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Managing Service Quality: An International Journal

Taking a critical perspective to the European Business Excellence Model using a balanced scorecard
approach: a case study in the service sector
Rodney McAdam Edel ONeill

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To cite this document:
Rodney McAdam Edel ONeill, (1999),"Taking a critical perspective to the European Business Excellence Model using a
balanced scorecard approach: a case study in the service sector", Managing Service Quality: An International Journal, Vol. 9
Iss 3 pp. 191 - 197
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Helen Atkinson, (2006),"Strategy implementation: a role for the balanced scorecard?", Management Decision, Vol. 44 Iss 10
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Meena Chavan, (2009),"The balanced scorecard: a new challenge", Journal of Management Development, Vol. 28 Iss 5 pp.

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Taking a critical
perspective to the
European Business
Excellence Model using
a balanced scorecard
approach: a case study
in the service sector

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Rodney McAdam and

Edel ONeill
The authors
Rodney McAdam and Edel ONeill are both at the Ulster
Business School, University of Ulster, UK.
European Foundation for Quality Management, Model,
Service industries, TQM
In this paper the business excellence model is examined
from a critical perspective by analysing the results from a
three year university/organisation partnership. The
organisation, a major service based electrical utility,
wanted to adopt a total quality culture that was based on
broad based learning principles, rather than a narrow
mechanised approach. Instead of using short term initiatives the organisation entered into a learning partnership
with the university. One of the approaches used was that
of the Business Excellence Model. However, rather than
apply the model as the ultimate panacea, it was carefully
deployed and any advantages and disadvantages were
noted and analysed by the TQM team and the researchers.
A balanced scorecard approach was used to cover deficiencies in the Business Excellence Model.

The European Business Excellence Model
(similar to the Baldrige Model) is now in
widespread use in many organisations.
Various approaches to applying the model,
emphasising its advantages in the area of total
quality management (TQM) are well documented in the literature. These advantages
include improved approaches, measurement
and benchmarking. However, there is a surprising lack of literature which adopts a critical perspective to the Business Excellence
Model (McAdam et al., 1998). Instead there
is an apparently endless stream of advocacy
based writings. In contrast to advocacy based
writings a critical perspective (Burgoyne and
Reynolds, 1998):
is concerned with questioning assumptions;
has a social rather than individual focus;
pays attention to the analysis of power
is concerned with emancipation.
Over the last three years this critical approach
has been applied within a large service based
electrical utility through a university/industry
partnership. The organisation wanted a learning approach to applying TQM, rather than
short term initiatives.
The aim of this paper is to critique one of
the main approaches used in the partnership,
namely the European Business Excellence
Model. The objectives are:
to define a TQM implementation framework from the literature;
to critique the EQA model against this
TQM framework;
to critique Balanced Scorecards against
this TQM framework;
to evaluate critically the university/industry
partnership case study and its use of the
EQA model and Balanced Scorecards
using the TQM framework.

TQM framework

Managing Service Quality

Volume 9 Number 3 1999 pp. 191197
MCB University Press 0960-4529

Over the past ten years there has been a proliferation of TQM frameworks in the literature.
Jamal (1998) provides a useful synthesis of the
literature based on the work of Grant et al.
(1994); Hackman and Wageman (1995);
Krishnan et al. (1993); McDonell (1992);
Ross (1993); Olian and Rynes (1991);
Spencer (1994) and Deschamps and Nayak
(1995). His summarised approach also largely

Taking a critical perspective to the European Business Excellence model

Managing Service Quality

Rodney McAdam and Edel ONeill

Volume 9 Number 3 1999 191197

agrees with that of Kanji and Asher (1993),

and Krasachol and Tannock (1998), namely:
TQM is strategically linked to the business
Customer understanding and satisfaction
is vital.
Employee participation and understanding
at all levels is required.
The need for management commitment
and consistency of purpose.
The organisation is perceived as a series of
processes which incorporate customer
supplier relationships.

