[This article appears in the Winter, 1993 edition of _The_Quality _Management_Forum_, pages 1 to 3.] These Aren't Baldrige Farm Teams, But All Intend to Move Up to the Big League A Chairman's Quality Award Story by Phillip M. Scanlan What would you say about an awards program that refuses to give anybody an award? Imagine someone stepping up to the podium and announcing, "Ladies and Gentlemen, the winner of this year's AT&T Chairman's Quality Award is...nobody." How would you react? Especially if you belonged to one of the 23 AT&T units which had spent countless hours writing an application, answering countless questions from examiners during site visits, then waited anxiously for the winners to be announced? The organizers of the Chairman's Quality Award (CQA) competition didn't like being the company spoilsports, but they honestly believed no one had qualified for a CQA. "That first year, when nobody won an award, we had to decide if we had set our standards too high," says Bill Scheerer, an AT&T executive who helped judge the CQA applicants. "We decided that we had not." The brainchild of Chairman Robert Allen and AT&T's Management Executive Committee, the CQA process had been unveiled with great fanfare in March of 1990. Allen was asking everyone to take the issue of quality seriously. But now, as the non-announcement swept through the corridors of AT&T, the silence was deafening. Taken the wrong way, this high-minded approach to handing out awards could have killed Allen's brainchild faster than you can make an overseas phone call. But perhaps without realizing it, AT&T was onto something: Sure, employees love recognition. Who doesn't? But what they desired even more strongly than bronze trophies and crystal decanters was a solid, reliable way to analyze and improve their businesses. Employees weren't insulted about not winning a CQA that first year. They were challenged. In CQA's second year, another 23 units and 160,000 employees were involved. By 1993, that num- ber had swelled to 46 units and 250,000 AT&T employees (from a total of 312,000). Employees seemed to enjoy using the CQA process to apply cold, hard slaps to their own faces, rather than to pat themselves on the back. "Don't get us wrong. Winning is great," said AT&T executive Bill Catucci, whose government affairs division won a CQA in 1992. "But it doesn't help you stay in business." "We want to find out what we're doing wrong, not just what we're doing right, so we can make dramatic improvements in our operations, not incremental ones. And we're going to do it through the CQA process." Not the Baldrige Award To win a CQA, AT&T business units sit down every year and produce detailed applications which document their business-management systems and compare them to rigorous award criteria. Teams of examiners--all AT&T employees--evaluate the applications and make site visits to the most promising units. After making site visits, the examining teams present their recommendations for Chairman's Quality Awards to judges, selected from the highest ranks of AT&T. The judges review these recommendations and present them to AT&T's Management Executive Committee for final approval. The application and site-visiting procedures obviously mirror those of the Malcolm Baldrige formula in several ways. To encourage participation, CQA applicants don't compete against each other. And unlike the Baldrige Awards, Chairman's Quality Awards are given to any number of applicants. Also, unlike the Baldrige competition, CQA applicants can win two awards: The Achievement Award, which uses the same 1,000 point scoring system as the Baldrige; or the Improvement Award, an AT&T innovation, which presents gold, silver and bronze awards to units which improve from earlier assessments by 200, 150, and 100 points respectively. This award recognizes units that may be far from winning an achievement award but are making great progress nonetheless. Value Apparent Perhaps because of these differences, AT&T employees have approached the CQA process as much more than a means for covering themselves with glory. In the past, says Catucci, "We might be all over the lot, trying to improve ourselves. CQA gives you a way to focus on what you need to improve the most." Based on CQA, for example, government affairs decided to focus on satisfying internal customers; specifically, the many AT&T divisions that need to understand how government decisions at all levels can help or hinder their own operations. As a result of CQA, government affairs has developed its first set of written contracts for internal customers. Says Catucci, "The contract tells each customer exactly what we're going to do for him or her, and how much it will cost. And, throughout the year, we report on what we've accomplished. "With these contracts, we offer very specific deliverables. And we can find out before we start working how much our customers are willing to pay for our services." Dale Myers, administrator of the CQA process, estimates that in 1991 the examining teams, judges and CQA administrators devoted a total of approximately 400 hours to each applicant that received a site visit. It's during this site visit that the scrutiny becomes really intense. Says Catucci, "CQA examiners were going out to our field offices around the country. Basically, our written application had stated that 95 percent of our people understand the strategic vision of this division. Well, the examiners would ask people, 'What do you know about this vision?"' "Did it surprise us how often our people would say, 'Gosh, we never heard of that!' We had sent them so many videotapes and letters! But apparently, even basic messages were still not getting through." The revelation prompted Catucci to work harder at communicating. Now, once a month, he holds "Business Over Breakfast" meetings with employees in his division, and every quarter he holds town meetings for 20 to 25 employees from all levels of government