This Glossary of Key Terms defines and briefly describes terms used
throughout the Criteria booklet that are important to performance
management. As you may have noted, key terms are presented in small
caps/sans serif every time they appear in the Categories and Scoring
Guidelines sections of this Criteria booklet.
Action Plans
The term "action plans" refers to specific actions that respond to
short- and longer-term strategic objectives. Action plans include
details of resource commitments and time horizons for accomplishment.
Action plan development represents the critical stage in planning when
strategic objectives and goals are made specific so that effective,
organization-wide understanding and deployment are possible. In the
Criteria, deployment of action plans includes creating aligned measures
for all departments and work units. Deployment also might require
specialized training for some employees or recruitment of personnel.
An example of a strategic objective for a supplier in a highly
competitive industry might be to develop and maintain a price leadership
position. Action plans could entail designing efficient processes and
creating an accounting system that tracks activity-level costs, aligned
for the organization as a whole. Deployment requirements might include
work unit and team training in setting priorities based on costs and
benefits. Organizational-level analysis and review likely would
emphasize productivity growth, cost control, and quality.
See also the definition of "strategic objectives" on page 68.
Alignment
The term "alignment" refers to consistency of plans, processes,
information, resource decisions, actions, results, and analysis to
support key organization-wide goals. Effective alignment requires a
common understanding of purposes and goals. It also requires the use of
complementary measures and information for planning, tracking, analysis,
and improvement at three levels: the organizational level, the key
process level, and the work unit level.
See also the definition of "integration" on page 65.
Analysis
The term "analysis" refers to an examination of facts and data to
provide a basis for effective decisions. Analysis often involves the
determination of cause-effect relationships. Overall organizational
analysis guides the management of processes toward achieving key
organizational results and toward attaining strategic objectives.
Despite their importance, individual facts and data do not usually
provide an effective basis for actions or setting priorities. Effective
actions depend on an understanding of relationships, derived from
analysis of facts and data.
Anecdotal
The term "anecdotal" refers to process information that lacks
specific methods, measures, deployment mechanisms, and
evaluation/improvement/learning factors. Anecdotal information
frequently uses examples and describes individual activities rather than
systematic processes.
An anecdotal response to how senior leaders deploy performance
expectations might describe a specific occasion when a senior leader
visited all of the organization’s facilities. On the other hand, a
systematic process might describe the communication methods used by all
senior leaders to deliver performance expectations on a regular basis to
all employee locations, the measures used to assess effectiveness of the
methods, and the tools and techniques used to evaluate and improve the
communication methods.
Approach
The term "approach" refers to the methods used by an organization to
address the Baldrige Criteria Item requirements. Approach includes the
appropriateness of the methods to the Item requirements and the
effectiveness of their use.
Approach is one of the dimensions considered in evaluating Process
Items. For further description, see the Scoring System on pages 54-55
Basic Requirements
The term "basic requirements" refers to the topic Criteria users
need to address when responding to the most central concept of an Item.
Basic requirements are the fundamental theme of that Item (e.g., your
approach for strategy development for Item 2.1). In the Criteria, the
basic requirements of each Item are presented as the Item title
question. This presentation is illustrated in the Item format shown on
page 58.
Benchmarks
The term "benchmarks" refers to processes and results that represent
best practices and performance for similar activities, inside or outside
an organization’s industry. Organizations engage in benchmarking to
understand the current dimensions of world-class performance and to
achieve discontinuous (nonincremental) or "breakthrough" improvement.
Benchmarks are one form of comparative data. Other comparative data
organizations might use include industry data collected by a third party
(frequently industry averages), data on competitors’ performance, and
comparisons with similar organizations in the same geographic area or
that provide similar products and services in other geographic areas.
Customer
The term "customer" refers to actual and potential users of your
organization’s products, programs, or services. Customers include the
end users of your products, programs, or services, as well as others who
might be the immediate purchasers or users of your products, programs,
or services. These others might include distributors, agents, or
organizations that further process your product as a component of their
product. The Criteria address customers broadly, referencing current and
future customers, as well as the customers of your competitors.
Customer-driven excellence is a Baldrige Core Value embedded in the
beliefs and behaviors of high-performance organizations. Customer focus
impacts and should integrate an organization’s strategic directions, its
value creation processes, and its organizational results.
