Available online at www.sciencedirect.

com

ScienceDirect
Procedia Economics and Finance 23 (2015) 445 – 452

2nd GLOBAL CONFERENCE on BUSINESS, ECONOMICS, MANAGEMENT and

TOURISM, 30-31 October 2014, Prague, Czech Republic

Criteria for Excellence in Business

Mihaela Ghicajanua*, Sabina Irimiea, Laura Maricaa, Rares Munteanua
a
University of Petrosani, Universitatii Street, no. 20, 332006 Petrosani, Romania

Abstract

In this paper we address business excellence, the significant elements of this term, and the criteria by which companies are
analysed to obtain the status of "Excellence in Business". Concerns for approaching the business excellence in both academic and
practical manner began to be developed in the 60s. Business excellence for a company were presented and analysed in close
connection with: decisions and strategic management, customer care, quality, ethics in management and organizational culture,
social responsibility and environmental actions. In theoretical and practical terms, business excellence is treated in several ways,
and to achieve this level it requires a plurality of values achieved and maintained on long term. Business excellence does not
mean a maximum profit or lower priced products, excellence in business is a complex approach from an economically,
technically and socially point of view. Thus, in this paper will be presented the most important contributions in defining and
studying business excellence by a number of experts and organizations in the field, such as Thomas Peters and Robert Waterman,
Robert Heller, Jim Collins, European Foundation for Quality Management (EFQM), The Malcolm Baldrige National Quality
Award (MBNQA).
© 2014 Authors. Published
2015 The Authors. Published by
byElsevier
ElsevierB.V.
B.V.This is an open access article under the CC BY-NC-ND license
Selection and/ peer-review under responsibility of Academic World Research and Education Center.
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Selection and/ peer-review under responsibility of Academic World Research and Education Center
Keywords: business; excellence; quality; leadership; strategy; customer.

1. About excellence and business excellence

"Good" is the enemy of "Excellent"; this is how Collins (2010) begins his reference work "GOOD THE GREAT:
Why Some Companies Make the Leap...and Others Don’t". He says that most companies do not achieve excellence
because they are good and pretty good and they satisfied with that.

* Mihaela Ghicajanu. Tel.: +04-072-278-1313;

E-mail address: ghicajanumihaela@yahoo.com

2212-5671 © 2015 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Selection and/ peer-review under responsibility of Academic World Research and Education Center
doi:10.1016/S2212-5671(15)00388-3
446 Mihaela Ghicajanu et al. / Procedia Economics and Finance 23 (2015) 445 – 452

Excellent companies are characterized by excellent financial and economic results compared to the good results
of the good companies in the same industry, while having the same opportunities and similar resources.
In the Dictionary of neologisms of the Romanian Academy, the excellence is defined as an "honorary title
granted to individuals or a high degree of perfection: the quality of being excellent, very good, exceptionally
admirable, wonderful".
In theoretical and practical terms, business excellence is treated in several ways, and to achieve this level it
requires a plurality of values achieved and maintained on long term. Business excellence does not mean a maximum
profit or lower priced products, excellence in business is a complex approach from an economically, technically and
socially point of view.
In today's business environment there are more and more concerns from major companies to focus on elements
that bring them the business excellence rating.
Excellence in business for a company, which in literature is understood that a firm may be called as having the
title of "business excellence", can be the company " that is maintained in an exemplary situation - success, profit for
a long a period of time and correctly and efficiently adapts to the demands of the socio-economic environment.
Moreover, in specialized American literature, this is really how the term "business excellence" is understood for
companies, as being those companies that perform exceptional long term if not for life, not the companies that
perform exceptional good in one year or in a short period of time.
In the following pages we will structure the elements significant to this term, that of business excellence.

2. Approaches to business excellence

Concerns for approaching the business excellence in both academic and practical manner began to be developed
in the 60s. Business excellence for a company were presented and analysed in close connection with: decisions and
strategic management, customer care, quality, ethics in management and organizational culture, social responsibility
and environmental actions.
The most important contributions in defining and studying these aspects belong to:
x the Americans Thomas Peters and Robert H. Waterman with the paper In Search of Excellence, (1982).
x Robert Heller, with the paper In Search of European Excellence. The 10 Key Strategies of Europe's Top
Companies (1997); Jim Collins of Good The Great: Why Some Companies Make the Leap…and Others Don’t
(2001); European Foundation for Quality Management, Joseph Moses Juran.

