive four-year trend data.
䊏 Availability of appropriate external comparisons.
The report concluded by making three recommendations:
1 Continuation of the work following the 1999 self-assessment round to collect additional
good practices from other units.
2 Proactive promotion of the use of the good practice information
3 Make progress towards using more challenging approaches to self-assessment.
These recommendations were carried forward into the next stage of the journey.
䊏
䊏 Towards the new millennium
The calibration project described above concluded that the approach to self-assessment
needed to evolve to meet current unit needs. The evolution of the EFQM Excellence Model
in 1999 presented an opportunity to make this change.
Under the cover of ‘the new model’, pro forma-based assessment was introduced, together
with the more rigorous RADAR assessment scoring approach. At the annual conference
facilitators were trained in the new approach in preparation for the 2000 self-assessment
round.
䊏 Figure C7.3
EFQM seven-step self-
assessment cycle
Figure C7.3 shows the self-assessment cycle expressed in terms of the EFQM seven-step
approach to self-assessment. The approach is discussed in this way so comparisons may be
made with other organizations. Each step will be discussed and in particular it will be noted
that under the ‘Conduct’ step there is a four-stage activity program.
Plan
The self-assessment is performed in the first part of the year after having all the consolidated
results from the previous year. The average score resulting from the scores of all units from
the previous year is published and this average score is part of the annual target. This annual
target appears on the HPCE, category, country and process level scorecards.
Nobody has an individual target on the score of their unit but it is a team target and is part
of the teamwork plan.
Train
To support the self-assessment there is a trained facilitator in each unit. Every year an annual
training workshop is held for the new facilitators and a refresher day for the previous
facilitators. The training has always been delivered using internal trainers and in 2001 the
training workshop was a two-day event.
The training of the facilitators covers:

䊏 HPCE management framework.
䊏 HPCE journey to excellence.
䊏 Eight fundamental concepts of excellence.
䊏 The EFQM Excellence Model.
䊏 Syndicates on elements of the model.

䊏 Syndicates on scoring enablers and results.
䊏 Guidelines on process:
– whom to involve;
– how much time;
– role of the board;
– four main stages of the self-assessment;
– timetable.
䊏 Self-assessment results database.
䊏 Implementation plan with good practices and excellence into action.
Communication
HPCE uses a variety of different media for Communications. These include:
䊏 E-mail.
䊏 HPCE.net, the local intranet facility.
䊏 Local magazines
䊏 OBJ! annual business group cascade meetings.
䊏 Board, Management team meetings and minutes.
All these channels are used to communicate the objective, the process, the timetable and the
results of the self-assessments. New managers receive an awareness session on both the
objective and the process. To measure Intranet traffic, some hits per page and detailed
statistics are available.
Conduct
The self-assessment is carried out by the management team, supported by criterion teams. It
has four main stages:
1 Launch.
2 Data collection and analysis.
3 Consensus meeting.
4 Definition and implementation of the Improvement Plan.
For units the process starts in March and finishes in May, and for the HPCE board the process
starts in May and finishes in July. It is a mandatory process that is applicable to all units.
Table C7.3 outlines the timing and the various areas of responsibility.
It is felt that the involvement of the management team demonstrates commitment to the
process.
Establish improvement plan

It is recommended that the Improvement Plan be agreed some time after the consensus
meeting. This gives time to reflect on the process and conclusions, and to look at best practice
benchmarking opportunities. It is also advised that the plan must:
䊏 Table C7.3 Stage timing and activities
Stage Timing Responsibilities Typical activities
Launch 0.5 day Management team and 䊏 Facilitator explains the process, EFQM model and
facilitator. learning from previous rounds
䊏 Facilitator explains the objectives and scope
䊏 Team agrees plan including approach for consensus
meeting (show and go or share and go)
䊏 Team agrees responsibilities: each part of the model is
assigned to a member of the team as ‘champion’
䊏 Agree timetable for data collection, review, consensus
meeting and improvement plan
Data collection 2–4 weeks Criterion sponsors 䊏 Collect the evidence and data
and analysis and criterion teams 䊏 Propose a score per criterion
Consensus 1 day Management team and 䊏 Understand the strengths and the weaknesses in
meeting facilitator approaches and results
䊏 Evaluate outcomes of previous year’s improvement plan
䊏 Agree on key areas for improvement – prioritized
䊏 Agree a score for the unit.
Action plan 10–12 months Management team and Conducted as part of next stage in the process.
implementation implementation teams
as part of Annual Plan
䊏 Deliver a measurable benefit to the business.

䊏 Support the achievement of one or more targets on the scorecard.
䊏 Close a significant gap in performance – when the unit’s performance is compared with
‘best in class’.
In the latest self-assessment cycle, units have been aligning their improvement activities with
the organization’s strategic thrusts.
The best way to ensure that the plan is implemented has been found to include the activities
in the unit’s Annual Plan activities and above all to ‘Keep it simple’. The President, John
Sharpe, in his ‘Rule of three’, also gave some additional advice:
At the end of the assessment the top team should take a step back from all the detail
and ask itself the question ‘What are the three things that would have the most
significant effect on improving business performance in the next year?
By defining three main themes and broad action plans, management is more able to
build the improvement goals into the ongoing planning process and achieve more
in the end.
The outputs from all the unit self-assessments and the HPCE level self-assessments are
recorded in a database accessible via HPCE.net. The two key themes from the assessment at
the HPCE level were addressing several people issues plus improving the quality of the
measures.
Implement Improvement Plan

The output of the self-assessment is an Improvement Plan, which is best integrated into the
Annual Plan and then cascaded through scorecards, team work plans and personal
objectives.
The board and management team members are responsible for their action(s), supported by
project or process team(s). The facilitator has a specific role to be sure that resources are
allocated and that the Improvement Plan actions are progressed. To help the facilitators in
this task of follow-up, formal half-year reviews, at board level, have been implemented from
1999.
For the HPCE key objectives, targets are included in the next scorecards, team activity plans
and individual objectives. To support the units in their Improvement Plans, three major
initiatives are in place:
䊏 Good practice: site visits, database, award.

䊏 Excellence into action: booklet, website, dedicated training sessions.
䊏 Benchmarking studies, factory awards.
Review
At the end of each self-assessment cycle a formal review is conducted and improvement
action implemented.
䊏
䊏 Reflecting over the years
Table C7.4 summarizes the main changes that have been made since the introduction of self-
assessment in 1996. This provides a useful summary of the details in the previous sections
and it shows how HPCE has moved from ‘Entry’ through to ‘World class’ level of the
model.
From Table C7.4 it may be seen that in recent years many new initiatives have been
introduced to support the process. In Yr 4 HPCE undertook its first external self-assessment
by writing a 75-page ‘award style’ submission report and submitting this to a team of
external assessors. Using the European Award process, these assessors assessed the
submission and conducted a site visit to clarify and verify their assessment. This resulted in
a detailed feedback report at the HPCE level that not only confirmed the progress that HPCE
had made, but was used as part of the improvement planning process. The submission
䊏 Table C7.4 Improvements to the self-assessment process – first six years
Cycle Improvements Level
Yr 1 䊏 Unilever simplified checklist Entry

䊏 Performed at top team level
䊏 Confidential unit scores
Yr 2 䊏 First Lotus Notes database password protected Entry
䊏 Process further deployed with involvement of direct reports
Yr 3 䊏 Revision of the checklist to focus more on ‘How’ than on ‘What’ Entry/User
䊏 Revision of the measures
䊏 Process further deployed with involvement of team (until 70% of unit people
were involved)
䊏 New Lotus Notes database with transparency of scores at unit level
Yr 4 䊏 New process for the HPCE SA User
䊏 First external submission with six EFQM/BQF assessors
䊏 Database with web interface not password protected
䊏 HPCE benchmarking data available
䊏 Good practice site visits
Yr 5 䊏 New EFQM Excellence Model User
䊏 New SA process in line with EFQM process
䊏 Second external submission with eight EFQM/BQF assessors
䊏 New database just available through HPCE.net
Yr 6 䊏 New process for the HPCE SA User/
䊏 Review of the training package World class
䊏 Analysis of the links between the enablers and results
䊏 Review of the measures
document itself was a valuable tool in promoting HPCE’s achievements both within HPCE
and to other Unilever business groups.
The external assessment exercise was repeated in Yrs 5 and 6 to monitor progression. The
process for generating the submission report has also been improved and has become a
diagnostic activity in itself, for example by examining the enabler/results linkages and
defining an extended set of measures for HPCE.
The good practice collection has continued and in Yr 5 an award was given for the unit that
had contributed good practices and was considered to be a role model for the generation of
good practices. A revision in Yr 6 was that the award was given for the adoption and not the
donation of the practices as a driver to promote learning.
As the transfer of knowledge gains more importance, the involvement in networking has
increased and HPCE has had an active involvement in several external benchmarking
initiatives.
䊏
䊏 Delivering the business objectives
The performance of HPCE since its formation has been outstanding and it is accepted that
business excellence has contributed to this success. Here some of the performance measures
are reviewed by results criteria showing that positive results have been obtained for every
stakeholder group.
Consumers
All but one of eight categories are number one or number two in the markets across Europe.
There has been a significant increase in market share of 2.5 percent, which represents a
growth of 18 percent. This is particularly impressive given the competitive market in which
HPCE competes.
Customers
Growth of the top 15 customers has been in double digits over the period, with some
growing up to 16 percent in a one-year period. HPCE is now considered to be number one
in the European markets against its competitors. As an example of an improvement in a
performance measure, there has been an increase in product delivery on time of 2 percent
from 97 percent on time to 99 percent on time. There have also been many customer awards,
such as the one given to the Dutch company by the trade in 2000.
People
People satisfaction has improved in the three surveys that have been conducted. As the
survey contains over 100 questions it is not appropriate to reproduce this data here. One
example of the excellent people results is the decreasing frequency of recordable accidents,
which is a key people measure as it relates to employee safety.
Society
HPCE factories and the design of the products have an impact on the environment. There has
been a continuing improvement in all the key performance measures, which include total
chemical oxygen demand, total waste and recycled waste, energy consumption and water
consumption. The impact of the products on the environment has also been steadily
reducing.
Key per formance results

Perhaps the most significant results for a private organization are the growth in turnover,
trading profit and trading margin. The indexed results for these key measures have shown
a minimum 20 percent improvement over 6–7 years in each of these areas.
Revenue from the core brands has also been a significant result as this has grown from 73
percent to 91 percent. This result is important as it reflects HPCE’s strategic objective of
investing the organization’s resources into the growth of the core brands in an industry
where there is high product complexity.
Progress of the scoring over time

