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The Fundamental Concepts of Excellence ® ®
The Fundamental Concepts of Excellence
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2 The European Foundation for Quality Management
The European Foundation for Quality Management (EFQM®) is a membershipbased not for profit organisation, created in 1988 by fourteen leading Europeanbusinesses, with a Mission to be the driving force for sustainable excellence inEurope and a Vision of a world in which European organisations excel.
EFQM has promoted the concept of partnership with similar National organisationsin Europe to help promote sustainable excellence in European organisations. All ofthese National organisations have worked with EFQM to develop theFundamental Concepts of Excellence and to promote the EFQM Excellence Model. Contact details for our partners can be found at http://www.efqm.org/partnership_distribution/npo_details.htm
By January 2003, EFQM membership had grown to around 800 organisationsfrom most European countries and most sectors of activity. Together with theNational organisations the membership network runs to thousands of organisationswith several million individuals employed in those organisations.
In addition to being the owner of the EFQM Excellence Model and managing The European Quality Award, EFQM also provides a portfolio of services for itsmembers.
© 1999 - 2003 EFQMNo part of this publication may be reproduced, stored ina retrieval system,or transmitted in any form or by any means(be this electronically, mechanically, through photocopyor recording, or otherwise) without either the priorwritten permission of, or a licence permitting restrictedcopying and use for a third party, from the publisher.V2.1/En
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Truly excellent organisations are those thatstrive to satisfy their stakeholders1 by whatthey achieve, how they achieve it and whatthey are likely to achieve. This is hardenough at the best of times; sustaining it ina world of increasing global competition,rapid technological innovation, changingprocesses and frequent movement in theeconomic, social and customer environments,is even harder.
Recognising this challenge, the EuropeanFoundation for Quality Management(EFQM) was created to promote world-classapproaches to the management of Europeanorganisations that would lead to sustainableexcellence2.
The EFQM Excellence Model was introducedas the primary framework for assessing andimproving organisations, in order that theymight achieve such a sustainable advantage.This Model is based upon the FundamentalConcepts of Excellence described here.
1. Sustainable Excellence
1 Stakeholders include those individuals or groups which impact upon, or have an impact on, the organisationsuch as customers, employees, partners, suppliers, the society in which the organisation operates, and thosewith a financial stake in the organisation.
2 Excellence is defined as the expression of the Fundamental Concepts of Excellence as set out in this brochure.
4 2. Fundamental Concepts of Excellence
The following pages describe the Fundamental Concepts of Excellence in further detail and provide examples of the benefits an organisationcan achieve by adopting them.
The achievement of excellence requires total leadership commitment and acceptance of these concepts. To start the process of gaining amutual understanding of the importance of these Fundamental Concepts to an organisation, we encourage the relevant management teamsto read this entire document. We suggest that a simple evaluation of which ‘maturity stage’ (see section 4) an organisation is currently ‘at’can help focus the debate on how, and why, to proceed further.
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Results Orientation
The ConceptExcellence is achieving results that delightall the organisation’s stakeholders.
How the Concept is put into practiceIn the fast changing environment that is today’sworld, Excellent organisations are agile,flexible and responsive as stakeholder needsand expectations change, often frequentlyand quickly. Excellent organisations measureand anticipate the needs and expectations oftheir stakeholders, monitor their experiencesand perceptions, and monitor and reviewthe performance of other organisations.Information is gathered from both currentand future stakeholders. This information isused in order to set, implement and reviewtheir policies, strategies, objectives, targets,measures and plans, for the short, mediumand longer term. The information gatheredalso helps the organisation to develop andachieve a balanced set of stakeholder results.
BenefitsAdded value for all stakeholders.Sustainable success for all stakeholders.Understanding of the current and futurerequirements for performance in order toset targets.Alignment and focus throughout theorganisation.Delighted stakeholders.
Customer Focus
The ConceptExcellence is creating sustainable customervalue.
How the Concept is put into practiceExcellent organisations know and intimatelyunderstand their customers. They understandthat customers are the final arbiters of productand service quality. They also understandthat customer loyalty, retention and marketshare gain is maximised through a clearfocus on the needs and expectations of bothexisting and potential customers. They areresponsive to those customers’ present needsand expectations. Where appropriate theysegment their customers to improve theeffectiveness of their response. They monitorcompetitor activity and understand theircompetitive advantage. They effectivelyanticipate what customers’ future needs andexpectations will be and act now in order tomeet and where possible exceed them. Theymonitor and review the experiences and perceptions of their customers and wherethings go wrong they respond quickly andeffectively. They build and maintain excellentrelationships with all their customers.
