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The EFQM (European Foundation for Quality Management) Excellence Model lets organizations of any size or sector identify what they need to change to improve performance. The model shows organizations the cause and effect between ‘enablers’ (what it does) and ‘results’ (what it achieves). What's more, the model complements other change management tools.
The History
In 1988, 14 business leaders from across Europe met with the European Commission’s Jacques Delors to sign a letter of intent. A year later, the CEOs and Presidents of 67 European companies had declared their commitment to the EFQM - and a team of experts was set up to create a model that could be used to assess how excellent European organizations are.
Since then, the EFQM model has evolved to reflect the activities and challenges to its members. Today, it is used by over 30,000 organizations around the world (including BMW, Bosch and Virgin Media) to keep benefitting customers, shareholders, employees and society. What's more, the EFQM lets members network and share their experiences with other organizations.
What is It?
The EFQM model is a framework that offers Total Quality Management (TQM). The idea is that continuously improving every aspect of an organization will lead to overall high performance. To achieve this goal, the EFQM model is split into:
- Fundamental Concepts – the qualities an excellent organization should have
- Nine Criteria which help visualize how an organization works and assess its effectiveness
- RADAR – a tool to plan and implement change and continouous improvement [1]
Taken together, these components:
- identify areas for improvement
- help set future goals
- provide a common language for organizations to share experiences
- provide a measure of success to compare with other organizations
- help an organization meet the requirements to compete for the EFQM Excellence Award – an annual prize given to the best European proponent of TQM
The Fundamental Concepts of Excellence
What is ‘excellence’? According to EFQM, excellent organizations demonstrate eight Fundamental Concepts that amount to a shared cultural understanding. The model is not prescriptive, however. It does not tell leaders how to embed these concepts within their organization; it only tells them what an EFQM assessor wouldexpect to see in an excellent organization. [2]
EFQM describe these Fundamental Concepts as: [3]
Adding Value for Customers
“Excellent organizations consistently add value for customers by understanding, anticipating and fulfilling needs, expectations and opportunities.” For example, reducing delivery times or costs.
Creating a Sustainable Future
“Excellent organizations have a positive impact on the world around them by enhancing their performance whilst simultaneously advancing the economic, environmental and social conditions within the communities they touch.” For example, hiring staff locally and providing training.
Developing Organizational Capability
“Excellent organizations enhance their capabilities by effectively managing change within and beyond the organizational boundaries.” For example, sharing resources and expertise with partner organizations for mutual benefit.
Harnessing Creativity & Innovation
“Excellent organizations generate increased value and levels of performance through continual improvement and systematic innovation by harnessing the creativity of their stakeholders.” For example, improving production methods based on customer feedback and employee suggestions.
Leading with Vision, Inspiration & Integrity
“Excellent organizations have leaders who shape the future and make it happen, acting as role models for its values and ethics.” For example, leaders who encourage team working and continuous learning.
Managing with Agility
“Excellent organizations are widely recognized for their ability to identify and respond effectively and efficiently to opportunities and threats.” For example, continuing to develop management processes to achieve higher performance.
Succeeding Through the Talent of People
“Excellent organizations value their people and create a culture of empowerment for the achievement of both organizational and personal goals.” For example, delegating authority so that employees are able to make their own decisions about how best to help customers.
Sustaining Outstanding Results
“Excellent organizations achieve sustained outstanding results that meet both the short and long term needs of all their stakeholders, within the context of their operating environment.” For example, consistently responding to customer needs to ensure long term brand loyalty.
Every one of these concepts is important, but they are not all equally important to every organization. The priority given to each concept depends on each organization’s focus and goals. [4]
The Nine Criteria
The Nine Criteria let organizations consider the relationships between its different parts.
At its most basic level, this is a cause-and-effect diagram. The five enablers on the left-hand side represent the component parts of the organization. The four results on the right-hand side represent what the enablers have achieved. To achieve different results, organizations need to make changes to the enablers.