The previous section gave a sample of the business results that were achieved over the
period. Improvement in the assessment of both the business enablers and the results has
been reflected in steady progress towards reaching world class overall scores. The trend in
self-assessment scores is shown in Figure C7.4.
䊏 Figure C7.4 HPCE’s progress towards world class
䊏
䊏 Going forward
This case study has examined the activities of Unilever HPCE over a six-year period. Self-
assessment is still considered valuable to the organization today and the practice is
spreading from HPCE to parts of Unilever throughout the world.
Unilever itself is engaged in pushing forward the frontiers of knowledge on business

excellence. The organization is currently researching how the model may be used in a more
informative way to provide a diagnostic tool that predicts future performance as opposed to
reflecting on past performance.
䊏
䊏 Conclusions
The success of HPCE is the reason why the organization has been actively promoting the
Excellence Model internally within the Unilever Group and externally via its suppliers,
customers, and trade associations. At a company conference in New York self-assessment
was recently declared as part of the Unilever management framework and all business
groups are using or have started to use it.
In giving advice to other business units, John Sharpe, recently retired President of HPCE, has
said:
There is no right or wrong time to start, but the best time is now!
Even when a company is facing difficult restructuring or major change programs

there is nothing to be gained by putting off a first self-assessment.
If the first assessment is started in the way we suggested, only the top team will be
directly involved and positive learning will emerge for the top team.
Delaying the first assessment simply delays the moment when the top team will
engage with the new perspective and the new complete business agenda which has
to be managed.
䊏
䊏 Questions
1 Describe the approaches used for self-assessment in Unilever HPCE and show how the
approach has been modified over time. What was it that changed?
2 Why has self-assessment been successful in Unilever HPCE? What have been the
benefits?
3 Identify the steps in the basic approach to self-assessment. What issues may arise in the
deployment of these in a public sector organization?
䊏
䊏 Acknowledgement
The author is grateful for the contribution made by Dr Brigitte Tantawy-Monsou, John
Sharpe and his colleague Dr Stephen Tanner in the preparation of this case study.
䊏
䊏
䊏
䊏 Business improvement strategies in
䊏
䊏 the Highways Agency
䊏
䊏 Background
The Highways Agency is responsible for England’s strategic road network, a network that
consists of 9400 km (5481 miles) of motorways and trunk roads and carries a third of all road
traffic and two-thirds of all freight traffic in the country. This equates to an annual total of
around 153 billion kilometers traveled. As an Executive Agency for the Department for
Transport the Highways Agency priorities are to:
䊏 Continue to maintain the network in good condition to ensure that it is safe and available
for use.
䊏 Maximize performance from the existing network.
䊏 Improve the network where necessary.
At the end of the 1990s the UK Cabinet Office introduced a Better Quality Services Review
(BQSR) program in response to the Government’s white paper ‘Modernising Government’.
As part of that program the Highways Agency undertook a review of the performance of its
activities with a view to considering one of five options:
䊏 Abolition
䊏 Market testing
䊏 Contracting out
䊏 Privatization or
䊏 Internal improvement
The Highways Agency Management Board realized the potential of the BQSR proposals,
particularly the opportunity to incorporate a long held policy to improve the management
and operation of the organization. The first step was to set up a small team to consider how
such a program could be delivered and by April 1999 this ‘Business Improvement Team’
presented a paper to the board detailing a potential improvement strategy, which linked the
need to implement a program of better quality service reviews to a structured approach to
improving the business.
The proposed BQSR program was authorized by the Highways Agency Management Board
and was due for completion in April 2004. Alongside the authorization of the program the
board approved the establishment of a Business Improvement Co-ordinator in each of its 23
divisions. This role was to be supported by the Business Improvement Team who were
charged with facilitating program delivery.
䊏
䊏 The approach
The approach that was adopted by the Agency was to use a small team of internal
consultants supported by external expertise to identify good business practices and assist the
functional directorates of the Agency to analyze the services provided using the BQSR
criteria, identify areas for improvement and implement any improvements. Each of the
services identified would then be subjected to a comparative benchmark with a view to
aiding the final BQSR decision-making process. Figure C8.1 is a visual representation of the
approach that each directorate used.
䊏 Figure C8.1 BQSR framework
The Business Improvement Team worked with the management teams in each area to decide
on the service strategy for each of the previously identified directorate key activities. This
was effectively the first BQSR analysis designed to identify those services which could be
abolished or where there was already consideration of outsourcing. This exercise provided
a strategic review helping directorates to clarify their purpose. The end of 1999 saw the
Business improvement strategies in the Highways Agency 427
completion of this part of the program with a limited number of services put forward as
having the potential for outsourcing. Those services that were put forward were subjected to
a comparative benchmark and a subsequent improvement program was devised.
The Business Improvement Team then facilitated the delivery of the second phase of the
framework – ‘Self-assessment using the EFQM Excellence Model’. Several of the divisions
were already using the EFQM Excellence Model to identify and plan improvements, so it
was decided early in the program that self-assessment against the Excellence Model was
likely to be the most effective way to identify, in a holistic sense, the areas that each
functional directorate of the Agency should consider for improvement. The Business
Improvement Team assessed a number of methods for self-assessment and eventually settled
on two. The first of these would be a simple questionnaire-based self-assessment, designed
for use with the smaller directorates, where all staff would participate. The second form of
self-assessment, to be utilized by larger directorates, would involve training a small group
of staff as EFQM assessors who would then gather evidence of business practice, assess that
evidence, identify areas for improvement and plan the implementation.
By mid-2001 over 90 percent of the organization had undergone one of the two forms of self-
assessment and a clearer picture of the key areas for improvement was evident. Indeed a
number of directorates had already agreed improvement action plans and were well into the
delivery of improvement.
䊏
䊏 Achievements
The improvement strategy has had an impact on the way the Highways Agency manages
and operates its day-to-day business. For example, work completed in the financial
payments division has led to improvements in key performance, particularly in terms of the
handling time of invoices for payment (down from an average of over 15 minutes to less than
four minutes per invoice). This has led to an improvement in the prompt payment initiative
targets, from less than 75 percent being paid within the mandated 28 days to greater than 95
percent being paid on time, with fewer staff employed in the process.
䊏 Figure C8.2 Directorate improvement frameworks

The planned improvement is led by the customer facing and program delivery directorates,
as they are responsible for the Agency’s key or core delivery activity, working to a directorate
improvement framework (see Figure C8.2).
From their clarified purpose (what they are there to achieve), both directorates have
identified their key activities (what they are there to do), and their key processes (how they
will operate). This was developed using ICOR (inputs, controls, outputs and resources)
techniques and has enabled the production of agreed consistent practices, recorded as
flowcharts and working procedures in the form of process tables (see Figures C8.3, C8.4 and
C8.5). These enable anyone in these directorates to understand their contribution to the
overall work of the Highways Agency and provide clear practical working guidance. These
delivery processes, held in an electronic web format, are continuously improved and
developed alongside their support processes for customer management, people manage-
ment, supplier partnerships and management planning, following ISO 9000:2000
principles.
This delivery process development work has enabled the picture of the Agency’s overall
delivery process to be developed, as shown in Figure C8.6.
This is enabling the wider process picture and to be addressed supporting the Directorates
in clarifying their contributions. Measures from these key delivery processes feed forward
into the Agency’s balanced scorecard.
䊏 Figure C8.3 Example of a directorate process hierarchy

䊏 Figure C8.4 Example of a process flowchart
Other areas include the identification of potential improvements to project delivery areas
that, once realized, should improve control over delivery processes, reducing wasted effort
through failures, etc.
Work in developing customer satisfaction and management systems allow the line managers
to identify key areas for improvement, based on the needs and expectations of the customers,
as well as clearly measuring, in both lead and lag terms, how the organization is performing
in meeting those needs and expectations.
䊏 Figure C8.5 Example of a process table
䊏 Figure C8.6 End-to-end Highways Agency process ICOR

There has also been a number of improvements identified as the result of detailed
benchmarking studies conducted with a range of public and private sector partners and it
would appear that the impact of these has been mainly positive.
A notable achievement following the adoption of the Highways Agency business

improvement strategy is the greater awareness and desire by all staff to embrace business
improvement as a way of resolving problems and delivering improved services to
customers.
䊏
䊏 Questions
1 What are the main issues a public sector organization like the Highways Agency faces
when designing and implementing a business improvement strategy?
2 Evaluate the BQSR framework (Figure C8.1), the directorate improvement frameworks
(Figure C8.2) and process hierarchy (Figure C8.3) and offer constructive criticisms and
suggestions for further improvements.
3 The Highways Agency has to deal with contractors and subcontractors in the construction
industry. What particular difficulties are there in this sector which might impact on
business improvement activities, such as those described in the case study?
䊏
䊏 Acknowledgement
The author is grateful for the contribution made by Dick Tyson and Barry Westwood in the
preparation of this case study.
䊏
䊏
䊏
䊏
䊏
䊏 Process management at Celestica Ltd
䊏
䊏 Company background
This case study refers to Celestica Ltd, part of Celestica Inc., based in Toronto, Canada. This
organization was Design to Distribution Ltd (D2D) which, until 1996, was a wholly owned
subsidiary of International Computers Ltd (ICL).
Based in the UK, Celestica Ltd primarily assembles printed circuit boards (PCBs), which are
distributed worldwide.
Investment in manufacturing technology and development and use of state-of-the-art

systems, including just-in-time techniques and ‘lean’ manufacturing systems, has:
䊏 Given Celestica a world class capability, which enables customers to maintain their
competitive edge in an extremely turbulent market place.
䊏 Resulted in showcase facilities which customers and equipment suppliers use as role
models.
D2D gained external recognition by winning prestigious awards such as the UK Best Factory,
British Quality Award, a European Quality Award prize, and the European Quality Award
itself.
Organization over view

D2D was based in the following main sites:
䊏 Kidsgrove, Staffordshire (1100 people).

䊏 Ashton-under-Lyne, Manchester (300).
Process management at Celestica Ltd 433
䊏 Bradwell Wood, Staffordshire (250).