BenefitsDelighted customers.Strong customer loyalty and retention.Enhanced market share.Sustained success for the organisation.Motivated employees.Understanding of competitive advantage.
Leadership and Constancy of Purpose
The ConceptExcellence is visionary and inspirational lea-dership, coupled with constancy of purpose.
How the Concept is put into practiceExcellent organisations have leaders who setand communicate a clear direction for theirorganisation. In doing so they unite andmotivate other leaders to inspire theirpeople. They establish values, ethics, cultureand a governance structure for the organisationthat provides a unique identity and attracti-veness to stakeholders. Leaders at all levelswithin these organisations constantly driveand inspire others towards excellence and inso doing display both role model behaviourand performance. They lead by example,recognising their stakeholders and workingwith them on joint improvement activity.During times of turbulence they display aconstancy of purpose and steadiness thatinspires the confidence and commitment oftheir stakeholders. At the same time theydemonstrate the capability to adapt and realignthe direction of their organisation in thelight of a fast moving and constantly changingexternal environment, and in so doing carrytheir people with them.
BenefitsClarity of purpose and direction withinthe organisation.A clear identity for, and within, the orga-nisation.A shared set of values and ethics.Consistent and role model behavioursthroughout the organisation.A committed, motivated and effectiveworkforce.Confidence in, and within the organisation,even in turbulent and changing times.
3. The Concepts
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Management by Processes and Facts
The ConceptExcellence is managing the organisation througha set of interdependent and interrelated systems,processes and facts.
How the Concept is put into practiceExcellent organisations have an effectivemanagement system based upon, and designedto deliver, the needs and expectations of allstakeholders. The systematic implementationof the policies, strategies, objectives andplans of the organisation are enabled andassured through a clear and integrated set ofprocesses. These processes are effectivelydeployed, managed and improved on a day-to-day basis. Decisions are based on factuallyreliable information relating to current andprojected performance, process and systemscapability, stakeholder needs, expectationsand experiences, and the performance of otherorganisations, including, where appropriate,that of competitors. Risks are identifiedbased on sound performance measures andeffectively managed. The organisation isgoverned in a highly professional manner,meeting and exceeding all corporate externalrequirements. Appropriate prevention measuresare identified and implemented inspiringand maintaining high levels of confidencewith stakeholders.
BenefitsMaximised effectiveness and efficiency indelivering the aims of the organisation andits products and services.Effective and realistic decision-making.Effective management of risk.Enhanced confidence of stakeholders.
People Development and Involvement
The ConceptExcellence is maximising the contribution ofemployees through their development andinvolvement.
How the Concept is put into practiceExcellent organisations identify and understandthe competencies needed, both now and in thefuture, in order to implement the organisation’spolicies, strategies, objectives and plans.They recruit and develop their people tomatch these competencies and actively andpositively support them throughout. Personaldevelopment is promoted and supportedallowing people to realise and unlock theirfull potential. They prepare people to meetand adapt to the changes required of themboth in terms of operational changes andpersonal capabilities.
They recognise the increasing importance ofthe intellectual capital of their people anduse their knowledge for the benefit of theorganisation. They seek to care, reward andrecognise their people in a way that buildstheir commitment and encourages their loyaltyto the organisation. They maximise the potentialand the active involvement of their peoplethrough shared values and a culture of trust,openness and empowerment. They utilisethat involvement to generate and implementideas for improvement.
BenefitsShared ownership of the organisation’saims and objectives.A committed, loyal and motivated workforce.Highly valuable intellectual capital.Continuous improvement of capabilityand performance of individuals.Increased competitiveness through enhancedimage.Achieved potential.
Continuous Learning, Innovationand Improvement
The ConceptExcellence is challenging the status quo andeffecting change by utilising learning to createinnovation and improvement opportunities.
How the Concept is put into practiceExcellent organisations continuously learn, bothfrom their own activities and performanceand from that of others. They rigorouslybenchmark, both internally and externally.They capture and share the knowledge oftheir people in order to maximise learningacross and within the organisation. There isan openness to accept and use ideas from allstakeholders. People are encouraged to lookbeyond today and today’s capabilities. Theyare careful to guard their intellectual propertyand to exploit it for commercial gain, whereappropriate. Their people constantly challengethe status quo and seek opportunities forcontinuous innovation and improvementthat add value.
BenefitsImproved value generation.Improved effectiveness and efficiency.Increased competitiveness.Innovation in products and services.Knowledge capture and sharing. Organisational Agility.