3. Employee understanding and

participation is required at all levels
The EQA model has both people management and people satisfaction enabler and
result criteria respectively. These criteria
enable approaches to people involvement to
be evaluated and benchmarked. However,
there are a number of problems in this area.
First, the model is an audit tool of what is
already happening; it does not indicate best or
preferred practice in an organisational context. Also, TQM is often translated through
the workforce by simple easily understood
approaches (Borley, 1994). The EQA model
remains rather complicated and bureaucratic
in this respect.

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This TQM framework is used throughout the

rest of the study to evaluate the EQA model,
the Balanced Scorecard and the case study

Critique of the EQA model (using the

TQM framework)
(A full description of the EQA model (European Business Excellence model) can be
obtained in EFQM, 1998.)
1. TQM is strategically linked to business
The EQA model claims to support this TQM
principle in a number of ways. First, the nine
criteria represent a business in its totality.
Second, policy and strategy is a key criterion
and third, the results criteria give some idea of
successful strategy. However, the EQA model
does not formulate strategy, nor does it properly evaluate strategy, rather it evaluates the
process of forming strategy. The danger in
this limited involvement in the strategic
process is that TQM, if equated withe the
EQA model, could be seen as simply a strategic audit tool rather than as intrinsically
linked with strategy (Madu and Chu-Hua,
2. Customer understanding and
satisfaction is vital
In this area of TQM the EQA model is seen as
making a significant contribution. Customer
Satisfaction is a key result criterion and links
must be shown back to enabling criteria.
Customer satisfaction ratings can also be
benchmarked across other organisations. One
cause for concern is the lack of a predictive
element that would help identify new
customers and markets, reflecting the lack of
strategic integration referred to already.

4. The need for management commitment

and consistency of purpose
The leadership criterion is a key enabler
within the model. It is based on a coach/
mentor style of leadership that advocates a
role modelling approach. This style of leadership is very supportive of the TQM framework (Wilkinson and Willmott, 1994).
Perhaps this definition of leadership is not
appropriate in all business circumstances and
emphasises the limitations of defining all
organisational settings within a rigid model.
5. The organisation is perceived as a
series of processes
Central to the EQA model is the business
process criterion. This criterion defines a
series of steps for systematic management and
improvement of business processes. However,
the model does not show how business
processes can be identified or improved it
remains as a detached audit tool. Also, it may
not be appropriate for organisations to be
completely process based; there may be a
partial process- functional structure (Peppard
and Rowland, 1996). The model takes no
account of this situation.
In summary, the EQA model has merit as
an business audit approach but should not be
viewed as synonymous with TQM; rather it is
a technique within TQM and not a model of
TQM. If the model is taken as synonymous
with TQM then its limitations as described
above will lead to unwarranted questioning of
the broad field of TQM.


Taking a critical perspective to the European Business Excellence model

Managing Service Quality

Rodney McAdam and Edel ONeill

Volume 9 Number 3 1999 191197

Critique of balanced scorecards (using

the TQM framework)

model incorporated within the scorecard.

Ultimately this could lead to the financial
objectives heavily outweighing the employee
growth objectives and measures.

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The balanced scorecard (BS) was originally

introduced by Kaplan and Norton (1992).
Since then it has increased in popularity and
has been further developed as an approach
within TQM.
1. TQM is strategically linked to business
Kaplan and Norton outlined four key areas
within the scorecard as key elements of
business strategy that must be measured,
namely: financial, customer, internal business
processes and learning and growth. Thus the
BS can help organisations balance their strategic between different aspects of the business
and also attach measures to strategic statements. However, the BS remains a means of
effectively measuring strategy rather than a
means of deciding strategy.
2. Customer understanding and
satisfaction is vital
The link with strategy ensures that BS
measures and objectives in regard to
customers are consistent and supportive of
the organisations strategy. The BS strengthens the link between customer improvement
initiatives and the organisations strategy. The
BS does not indicate how new customers and
markets can be identified.
3. Employee understanding and
participation is required at all levels
The strategic balanced scorecard can be
devolved into scorecards at lower levels in the
organisation (Kaplan and Norton, 1996).
Ultimately each operative could have a Scorcard which can be traced back to the overall
strategic scorecard. This approach is seen as
enabling employees to see clearly their own
area of involvement and how that links to the
bigger picture. However, certain scorecard
objectives may become very fragmented at
lower levels and also the employee understanding of the higher level scorecards may
become tenuous.
4. The need for management
commitment and consistency of purpose
Ideally a well communicated BS approach
should lead to consistent management action
across organisations. However, unlike the
EQA model, there is no specific leadership