See the definition of "stakeholders" on page 68 for the relationship
between customers and others who might be affected by your products,
programs, or services.
Cycle Time
The term "cycle time" refers to the time required to fulfill
commitments or to complete tasks. Time measurements play a major role in
the Criteria because of the great importance of time performance to
improving competitiveness and overall performance. time" refers to all
aspects of time performance. Cycle time improvement might include time
to market, order fulfillment time, delivery time, changeover time,
customer response time, and other key measures of time.
Deployment
The term "deployment" refers to the extent to which an
approach is applied in addressing the requirements of a Baldrige
Criteria Item. Deployment is evaluated on the basis of the breadth and
depth of application of the approach to relevant work units throughout
the organization.
Deployment is one of the dimensions considered in evaluating Process
Items. For further description, see the Scoring System on pages 54-55.
Diversity
The term "diversity" refers to valuing and benefiting from personal
differences. These differences address many variables, including race,
religion, color, gender, national origin, disability, sexual
orientation, age, education, geographic origin, and skill
characteristics, as well as differences in ideas, thinking, academic
disciplines, and perspectives.
The Baldrige Criteria refer to the diversity of your employee hiring
and customer communities. Capitalizing on both provides enhanced
opportunities for high performance; customer, employee, and community
satisfaction; and customer and employee loyalty.
Effective
The term "effective" refers to how well a process or a measure
addresses its intended purpose. Determining effectiveness requires (1)
the evaluation of how well the approach is aligned with the
organization’s needs and how well the approach is deployed or (2) the
evaluation of the outcome of the measure used.
Employee
The term "employee" refers to all people who contribute to the
delivery of an organization’s products and services, including paid
employees (e.g., permanent, part-time, temporary, and contract employees
supervised by the organization) and volunteers, as appropriate.
Employees include team leaders, supervisors, and managers at all levels.
Empowerment
The term "empowerment" refers to giving employees the authority and
responsibility to make decisions and take actions. Empowerment results
in decisions being made closest to the "front line," where work-related
knowledge and understanding reside.
Empowerment is aimed at enabling employees to satisfy customers on
first contact, to improve processes and increase productivity, and to
improve the organization’s performance results. Empowered employees
require information to make appropriate decisions; thus, an
organizational requirement is to provide that information in a timely
and useful way.
Ethical Behavior
The term "ethical behavior" refers to how an organization ensures
that all its decisions, actions, and stakeholder interactions conform to
the organization’s moral and professional principles. These principles
should support all applicable laws and regulations and are the
foundation for the organization’s culture and values. They define
"right" from "wrong."
Senior leaders should act as role models for these principles of
behavior. The principles apply to all individuals involved in the
organization, from employees to members of the board of directors, and
need to be communicated and reinforced on a regular basis. Although
there is no universal model for ethical behavior, senior leaders should
ensure that the organization’s mission and vision are aligned with its
ethical principles. Ethical behavior should be practiced with all
stakeholders, including employees, shareholders, customers, partners,
suppliers, and the organization’s local community.
While some organizations may view their ethical principles as
boundary conditions restricting behavior, well-designed and clearly
articulated ethical principles should empower people to make effective
decisions with great confidence.
Goals
The term "goals" refers to a future condition or performance level
that one intends to attain. Goals can be both short- and longer-term.
Goals are ends that guide actions. Quantitative goals, frequently
referred to as "targets," include a numerical point or range. Targets
might be projections based on comparative or competitive data. The term
"stretch goals" refers to desired major, discontinuous (nonincremental)
or "breakthrough" improvements, usually in areas most critical to your
organization’s future success.
Goals can serve many purposes, including
- clarifying strategic objectives and action plans to indicate how
you will measure success
- fostering teamwork by focusing on a common end
- encouraging "out-of-the-box" thinking to achieve a stretch goal
- providing a basis for measuring and accelerating progress
Governance
The term "governance" refers to the system of management and
controls exercised in the stewardship of your organization. It includes
the responsibilities of your organization’s owners/shareholders, board
of directors, and senior leaders. Corporate or organizational charters,
by-laws, and policies document the rights and responsibilities of each
of the parties and describe how your organization will be directed and
controlled to ensure (1) accountability to stakeholders and other
owners/shareholders, (2) transparency of operations, and (3) fair
treatment of all stakeholders. Governance processes may include the
approval of strategic direction, the monitoring and evaluation of CEO
performance, the establishment of executive compensation and benefits,
succession planning, financial auditing, risk management, disclosure,
and shareholder reporting. Ensuring effective governance is important to
stakeholders’ and the larger society’s trust and to organizational
effectiveness.