䊏 Byley, Cheshire (100).
䊏 Stevenage, Hertfordshire (250).
It had four main organizations:
䊏 Ashton manufacturing.
䊏 Kidsgrove manufacturing.
䊏 Refurbishment and Special Manufacturing (R&SM).
䊏 Supply.
Global restructuring has led to Celestica Ltd being now based on one site, in Kidsgrove,
Staffordshire, with 700 people.
Histor y
Changes in D2D’s manufacturing operations included development and investment in
production lines, facilities and staff, accompanied by significant improvements in productiv-
ity and efficiency. There was and continues to be a strong commitment to total quality.
In 1990 the company entered into a strategic partnership with SUN Microsystems (the first
non-ICL customer) to supply PCBs. There were further moves into the contract electronics
market by other customers being secured. These customers used the recognized expertise of
D2D to produce subcomponents of their own brand of computer systems. The company’s
main businesses were:
䊏 Bare printed circuit boards.

䊏 Printed circuit board assembly.
䊏 System assembly and test.
䊏 Refurbishment and special manufacturing.
䊏 Literature and software operations.
䊏 Distribution.
䊏 Electromagnetic conformance.
䊏 Procurement.
䊏
䊏 Core processes in D2D
D2D realized in the early 1980s that to be a cost-effective, competitive, and indeed world
class organization, it must ensure that all processes are understood, measured and in control.
Starting in 1987 everyone was trained in process management and improvement, and shown
how they are part of a supplier-process-customer chain.
Customer care training was delivered to everyone to reinforce this, and to re-emphasize that
the:
䊏 supplier-process-customer chains are interdependent;

䊏 processes all support the delivery of products or services to customers.
Part of everyone’s training was to emphasize that all work is a process and that all activity
can be modeled as a supplier-process-customer chain. Almost 3500 people received this
process training.
New employees or part-time staff were trained in customer care during their induction
training, together with suppliers and vendors. All processes within the company had been
identified, all had appropriate measures and were modeled or flowcharted. Strategic and
business reviews were used to identify the processes critical to the success of the
organization. Information identified from the processes and reviews, including that from
customers, competitive and market data, vendors and employees was used in the
achievement of customer satisfaction and good business results.
How processes were identified

D2D’s quality training, given to everyone, defined a process as the mechanism whereby
inputs provided by suppliers are changed into outputs provided to customers. Every process
had a performance measurement, targeted to ensure continuous improvement. Operators of
every process were properly trained, had any necessary work instructions available, and also
had the appropriate tools, facilities and resources to perform the process at optimum
capability. This applied to all processes throughout the organization, whatever the outputs,
including those in finance and human resources.
Manager and employee teams reviewed performance of all D2D’s processes on daily, weekly,
monthly, quarterly and annual cycles. The process management required that all processes
had appropriate measurements, targets and benchmarks, and process performance was
continually refined by the monthly Non-Financial Business Reviews, the annual target
agreement process and the annual strategy agreement process. Manager and employee
teams agreed strategic objectives annually and reviewed them quarterly. The objectives
identified the business areas and markets within which D2D operated, and the products and
services provided.
The critical process list was determined by the senior management team at the annual
strategy review, supported by the quarterly strategy updates and the monthly business
reviews. The management team analyzed business performance and methods of manage-
ment in detail.
A bi-annual self-assessment against the business (EFQM) model was conducted. This
identified the need to review process management methods, and to re-evaluate top level
(critical process) measures periodically. D2D flowcharted and documented the major
processes as part of its quality management systems and self-assessment was a major input
to the review of D2D processes.
Resolving interface issues

D2D had a consistent process that defined how interfaces should be established, which had
been used and continuously refined from 1981. For each process, the process owner agreed
measures for the process and the delivery requirement with his/her customers. These could
be internal or external processes. Where possible, a scorecard was agreed. Customers were
asked to provide data, feedback and information on each failure to conform to their
requirement, and the feedback was compared with the internal performance measures of the
supplier. The process owner within D2D and the customer (who may or may not be within
D2D) mutually agreed the appropriate corrective action, with timescales. Failure to agree at
any stage escalated the problem to a higher management review which could ultimately
reach the monthly review held by the managing director and his team.
Evaluating the impact on the business

D2D knew that if they delivered products or services that did not conform to customers’
requirements in terms of cost, quality or service, they would lose customers. They also knew
that, if they did not continually ensure delivery, they would not retain existing or win new
customers. In other words, processes that are not controlled cost business, profit, and
customers.
D2D used customer satisfaction data from feedback, such as scorecard reviews, delivered
quality audits, or customer surveys, to continuously measure internal business process
performance. There were also meetings of customer services, salespeople, senior designers,
senior manufacturing managers and deliverers who focused on process and product
performance.
Measuring the cost of quality highlighted the internal cost impact if processes failed to
achieve required levels of performance. This measurement covered all processes, including
non-manufacturing. The cost and efficiency of all processes was measured and reviewed
weekly and monthly, including the finance, human resource and sales organizations. The
cost of quality was then used to identify problem areas and to prioritize corrective
actions.
Measuring the cost of quality as a percentage of revenue, month by month, showed a steady
reduction, although the company constantly discovered new sources of non-conformance
cost. The performance of all critical processes was measured, in terms of D2D’s market share
and customer satisfaction performance.
Process ownership and standards of operation

Processes were owned in D2D by the people responsible for the output of the process. This
principle applied from the single tasks performed by the individual operator or member of
staff, to the ownership of the D2D business by the managing director.
Ownership of a process was given to the person agreed by appropriate management and
employees as having the best ability, based on training, skills and experience to optimize and
maximize the performance of that process. This was part of the continuous drive to give the
responsibility, authority and resources to the person best able to do any given task.
All processes were developed and refined, and measures of the performance of the processes
agreed between customers and suppliers. The agreed standard took into account meeting the
full customer requirement, at the most cost-effective method of operation, in comparison
with competitors and benchmark standards. For D2D’s build and assembly processes this
䊏 Figure C9.1 Sample process control chart
included agreeing control limits for the application of statistical process control. (Figure
C9.1)
The standard for all processes stated that all appropriate processes would improve towards
and achieve a process capability index (Cpk) of 1.6. A Cpk of 1.6 implies a very high level
of control of the process (less than 3 ppm failure rate) and many of D2D’s processes reached
this level of control. The drive towards six-sigma levels of control was also part of the quality
improvement process.
The monthly quality reviews examined the performance of each process against the
measures agreed at the beginning of the year. Each area was measured on delivery, efficiency,
effectiveness, and process yield performance, based on customer requirements and
benchmarks.
Process measures used in process management

Business and customer satisfaction performance measures set the requirements for each
process, and company measures on business results, customer satisfaction, people
satisfaction and impact on society covered all process requirements throughout the
organization. These measures included customer requirements, plus measures of the
effectiveness and efficiency of the process.
Process owners regularly reviewed these measures, as appropriate to the process, and agreed
new targets, as the requirements changed, or new benchmarks or competitive information
became available.
Specific manufacturing process measures included:
䊏 Solder paste height.

䊏 Chemical concentration in solutions.
䊏 Component placement accuracy.
䊏 Test yields.
䊏 Failures from thermal screening and configuration.
Specific supply process measures included:
䊏 Delivery on time.
䊏 Error free deliveries.
䊏 Pre-notification to customers of the delivery.
䊏 New product introduction cycle times.
Measures were selected which were important when processes were developed, and
continually refined to ensure that the most appropriate measures were being used, based on
the performance or external benchmark information.
For example, the solder paste height measurement was carefully calibrated against Japanese,
American and European manufacturers to identify precisely:
䊏 How measurements were made.

䊏 Where measurements were made.
䊏 What measures were taken.
Similar benchmark comparisons were made for non-manufacturing processes in, for
example, document distribution (speed and accuracy of the distribution process), human
resource management (absenteeism and staff turnover) and finance (speed and accuracy of
invoice placement).
D2D selected test yield measures to remove as many faults in the products as early in the
manufacturing cycle as possible, thus applying the principle of prevention of errors for all
processes, product service and support.
Application of quality systems standard in process management

Allied Quality Assurance Procedure (AQAP) 1 registration was achieved in 1981, and ISO
9002 within D2D in 1988. AQAP was the quality system required to allow a vendor to sell
to defence installations. To achieve registration to the ISO 9000 requirements D2D needed
evidence of a comprehensive management review structure, supported by documentation
and auditing processes to confirm the understanding and control of the business process.
The British Standards Institution (BSI) audited D2D’s system every six months, and
provided an external benchmark for the effectiveness of their own auditing system.
Benchmarks for discrepancies raised were made with other large organizations, such as IBM,
Avis Rentacar, Elida Fabergé and Kodak. D2D was shown to have the lowest number of
uncorrected non-conformances of all benchmarked companies, and the most advanced
relationship with the registration authority.
Audits covered all parts of the organization, and the results of the audits were reviewed
locally every month. The company business results review covered the performance of
audits and the clearance of non-conformances; there were at least six informal audits per
month.
Review of process performance and targets for improvement

Prevention-based feedback loops were built into all processes and all faults reported by
customers were proactively managed for analysis and resolution.
People made improvements to processes as part of their everyday work, or by one of the
following mechanisms:
䊏 At regular local team meetings.

䊏 Directly to their supervisor or manager.
䊏 dELTA and local suggestion schemes.
䊏 Team brief or DONUT meetings.
Quality team leaders and members were all trained in:
䊏 Ishikawa root cause analysis.

䊏 Pareto diagrams.
䊏 Force field analysis.
䊏 Paired comparison.
The use of quality circles was initiated in 1983. Teams of individuals met voluntarily every
week, during working hours, to discuss and improve the processes in their area. The value
and importance of team involvement was regularly examined.
Corrective action teams were trained in DFICE methodology to:
䊏 Define the problem.

䊏 Fix it.
䊏 Investigate the root cause.
䊏 Correct the root cause.
䊏 Evaluate the corrective action.
Customers told D2D what they expect via:
䊏 A bi-annual ICL customer survey.