2.1. Criteria for business excellence according to Thomas Peters and Robert Waterman

A relevant study on business excellence was made by Thomas Peters and Robert Waterman on a sample of 62
large American companies for a period of twenty years, during the period from 1961 to 1980, analyzing the six
indicators:
x Balance increasing in sheet assets
x Real growth of assets (accumulated)
x Average growth rate of the wealth of the respective companies (increased market value)
x Average utilization efficiency of capital (net income / total invested capital)
x Average income after paying creditors (net profit / rights due to shareholders after payment of creditors)
x Average income on sales
The findings of the study were reflected in the paper In Search of Excellence (1982). In this study, the authors
concluded that only a certain number of companies satisfied the conditions for business excellence. These conditions
were defined in eight criteria or attributes for business excellence (Peters and Waterman, 2011, p.8-10).
The eight attributes of excellence according to Peters and Waterman are:
x Predisposition towards business A bias for action, active decision making - 'getting on with it'
x Remaining Close to the customer - learning from the people served by the business
x Autonomy and entrepreneurship – promoting and sustaining innovations in company
x Productivity among people - treating rank and file employees as a source of quality
 Mihaela Ghicajanu et al. / Procedia Economics and Finance 23 (2015) 445 – 452 447

x Hands-on, value-driven - management philosophy that guides everyday practice - management showing its
commitment
x Stick to the knitting - stay with the business that you know
x Simple form, lean staff - some of the best companies have minimal headquarters (HQ) staff
x Simultaneous loose-tight properties - autonomy in shop-floor activities plus centralised values.

2.2. Criteria for business excellence according to Robert Heller

A decade and a half later, in Europe, Heller (1997) continues, completes and updates the Peters and Waterman
preoccupation. Heller in his work: In Search of European Excellence. The 10 Key Strategies of Europe's Top
Companies brings new ideas for corporate excellence. Therefore, Heller examines the ten strategic keys, applied by
European companies to acquire excellence. He believes that business excellence is determined in ten ways (the 10
key strategies), quite similar to those identified by Peters and Waterman:
x Transmitting Authority (strong delegation of authority)
x Transforming enterprise culture in the secret of success
x Starting radical changes
x Dividing the company in order to achieve success
x Exploiting the potential of leading the organization through new leading methods
x Maintaining the company ahead of the competition
x Achieving a constant renewal (continuous improvement)
x Employee motivation
x Make work teams
x Achieving Total Quality Management (Heller, 1997).

2.3. Excellence in business approached by Jim Collins

A more recent approach belongs to Jim Collins, author of Good The Great: Why Some Companies Make the
Leap…and Others Don’t (2001), who conducted a study for two years with a team of over twenty professionals. The
research was conducted on 28 companies that the author divided into three groups: 11 excellent companies (Abbott,
Gillette, Fannie Mae, Philip Morris, and other, 11 reference companies (Upjohn, Silo, Bethlehem Steel, Bank of
America, and other) and 6 unsustainable companies.
Through this study, Jim Collins reached some entirely new conclusions about how some companies could reach
and maintain excellence in business and others only manage to reach good or very good results in their business
environment. As Drucker said, the results of this study prove once more the “disprove of the most inaccurate
theories of current management” (Collins, 2010).
Jim Collins believes that the 11 companies analysed have reached excellence in business due to:
x They had level 5 leaders
x First „who” and then „what”
x Confrontation with reality
x „Hedgehog concept”
x Culture of discipline
x Technological accelerators.
448 Mihaela Ghicajanu et al. / Procedia Economics and Finance 23 (2015) 445 – 452

Level 5 First „who” and then Confrontation Hedgehog Cultural Technological

leaders „what” with reality concept discipline accelerators

Disciplined people Disciplined thinking Disciplined action

Fig.1. Excellence business criteria by Jim Collins (adapted by Jim Collins)

All these elements were accompanied by: disciplined people, disciplined ways of thinking and disciplined actions
(Collins, 2010, p.38).
These criteria show how they are understood by Jim Collins and his research team:
x 5 Level leaders. The excellent leader in a level 5 leader with the following attributes: „silent, humble, helpful,
modest, secretive, shy and gentle, dull, shallow”. His basic characteristics are fig.2.