High-Performance Work
The term "high-performance work" refers to work processes used to
systematically pursue ever-higher levels of overall organizational and
individual performance, including quality, productivity, innovation
rate, and cycle time performance. High-performance work results in
improved service for customers and other stakeholders.
Approaches to high-performance work vary in form, function, and
incentive systems. High-performance work frequently includes cooperation
between management and the workforce, which may involve workforce
bargaining units; cooperation among work units, often involving teams;
self-directed responsibility and employee empowerment; employee input to
planning; individual and organizational skill building and learning;
learning from other organizations; flexibility in job design and work
assignments; a flattened organizational structure, where decision making
is decentralized and decisions are made closest to the "front line"; and
effective use of performance measures, including comparisons. Many
high-performance work systems use monetary and nonmonetary incentives
based on factors such as organizational performance, team and individual
contributions, and skill building. Also, high-performance work usually
seeks to align the organization’s structure, work, jobs, employee
development, and incentives.
How
The term "how" refers to the processes that an organization uses to
accomplish its mission requirements. In responding to "how" questions in
the Process Item requirements, process descriptions should include
information such as approach (methods and measures), deployment,
learning, and integration factors.
Innovation
The term "innovation" refers to making meaningful change to improve
products, programs, services, processes, or organizational effectiveness
and to create new value for stakeholders. Innovation involves the
adoption of an idea, process, technology, or product that is either new
or new to its proposed application.
Successful organizational innovation is a multistep process that
involves development and knowledge sharing, a decision to implement,
implementation, evaluation, and learning. Although innovation is often
associated with technological innovation, it is applicable to all key
organizational processes that would benefit from change, whether through
breakthrough improvement or change in approach or outputs. It could
include fundamental changes in organizational structure to more
effectively accomplish the organization’s work.
Integration
The term "integration" refers to the harmonization of plans,
processes, information, resource decisions, actions, results, and
analyses to support key organization-wide goals. Effective integration
goes beyond alignment and is achieved when the individual components of
a performance management system operate as a fully interconnected unit.
See also the definition of "alignment" on page 62.
Integration is one of the dimensions considered in evaluating Process
Items. For further description, see the Scoring System on pages 54-55.
Key
The term "key" refers to the major or most important elements or
factors, those that are critical to achieving your intended outcome. The
Baldrige Criteria, for example, refer to key challenges, key plans, key
processes, and key measures—those that are most important to your
organization’s success. They are the essential elements for pursuing or
monitoring a desired outcome.
Knowledge Assets
The term "knowledge assets" refers to the accumulated intellectual
resources of your organization. It is the knowledge possessed by your
organization and its employees in the form of information, ideas,
learning, understanding, memory, insights, cognitive and technical
skills, and capabilities. Employees, software, patents, databases,
documents, guides, policies and procedures, and technical drawings are
repositories of an organization’s knowledge assets. Knowledge assets are
held not only by an organization but reside within its customers,
suppliers, and partners as well.
Knowledge assets are the "know how" that your organization has
available to use, to invest, and to grow. Building and managing its
knowledge assets are key components for your organization to create
value for your stakeholders and to help sustain competitive advantage.
Leadership System
The term "leadership system" refers to how leadership is exercised,
formally and informally, throughout the organization; it is the basis
for and the way key decisions are made, communicated, and carried out.
It includes structures and mechanisms for decision making; selection and
development of leaders and managers; and reinforcement of values,
ethical behavior, directions, and performance expectations.
An effective leadership system respects the capabilities and
requirements of employees and other stakeholders, and it sets high
expectations for performance and performance improvement. It builds
loyalties and teamwork based on the organization’s vision and values and
the pursuit of shared goals. It encourages and supports initiative and
appropriate risk taking, subordinates organizational structure to
purpose and function, and avoids chains of command that require long
decision paths. An effective leadership system includes mechanisms for
the leaders to conduct self-examination, receive feedback, and improve.