䊏 Scorecards.
䊏 Customer Service feedback.
䊏 Visits to the factory.
䊏 D2D’s visits to the customers.
䊏 Delivered quality audits.
䊏 Customer reply cards.
䊏 Delivery phone calls.
This data was collected for input to the annual target setting process to continually ensure
that appropriate measures were being used.
䊏 Figure C9.2 Quality Modeling System – model structure
D2D developed a Quality Modeling System (QMS) for processes, to understand what the
performance should and could be in comparison to actual performance. The QMS was a
powerful software tool that allowed D2D to feed predicted yields and failure rates at all
stages into a model of the manufacturing line. This yielded theoretical output targets for
delivered quality. A detailed ‘what if analysis’ was carried out to establish where
improvements were theoretically possible.
The model also allowed ‘what if analyses’ to be undertaken to stimulate the effects of process
changes. The basic structure is detailed in Figure C9.2. The Quality Modeling System was
reviewed at design and site business result reviews.
Suppliers, with whom D2D had a very close relationship, played a large part in the
improvement process. Their input was obtained via joint management improvement teams,
on new products and market trends, competitive performance of their own and competitors’
products, and improved methods of using their products throughout the review and
improvement processes.
D2D’s benchmarking processes provided systematic analysis of all processes and use was
made of competitive benchmark data wherever it was available. The target was always to be
better than benchmark.
Performance targets were typically based on:
䊏 Customer requirements.
䊏 Appropriate world class standards.
䊏 Machine and equipment capability.
䊏 Previous performance.
䊏 Process attributes and variables.
New targets were agreed on the basis of existing targets or changes to the customer require-
ment, aimed at meeting the customer requirement 100 percent of the time, in the most efficient,
cost-effective manner. Team and individual targets were agreed in the appraisal process, and
provided objectives throughout the organization to ensure 100 percent deployment.
The target performance for processes throughout D2D was zero defects, whatever the
processes; this included all areas: sales, human resources, finance, information systems, etc.
Mission Customers
Identify Process Past Data

Performance Measures
Operational Definition
PLAN
Observe Process Collect Data, Run Chart, Histogram,
Performance Control Chart, Flowchart
Brainstorm, Cause and Effect, Collect

Analyse Data, Specification, Check Sheet,
Process Scatter Diagram, Pareto
DO Improve the Flowchart

Process
CHECK Observe Process Run Chart, Histogram, Control Chart

Performance
Objectives
Met? No
ACT Yes
Monitor
䊏 Figure C9.3 Plan-Do-Check-Act applied to process review
Review of processes critical to the success of the business

All of the key/critical processes were reviewed by the senior management team every month
at the Non-Financial Business Review.
Major processes were systematically reviewed by the local management teams, with input
from customers, suppliers, employees and consultants with special skills, as appropriate.
These analyzed ongoing performance against the identified requirements to ensure
improvement plans were in place for all attributes of the process. As with all processes, the
Plan-Do-Check-Act cycle was applied, as in Figure C9.3. For example, the recognition
process was continuously reviewed against the feedback from employees, and was refined
many times.
Challenging targets
Comparison was made with competitors in major business streams in several ways –
external surveys, conferences, visits, and published papers – to obtain details on the
achieved performance and perceived requirement of customers. D2D’s internal reporting
systems yielded feedback on customer expectations.
This information was used to continuously review targets and process measures, and
constantly improve towards 100 percent process yields and zero defects in delivered quality.
First, the pilot process and its measurement was planned and established. The pilot process
and its performance was then checked in actual operation.
This approach was applied to all target agreement processes, against the benchmark
competitors, identified in the business strategy. The approach itself was subject to a quarterly
process review.
䊏
䊏 Process management in Celestica
Process management is now a core Celestica value. Strategic management reviews led by the
general manager identify processes that are core business competencies, and ensure that
appropriate measures, targets and reviews exist (Figure C9.4.) Celestica systematically
identifies key processes annually and aligns them to the organization’s objectives. The
criteria for identifying key processes are that they are:
䊏 Essential to achieving policy and strategy.

䊏 Fundamental to the achievement of company objectives.
䊏 Require the engagement and support of major proportions of the company’s resources.
1993 1994 1999 2000

Purchasing and Product and Global Sourcing materials
materials supply service delivery service (SCM process)
Printed circuit Process Delivery and customer Making

assembly and test improvement relationships (operations process)
System validation People New product Delivering

and test satisfaction introduction (SCM process)
Printed circuit Supplier People Partnership process

manufacturing partnerships partnerships
Cost Global partnerships Information and

reduction and SCM knowledge management
Competitive Competitive Technology

technology capability development
Prospective customer Acquisition and Human resource

identification business integration management
Self-assessment Self-assessment Environmental

management
Recognition Deployment Customer acquisition

and development
Deployment Society Business improvement

process
Corporate
development
Assessment
and review
Deployment
䊏 Figure C9.4 Review and changes in key processes

Business process re-engineering studies were completed in 1992, 1995, 1997, and 2000, to
continually match the performance of the business to customer requirements. By relating
hard business measures to the performance of key processes and ensuring managers have
strong incentives to achieve these process objectives, key processes are closely aligned to the
key strategic goals and short-medium-term objectives.
Key business process responsibility is assigned to senior managers. Each year, as part of the
management review process, all the process control point targets are restated to meet the
company’s new objectives. Best practice is adopted in all processes, and innovations are
introduced as they are identified from best practice elsewhere. New technology, customers
and products drive the need for new subprocesses, which are established by teams of
engineers and others working in customer-focused teams.
Since the 1980s, process design has been based on flowcharts or system flows, which can
then be used as part of Failure Mode Effect Analysis (FMEA) studies. Kidsgrove is certified
to ISO 14001:1996 and ISO 9001:2000, and is compliant with the requirements of TL 9000.
The effectiveness of manufacturing processes is reviewed as part of the customer scorecards

and the operational balanced scorecards, which cover measures such as process yield,
running time, throughput and inventory. Customer introduction and development processes
rely on world class performance to achieve customers’ need to minimize the time-to-volume
manufacture cycle. This measure has been specifically targeted over eight years with the
result that the manufacturing cycle has decreased from 12 weeks to two weeks. New
business requirements and existing performance are compared to ensure that local business
reviews capture and understand the need for change and build these new requirements into
their process measures. Resulting process enhancements have led to improved responsive-
ness to results, and clearer focus on the results to be reviewed at each level.
The fundamental principle behind Celestica’s creativity since 1983 is teamwork, and
managers give time, resources, their own efforts and motivation to many different teams.
Over 95 percent of Celestica’s people are now involved in teams to drive improvement.
䊏
䊏 Questions
1 Evaluate the approach to process management adopted by D2D and then Celestica, in
relation to the company’s concern for customer care.
2 Discuss the links between the use of SPC, process capability and process ownership in this
case.
3 How would the work on review of processes, their performance and targets for
improvement translate into an organization in the service sector?
C a s e S t u d y 1 0 䊏䊏䊏
䊏
䊏
䊏
䊏 Developing a business management
䊏
䊏 system (BMS) in QinetiQ
䊏
䊏 Background
QinetiQ is the result of a lengthy transformation from a set of independent government
research and development establishments to a public limited company (plc), which is at the
forefront of creating technology and its use in providing solutions for a variety of customers,
to afford them a competitive edge in their market places. The transformation had many
facets, mostly to do with the changing of attitudes and behaviors, and many initiatives and
change programs were spawned to develop new skills and attitudes. This short case study
examines one thread – the development of a business management system (BMS) based on
the right processes to achieve the goals of the company.
In April 1991 the Defence Research Agency (DRA) came into being, bringing together four
UK Ministry of Defence (MoD) establishments with some 15 000 people in eight major
locations. The business of the Agency was to provide the MoD with advice on which it could
make decisions in its equipment acquisition programs. At the same time, the MoD was
looking at ways in which it could ensure better focus for its research spend, particularly in
the light of the expected reduction in the defence budget, which in turn was the result of the
changing political scene, following the collapse of the Soviet Union.
The rationale for the creation of agencies was simple – the UK government believed that
there should be a clear separation between those elements of the civil service that provide
advice to Ministers so that policy can be created and those that deliver a service consumed
by the public (for example, the Passport Agency) or another part of government. It was felt
that giving an agency more freedom to conduct its affairs should ensure that the service is
delivered more effectively and efficiently.
In DRA, the plans to realize those twin benefits were drawn up by a newly appointed chief
executive; John Chisholm, who was recruited because of his commercial acumen and his
Satisfaction
Staff Responsiveness
Problem area
Facilities Formal quality
䊏 Figure C10.1
Comparing DRA’s Technology Project management
performance with other
suppliers to the MoD Understanding
synergy with the business. There was much to do; duplication of activities to be removed,
costs to be reduced through greater efficiencies, but most importantly DRA had to learn first
that it was a supplier to a customer rather than a customer of its own work. It had to learn
how to understand the customer and satisfy its needs. Another major change required was
the need to accept managerial responsibility, in contrast to the ‘committee’ where many
could celebrate success but none would admit failure. Lastly, DRA needed to formalize its
approach to quality. These needs were represented in a performance diagram (Figure C10.1)
which compared DRA’s performance against that of other suppliers to the MoD.
Each of the initiatives used to address these problem areas is a case study in its own right,
but this one concentrates on the work done to improve formal quality and develop a truly
process-based management system.
䊏
䊏 Process and procedure
By the middle of 1992, the main thrusts of change were biting. In preparation for running
DRA as a trading fund, where just as with any commercial company, money is earned from
customers to pay costs (as opposed to the ‘vote funded’ system where a civil service
establishment has a budget approved annually and the money voted to it by Parliament), the
necessary financial systems and methods had been developed and deployed. The use of
project management techniques to manage all of the customer tasks was being taught and
managers at all levels were being prepared to undertake their changed roles to face
customers and manage profit and loss.
The need to improve formal quality was addressed at two levels. First, the way in which the
Agency needed to operate was described in process terms. The framework had five top level
processes – Figure C10.2.
Developing a business management system (BMS) in QinetiQ 445
Policies, plans,
procedures and
Policy setting standards Reports Cost collection
and planning and allocation
Core activities
Customer needs Execution R&T services to customers