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Partnership Development
The ConceptExcellence is developing and maintainingvalue adding partnerships.
How the Concept is put into practiceExcellent organisations recognise that in theconstantly changing and increasingly deman-ding world of today success may depend onthe partnerships they develop. They seekout, and develop, partnerships with otherorganisations. These partnerships enable themto deliver enhanced value to their stakeholdersthrough optimising core competencies.These partnerships may be with customers,society, suppliers or even competitors and arebased on clearly identified mutual benefit.Partners’ work together to achieve sharedgoals, supporting one another with expertise,resources and knowledge and build a sustainablerelationship based on mutual trust, respectand openness.
BenefitsIncreased value for stakeholders.Improved competitiveness.Optimising core competencies.Improved effectiveness and efficiency.Improved chances of survival.Shared risk and cost.
Corporate Social Responsibility
The ConceptExcellence is exceeding the minimum regulatoryframework in which the organisation operatesand to strive to understand and respond to theexpectations of their stakeholders in society.
How the Concept is put into practiceExcellent organisations adopt a highly ethicalapproach by being transparent and accountableto their stakeholders for their performanceas a responsible organisation. They give consi-deration to, and actively promote, social responsibility and ecological sustainability bothnow and for the future. The organisation’sCorporate Social Responsibility is expressedin the values and integrated within the organisation. Through open and inclusivestakeholder engagement, they meet andexceed the expectations and regulations ofthe local and, where appropriate, the globalcommunity. As well as managing risk, theyseek out and promote opportunities to workon mutually beneficial projects with societyinspiring and maintaining high levels ofconfidence with stakeholders They areaware of the organisation’s impact on boththe current and future community takingcare to minimise any adverse impact.
BenefitsEnhanced public image.
Increased brand value.Greater access to finance (e.g. socially responsible investment funding).Healthier and safer workforce.Stronger risk management and corporategovernance.Motivated people.Customer loyalty.Enhanced confidence and trust of stake-holders.
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Earlier we emphasised the importance of a management team gaining a common understanding of these Fundamental Concepts and howthe application of all of them can lead to excellence. As part of developing this shared understanding, and providing a catalyst for action,it can be useful for the management team to conduct a simple evaluation, using the chart below, to answer the question, “where are wenow in relation to these concepts?”
4. The Fundamental Concepts at different ‘organisational’maturity stages
CONCEPT
Results Orientation
Customer Focus
Leadership and Constancy of Purpose
Management by Processes and Facts
People Development & Involvement
Continuous Learning, Innovationand Improvement
Partnership Development
Corporate Social Responsibility
START UP
All relevant stakeholders are identified
Customer satisfaction is assessed
Vision and Mission, are defined
Processes to achieve desired results aredefined
People accept ownership and responsibilityto solve problems
Improvement opportunities are identifiedand acted on
A process exists for selecting and managingsuppliers
Legal and regulatory requirements areunderstood and met
ON THE WAY
Stakeholder needs are assessed in astructured way
Goals & targets are linked to customerneeds & expectations.Loyalty issues are researched
Policy, People and Processes are alignedA leadership “Model” exists
Comparative data and information isused to set challenging goals
People are innovative and creative infurthering organisational objectives
Continuous improvement is an acceptedobjective for every individual
Supplier improvement and achievementsare recognised and key external partnersare identified
There is active involvement in ‘society’
MATURE
Transparent mechanisms exist tobalance stakeholder expectations
Business drivers of customer satisfactionneeds & loyalty issues are understood,measured & actioned
Shared Values and Ethical role modelsexist at all organisational levels
Process capability is fully understood andused to drive performance improvements
People are empowered to act and openlyshare knowledge and experience
Successful innovation and improve-ment is widespread and integrated
The organisation and its key partnersare interdependent. Plans and policiesare co-developed on the basis of sharedknowledge
Societal expectations are measuredand actioned
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Excellence is not a theory; it relates to thetangible achievements of an organisation inwhat it does, how it does it, the results it getsand the confidence that these results will besustained in the future.
The evidence needed to give that confidenceis not limited to the financial results, whichdemonstrate the outcome of past performance.The evidence also includes results from otherstakeholders that serve as leading indicatorsof future financial performance.
These leading indicators include, measuredexcellence in customer satisfaction and loyalty;people motivation and capability; and thesatisfaction of the wider community.
To create confidence that the results can besustained, there must also be evidence whatthe organisation does, and how it does it, issoundly based, systematic, and continuouslyreviewed and improved.