affairs. Swinging at the Right Ball An AT&T unit such as Network Services Division (NSD) is not eligible on its own for a Baldrige Award because NSD is a support function, not a profit center. But NSD, which engineers and operates AT&T's worldwide communications network, can and does apply for a CQA. The process is open to all AT&T business units and divisions. Eligible or not, NSD had undergone so many technological and organizational changes over the previous two years that Frank Ianna, the division's chief quality officer, felt NSD's business processes were not mature enough to withstand the rigors of CQA competition in 1992. At first, Ianna was reluctant to enter. "Why stand up to bat against a pitcher for the Yankees, if you think you're likely to strike out?" he says. Then he changed his mind. "I figured, if you want to improve your swing, get yourself videotaped so you can see how you stand, how you swing, and how you follow through," he said. "If you can see what you're doing wrong, you can really improve." As Ianna predicted, NSD did not win any awards in 1992. But through the CQA process, NSD has gained a much clearer picture of what its internal customers really needed, and how to meet these needs. For example, one of the AT&T business units served by NSD sells 800 services to business people who depend on AT&T reliability. These people need high reliability and fast call set-up time because long delays after dialing can cause their customers to hang up the phones and take their business elsewhere. With this in mind, NSD has focused on making technical changes in the network to ensure a call set-up time for AT&T that is lower than both of its major competitors. Also, NSD is now making more of an effort to use so-called "expert" systems to detect and circumvent cable failures within minutes, in order to minimize problems for customers. Finally, NSD has asked its internal customers for help in determining AT&T's unit costs so these can be benchmarked against world-class performance. "In a competitive world like ours," says Ianna, "cost, as well as quality, is a critical success factor." "It's so easy to talk past each other and work on agendas that are not really tied together," he says. "CQA helps us make sure that we're swinging at what they're pitching." Practicing What They Preach Not surprisingly, a process which probes so deeply into other people's performance can hardly expect to escape the scrutiny of others. But, true to form, the CQA administration team, which includes Myers, Jo Ann Kowalski, Judy Soltis and Glady McDuffie, has taken many opportunities to improve its own procedures. In 1992, for example, the administrators focused on utilizing the experience of past examiners and senior examiners (team leaders). Each team was formed to include several examiners with previous experience. Also, a new position of Assistant Senior Examiner was created for two purposes: as a step up for previous examiners who were not ready to assume the role of senior examiner, and so that senior examiners from previous years could continue to serve on teams in a coaching role. As usual, all 1992 examiners attended a three-day workshop where they studied Baldrige criteria and learned to use them in evaluating CQA applicants. In 1992, this training focused particularly on conducting site visits, scoring on the Baldrige system, and preparing feedback. In 1992, CQA applicants also received more immediate feedback than in previous years. Those units that did not merit site visits received their feedback reports from the examining teams within 12 weeks of applying, which is six weeks less than in 1991 . After each unit receives its feedback report, the senior examiner gives a detailed verbal presentation to the unit's senior management team. Many applicants feel this presentation is the most valuable part of CQA. As a result, CQA administrators paid special attention in 1992 to helping senior examiners prepare to give this presentation. A special rally had been held in March of 1992, where the 1991 CQA winners could share their success stories and methods with the entire company. This "sharing rally" was so well received that after the 1992 winners were announced in October, the winners were asked to speak at AT&T's annual Quality Conference in late October, rather than the following March. "Again, the feedback becomes more immediate," says Myers, "and everybody likes that." Current improvements in the CQA process will support AT&T's globalization efforts. In 1992, AT&T used the first examiner from outside the United States. Also, the first site visit was conducted outside the U.S. to an AT&T Consumer Products manufacturing plant in Mexico. In 1993, the process utilized five examiners from outside the U.S. Since the first year of CQA, several units have received achievement and improvement awards. But they don't seem to have turned anyone's head away from the real goal of CQA. "The CQA process forces everyone at AT&T to ask the big questions and answer them honestly," says Myers. "As a result, we're all learning to examine every activity we're engaged in, to determine if it really does improve the quality of our products and services to customers, whoever they are." Phillip M. Scanlan has worked for AT&T for the past 27 years. In 1986, he became Director of Quality for one of AT&T's Business Units, and now holds the position of Corporate Quality Office Vice President. Mr. Scanlan supports the Chairman of AT&T and the AT&T Senior Leadership Team in their AT&T Quality Council responsibilities, and provides support and leadership for the AT&T Quality Community. Mr. Scanlan is a member of the American Society for Quality Control, and was selected as the keynote speaker for the first joint ASQC/AMA conference. In 1990, Mr. Scanlan was selected as a Malcolm Baldrige National Quality Award Examiner, and served as a Senior Examiner in 1991. Mr. Scanlan may be contacted by calling (908) 771-3037.