Total and
sales delivery
People Skilled people

process
Facilities and infrastructure
Technical knowledge
External suppliers
Systems
䊏 Figure C10.2 The five top level process framework
The processes were described in detail, both in words and in a set of process maps.
However, while the business operated along these processes, the detail was not neces-
sarily followed. Each of the top level processes was ‘owned’ by a senior member of the
executive, but little leadership was given along process lines. The diagram closely
mirrored organizational lines and it was seen as a ‘structure’ and not an interdependent
suite of processes.
The MoD requires all of its suppliers to be registered to the ISO 9000 series and DRA needed
to comply with the standard. In order to provide a local focus, the chief executive invited
each of the business units (at the time there were some 15, ranging in size from 200 to 1000
people) to put in place the necessary processes and procedures to achieve certification by the
end of 1996. The businesses at their own pace did just that and, while each of the systems
was rooted loosely on the model shown in Figure C10.2, they were each unique in their
methodology and style.
The effect of this was to create a set of fairly independent business units each operating in
a slightly different way. This gave rise to two undesirable effects: co-operation between
business units became cumbersome and the ability to reorganize rapidly to face a changing
external environment was hampered. By late 1995, a new quality department was born with
the initial remit of creating a single management system to meet the needs of the entire
business and satisfy the ISO requirement. At about the same time the Agency was enlarged
by the addition of the MoD’s test and evaluation and other R&D assets – elements which
operated in a different way to the research-based DRA. This gave rise to the Defence
Evaluation and Research Agency (DERA).
The development of a single corporate management system began with an examination of

the processes that needed to operate successfully. Using process-mapping techniques, a new
model was derived (Figure C10.3).
Owner’s direction
Direction and
improvement Deliverables
Staff
Assets
Manage Satisfy external
capability customer needs
Knowledge
Measure performance Customer

and benchmark needs
䊏 Figure C10.3 A single corporate management system for DERA
While not hugely different to its predecessor at this level, beneath the top level was a wealth
of detail to ensure consistency, using IDEFO notation. Such models are useful for systems
developers but generally can confuse users and so the model was not widely publicized. The
resulting documentation was the medium to broadcast the processes and a large
communications exercise was embarked upon to ensure that it was widely known. The
documentation was structured as shown in Figure C10.4.
Framework document
Source material
Policies
Business management system
Business process framework
Roles
Organization
Dictionary
DERA manual
DERA practice manual DERA guidance manual

Corporate procedures Corporate guides
Local procedures Local guides
Project and operating plans
䊏 Figure C10.4 DERA management system document structure

Satisfaction
Staff Responsiveness
Facilities Formal quality
䊏 Figure C10.5 Technology Project management

Improved performance of
DERA Understanding
This was not a ‘light’ system – corporately there were about 150 mandatory documents
supported by a similar number of (probably more wordy) guidance documents. In addition,
the businesses found it necessary to add some 1500 documents of their own! However, while
the system was document-based, it was delivered to most users’ desktops through the
corporate intranet.
These efforts proved successful, as the 1997 rerun plot of Figure C10.5 shows. It is important
to note that other change initiatives were being undertaken in parallel with this and the BMS
could not take all of the credit for the improvements achieved.
In essence the remit was met, DERA had a single corporate management system covering all
of its business and a single ISO registration. Now the journey could begin.
䊏
䊏 Improvement
A key question for DERA now was ‘how can the BMS be improved such that it can increase its
ability to deliver the organization’s objectives?’ A benchmarking study was initiated,
therefore, to study how the BMS in other organizations contributed to success. The aim of the
study was to improve the architecture, management, control, communication and deployment
of the DERA BMS by reviewing current best practice. The primary objective was to benchmark
the infrastructure and, in doing so, identify improvement opportunities. The benchmarking
project, which followed the methodology described in Chapter 9, was conducted on the basis
of sharing best practice to the benefit of both DERA and its external partners.
The purpose of a benchmarking questionnaire used was to provide an initial screen of

potential partners to ensure that the site visits were to be of value. Although the
questionnaire served its purpose, the real challenge came when it was time to conduct the
site visits. Unlike process benchmarking, where there are clear process metrics, this study
involved looking at the total system. A novel approach to evaluating the effectiveness of the
Design Audit
and build
Control Improve
Measurement
Management Process metrics
system Review
Impact on results
Communication
䊏 Figure C10.6 System elements for the benchmarking study
organizations visited, therefore, had to be developed. The system under study was broken
down into a number of elements, as shown in Figure C10.6.
The structure of the visits was thereby managed around the following topics:
1 Design – how was the system designed?

2 Build – how was the system built?
3 Control – how is the system controlled?
4 Deployment – how is the system deployed?
5 Review – how is the system reviewed?
6 Improvement – how is the system improved?
At site visits the topics were studied and observations recorded in a site visit report, which
captured the process elements using the ICOR (inputs, controls, outputs, resources)
methodology.
䊏
䊏 Lessons from the benchmarking approach
Several lessons were identified during the post-completion review conducted at the end of
the benchmarking study. These led to defining the infrastructure design and purpose of the
BMS more clearly so that it could be communicated better to the user community. The
findings were as follows.
Design – structure
During all the site visits, the strong visible commitment from senior managers, in designing
the system to suit the organization’s needs, was apparent.
Each company visited had improved or was in the process of improving their system, with
the drive for this coming from the top of the organization.
Each company used a model or framework to lead the thinking. Most companies visited
used the EFQM Excellence Model in some variant.
The design of the respective management systems came from well-defined goals and
strategies.
Evidence was found that each element of the chosen model clearly linked to the needs of one
or more stakeholders.
Most of the partner companies had process-based systems. A wide range was evident – from
one system being entirely process-based (including the assessment of processes) to a more
functionally based system assessed via traditional compliance-based audits.
It became apparent during the course of the site visits that the great challenge for almost all
the partner companies was to integrate several systems into one. DERA had succeeded in
this area as the BMS incorporated more than one system.
Design – process
Most of the partner companies had a clear mandate in designing the management system
that was accepted by all staff.
Without exception, competent people (such as those in the quality function) were involved
in the design of the management systems architecture. However, involvement was higher
and buy-in to the system more robust when other functions were also involved.
Design – implementation
Process packages, to varying degrees, were used to assist with the implementation of the
systems, where each process is described by a combination of: documentation, education
and training, tools and systems, and metrics that suited the users.
A mixture of presentation formats was used, varying from use of flowcharts to use of text
and a combination of both.
Electronic deployment of management systems is increasing via intranets.
Control
Most partner companies’ control systems were deeply rooted in ISO 9000.
The size and complexity of the organization had a great bearing on the method and medium
for change control and communication of the change. Where total control was possible,
typically in small, less complex organizations, it worked well.
Good practice was found where key stakeholders were documented within the process and
where the process owner is allowed to control all of the process, requiring only the input and
output owners to agree that the boundaries had not changed.
Measurement of the BMS
In general, each of the partner companies had good measurement systems in place but none
appeared to measure the contribution of the actual system to the business goals.
DERA adopted the most holistic approach to measurement of its BMS, measuring the
following aspects:
䊏 Is policy definition complete?

䊏 Does the BMS cover the business to an appropriate degree?
䊏 Does the BMS reflect the policies?
䊏 Is the BMS fully deployed?
䊏 Are the processes being measured?
䊏 Is the BMS being used?
䊏 Are staff finding it helpful in their work?
䊏 How quickly can the BMS be changed?
䊏 Is the BMS architecture relevant to the job in hand?
‘We think we have the elements of the equation – but not the formula yet’
䊏
䊏 Measurement – general
Each partner company had some form of scorecard deployed throughout the organization
down to the individual objectives level. In addition to output/outcome measures, good
systems had in-process measures in place.
Good practice was found in one company where the focus was on measuring aspects that
encouraged and drove desired types of behavior. It was repeatedly reiterated that the setting
of targets is vital. The use of benchmarking in informing targets is advantageous.
In several instances, the benchmarking team saw the use of standardized reporting systems
that went beyond mere number reporting to addressing causes, issues and improvement
activities.
䊏
䊏 Actions resulting from the benchmarking study
The benchmarking study and its recommendations were key in the development of a
revision to the DERA BMS. It was not, of course, the sole input. DERA had monitored the
opinions of the users of the BMS through a monthly survey. An analysis of the opinions, both
numerically and verbally, led to a better understanding of the presentational aspects of the
BMS, and other research into process management, reinforced the conclusions from the
benchmarking study.
An improvement project was initiated with the aim of making the BMS even more process
based than it had been and improving the ‘look and feel’ to suit the needs of the users
better.
Facilitated by the quality department, a top level process model was derived, in parallel with
the development of the future strategy for DERA, by the senior managers. From this model
the key processes were identified and described at several levels of detail, indicating:
䊏 What must be done to meet the overall objectives – with process metrics derived from those
objectives.
䊏 How it is to be done – to meet the needs of the regulatory frameworks, such as ISO and
accountancy codes.
䊏 How it is best done – to reflect good practice found both internally and externally.
The project also made better use of web technology to present the elements of the system to
the users in a way that enables them quickly and easily to find the information that helps
them to do their work.
䊏
䊏 The new e-BMS in the new QinetiQ
With the advent of Public Private Partnerships (PPP) and the splitting of DERA into QinetiQ
and [dstl], with the majority of the assets going to QinetiQ as a plc, there was a clear need
to remove unnecessary bureaucracy and enable entrepreneurship, while retaining the
controls essential for good governance. Hence, sets of new principles and structure and
concept were derived, as follows:
BMS Principles
䊏 the board sets out the strategic intent for QinetiQ;

䊏 we clearly and unambiguously set out the policies that we must follow in QinetiQ to
achieve that strategic intent;
䊏 we do this through a framework of processes;
䊏 the processes describe the minimum set of mandatory steps and controls to deliver
QinetiQ’s objectives;
䊏 at the delivery level, the principle of subsidiarity applies;
䊏 we adopt a risk based approach to control;
䊏 we employ people competent to carry out their tasks;
䊏 we demonstrate that the processes continue to:
– be effective in delivering QinetiQ’s needs; be efficient in their operation;
– compare favourably with other world-class organisations.
Structure and concept of the BMS
䊏 Processes
– policy
– mandatory steps
䊏 Obligatory
– essential ‘rules’ but not processes
䊏 Practice
– good ways of working
䊏 Why
– objectives
– policies
䊏 What
– process steps
– corporate tools
䊏 How
– plans
䉬 calling on the practices as appropriate
Here the processes describe the minimum mandatory steps to ensure consistency, if
appropriate, and governance. The main assumption is that people are competent to do their
job and, therefore, do not need to be told how to do it – merely what they must do. In this way
QinetiQ ensure the right balance in ‘the way we work’ (Figure C10.7).
The processes are contained in a new framework shown in some detail in Figure C10.8.
The way
we work
Competent
people
Clear Effective
processes tools
Comprehensive
plans
䊏 Figure C10.7
‘The way we work’ balance in
QinetiQ
䊏 Figure C10.8 New QinetiQ BMS Top Level Process Framework

The controls within the processes are based on a risk assessment for the process. An example
of this is given below:
Objectives and risks