At the same time, the diagram is cyclical. Organizations that use the diagram can learn from the results that they achieve. This learning can then be combined with creativity and innovation to improve the enablers, as depicted by the bottom arrow. In this way, the results improve the enablers, and the enablers improve the results, in a process of continuous improvement.
The Five Enablers
The EFQM team found the main challenges facing organizations globally were the need to be flexible and adaptable. The five enablers reflect this need by helping an organization’s leaders visualize what they can change and consider the effects of those changes. [5]
The five enablers are described by EFQM as: [6]
Leadership – “Excellent organizations have leaders who shape the future and make it happen, acting as role models for its values and ethics and inspiring trust at all times. They are flexible, enabling the organization to anticipate and react in a timely manner to ensure the on-going success of the organization.”
Strategy – “Excellent organizations implement their Mission and Vision by developing a stakeholder focused strategy. Policies, plans, objectives and processes are developed and deployed to deliver the strategy.”
People – “Excellent organizations value their people and create a culture that allows the mutually beneficial achievement of organizational and personal goals. They develop the capabilities of their people and promote fairness and equality. They care for, communicate, reward and recognize, in a way that motivates people, builds commitment and enables them to use their skills and knowledge for the benefit of the organization.”
Partnerships & Resources – “Excellent organizations plan and manage external partnerships, suppliers and internal resources in order to support their strategy, policies and the effective operation of processes. They ensure that they effectively manage their environmental and societal impact.”
Processes, Products & Services – “Excellent organizations design, manage and improve processes, products and services to generate increasing value for customers and other stakeholders.”
The most successful organizations use these enablers to proactively anticipate and lead change, rather than simply reacting to it. In addition, they implement change with the minimum possible disruption.
The Four Results
The EFQM model reflects the fact that excellent companies do not just have a responsibility to increase profits. As well as business results, organizations have a responsibility for people, customer and society results.
RADAR Logic
The final component of the EFQM excellence model is the RADAR logic, an assessment tool with two key functions: [7]
- For assessors to analyze the organization and produce an excellence score for each criterion part.
- For organizations to question current performance levels and drive improvement.
The RADAR component is usually depicted in the diagram below:
In many ways, RADAR is similar to Action Research techniques for driving organizational change, in that it consists of four steps that constantly repeat. Essentially, the organization’s leaders:
- identify the Results they require to achieve excellence
- plan and develop the Approaches needed to achieve those results.
- Deploy the approaches they have decided to use.
- Assess and Refine their approaches based on what they learned from the first deployment.
The cycle continues as the leaders assess how close they are to the desired results and alter their approach accordingly.
Does it work?
A 2005 study published by the University of Leicester’s Center of Quality Excellence found that organizations which had won an EFQM Excellence Award performed better over an 11 year period than comparison companies on measures such as share value, sales and growth in assets. The study, however, was funded by EFQM and the British Quality Foundation. [8]
An independent US study, conducted in 1999, found that organizations which embraced TQM generally experienced economic gains, but this tended to take place over the long term. [9]
Criticisms
The main criticism of the EFQM model is that it is based on “attitudes and beliefs” rather than objective data. [10]
The five enablers were assumed to have a causal relationship with the four results, such that changing the former would have an impact on the latter. However, there was little evidence that this was the case until the late 1990s.
Since then, a number of studies have examined the framework to assess its usefulness as a tool for Total Quality Management (TQM), and this criticism has largely been dismissed. [11]
Conclusion
The EFQM model can be an effective tool for instigating organizational change. It can help leaders and managers ‘take the pulse’ of their organization by assessing how close current performance is to ‘excellence’. It also provides a framework that can help conceptualize how the organization operates, and help leaders think about the impact of their change on the wider organization and its results.
Find out more
The EFQM model is a complex tool that must be integrated into an organization’s strategy if it is to be used effectively. To find out more about the model, visit the EFQM website: http://www.efqm.org.For a quick introduction to the 2013 model, watch this YouTube video from EFQM: http://www.youtube.com/watch?v=ioyMjUc2g60.
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