To help guide an organisation to improve itsperformance, EFQM launched, in 1991, theEFQM Excellence Model. This Model,which is the application of the FundamentalConcepts reflected in a structured managementsystem, is now being used by tens of thousandsof organisations across Europe and beyond.Companies, schools, healthcare organisations,police services, utilities and governmentoffices all use it. The Model additionallyprovides these organisations with a common
management language and tool, thus facilitatingthe sharing of ‘good practice’ across differentsectors throughout Europe.
The purpose of this brochure has been topromote the existence and importance ofthese Fundamental Concepts as essentialsfor achieving excellence. For an organisationto maximise the benefits of adopting theEFQM Excellence Model it needs, in the firstinstance, to debate whether it accepts theconcepts that underpin the Model. Clearlyif these concepts are not fully understoodand accepted then progress with adoptingthe Model will be difficult and meaningless.
5. The EFQM Excellence Model
10 6. Further Help
EFQM works in partnership with many national organisations in Europe and licenses a number of organisations to deliver training coursesrelated to the EFQM Excellence Model. We also organise a number of events throughout Europe related to the Excellence Model. Furtherinformation on these organisations and events are available via our website (www. efqm.org)
ASSOCIATED PRODUCTS
TITLE
Introducing Excellence
Fundamental Concepts of Excellence
The EFQM Excellence Model
The EFQM Excellence Model Public Sector Version
The EFQM Excellence Model Small and Medium Enterprise Version
Assessing for Excellence - A Practical Guide for Self-Assessment
Pack of Advice
CD-ROM Self-Assessment Workbook
Excellence One Tool Box and CD-ROM
PURPOSE
Overview of the Model, the Concepts, the Levels ofExcellence Recognition Scheme and Self-Assessment.
To provide detailed information on the FundamentalConcepts. To persuade senior executives that the Modelhas value, and is based on sound business sense.
To provide details on the EFQM Excellence Model,including the linkages with the FundamentalConcepts, criteria and criterion parts.
As above with Public Sector differences.
As above with SME differences.
To provide a summary of what Self-Assessment is, thevalue of it, the different approaches to Self-Assessmentand their respective risks and benefits.
Providing general advice on the implementation ofExcellence into an organisation using the EFQMExcellence Model.
A structured set of 90 questions based on the EFQMExcellence Model.
A comprehensive, interactive, online learning platformfor Performance Excellence.
AUDIENCE
Anyone with a general enquiry or interest onEFQM, the EFQM Excellence Model and Modelrelated activities.
Those with an interest in the concepts underpinningthe Model.Senior Executives and people who need to persuadeSenior Executives.
Award Applicants (2004 awards onwards).Self-Assessment practitioners including internal andaward assessors.Quality professionals and others with a wish tounderstand the Model in more detail.Also supporting Material for the EFQM AssessorTraining & Self Assessment Training Courses.
As above but also for those with a specific interest inusing the Model within Public Sector organisations.
As above but also for those with a specific interest inusing the Model within SMEs.
People either charged with, or involved in, developingSelf-Assessment strategies in their organisation.People who wish to benchmark their current Self-Assessment approach.Also supporting material for the EFQM Self-Assessment Training Course.
Those wishing for easy description and liveexamples of the implementation of the Model.
Organisations wishing to undertake an easy questionnaire approach to Self-Assessment.
Any organisation or individual wishing to haveaccess to regular news updates, latest managementpractices and tools and discussion forums onPerformance Excellence topics.
117. Acknowledgements
This update of the Fundamental Concepts was produced in 2002. Inputs were taken frommany sources but EFQM expressly wishes to acknowledge the Model Refreshing ReviewGroup Members.
Roger Cliffe Lloyds TSB Bank PlcManfred Jung Sustainability Initiative “Nezwerk COUP 21 Nürnberg” Mark Webster Mark Webster ConsultingNikos Avlonas American College of Greece /Hellenic Management AssociationWalter Ludwig Deutsche Gesellschaft für Qualität e.V./BASF AktiengesellschaftRichard Parker British Quality FoundationXavier Tort-Martorell Technical University of Catalonia (UPC)Jann Jevons PACEPerformance LtdGeoff Carter PACEPerformance LtdTracey Swift Institute of Social and Ethical AccountAbiltyDiane Dibley EFQM
And all its National Partner organisations for their contributions and time.
Brussels Representative OfficeAvenue des Pléiades, 151200 Brussels, BelgiumTel: + 32 2 775 35 11Fax: + 32 2 775 35 35http://www.efqm.orge-mail: [email protected]
ISBN 90-5236-077-4
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