Learning
The term "learning" refers to new knowledge or skills acquired
through evaluation, study, experience, and innovation. The Baldrige
Criteria include two distinct kinds of learning: organizational and
personal. Organizational learning is achieved through research and
development, evaluation and improvement cycles, employee and stakeholder
ideas and input, best practice sharing, and benchmarking. Personal
learning is achieved through education, training, and developmental
opportunities that further individual growth.
To be effective, learning should be embedded in the way an
organization operates. Learning contributes to a competitive advantage
for the organization and its employees. For further description of
organizational and personal learning, see the related Core Value and
Concept on page 9
Learning is one of the dimensions considered in evaluating Process
Items. For further description, see the Scoring System on pages 54-55.
Levels
The term "levels" refers to numerical information that places or
positions an organization’s results and performance on a meaningful
measurement scale. Performance levels permit evaluation relative to past
performance, projections, goals, and appropriate comparisons.
Measures and Indicators
The term "measures and indicators" refers to numerical information
that quantifies input, output, and performance dimensions of processes,
products, programs, projects, services, and the overall organization
(outcomes). Measures and indicators might be simple (derived from one
measurement) or composite.
The Criteria do not make a distinction between measures and
indicators. However, some users of these terms prefer the term
"indicator" (1) when the measurement relates to performance but is not a
direct measure of such performance (e.g., the number of complaints is an
indicator of dissatisfaction but not a direct measure of it) and (2)
when the measurement is a predictor ("leading indicator") of some more
significant performance (e.g., increased customer satisfaction might be
a leading indicator of market share gain).
Mission
The term "mission" refers to the overall function of an
organization. The mission answers the question, "What is this
organization attempting to accomplish?" The mission might define
customers or markets served, distinctive competencies, or technologies
used.
Multiple Requirements
The term "multiple requirements" refers to the individual questions
Criteria users need to answer within each Area to Address. These
questions constitute the details of an Item’s requirements. They are
presented in black text under each Item’s Area(s) to Address. This
presentation is illustrated in the Item format shown on page 58.
Overall Requirements
The term "overall requirements" refers to the topics Criteria users
need to address when responding to the central theme of an Item. Overall
requirements address the most significant features of the Item
requirements. In the Criteria, the overall requirements of each Item are
presented in one or more introductory sentences printed in bold. This
presentation is illustrated in the Item format shown on page 58.
Partners
The term "partners" refers to those key organizations or individuals
who are working in concert with your organization to achieve a common
goal or to improve performance. Typically, partnerships are formal
arrangements for a specific aim or purpose, such as to achieve a
strategic objective or to deliver a specific product or service.
Formal partnerships are usually for an extended period of time and
involve a clear understanding of the individual and mutual roles and
benefits for the partners.
Performance
The term "performance" refers to output results and their outcomes
obtained from processes, products, and services that permit evaluation
and comparison relative to goals, standards, past results, and other
organizations. Performance can be expressed in nonfinancial and
financial terms.
The Baldrige Criteria address four types of performance:
(1) product and service, (2) customer-focused, (3) financial and
marketplace, and (4) operational.
"Product and service performance" refers to performance relative to
measures and indicators of product and service characteristics important
to customers. Examples include product reliability, on-time delivery,
customer-experienced defect levels, and service response time. For
nonprofit organizations, "product and service performance" examples
might include program and project performance in areas of rapid response
to emergencies, at-home services, or multilingual services.
"Customer-focused performance" refers to performance relative to
measures and indicators of customers’ perceptions, reactions, and
behaviors. Examples include customer retention, complaints, and customer
survey results.
"Financial and marketplace performance" refers to performance
relative to measures of cost, revenue, and market position, including
asset utilization, asset growth, and market share. Examples include
returns on investments, value added per employee, debt-to-equity ratio,
returns on assets, operating margins, performance to budget, amount of
reserve funds, cash-to-cash cycle time, other profitability and
liquidity measures, and market gains.
"Operational performance" refers to human resource, leadership,
organizational, and ethical performance relative to effectiveness,
efficiency, and accountability measures and indicators. Examples include
cycle time, productivity, waste reduction, employee turnover, employee
cross-training rates, regulatory compliance, fiscal accountability, and
community involvement. Operational performance might be measured at the
work unit level, key process level, and organizational level.
