Does Good Quality Mean
Higher Profitability?
As seen from the discussion on Quality Costs and Six Sigma,
it is not difficult to realize that poor quality level costs a lot. However,
can good quality really bring profit? Studies by the National Institute of
Standards and Technology (NIST), universities, and the U.S. General
Accounting Office (GAO) found that companies adopting quality management
practices experienced an overall improvement in employee relations, higher
productivity, greater customer satisfaction, increased market share, and
improved profitability. In addition, a recent NIST study that tracks a
hypothetical stock investment in Malcolm Baldrige National Quality Award (MBNQA)
winners shows that these companies soundly outperformed the Standard &
Poor’s 500 (S&P 500) for the seventh straight year in a row (see Table 4.1
NIST, Baldrige Index Outperforms S&P 500 for Seventh Year, 2001).
Table 4.1 NIST, Baldridge Index Outperforms S&P 500 for Seventh Year
Year
|
MBNQA Winners vs S&P 500
|
Scale
|
2001
|
Outperform
|
4.4 to 1
|
2000
|
Outperform
|
4.9 to 1
|
1999
|
Outperform
|
2.6 to 1
|
1998
|
Outperform
|
2.9 to 1
|
1997
|
Outperform
|
3.5 to 1
|
1996
|
Outperform
|
4 to 1
|
1995
|
Outperform
|
6.5 to 1
|