- Irresistible personal modesty ;

- Professional volition;
Level 5 leader
- Ambition, firstly for the company’s interest and concern for its success more
than personal wealth and renown.
- Unwavering when something needs to be done;
- Rigorous, not relentless

Jim Collins states that there are 5 levels of leaders categorized as follows:

Level 5 leaders → Builds a lasting excellence by paradoxically blending personal modesty and professional
volition;
Level 4 leaders → Aims firmly a clear and rigorous vision, stimulating high-level performance standards;
→ Organises people and resources aiming to predetermine effectively and efficiently pre-
Level 3 leaders established objectives;
→ Contributes with his own personal characteristics to realizing group objectives and works
Level 2 leaders promptly with the other people;
→ Bring productive contributions through talent, knowledge and good work related habits.
Level 1 leaders

Fig.2. Level 5 leader characteristics

x First “who” and then “what”. It relates to choosing the right people for the right places for them, namely “who”
ant then sets “what” each of them has to realise
x Confrontation with reality (without losing confidence). Dealing with raw facts of current reality consists of
reactions, attitudes and actions based on the belief that one can successfully prevail until the end, regardless of
the difficulties.
x Hedgehog concept. Hedgehog concept says that one can achieve excellence in business or any other area if the
following three aspects intersect: What you are deeply passionate about; If you can be the best in this passion;
The passion produces an added value and can be traded on the market (fig.3).
x Culture of discipline. All companies have their own organizational culture, some possess discipline, but very few
have a culture of discipline. Which means finding disciplined people who engage disciplined ways of thinking
and who, after al these, resort to disciplined action.
x Technological accelerators. Excellent organizations avoid technological fastidiousness and, after all, become
pioneers in applying selected technologies gingerly.
 Mihaela Ghicajanu et al. / Procedia Economics and Finance 23 (2015) 445 – 452 449

What you are deeply

passionate about

What you can be the What makes your

best in the world at economic engine move

Fig. 3. The hedgehog concept

3. Models of excellence in business for companies

In practice, granting awards of excellence in business is made based on models of excellence in business, which
are based on a few criteria and sub-criteria of assessment. Different countries and regions have developed their own
models of excellence, using them as frameworks of reference to assess and recognize performance between
companies through awards programs.
Companies that sign up in the competition are evaluated based on such criteria. They are somehow related to
those identified by Peters and Waterman, Heller or Collins, but they show differences according to the type of the
Award.
For instance, Quality Awards are considered Business Excellence Awards, and companies are evaluated based on
Total Quality Management (TQM) models. In this regard, the most popular Business Excellence Models are:
x Deming Model since 1951 (Japanese Model of TQM)
x Baldrige Criteria for Performance Excellence since 1987
x European Foundation for Quality Management – EFQM - Excellence Model since 1991
A comparative synthesis of business excellence criteria established by the most popular business excellence
models (models of TQM) is presented in Table 1 (adapted source Vokurka et al. 2000).

Table 1 Business Excellence Models criteria

Deming Model -Japanese Model of TQM Baldrige Model -American Model of EFQM Model - European Model of
(importance of criteria) TQM (importance of criteria) TQM (importance of criteria)

1. Policies (10%) 1. Leadership (10%) 1. Leadership (10%)

2. Organization (10%) 2. Information and analysis (5%) 2. Policy and Strategy (8%)
3. Information (10%) 3. Strategic planning (10%) 3. People management (9%)
4. Standardization (10%) 4. Human resource focus (17%) 4. Partnerships and Resources (9%)
5. Human resources (10%) 5. Process management (17%) 5. Processes management (14%)
6. Quality assurance (10%) 6. Business results and company 6. Customer Results (20%)
performance (24%)
7. Maintenance (10%) 7. Customer focus and satisfaction 6. People Results (9%)
(17%)
8. Improvement (10%) 7. Society Results (6%)
9. Effects (10%) 8. Key Performance Results (15%)
10. Future plans (10%)

Deming Model (Japanese Model of TQM). The Japanese Union of Scientists and Engineers (JUSE) created the
first major management award, the Deming Prize, to recognize "contributions to quality and dependability of
product. The JUSE instituted the award in 1950, and began awarding the prize annually in 1951. The Deming Prize
450 Mihaela Ghicajanu et al. / Procedia Economics and Finance 23 (2015) 445 – 452

does not provide a model framework for organizing and prioritizing criteria. Instead, the evaluation includes 10
equally weighted.
Baldrige Criteria for Performance Excellence (American Model of TQM). The Baldrige Model was developed in
response to a crisis in U.S. competitiveness several decades ago, at the dawn of the global information era. In 1987
U.S. Congress developed this model to raise awareness of quality management and recognize U.S. companies that
have implemented successful quality management systems. The criteria, used to assess an applicant’s performance,
are divided into seven categories and provide the strategic direction for the entire system. The categories are
leadership, strategic planning, customer and market focus, information and analysis, human resource focus, process
management and business results. Model is also commonly known as the Baldrige model, the Baldrige criteria, or
the Criteria for Performance Excellence. More than 60 national and state/regional awards base their frameworks
upon the Baldrige criteria.
EFQM Excellence Model (European Model of TQM). The Excellence Model is used as reference basis for good
management practice and long-term sustainability. Each organisation is unique but the Model provides a non-
prescriptive generic framework consisting of nine criteria that can be applied to any organisation.
Between these excellence models there are some differences, but most objectives and criteria are common (table
2).

