Aristotle stated that it is not enough to know about excellence, we must try to have and use it. In the twenty-first century, it is impossible to rely exclusively on financial parameters to measure, monitor, and sustain an organisationâs success. Up to 75% of a companyâs value can no longer be measured by standard accounting techniques (ZdriliÄ and DulÄiÄ 2016). A standard accounting technique, for example, will describe how a firm prepares and presents its business income, expenses, assets, and liabilities. Further, due to competition at a global level in all spheres of business activity, organisations that want to survive and lead in an industry today must continuously improve their processes, services, and products to achieve a competitive advantage, or, in other words, its business excellence (BE). Thus, in these increasingly competitive business environments, BE allows organisations to assess their competitive strengths, understand and manage their performance, develop and implement strategic plans, and, above all, find opportunities to learn (Ahmed 2015).
Through the empirical analysis in this book we contribute to our current state of knowledge by asking the following questions: What is BE? How can organisations achieve sustained BE? How does human capital relate and contribute to BE?
In this introductory chapter, we define these questions and more. We define BE and analyse its underlying principles, present an overview of global BE models (BEMs) and identify the common themes within them, and provide best practice examples of the ways in which high-performing organisations have implemented various excellence principles.
Introduction to Business Excellence
Simply put, excellence means taking steps to ensure that the techniques and strategies that work today will be implemented in an even better and wiser way tomorrow. In an organisational context, excellence manifests itself through leaders and the management, who are dedicated to the continuous improvement of their organisationâs key processes, working conditions, morale, and general organisational culture. While a âgoodâ organisation uses sustainability, innovation, diversity, and risk management to provide product and process quality, a truly excellent organisation goes above and beyond by satisfying its customers, employees, and any other stakeholders while at the same time presenting a clear vision for achieving the same or greater outcomes in the future. Mann et al. (2011) described excellent organisations as those that strive to be not only ahead in their profits, but also outstanding in everything they do by implementing âimprovement programs, initiatives and quality toolsâ (p. 10) to develop and strengthen management practices and organisational processes, thereby improving their overall performance and creating value for their stakeholders. More precisely, the idea behind BE is that quality should not be focused only on the products and services produced by the organisation; it should be the fundamental value of the organisationâs management strategy (Evans 2008).
BE is therefore a philosophy of management or management approach that emphasises the importance of transformation in business processes and of striving for continuous improvement within an organisation to yield superior performance. On the other hand, total quality management (TQM) (also known as total productive maintenance) âdefines a management approach to long-term success through customer satisfaction. In a TQM effort, all members of an organisation [i.e. its human capital] participate in improving processes, products, services, and the culture in which they workâ (ASQ 2017). While the TQM movement that began in the late 1980s has admittedly run its course, TQM organisations that implemented BE early on in their life cycles have long reported consistently high performance and market success, providing valuable examples for companies that wish to achieve similar excellence (Matias and Coelho 2011; Zairi and Alsughayir 2011). Thus, BE principles developed in and modelled by TQM organisations provide a âjumping-offâ point for organisations that wish to identify opportunities and capitalise on their learning.
Given its broad applicability, BE has a variety of definitions and connotations. Simply put, it refers to doing things better than oneâs competitors and constantly improving staff, systems, processes, and organisations in a competitive environment (Arasli 2012). Its primary focus is determining how to achieve excellence in everything that an organisation does. In an early study of BE, Kanji (1998, p. 633) described it as a technique for scaling the âwell-beingâ of employers, customers, shareholders, or stakeholders while simultaneously providing a means to comprehensively evaluate business performance. More recently, Aras and Crowther (2010) defined BE according to four fundamental concepts: profitability, sustainability, good governance, and corporate reputation. Along similar lines, the European Foundation for Quality Management (EFQM n.d.-a) stated that BE is reflected in outstanding practices based on eight fundamental concepts: leading with vision, harnessing creativity, agile management, encouraging their staff, adding customer value, developing their organisational capability, being sustainable (in society as well as the organisation), and sustaining their results.
It has also been argued that BE produces different outcomes according to how long it is/has been implemented and at what stage of development an organisation is when it begins using it. In the short term, BE can help a company reach a return on investment (Mann and Grigg 2006) and in the long term it can both generate and strengthen an organisationâs competencies. However, it is important to note that there is no âuniversal ruleâ or one single path to successful BE implementation in business (Harrington 2004; Oakland and Tanner 2008).
Fortunately, organisations that aspire to achieve higher levels of excellence can choose one or more existing BEMs to ensure that they continue to improve and hold a competitive advantage. BEMs are frameworks that, when applied within an organisation, can help to focus thought and action in a systematic and structured way. These models are holistic in that they focus on all areas and dimensions of an organisation and, in particular, factors that drive performance. They provide a framework to assist in the adoption of BE principles and serve as a reliable means to measure how effectively this adoption has been executed.
Foundations of Human Capital
The principal questions we aim to probe in this book relate to defining what BE means for firms across the globe, and how these firms achieve sustained BE. But more importantly, we contribute by investigating how human capital relates and contributes to BE, through best practice examples in which high-performing organisations have implemented various excellence principles. In other words, we investigate the role of human capital in achieving business excellence. Put simply, human capital is the extent of the commercial worth of an employeeâs or teamâs skills, knowledge, experience, attitude, value, and motivation to an organisation (micro level), industry (meso level), or nation (macro level). In Chap. 2, we discuss in detail how various theoretical foundations of human capital, alongside other relevant management theories, collectively help a firm in its pursuit of achieving greater BE.
Global Business Excellence Frameworks
During the TQM movement of the late 1980s and early 1990s, the strategic significance of quality in business became universally recognised. Drawing on early innovations in Japan, which launched the Deming Prize to identify quality practices in 1951, organisations began to implement award programmes to increase quality and excellence in business. The frameworks and criteria for ensuring quality developed during this time laid the groundwork for contemporary BE principles. As Adebanjo (2001, p. 39) astutely remarked, âBE took off where TQM failedâ.
Today, organisations follow updated BEMs in every aspect of their day-to-day operations to achieve quality, value, and sustainability both for themselves and for their stakeholders. The two most commonly used BEMS are the Baldrige Criteria for Performance Excellence (BCPE), developed in the United States, and the EFQM Excellence Model, developed in Europe. These BEMs provide highly structured managerial approaches. They also ensure that organisational review remains holistic; that is, they consider all levels of the organisation and all factors that can influence performance. They enable any organisation to clarify factors that inhibit or accelerate organisational advancement and provide tools to implement targeted strategies. Moreover, these models, which acknowledge the distinct nature of the enterprise in which they are used, have proven relevant to all types and sizes of organisation: multinational, small to medium-sized enterprise (SME), not-for-profit, public sector, and so on.
Administered by the National Institute of Standards and Technology (NIST), the BCPE is non-prescriptive and provides comprehensive criteria for BE, requiring organisations to diagnose overall performance management systems, identify opportunities for improvement, and assess their improvement efforts (NIST 2017a). Its scope is also wide and takes in the whole organisation using 11 core values which are assessed across the modelâs categories. Systemic processes make up six of the seven categories used (operations focus; leadership; workforce focus; strategic planning; measurement, analysis, and knowledge; and customer focus) which contribute to the seventh category, performance results. Each area of organisational performance is measured and scored according to a 1000-point system (Asif and Gouthier 2014).
The E...