5. The organisation is perceived as a

series of processes
The BS assumes that business operations are
based on business processes. However, this
view suffers from the same limitation as that
of the EQA model, namely that organisations
may not be wholly process driven but may be
a mixture of functions and processes.
In summary, the BS can enable a strong
link between strategy and measurement and
in the deployment of this strategy to lower
levels in the organisation. However the BS,
like the EQA model, is only an approach
within the broad field of TQM and not the
essence of TQM itself.

Case study organisation methodology

and discussion
In 1995 a major electrical utility formed a
partnership with the Ulster Business School,
University of Ulster to develop a learning
based approach to TQM within the organisation.
The organisation currently has over 2,200
employees and has undergone enormous
change over recent years. The change
includes privatisation and flotation on the
Stock Exchange. This resulted in the organisation facing a number of business and market
forces. Some of the key forces were as follows:
An Industry Regulator.
City pressure in the form of Shareholder
Competition in the form of natural gas and
opportunities for domestic and industrial
customers to purchase from other utilities
or possibly through the intermediary of
other large companies (highstreet supermarkets for example) post 1998.
Rising customer expectations driven by
national and global service providers.
These pressures have resulted in the need for
radical change within the organisation. These
changes have taken place over a three year
timescale and are currently ongoing within
the university/organisation partnership. The
key aim of the partnership is to instil a TQM
culture within the organisation.

Taking a critical perspective to the European Business Excellence model

Managing Service Quality

Rodney McAdam and Edel ONeill

Volume 9 Number 3 1999 191197

The partnership has a joint operating team

consisting of university and industry personnel. This operating team reports to a partnership directorate which ensures the partnership
aims are being met. A number of research
students ensure the change process is underpinned with systematic research.
The research material for this paper has
been gathered using participant observation
workshops on the TQM change process,
longitudinal ethnographic observations and a
series of semi-structured interviews with
individual stakeholders.

help form strategy, devolve it throughout the

organisation and effectively measure the
strategic goals. The model was applied corporately at senior management level and then in
each strategic business unit with senior and
middle management. An assessment of the
exercise revealed that the model did not help
in forming strategy; rather it helped assess the
existing situation and did not have predictive
elements. It ensured there was a rigorous
strategic planning process but did not assist in
giving strategic direction. However, the model
gave inputs to the strategic process, showing
existing strengths and areas for improvement
which was useful information in forming
strategy. These benefits of using the model
were especially useful in the regulated parts of
the business strategy (e.g. customer satisfaction and cost) but was inadequate for the
unregulated or growth side of the business.
The limitations prompted the organisation
to consider other approaches including the
BS. Senior managers seemed to identify much
more readily with the BS as an approach for
covering the entire strategic business plan.
The BS was seen as including aspects relating
to both business efficiency and business effectiveness and hence covered the growth parts
of the strategy. Because the BS only indicates
the broad headings for strategy and does not
have the constraints and limitations of the
more prescriptive EQA model, it was judged
to be more suitable for overall strategic goals
and suitable measures. The EQA model was
seen as complementing this approach by
concentrating on the efficiency or operational
assessments (Figure 1).

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Case study analysis (using the TQM

1. TQM is strategically linked to business
The organisation was facing large challenges on
three fronts. First, there was the regulated part
of the business in which continuous index
linked annual cost reductions and five year
review realignment cost reductions were
required. These cost reductions are monitored
by a regulator on behalf of OFFREG and
ultimately have to be passed on to the customer.
Second, the regulator also required significant
measurable improvement in customer satisfaction standards. Third, the organisation had the
challenge of growing unregulated income which
is not subject to the scrutiny of the regulator.
Being a recently privatised Network driven
organisation, there was little experience within
the organisation in this area.
In developing a strategy to address these
challenges the organisation formed the
university/industry partnership to instil TQM
into every aspect of the business. TQM was
seen as vital to achieving the strategic goals
which were defined as:
grow unregulated income;
reduce costs;
improve customer satisfaction.
Initially the partnership adopted a double
loop learning approach (Garrett, 1987;
McAdam and Leonard, 1998) where TQM
based initiatives were constantly compared
with the organisations strategic direction to
ensure compatibility and effective use of
resources. The operational and the directorate
groups drove this double loop learning
process. The EQA model was identified early
in the process as a useful approach. Initial
expectations were that the EQA model would