Example: Win Business
䊏 To win valued work that is commercially viable and furthers the objectives of
QinetiQ
䊏 Wrong prospect
䊏 No profit
䊏 Conflicts with MoD compliance regime
䊏 Laws of physics
Control activities
Example: Win Business
䊏 Delegated authority
䊏 Proceed with prospect
䊏 Bid/No bid decision
䊏 Offer release
Continuous improvement is now embedded in the new QinetiQ through its process-based
electronic business management system. This is the backbone of the organization’s highly
specialized operations and provides a route to sustained performance in the increasingly
commercial and competitive world in which its scientists live.
䊏
䊏 Questions
1 Evaluate the business management system (BMS) approach adopted by QinetiQ, in

relation to the changes the organization was and is facing.
2 Discuss the links between the process frameworks developed in QinetiQ and the BMS
deployment.
3 What role did benchmarking play in the development of the BMS in QinetiQ and how may
this be streamlined to provide a regular assessment of the systems in a public sector
organization?
䊏
䊏 Acknowledgement
The author is grateful for the contribution made by Peter Morling and his own colleague, Dr
Steve Tanner, to the preparation of this case study.
C a s e S t u d y 1 1 䊏䊏䊏
䊏
䊏
䊏
䊏 Business excellence through speed
䊏
䊏 and teamwork in Philips Electronics
䊏
䊏 Philips – a global company
Royal Philips Electronics is eighth on Fortune’s list of global top 30 electronics corporations.
The company is active in about 100 businesses, varying from consumer electronics to
domestic appliances, and from security systems to semiconductors.
Philips is among the world’s top three producers in many of its businesses, including
lighting, monitors, shavers, and color picture tubes for TVs and monitors. Translated into
figures, the company produces over 1.5 billion incandescent lamps every year, and some 30
million picture tubes; and each day, the factories turn out a total of 50 million integrated
circuits. PolyGram, a 75 percent subsidiary, is the world’s largest music corporation.
Worldwide, Philips:
䊏 employs about 265 000 people;

䊏 has some 240 production sites in over 40 countries and sales and service outlets in 150
countries;
䊏 has research laboratories, located in six countries and staffed by some 3000 scientists, and
is responsible for some 10 000 inventions;
䊏 has a global network of some 400 designers spread over 25 locations;
䊏 has shares listed on 16 stock exchanges in nine countries.
The strength of Philips’ global operations is reflected in its (value-base) leadership position
in many of the markets in which it is active:
Business excellence through speed and teamwork in Philips Electronics 455
World Europe
Lighting 1 1
Consumer electronics 3 2
Corded/Cordless phones (in units) 1 1
Shavers 1 1
Steam irons 2 2
Semiconductors 9 4
Color picture tubes 1 1
Laser optics 2 1
Medical imaging equipment 3 2
PolyGram (music) 1 1
䊏
䊏 Company history and achievements
The foundations for what was to become one of the world’s biggest electronics companies
were laid in 1891 when Gerard Philips established a company in Eindhoven, the
Netherlands, to ‘manufacture incandescent lamps and other electrical products’.
The company initially concentrated on making carbon-filament lamps and by the turn of the
century was one of the largest producers in Europe.
Developments in new lighting technologies fueled a steady program of expansion, and, in

1914, it established a research laboratory to study physical and chemical phenomena, so as
to further stimulate product innovation. Marketing companies had already been established
in the US and France before the First World War, and in Belgium in 1919, and the 1920s saw
an explosion in their number.
It was at this time that Philips began to protect its innovations with patents, for areas taking
in X-ray radiation and radio reception. This marked the beginning of the diversification of
its product range. Having introduced a medical X-ray tube in 1918, Philips then became
involved in the first experiments in television in 1925. It began producing radios in 1927 and
had sold one million by 1932. One year later, it produced its 100 millionth radio valve, and
also started production of medical X-ray equipment in the United States.
Philips’ first electric shaver was launched in 1939, at which time the company employed
45 000 people worldwide and had sales of 152 million guilders.
Science and technology underwent tremendous development in the 1940s and 1950s, with
Philips Research inventing the rotary heads which led to the development of the Philishave
electric shaver, and laying down the basis for later ground-breaking work on transistors and
integrated circuits. In the 1960s, this resulted in important discoveries such as CCDs (charge-
coupled devices) and LOCOS (local oxidation of silicon).
Philips also made major contributions in the development of the recording, transmission and
reproduction of television pictures, its research work leading to the development of the
Plumbicon TV camera tube and improved phosphors for better picture quality.
It introduced the Compact Audio Cassette in 1963 and produced its first integrated circuits
in 1965. The flow of exciting new products and ideas continued throughout the 1970s:
research in lighting contributed to the new PL and SL energy-saving lamps; other key
breakthroughs came in the processing, storage and transmission of images, sound and data
where Philips Research made key breakthroughs, resulting in the inventions of the
LaserVision optical disc, the compact disc and optical telecommunication systems.
Philips established PolyGram in 1972, and acquired Magnavox (1974) and Signetics (1975) in
the United States. Acquisitions in the 1980s included the television business of GTE Sylvania
(1981) and the lamps business of Westinghouse (1983).
The Compact Disc was launched in 1983, while other landmarks were the production of
Philips’ 100 millionth TV set in 1984 and 300 millionth Philishave electric shaver in 1995.
The 1990s were a decade of major change for Philips. The Centurion program was
introduced to return the company to a healthy footing, businesses were sold, activities
stopped and cutbacks made in employment. Today, the company is still actively
reorientating itself to face the demands of the twenty-first century. In line with Philips’ theme
‘Let’s make things better’ the emphasis is firmly placed on providing the products that
people really want to buy, on establishing the basis for substantial long-term profits, and on
maximizing shareholder value.
䊏
䊏 Managing the company
Royal Philips Electronics is managed by the board of management, which also looks after the
general direction and long-term strategy of the Philips group as a whole.
The supervisory board monitors the general course of business of the Philips group, advises
the board of management and supervises its policies.
These policies are implemented by the group management committee, which consists of the
members of the board of management, chairmen of most of the seven product divisions and
some other key officers.
The group management committee, which is the highest consultative committee, also serves
to ensure that business issues and practices are shared across Philips.
䊏
䊏 The Philips brand
The Philips name and shield logo are among the world’s most recognized trade marks.
Together they form Philips’ most important asset, for while manufacturers make products,
it is a brand that consumers buy. . . and keep on buying. Brand recognition is not enough,
however. Consumers must have a clear idea of what the brand stands for – they must be able
to see the ‘personality’ of Philips and understand its values and standards.
This is why the company has invested in a worldwide brand management program in order
to better understand consumers’ needs, desires and dreams and incorporates these into the
product creation process; to communicate with consumers in a consistent way; and to
progressively develop a common brand language and culture throughout the company.
First steps in this program have included the setting up of a marketing competence center
and a global consumer intelligence unit, together with the introduction of dedicated brand
champion managers for the different regions of the world.
The aim of these and other measures is to unleash the power of the Philips brand; to build
on an awareness established over 100 years to enable it to become one of the top three brands
in every market in which the company is present.
䊏
䊏 ‘Let’s make things better’
‘Let’s make things better’ is Philips’ company theme – both a rallying cry and a public
commitment; it is the creed to which the company has committed itself and it exemplifies the
company’s aspirations.
‘Lets make things better’ can mean making better products, systems and services, of course.
However, of greater importance to Philips, it is far more a case of making things better, in the
sense of contributing to improving the quality of people’s work and lives. The theme
developed as a corporate pledge from the appreciation that consumers are far more
individualistic than ever before in their attitudes and demands. They have their own tastes
and preferences and they are unique individuals, which is how they want to be treated – and
not as one of the masses. ‘Let’s make things better’ is Philips’ commitment to improving the
quality of their lives on an individual basis; to strive to make things better for each and every
one of them.
䊏
䊏 Philips quality – journey to world class level
The quality journey is regarded by Philips as a race without a finish line. As businesses grow
and mature new benchmarks appear and new targets are set. Nearly all Philips organizations
are ISO 9000 certified, which lays the foundation for continuous improvement or ‘Let’s make
things better’, all the time.
The ‘Philips Quality Award’ (PQA-90) was the next challenge after ISO 9000, with its focus
on process management. Those units that achieved the desired PQA-90 level and thus
obtained the PQA-90 Award defined the next steps towards world class performance.
From the world class quality models, including the Malcolm Baldrige National Quality
Award, Philips chose the EFQM model for business excellence as the most comprehensive
and suitable one for the entire Philips organization. In this way, Philips continued to have a
single model which serves as a uniform reference and external standard.
The PQA-90 program taught Philips the value of self-assessment and made people in the
company aware of the value of mutual learning through peer auditing. In a similar way they
have applied the EFQM model within Philips under the theme of ‘Reaching the BEST’
(Business Excellence through Speed and Teamwork). This is presented in the Philips
Business Excellence (PBE) Policy, their ‘approach to Total Quality,’ as follows:
Business excellence
We aim to be one of the best companies in the world: the best to trade with, work
for, and invest in.
䊏 Customers are fully satisfied by the quality of Philips’ products and services.
䊏 Employees can develop and use their full potential.
䊏 Shareholders get a premium return on their investment.
䊏 Suppliers like to work with us as this generates superior value for both.
䊏 In the larger community, we contribute to the quality of life.
To achieve our goals we will deliver excellence in every way based on the PBE
model.
. . . through Speed . . .
Superior customer value of products and services is attained through world-class