Performance Excellence
The term "performance excellence" refers to an integrated approach
to organizational performance management that results in (1) delivery of
ever-improving value to customers and stakeholders, contributing to
organizational sustainability; (2) improvement of overall organizational
effectiveness and capabilities; and (3) organizational and personal
learning. The Baldrige Criteria for Performance Excellence provide a
framework and an assessment tool for understanding organizational
strengths and opportunities for improvement and thus for guiding
planning efforts.
Performance Projections
The term "performance projections" refers to estimates of future
performance. Projections may be inferred from past performance, may be
based on competitors’ or similar organizations’ performance that must be
met or exceeded, may be predicted based on changes in a dynamic
environment, or may be goals for future performance. Projections
integrate estimates of your organization’s rate of improvement and
change, and they may be used to indicate where breakthrough improvement
or change is needed. Thus, performance projections serve as a key
management planning tool.
Process
The term "process" refers to linked activities with the purpose of
producing a product or service for a customer (user) within or outside
the organization. Generally, processes involve combinations of people,
machines, tools, techniques, and materials in a defined series of steps
or actions. In some situations, processes might require adherence to a
specific sequence of steps, with documentation (sometimes formal) of
procedures and requirements, including well-defined measurement and
control steps.
In many service situations, particularly when customers are directly
involved in the service, process is used in a more general way (i.e., to
spell out what must be done, possibly including a preferred or expected
sequence). If a sequence is critical, the service needs to include
information to help customers understand and follow the sequence. Such
service processes also require guidance to the providers of those
services on handling contingencies related to the possible actions or
behaviors of those served.
In knowledge work, such as strategic planning, research, development,
and analysis, process does not necessarily imply formal sequences of
steps. Rather, process implies general understandings regarding
competent performance, such as timing, options to be included,
evaluation, and reporting. Sequences might arise as part of these
understandings.
In the Baldrige Scoring System, process achievement level is
assessed. This achievement level is based on four factors that can be
evaluated for each of an organization’s key processes: Approach,
Deployment, Learning, and Integration. For further description, see the
Scoring System on pages 54-55
Productivity
The term "productivity" refers to measures of the efficiency of
resource use.
Although the term often is applied to single factors, such as
staffing (labor productivity), machines, materials, energy, and capital,
the productivity concept applies as well to the total resources used in
producing outputs. The use of an aggregate measure of overall
productivity allows a determination of whether the net effect of overall
changes in a process—possibly involving resource tradeoffs—is
beneficial.
Purpose
The term "purpose" refers to the fundamental reason that an
organization exists. The primary role of purpose is to inspire an
organization and guide its setting of values. Purpose is generally broad
and enduring. Two organizations could have similar purposes, and two
organizations in the same field could have different purposes.
Results
The term "results" refers to outputs and outcomes achieved by an
organization in addressing the requirements of a Baldrige Criteria Item.
Results are evaluated on the basis of current performance; performance
relative to appropriate comparisons; the rate, breadth, and importance
of performance improvements; and the relationship of results measures to
key organizational performance requirements. For further description,
see the Scoring System on pages 54-55.
Segment
The term "segment" refers to a part of an organization’s overall
customer, market, product or service line, or employee base. Segments
typically have common characteristics that can be grouped logically. In
Results Items, the term refers to disaggregating results data in a way
that allows for meaningful analysis of an organization’s performance. It
is up to each organization to determine the specific factors that it
uses to segment its customers, markets, products, services, and
employees.
Understanding segments is critical to identifying the distinct needs
and expectations of different customer, market, and employee groups and
to tailoring products, services, and programs to meet their needs and
expectations. As an example, market segmentation might be based on
geography, distribution channels, business volume, or technologies
employed. Employee segmentation might be based on geography, skills,
needs, work assignments, or job classification.
Senior Leaders
The term "senior leaders" refers to an organization’s senior
management group or team. In many organizations, this consists of the
head of the organization and his or her direct reports.
Stakeholders
The term "stakeholders" refers to all groups that are or might be
affected by an organization’s actions and success. Examples of key
stakeholders might include customers, employees, partners, governing
boards, stockholders, donors, suppliers, taxpayers, policy makers,
funders, and local and professional communities.