Table 2. Common Criteria for Business Excellence Models

Deming Model
Management Vision and Leadership:
Senior executives' leadership
Mapping Out and Deploying Strategies
Understanding and Interaction with
Customers and Markets: Quick response
to market/customer needs
Human Resource Development and
Learning Environment: Education and
training of human resources, and
development of skills aligned to strategy
Process Management: Continuous
improvement of systems and processes
Results of Enterprise Activities:
Customer Satisfaction: Quality as judged
by the customers; Partnership and
teamwork, Commitment to environment
protection and public responsibility
Baldrige Model
Leadership: How upper management leads the
organization, and how the organization leads
within the community
Strategic planning: How the organization
establishes and plans to implement strategic
directions.
Customer and market focus: How the
organization builds and maintains strong,
lasting relationships with customers
Human resource focus: How the organization
empowers and involves its workforce
Process management: How the organization
designs, manages and improves key processes
Business/organizational performance results:
How the organization performs in terms of
customer satisfaction, finances, human
resources, supplier and partner performance,
operations, governance and social
responsibility, and how the organization
compares to its competitors.
EFQM Model
Leading with vision, Inspiration &
Integrity: leaders who shape the future and
make it happen, acting as role models for
its values and ethics.
Strategy: implement mission and vision by
developing a stakeholder focused strategy.
Policies, plans, objectives and processes are
developed and deployed to deliver the
strategy.
Customer - consistently adding value for
customers by understanding, anticipating
and fulfilling needs, expectations and
opportunities.
People - value people and create a culture
that allows the mutually beneficial
achievement of organisational and personal
goals.
Processes, Product & Service - manage and
improve processes, products and services to
generate increasing value for customers and
other stakeholders.
Business results: customer, people and
society results. Achieve and sustain
outstanding results that meet or exceed the
need and expectations of their business
stakeholders

The difference between these models of business excellence consists in:

x how these criteria are named
x how they are grouped into criteria of influence (enables) or criteria of outcomes (results)
x how these basic criteria are detailed and analysed in different subcategory
x importance percentage of the criteria in the evaluation.
 Mihaela Ghicajanu et al. / Procedia Economics and Finance 23 (2015) 445 – 452 451

4. Business Excellence Award in various regions and countries of the world

As stated above, different countries and regions of the world have either developed their own national models of
excellence in business, or they had as a base the established models of TQM (American, Japanese or European). The
table 3 presents a summary of the known situation regarding Business Excellence Award and the related models in
different world regions and countries (Mohammad et al. 2010).
From these data it can be observed that the excellence model EFQM or models developed from EFQM prevail in
the European countries, while in the American countries are known the Baldrige Criteria for Performance
Excellence and models developed upon these criteria.

Table 3. Business Excellence Award in different countries (especially in Europe)

No. Model Used Country - Name of Award Region
1. EFQM Czech Republic - Quality Award of the Czech Republic; Hungary- Hungarian National Europe
Excellence Quality Award; Poland - Polish Quality Award and Business Fair Play Award; Romania -
Model Romanian Quality Award; Russian Federation - Russian National Quality Award; Ukraine -
Ukrainian National Quality Award; Danmark - Danish Quality Prize; Estonia - Estonian
Quality Award; Ireland - Irish Business Excellence Award; Latvia- Latvian National Quality
Award; Austria - Austrian Quality Award; Lithuania - Lithuanian National Quality Prize;
Northern Ireland - Northern Ireland Quality Award; Scotland - Scottish Award for Business
Excellence; Sweden - Swedish Quality Award; United Kingdom - UK Business Excellence
Award; Wales - Wales Quality Award; Italy - Italian Quality Award; Portugal - Portuguese
Quality Award; Slovenia - Slovenian Business Excellence Prize; Austria - Austrian Quality
Award; Belgium - K2 Award; Germany - German National Quality; Switzerland - Swiss
Quality Award for Business Excellence.
India - CII-EXIM Bank Award for Business Excellence Asia
United Arab Emirates; Turkey
2 National model (developed from EFQM Excellence Model) Europe
France - French Quality Award
Slovakia - The Slovak Quality Award
Norway - Norwegian Quality Award
Netherlands - Dutch Quality Award
Greece - Athens Chamber of Commerce and Industry Awards
3 National model (developed from Deming Prize Model) Europe
Hungary - IIASA SHIBA Award
Ireland - Q-MARK National Quality Award
4 National model Sweden - Swedish Quality Award Europe
(unique)
Greece - ECO-Q Recognitions
Spain - Prince Philip Award for Business Excellence
Luxembourg - Prix Luxembourgeois de la Qualite Northern
America
Canada - Canada Awards for Excellence
Japan - Deming Prize Asia