2. Customer understanding and

satisfaction is vital
Customer satisfaction is a vital part of the
regulated side of the business. Two sets of
measures are imposed by the regulator
overall customer standards (OS) and

Figure 1 EQA and BS integration


Organisation Strategy

Strategic Objectives
Strategic Balanced
Devolved Balanced

EQA Model
Self Assessment

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Taking a critical perspective to the European Business Excellence model

Managing Service Quality

Rodney McAdam and Edel ONeill

Volume 9 Number 3 1999 191197

guaranteed customer standards (GS). The

EQA model was used first to try and improve
customer satisfaction. The partnership
applied the model to the most customer
facing business unit (Customer Service)
identifying key areas for improvement which
were addressed by action teams. This resulted
in considerable improvement and led to a
number of customer focused initiatives. The
model was especially useful in emphasising
the importance of perceptive customer data in
addition to internally collected customer data.
However, the model did not appear to provide
a cohesive link between the overall business
strategy and the Customer Service improvement initiatives, largely because of the
prescriptive nature of the customer measures
in the EQA model. The BS was found to
address this deficiency by allowing Customer
Service to form customer measures and
objectives consistent with, and devolved from,
the strategic balanced scorecard.
Thus, the customer aspects of TQM were
reinforced by using the BS to link the strategy
to the improvement initiatives with effective
measures and the EQA model improved the
efficiency of customer satisfaction especially
by addressing perceptive customer data.
The application of both approaches resulted in significant customer satisfaction. These
improvements are all well above the regulator
requirements. Based on this improvement the
organisation became the first utility to win the
prestigious Charter Mark award for customer
service. They also successfully achieved ISO
9000 to the Customer Service business unit.
The overall GS figures are shown in Figure 2.

made employees more involved in more meaningful activities. The EQA model was initially
use to try and involve as many people from as
many organisational levels as possible. Selfassessment using the model started at the senior
management level and worked downwards.
While the process was found to be rigorous it
was also found to be bureaucratic and time
consuming. Even simplified approaches took
considerable time and resources. Also the
complexity of the model was difficult to explain
within short time scales. These problems were
further heightened by employees at lower levels
not seeing a clear link between the wide-ranging
self-assessment and their immediate jobs.
Furthermore, the link back to the overall
company strategy was obscure.
The BS was found to offer a much simpler
and more effective approach. The strategic
level BS could readily be devolved to scorecards
down to individual level. These personal and
team scorecards were reinforced by the organisations personal performance review (PPR)
system where appraisal was linked to achievement of the scorecard objectives and measures.
However, this approach did not give employees
a view of the wider business. The EQA model
was more successful in this respect. Quality
improvement teams were more readily formed
from the scorecard approach as the participants
could relate the improvements more to their
own specific jobs.The EQA model process
identified areas for improvement more suited to
wide ranging cross functional improvement
teams. Figure 3 shows the increased turnover
per employee due to increased involvement.
A benchmarking study against the average
rate of defaults per 100,000 customers for all
UK Regional Electricity Companies (NI
Telco) enabled further improvements to be
made including the comparison of favourable
benchmarks (e.g. General Standard Customer
defaults per 100,000 customers Figure 4).
Thus, both approaches can be used for involving employees in the TQM process. The BS
approach was found to be faster, more job

3. Employee understanding and

participation is required at all levels
The organisation has a reputation of having
excellent employee benefits and conditions
which is reflected in good industrial relations
over many years. The partnership wanted to
build on these relations by ensuring TQM
Figure 2 The overall guaranteed standard results

Figure 3 Increased turnover per employee



(based on 1992/93 = 100 index)