See also the definition of "customer" on page 63.
Strategic Challenges
The term "strategic challenges" refers to those pressures that exert
a decisive influence on an organization’s likelihood of future success.
These challenges frequently are driven by an organization’s future
competitive position relative to other providers of similar products or
services. While not exclusively so, strategic challenges generally are
externally driven. However, in responding to externally driven strategic
challenges, an organization may face internal strategic challenges.
External strategic challenges may relate to customer or market needs
or expectations; product, service, or technological changes; or
financial, societal, and other risks or needs. Internal strategic
challenges may relate to an organization’s capabilities or its human and
other resources.
See the definition of "strategic objectives" that immediately follows
for the relationship between strategic challenges and the strategic
objectives an organization articulates to address key challenges.
Strategic Objectives
The term "strategic objectives" refers to an organization’s
articulated aims or responses to address major change or improvement,
competitiveness or social issues, and organizational advantages.
Strategic objectives generally are focused both externally and
internally and relate to significant customer, market, product, service,
or technological opportunities and challenges (strategic challenges).
Broadly stated, they are what an organization must achieve to remain or
become competitive and ensure long-term sustainability. Strategic
objectives set an organization’s longer-term directions and guide
resource allocations and redistributions.
See the definition of "action plans" on page 62 for the relationship
between strategic objectives and action plans and for an example of
each.
Sustainability
The term "sustainability" refers to your organization’s ability to
address current organizational needs and to have the agility and
strategic management to prepare successfully for your future
organizational, market, and operating environment. Both external and
internal factors need to be considered. The specific combination of
factors might include industry-wide and organization-specific
components.
In addition to responding to changes in the organizational, market,
and operating environment, sustainability also has a component related
to preparedness for real-time or short-term emergencies.
Systematic
The term "systematic" refers to approaches that are well-ordered,
repeatable, and use data and information so learning is possible. In
other words, approaches are systematic if they build in the opportunity
for evaluation, improvement, and sharing, thereby permitting a gain in
maturity. For use of the term, see the Scoring Guidelines on pages
56-57.
Trends
The term "trends" refers to numerical information that shows the
direction and rate of change for an organization’s results. Trends
provide a time sequence of organizational performance.
A minimum of three data points generally is needed to begin to
ascertain a trend. More data points are needed to define a statistically
valid trend. The time period for a trend is determined by the cycle time
of the process being measured. Shorter cycle times demand more frequent
measurement, while longer cycle times might require longer time periods
before meaningful trends can be determined.
Examples of trends called for by the Criteria include data related to
product and service performance, customer and employee satisfaction and
dissatisfaction results, financial performance, marketplace performance,
and operational performance, such as cycle time and productivity.
Value
The term "value" refers to the perceived worth of a product,
service, process, asset, or function relative to cost and to possible
alternatives.
Organizations frequently use value considerations to determine the
benefits of various options relative to their costs, such as the value
of various product and service combinations to customers. Organizations
need to understand what different stakeholder groups value and then
deliver value to each group. This frequently requires balancing value
for customers and other stakeholders, such as employees and the
community.
Value Creation
The term "value creation" refers to processes that produce benefit
for your customers and for your organization. They are the processes
most important to "running your organization"—those that involve the
majority of your employees and that generate your products, services,
and positive organizational results for your key stakeholders, including
your stockholders.
Values
The term "values" refers to the guiding principles and behaviors
that embody how your organization and its people are expected to
operate. Values reflect and reinforce the desired culture of an
organization. Values support and guide the decision making of every
employee, helping the organization accomplish its mission and attain its
vision in an appropriate manner. Examples of values might include
demonstrating integrity and fairness in all interactions, exceeding
customer expectations, valuing employees and diversity, protecting the
environment, and striving for performance excellence every day.
Vision
The term "vision" refers to the desired future state of your
organization. The vision describes where the organization is headed,
what it intends to be, or how it wishes to be perceived in the future.
Work Systems
The term "work systems" refers to how your employees are organized
into formal or informal units to accomplish your mission and your
strategic objectives; how job responsibilities are managed; and your
processes for communication and employee hiring, performance management,
compensation, recognition, and succession planning. Organizations design
work systems to align their components to enable and encourage all
employees to contribute effectively and to the best of their ability.