Korea, Taiwan, India Australia

Australia - Australian Business Excellence Award

5 Baldrige Sweden - Swedish Quality Award Europe
Criteria for United States of America - Malcolm Baldrige National Quality Award (MBNQA) Northern
Performance America
Excellence New Zealand - New Zealand Business Excellence Award
Hong Kong - Hong Kong Management Association Quality Award Oceania
452 Mihaela Ghicajanu et al. / Procedia Economics and Finance 23 (2015) 445 – 452

Indonesia, Sri Lanka, Philippines, Thailand Asia

6. National model (developed from Baldrige model) Asia
China - China Quality Award
Japonia - Japan Quality Award
Vietnam, Mongolia Africa
Egypt

In Asian countries, excepting Japan where reference is the Deming Prize model, most countries have developed
models combined between the American and /or European ones (i.e. excellence model of Singapore, based on
Baldrige and EFQM models). But there are countries that have unique business excellence models such as Canada,
Sweden, Spain, Greece.

5. Conclusions

The Models of Excellence are designed to recognize excellent practices in managing the organization and
achieving results, all based on a set of concepts and values. Such practices have evolved over time and have become
models used worldwide, illustrating the manner in which an organization should operate to achieve a high level of
performance and excellent results.
Theoretical models have established both the factors determining business excellence and the evaluation criteria
for companies to obtain the title of business excellence. Whichever the model taken into consideration to analyse
business excellence, now the focus is on the following aspects: business innovation, customer satisfaction, human
resources, vision and strategy, leadership, business ethics and sustainability in business, financial performance
(success, as measured by financial results or customer / employee / community / investor benefits).
Business Excellence Awards are designed to create a framework in which:
x is promoted and recognized innovation in business
x is recognized and appreciated the success of the companies in business
x are designated best examples able to inspire the business community
x is offered an active platform for debate.

References

Băloiu, M. (1995). Innovation Management. Bucharest: Efficient Publishing House.

Bruhn, M. (2001). Customer Orientation – The Foundation of Successful Business. Bucharest: Economica Publishing House.
Ciobanu, I, Ciulu, R. (2010). Competitive Strategies of The Company. Iaşi: Polirom Publishing House.
Collins, J. (2010). Business excellence: Why Some Companies Succeed In Taking The Leap From "good" to “excellent "and Others Don’t?.
Bucharest: Curtea Veche Publishing House.(Original work published 2001).
Dictionary of Neologisms Romanian Academy. Retrieved from http://www.dexx.ro
Dinu, Gh. (n.d.). Models of Business Excellence, University Valahia, Session J. M. Juran. Retrieved from http://ecr-uvt.ro.
Drãgulãnescu, N. (2000). Contribution of Dr Joseph Moses Juran to The Development of Quality Management. Polytechnic University of
Bucharest, Q-Media,6, 10-15. Retrieved from http://www.ndragulanescu.ro/publicatii/JP28.pdf
Heller, R. (1997). In Search of European Excellence. The 10 Key Strategies of Europe's Top Companies, Harper Collins Business.
Ionaşcu, V. (2007). Customer Orientation Development Trends, Online Marketing Magazine, 1(4).
Marian, L. (2007). Entrepreneurs and Entrepreneurship, Targu Mures: Publishing House Efri Rom.
Mohammad, M. (2010). National Quality/Business Excellence Awards in different countries. Retrieved from http://www.nist.gov/
Peters, Th., Waterman, R. (2010). In Search of Excellence. Lessons from American’s Best-run Companies. . Bucharest: Meteor Press New
(Original work published York: Harper&Row, 1982).
Smith, R.(2005). Sustainable Excellence of The Enterprises, Economy, Series, Year VIII (1), 137.
Vokurka, R.J., Stading. G. L., Brazeal, J. (2000). A Comparative Analysis of National and Region Quality Awards, Qualitiy Progress, 41-49.
Retrieved from http://www.texas-quality.org/