performance of business processes. Excellence process performance is the result of
systematic improvement, both by incremental steps and by breakthroughs. To
achieve excellence performance, we will accelerate our speed of learning.
. . . and Teamwork . . .
Competence and knowledge are the foundation for excellence. We utilize company
talents fully by working in teams and learning from the best internal and external
practices. Open communication both within and between teams, departments,
businesses and divisions will mobilize all our capabilities.
The Philips way to achieve Business Excellence is known as:
BEST – Business Excellence through Speed and Teamwork
The words are familiar and the goals are understood but it is the BEST process that
represents a breakthrough in leadership for Philips. BEST is a management process that
drives the company to world class performance levels through improvement and alignment
of all business it processes.
The relentless pursuit of excellence, the drive for continuous improvement, the commitment
to make things better, to constantly seek better and breakthrough ways to manage the
enterprise – these are principles guiding Philips today. Reaching for the BEST is for:
䊏 Customers – Philips recognizes that their customers want products and services to be the
very best, just as Philips wants to be their first choice.
䊏 Suppliers – Philips knows that close co-operation with suppliers will enable it to improve
the whole supply chain.
䊏 Employees – they want to be part of a winning team. Sharing in the success of the company
gives a sense of achievement and inspires people to take on new challenges.
䊏 Shareholders – Philips’ shareholders demand consistently high performance based on the
company’s resolve to be the best.
䊏 Society – the larger society, of which Philips forms a part, expects the company to
contribute to the quality of life.
Speed and teamwork are an important part of the BEST equation for Philips.
Speed
Improvement programs can be clear, correct and focused but, just like business processes, if
they are too slow, they don’t deliver results ahead of the competition. By carefully
considering their working methods and finding ways to work smarter, Philips know they
can reduce the cycle time of business processes. Shorter process cycle time also accelerates
the speed of learning.
Teamwork
Philips recognize they can only be the best with teamwork, sharing knowledge and
communicating with each other. In Philips, teamwork is the key to competitiveness and the
route to achieving the full potential. By sharing best practices and providing mutual support,
Philips is able to outperform competitors.
(See Explanatory Note 1 at the end of the case study.)
In Philips, business excellence, speed and teamwork are the hallmarks of business today and
provide the road map to success. They define what the company has to do to thrive and
prosper. The BEST process also specifies how to implement these imperatives, how to direct
and focus the efforts – it is the engine that drives the implementation of what the company
wants: a secure and prosperous position, now and in the future.
䊏
䊏 BEST – the Philips way to business excellence
BEST is a high performance change engine that embraces the characteristics of the Philips
quality system and surpasses the PQA standards. BEST reinforces the significance of the
tools and concepts of Philips quality for building the winning organization. Philips believes
that the BEST way to business excellence is through the continuous four-step cycle of Plan,
Do, Check, Act (PDCA – Figure C11.1), both at the strategic and operational level:
䊏 Plan: translate strategy into action
Philips knows that clarity about the goals and the way to achieve them is essential to
transform a common vision into a shared reality. Management teams identify, prioritize
PL
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䊏 Figure C11.1
The Plan, Do, Check, Act
(PDCA) cycle in Philips
and align key goals through balanced scorecards and policy deployment. The goals and
the actions to achieve the goals as well as targets and dates are specified and agreed upon
at all levels.
The balanced scorecards specify the business priorities based on a cause and effect
analysis. This analysis takes into account the requirements of all stakeholders, and
incorporates the learning from reviews.
Policy deployment in Philips communicates and translates these priorities through
successive organizational layers, ensuring that all employees pull in the same direction
towards clearly defined and cascaded goals.
䊏 Do: manage processes
In Philips, processes are recognized as the drivers of business results:
– Cycle time is a powerful driver of process improvement – reduction of cycle time drives
the expansion of a process’s capability.
– Process survey tools reveal priorities for improvement and indicate what should be
done next.
– Cross-functional teams co-operate across functional boundaries with the total business
chain as their common focus.
The way Philips improve business results, therefore, is to improve the performance of its
business processes. Management teams identify their main business processes and
organize cross-functional teams to improve and maintain process performance. Team
competitions promote working in process improvement teams.
䊏 Check: review processes and results

䊏 Review of business performance shows, in business-specific terms, how results have been
achieved. The ability of Philips to learn and improve continuously is seen as its most
sustainable competitive advantage:
– operational progress is reviewed with the balanced scorecard;
– the PBE model is used to assess improvement of the total business;
– headquarters audits assess BEST leadership.
䊏 Act: respond to the review
䊏 Conclusions from the review lead to consolidation of achievements and start a next cycle
of improvement.
䊏 Applying the learning from audits and reviews closes the improvement cycle. Knowledge
management makes current understanding available throughout the company.
Systematic practice of these steps integrates the management of improvement with the
management of the business. Philips recognizes that hands-on leadership is essential and
BEST leaders are required to give their teams the inspiration, information and instruments
to be creative and self-directive.
The BEST tools

In Philips, BEST merges the management of improvement with the management of the
business through four tools that tie improvement efforts to business results:
䊏 BBS – balanced business scorecards
䊏 PST – process survey tools
䊏 PBE – PBE assessments
䊏 HQA – headquarters audits
The BEST competencies

It is recognized that the success of the BEST way in Philips is dependent on how well the
organization is led and how well it learns, i.e.:
䊏 knowledge management;
䊏 professional competence; and
䊏 leadership competencies;
are vital.
The balanced business scorecards

Balanced business scorecards are used in Philips to identify and monitor the drivers of
results and facilitate faster, more informed decision making. The balanced business scorecard
(BBS) focuses on the factors that are critical for business success and presents them in a chain
of four perspectives (Figure C11.2).
Philips concentrates on developing the competencies that are required to manage business
processes that provide products and services that satisfy customers who, by buying the
Competence Processes Customers Financial
Knowledge/Technology Drivers for Value Value, Growth

Leadership/Teamwork Performance propositions Productivity
䊏 Figure C11.2 The four perspectives of the BBS
products, determine the financial results. The BBS enables Philips to explore and monitor the
cause and effect relationships between these four perspectives, financial indicators showing
what to achieve in the common language of money. Indicators in the other three categories
show how the desired results will be achieved. In other words, understanding what drives
top performance is the basis for deciding how to achieve top results in Philips.
Process sur vey tools
A Philips survey gives a team a tool to assess their business process and develop an
improvement plan based on their assessment. The team assesses elements that need to be in
place in order to raise process performance on a ten-step scale, from basics to world class
performance.
Philips has found a process survey to be a powerful tool because:
䊏 Step descriptions indicate what should be done to reach the next level and can readily be
translated into a specific improvement plan.
䊏 The maturity profile indicates weak and strong areas and suggests improvement
priorities.
䊏 The maturity profile enables sharing of best practices through comparison with other
processes and other units.
PBE assessments
PBE assessments against the ‘new’ EFQM Excellence Model (Figure C11.3) identify areas for
improvement and put enablers and results in an all-encompassing perspective. Building on
the positive experiences with self-assessments and peer audits in the PQA program, the PBE
model is used in a similar way, albeit with a stronger link to the regular performance
management process.
Headquarters audits
In a headquarter audit (HQA), peers assess how a business management team provides
leadership in achieving business excellence using the world class standard specified in the
䊏 Figure C11.3 The EFQW excellence model
PBE model. They look into the way a business center manages its internal processes and its
constituent businesses:
䊏 Are the right measures defined?

䊏 Are cause and effect relationships that are characteristic for the business identified?
䊏 Are business processes assessed?
䊏 Are cycle times reduced?
䊏 How is learning shared?
䊏 Is the PDCA cycle applied to the BEST process itself?
By asking such questions the managers/auditors help their colleagues to review the
effectiveness of their BEST policy and validate the results of their self-assessment. Further
objectives are to share learning across the organization and to strengthen the commitment of
top management.
Knowledge management
Philips recognize that knowledge management (KM) – the proficiency with which a
company creates, acquires and disseminates knowledge and turns it into a business
competence – is the basic source of competitive advantage. Knowledge can be made
accessible through information systems with directories of experts (Philips Yellow Pages)
and databases of best practices. But information technology, although vital, is merely an
enabler. People are only inclined to offer and seek knowledge when they can interact freely,
motivated by a shared vision. Trust and teamwork are the fundamental enablers of KM in
Philips. Knowing this, good managers, raise the capability of the organization by creating a
collaborative environment in which explicit and tacit knowledge is actively shared.
Knowledge management is the result of several developments. On the demand side in

Philips are: business process management, global competition, speed of change; while on the
supply side are: information systems using intranet, peer audits using the PQA or PBE
model, balanced scorecards that explore cause-and-effect relationships, survey tools that
facilitate benchmarking, leadership competencies which include coaching.
Applying the lessons learned in Philips is the completion of the PDCA cycle and knowledge
management means to expand ‘applying the lessons learned’ to ‘sharing the lessons learned
and learning from the lessons others learned’.
Professional competence
Philips has numerous examples of professional excellence. The financial function, the
manufacturing function, the purchasing function, the logistics function, all have developed
or adopted frameworks for raising their performance. Significant resources have been
dedicated to raising the level of professionalism of these communities. However, it is
recognized that this is not enough and that world class performance requires breakthroughs
in cross-functional business processes such as product creation, demand generation and
order fulfillment. The goal of BEST is to integrate improvements across the business chain
and thereby make professionalism more relevant for the stakeholders.
Leadership competencies
The recently defined leadership competencies in Philips describe the behavior of the
individual manager that is required to achieve business excellence:
Task-oriented competencies
䊏 Determined to achieve excellent results (translates vision into challenging goals).
䊏 Focus on the market (understand the market and external environment).
䊏 Find better ways (use every opportunity to improve business processes).
People-oriented competencies
䊏 Demand top performance (are role models for top performance).
䊏 Inspire commitment (persuade the team to share the vision).
䊏 Develop self and others (coach and manage knowledge).
In Philips BEST leaders integrate the management of improvement with management of the
business.
Communicating BEST
The Philips intranet site is available to guide people in finding the training, tools,
publications, best practices, links to other sites and information to support them in
implementing BEST. The site, called Phillips Yellow Pages, provides the opportunity to
contact people easily and learn about their fields of experience. Employees are encouraged
to e-mail to an address and, by automatic reply, they receive a registration form.
The Philips magazine Quality Matters serves as a platform for the communication of best
practices across the entire Philips organization, and informs Philips management about new
developments and guidelines in BEST.
Both the intranet site and Quality Matters contain announcements of new publications to
support BEST, as well as reply forms for ordering materials and publications, and for
subscribing to Quality Matters.
䊏
䊏 Explanatory notes
1 Philips Quality Teams

A Philips Quality Team is a group of people, in any business, at any level, who join together
to improve the way they work by focusing on their process(es). Management makes sure
they have the time, place, knowledge and authority to analyze their processes, identify
problems, find answers and implement solutions.
The Philips Quality Network creates the conditions under which the Philips Quality Teams
can flourish. The network consists of the Corporate Quality Council, the Quality Councils of
the division and business units and the Quality Steering Groups of plants. They are
responsible for driving the change process and monitoring progress.
Quality Support Managers assist their Quality Council or Steering Group by preparing
policy, proposing initiatives and supporting the PBE process. They help managers to coach
their teams by organizing workshops and providing problem-solving tools. They support
teams by facilitating teamwork and problem solving.
2 Business balanced scorecards (BBS)

The illustrations of balanced business scorecards in Figures C11.4 and C11.5 are taken from
Philips business units. The first scorecard is a Strategy Review example (Figure C11.4); the
second is an Operations Review example (Figure C11.5). (Note: The data are for illustrative
purposes only.)
Traffic light reporting

Colors are used to indicate how the actual performance compares with the target
entitlement:
䊏 Green – meeting entitlement.

