Baldrige Winners Show Bottom-Line Results, Too

Jan. 13, 2005
Companies that have won the Malcolm Baldrige National Quality Award not only shine in their quality achievements, but also perform well financially, indicates the National Institute of Standards & Technology (NIST). For the fifth straight year says the ...

Companies that have won the Malcolm Baldrige National Quality Award not only shine in their quality achievements, but also perform well financially, indicates the National Institute of Standards & Technology (NIST). For the fifth straight year says the Commerce Dept. unit, the "Baldrige Index" -- a fictitious stock fund made of firms that received the award during 1988-97 -- outperformed companies comprising Standard & Poor's 500 index by a margin of 2.6 to 1. The Baldrige firms achieved a 460% return on investment compared with a 175% return for the S&P 500. NIST arrived at the index by "investing" a hypothetical $1,000 in each of the six "whole company" Baldrige winners -- ADAC Laboratories, Eastman Chemical Co., Federal Express Corp., Motorola Inc., and Solectron Corp. The investments were tracked from the first business day of the month following the announcement of the award recipients through Dec. 1, 1998, with adjustments made for stock splits. Another $1,000 was hypothetically invested in the S&P 500 for the same time period. In another analysis, NIST tracked a similar hypothetical investment not only in stocks of the six whole-company winners, but also the parent firms of 17 Baldrige winners that are subsidiaries. This group of 23 outperformed the S&P by about 2.5 to 1, and showed a 426% return on investment compared with 173% return for the S&P 500.

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