% success 99.8
in GS










Taking a critical perspective to the European Business Excellence model

Managing Service Quality

Rodney McAdam and Edel ONeill

Volume 9 Number 3 1999 191197

Downloaded by Universitas Sebelas Maret At 08:34 22 May 2015 (PT)

specific and linked improvements to the

organisations overall strategy while the EQA
approach was more wide ranging and comprehensive.
4. The need for management commitment
and consistency of purpose
The EQA model made a considerable impact
in the management commitment area. The
Leadership criterion espoused a coaching/
mentoring leadership style while the People
Management and Resources criteria promoted involvement and participation styles of
leadership. The Chief Executive was a role
model of this style of leadership and encouraged it in the senior management team.
Middle management remained somewhat
resistant to this approach although significant
changes were observed. Based on improvements in this area the organisation has now
applied for the Investors in People award.
The BS added little to this area of the TQM
framework. There is no specific leadership
style area within the BS and it was not used at
any level to encourage increased management
commitment and participatory style of leadership. However, the BS did help in ensuring
consistency of purpose as it acted as a linking
mechanism between overall company strategy
and individual leaders objectives and
measures. For example one managers
objective was to involve 40 per cent of his team
in improvement activities linked to the overall
strategic objective of reducing costs.
5. The organisation is perceived as a
series of processes
Prior to the TQM partnership the organisation had undergone a process-based realignment. Thus, managers and employees were
familiar with the language of business processes. When the EQA model was introduced
there was ready acceptance of the models
approach to business processes as defined in
Figure 4 Benchmark comparisons of GS defaults
Defaults 300
NI Delco


criterion 5 namely Processes. This criterion

advocates effective process management and
improvement. Because the organisation had
been realigned business processes were readily
identified and targets sets for improvement.
The BS also helped in this respect by ensuring process initiatives and targets were linked
to the overall strategy (including the growth
strategy for new processes) through a series of
devolved scorecards. However, the EQA
model was more effective in enforcing a rigorous process management and change
approach. For example a new computerised
Geographic Network Information process was
subjected to the process criterion requirements before vendor selection, resulting in a
number of quality features being added.

A TQM framework has been defined which
was used to critique the application of the
European Business excellence model in a
TQM university/industry partnership
application. The Balanced Scorecard was also
applied in the partnership and helped to critique the EQA model by being compared and
Based on the case study the key comparisons against the TQM framework are
summarised in Table I. This shows that the
EQA model supports TQM mainly through
improving business efficiency, customer satisfaction and encouraging a coach/mentor style
of leadership. It also defines a rigorous process
management approach. The BS was found to
support TQM mainly through
linking TQM practice to the organisations
strategy, improving customer measures and
encouraging involvement at all levels.
The case study also showed that the organisation made significant TQM based improvements in all aspects of its business by applying
both the EQA model and the BS concurrently
(Figure 1). For example customer satisfaction
has improved across all measures, there has
been increased business growth and diversification and the organisation has won the
Charter mark award. The overall business
performance also increased significantly.
Figure 5 shows the increasing dividend per
Thus, these approaches, although having
their respective strengths and limitations, can
make a significant approach to instilling TQM
within an organisation.


Taking a critical perspective to the European Business Excellence model

Managing Service Quality

Rodney McAdam and Edel ONeill

Volume 9 Number 3 1999 191197

Table I Comparison of EQA model and BS using the TQM framework

TQM elements

EQA model

Lack of proactive
strategic approach
limited to
business efficiency
Linked well to
proactive growth

Encouraged use
of both perceptive
and internal
customer data
Easier to adapt to
guaranteed and
overall customer

Bureaucratic and
time consuming
in regard to this
Easier to involve
people at all levels
and to relate to a
specific job

Encourages coach/ Encourages rigorous

mentor style of
process management
style of leadership


Links process measures

to business strategy

Kanji, G. and Asher (1993), Total quality management

process: a systematic approach, Journal of Total
Quality Management, Vol. 4, Suppl.

Figure 5 Increasing dividends per share

(based on 1992/93 = 100 index)


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Little contribution
to this element

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Finally, it is a disservice to the philosophy of

TQM and to organisations seeking to apply
TQM to assume that the EQA model is the
essence of TQM. Rather it is a TQM approach
that has its own strengths and areas for


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