䊏 Yellow – performance is in line with the plan.
䊏 Red – performance is below plan.
In the business unit example, the columns headed ‘target’ state the expected performance
that can be below what is actually required. For instance, for some processes, the ‘99 process
䊏 Figure C11.4 Strategy review
Balanced Scorecard (illustrative data) Check Points

Critical Success Factor Performance Indicator Target Q1 Target Q2 Target Q3 Target Q4
Economic Profit Related USD min 6 12 20 28
Sales USD min 109 231 363 500
Financial
Ifo %age of sales 9.0% 8.7% 9.3% 10.0%

Working capital %age of sales 13.5% 13.3% 12.8% 11.1%
Productivity USD 0.11/0.43 0.11/0.42 0.10/0.41 0.10/0.40
Cashflow USD min 16 20 30 55
Market share %age 10.9% 11.1% 11.2% 11.3%
Customers
Delivery performance CSL 85% 85% 90% 93%

Partnership Programme %age of sales 0% 0% 5% 10%
Brand index Absolute value 1.40 1.36 1.33 1.31
Survey results Score 7.1 7.2 7.4 7.5
BEST Marketing Survey tool score 1.5 1.5 3
Processes
BEST Purchasing Cost reduction -0.5% -1.0% -1.5% -2.5%

Cycle time Export Surabaya - days 45 40 37 35
Malu GLS - days 30 27 23 21
BEST Manufacturing Survey tool score 3.5 4.5 5.0 6.0
Competence
Organization capability PQA 90 achievement 0 0 1 3 units

Leadership assessment Approached action plan 20% 30% 65% Complete
BEST training %age of target group complete 45% 70% 90% 90%
QIC participation %age of population 15% 15% 20%
Below Plan Meeting Plan Meeting Entitlement
䊏 Figure C11.5 Operations review

survey score is expected to be below 3. It is therefore reported red although it is foreseen in

the plan.
Indicators at the level of a business may include
Financial Processes
Economic profit realized Process Survey Tool score
Income from operations % reduction in process Cycle Time
Working capital Number of Engineering changes
Operational cash flow Capacity Utilization
Inventory Turns Order response Time
Productivity Process Capability (Cpk)
Customers Competence
Ranking in Customer Survey PQA/PBE Score
Market share Leadership competence
Repeat order rate % Patent-protected Turnover
Complaints BEST Training Days/Employee
Brand Index QIC participation
Indicators below business level

Many business indicators can be deployed to next levels in Philips.
Other indicators cannot meaningfully be consolidated and will only be reported at

operational level. For instance: yield, Cycle Time, defects (PPM), Mean Repair Time, Back
Orders, and Incorrect Delivery.
3 Headquarters audits
Objectives
The objectives of the headquarters audits are:
䊏 To help the auditees review the effectiveness of their implementation of the Philips
Business Excellence Policy by identifying strong points and areas for improvement.
䊏 To validate the results of the self-assessment of the organization (optional).
䊏 To provide an opportunity for shared learning across PDs.
䊏 To strengthen the visible commitment and involvement of top management.
Scope
The scope of the audit is: how the headquarters manages its internal processes and its
interfaces with the constituent businesses to provide leadership in business excellence
throughout the entire organization.
Auditees
Headquarters of the divisions (PDs) and the company HQ are audited. The list of audits to
be conducted is reviewed annually by the Philips Quality Policy Board and approved by the
Group Management Committee (GMC).
The PDs are responsible for organizing similar audits at the business level.
Audit team
The audit team consists of three to four auditors. All members are either members of a PD
Management Team or of the GMC.
A GMC member will act as the lead auditor. Most of the auditors are experienced in PQA
auditing and trained in PBE.
A PD/CQB Quality Manager acts as facilitator and, to ensure some continuity, one or two of
the auditors are taken from the previous audit team.
Reference for the audit

The PBE model is the reference for the audit. As a one-day audit does not allow a
comprehensive audit result on all PBE criteria, the audit focuses on the enabling factors of
PBE (about two-thirds of the audit time is spent on the enabling factors).
Primary focus
The audit team’s primary focus is on the implementation of the BEST approaches as a
customized subset of the enablers defined in the PBE model. The most important BEST
approaches focus on policy deployment and process management through the concepts of
balanced scorecards and process survey tools.
Timing
The headquarters audits are conducted once a year, attuned to the performance review cycle.
If another (award-based) audit has been planned for an organization in the same period, the
HQ audit can be shifted. The schedule of the audits is agreed and reviewed in the Philips
Quality Policy Board and GMC. The audit takes one whole day plus the evening before.
Audit briefing pack

One week before the audit, an audit briefing pack must be made available to the auditors.
This pack enables the auditors to prepare for the audit, to select the issues to focus on and
the persons to be interviewed.
The pack includes:
䊏 Organization charts.
䊏 An introduction to the organization, its processes and improvement program.
It is also strongly recommended to include:
䊏 PQA or PBE self-assessment scores and material underlying some or all of the
subcriteria.
䊏 Improvement plans and information on improvement teams.
Typical program
First evening – Presentation by CEO, including Q & A of auditee
Audit team meeting to select focus areas
Next day – Teams of two auditors meet with individuals or groups
Working lunch for the audit team
Audits by one or two auditors who walk around
Meeting to reach a consensus
Presentation of the audit report, discussion of main issues
Evaluation and closing discussions.
Presentation by the auditee

A short presentation to the auditors is made, focusing on:
䊏 Improvements since the last audit (if an audit has taken place before).
䊏 Explaining the improvement plan and its links to the various inputs.
䊏 How resulting improvements of the main processes are measured.
䊏 Linking these improvements to the business results.
Audit report by the auditors

The audit report contains:
䊏 Strong points and areas for improvement, preferably addressed per PBE criterion.
䊏 If applicable: validation of the self-assessment.
Distribution of the audit report is restricted to the auditees and the members of the audit
team.
An evaluation of the audit process is sent by the facilitator to the head of CQB.
The audit team will not communicate any findings outside the group of participants without
prior consent of the audited organization.
Auditor’s preparation for the audit

The facilitator takes the initiative for the audit according to the overall schedule agreed by
the GMC. He/she:
䊏 Fixes the date approximately six months in advance.

䊏 Clarifies roles and tasks within the audit team.
䊏 Determines who will be interviewed during the audit (audit plan).
䊏 Discusses the overall business issues this particular organization is facing, based on the
different frames of reference the auditors may have.
䊏 Ensures that the overall purpose of the audit is to help the auditee.
䊏 Ensures attention is paid to details to achieve excellence – the unit is expecting a thorough
audit – it does not expect the auditors to cover all points, but expects them to probe certain
areas in depth.
Auditee’s preparations for the audit

These should include:
䊏 Prepare the organization for the upcoming audit: communicate the objectives of the audit
and the expected working approach of the audit team.
䊏 Prepare the presentation for the audit team.
䊏 Have a meeting room available where the auditors can meet undisturbed during the audit
day.
䊏
䊏 Questions
1 Describe the ‘quality journey’ in Philips, drawing a chart of activities which a company in
a similar industry could follow if it was beginning the implementation of TQM.
2 Evaluate the approach taken by Philips and offer constructive criticism and suggestions
for improvement.
3 What role has teamwork played in the development of business excellence through speed
and teamwork (BEST) in Philips?
䊏
䊏 Acknowledgement
The author is grateful for the contribution made by Paul Morgan in the preparation of the
case study.

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C a s e S t u d y 1 䊏䊏䊏

In 2000 after a decade of international expansion, BT decided to refocus on the UK and

䊏 We put our customers first.

The approach to ‘Revitalizing Quality’ is based on seven steps to ‘real’ quality:

䊏 put customers at the heart of what we do;

Put customers at the heart of what we do

As well as this fundamental shift in measurement methodology a number of strategic change

䊏 Figure C1.1 The drivers of customer satisfaction

Reduce the cost of failure

Develop and deploy strategy

Get the basics right – quality for ever yone

䊏 Customers are at our heart – we must listen to the customer.

Quality approach to major change

2. Define the desired state

3. Define in-process and result measures

4. Performance benchmarking and set overall goal

5. Set interim goal

6. Gap analysis and identify root cause

7. Review interim goals and set targets

8. Define transformation projects and other relevant improvement process

Involving the workforce

Setting up a new global organization is a challenge in itself. To do this by harmonizing

Process classification ISO 9000

Processes SQF Process control

Baldrige Business excellence

Enabling activities (enablers) Results

Purpose Processes Performance

䊏 Figure C2.3 The SQF – a simple but powerful construct

䊏 Figure C2.4 Cascading the SQF down to best practice

The majority of the scores fell below tier 2

䊏 Figure C2.5 Average baseline findings

Purpose elements dealing with issues of strategy and leadership

Unit A Unit B Unit C Unit D

Improvement tools and techniques

In order to operationalize this system a structured approach to process improvement was

D Define scope of process improvement Purpose, scope and success criteria

Process mapping guidelines

Process management guide

Per formance measurement framework

Business focus Applied to Purpose Examples to date

Choice Initiatives To help prioritize by considering purpose, Business Improvement Program, HR

Assessment Organization To self-assess for continuous Customer service teams, customer

Recognition Business To achieve accreditation/recognition

As a summary, progress in the area of business improvement is highlighted in Table C2.2.

What do you really

What numbers, People

What are the

䊏 Figure C2.9 Five easy questions!

Each of TI’s businesses is organized on a worldwide basis, with regional managers in

The approach was refined by adopting a common program of continuous improvement

䊏 Disengage from non-strategic, labor-intensive and uncompetitive manufacturing activities

䊏 Refocus marketing on sustainable, profitable growth and penetration gain.

Texas Instruments Quality Policy

We will achieve business excellence by:

TI Europe Vision Statement

We Will Excel In Our Business By Providing

Texas Instruments Vision

Semiconductor Group WW Vision

Semiconductor Europe Vision

WW MSP Vision WW ALP Vision

䊏 Figure C3.6 European MSP/ALP Vision

1 What are the particular features of implementing TQM/business excellence in a large