The EFQM model is a management framework helping organizations manage change and improve performance. The EFQM model was launched by the European Foundation for Quality Management in 1992 to increase the competitiveness of European companies.
Element
Description
Analysis
Implications
Benefits
Challenges
Use Cases
Examples
Leadership
Leadership refers to the role of top management in setting a clear vision, values, and culture for the organization. It includes their commitment to excellence and sustainable success.
Analyzing the leadership’s ability to inspire, engage, and align the organization toward its mission and strategic goals.
Strong leadership sets the direction for the organization and influences its culture, performance, and adaptability.
Enhanced organizational culture, innovation, and strategic focus.
Challenges in evaluating leadership impact objectively.
Strategic planning, leadership development.
A CEO guiding the organization towards sustainability goals.
Strategy
Strategy involves developing and implementing a clear and effective strategic plan aligned with the organization’s mission and vision. It includes setting objectives, priorities, and resource allocation.
Assessing the organization’s strategic planning process and the alignment of objectives with its vision and stakeholder needs.
Effective strategy ensures that resources are used efficiently and that the organization remains competitive and adaptable.
Improved strategic focus, resource allocation, and performance.
Risk of misalignment between strategy and execution.
Strategic planning, performance evaluation.
A company adopting a sustainability strategy to address environmental concerns.
People
People encompass the organization’s approach to managing and developing its workforce. This includes recruitment, training, employee engagement, and diversity and inclusion initiatives.
Analyzing how the organization attracts, retains, and develops talent and whether it fosters a culture of continuous learning and improvement.
Investing in people development leads to higher employee engagement, better performance, and greater adaptability.
Enhanced employee satisfaction, innovation, and adaptability.
Talent retention and development challenges.
Employee training, talent management.
An organization promoting diversity and inclusion in its workforce.
Partnerships and Resources
Partnerships and resources focus on how the organization manages its external relationships, collaborations, and the allocation of resources for sustainability and growth.
Evaluating the organization’s ability to create and leverage partnerships, manage its resources efficiently, and contribute to a sustainable future.
Effective resource management and strategic partnerships enhance the organization’s competitiveness, sustainability, and resilience.
Improved resource efficiency, innovation, and collaboration.
Resource constraints and challenges in building partnerships.
Resource allocation, partnership development.
A company forming partnerships for sustainable supply chain practices.
Processes, Products, and Services
This element examines how the organization designs, manages, and improves its processes, products, and services to meet or exceed stakeholder expectations and contribute to sustainability.
Assessing the organization’s approach to process improvement, innovation, product development, and service delivery.
Effective processes and offerings drive customer satisfaction, cost efficiency, and market competitiveness.
Enhanced quality, customer satisfaction, and operational efficiency.
Resistance to process change and innovation.
Process optimization, product development.
An organization improving its production processes for sustainability.
Customer Results
Customer Results focus on the organization’s ability to deliver value to its customers, meet their needs, and maintain high levels of customer satisfaction and loyalty.
Evaluating customer satisfaction, loyalty, and the organization’s ability to meet customer needs and expectations.
Satisfied customers lead to repeat business, positive word-of-mouth, and brand loyalty, contributing to the organization’s success.
Increased customer loyalty, market share, and revenue.
Challenges in measuring customer satisfaction accurately.
Customer feedback analysis, market research.
A company achieving high customer satisfaction scores.
People Results
People Results assess the organization’s ability to manage, develop, and engage its workforce effectively. This includes employee satisfaction, development, and retention.
Measuring employee satisfaction, development, and retention rates, as well as the impact of human resource practices on the workforce.
Engaged and satisfied employees are more likely to contribute to the organization’s success and adapt to changes effectively.
Higher employee satisfaction, productivity, and adaptability.
Challenges in quantifying employee satisfaction accurately.
Employee surveys, talent development.
An organization with low employee turnover and high job satisfaction rates.
Society Results
Society Results consider the organization’s impact on society, including environmental sustainability, corporate social responsibility, and contributions to the community.
Assessing the organization’s sustainability practices, environmental impact, and community engagement.
Responsible and sustainable practices enhance the organization’s reputation and long-term viability.
Improved reputation, sustainability, and community relationships.
Challenges in quantifying social and environmental impact.
Sustainability reporting, community engagement.
A company recognized for its environmental sustainability efforts and community involvement.
Key Performance Results
Key Performance Results focus on quantifiable performance metrics aligned with the organization’s objectives and strategies. These metrics indicate the organization’s overall success and effectiveness.
Analyzing key performance indicators (KPIs) and metrics related to the organization’s strategic goals and objectives.
Meeting or exceeding KPIs demonstrates the organization’s effectiveness in achieving its mission and sustaining success.
Improved performance, financial results, and goal attainment.
Challenges in identifying the most relevant KPIs.
Performance measurement, KPI tracking.
A company achieving or surpassing its financial and operational goals.
The EFQM model was launched by the European Foundation for Quality Management in 1992 to increase the competitiveness of European companies.
To facilitate this, the model incorporates a self-assessment framework measuring the strengths and weaknesses of an organization across all its operations.
The EFQM model is non-prescriptive and does not advocate strict adherence to rules or procedures.
Instead, it provides a broad overview of what is required to achieve organizational excellence.
Since its release, however, the model has evolved to reflect an increasingly dynamic global marketplace.
The latest version has seen the framework transition from a simple assessment tool to one that offers a basic methodology for managing change and its associated impacts.
Let’s take a look at the key components of the revised model in the following sections.
The three questions of the EFQM model
The model is now based on the answering of three questions:
Direction
Why does the organization exist? What purpose does it fulfill? Why was one strategy chosen over another?
Execution
How does the organization intend to deliver on its purpose or strategy?
Results
What has the organization achieved? What does it want to accomplish in the future?
Direction, execution, and results then drive the rest of the framework, with each question supported by a few key criteria in the form of guiding principles.
The seven criteria of the EFQM model
With the above said, we will now take a look at the seven main criteria and how they are distributed across the three questions.
Direction
Criterion 1: Purpose, vision, and strategy
Organizational excellence is underpinned by an inspiring purpose, an aspirational vision, and a strategy that delivers.
Criterion 2: Organizational culture and leadership
Culture refers to the values exhibited by employees that influence behavior over time.
Leadership in the EFQM model means the organization is recognized as a role model by its peers.
Execution
Criterion 3: Engaging stakeholders
The organization must also identify its key stakeholders, or those most likely to play a role in organizational success.
Stakeholder relationships are built on transparency, accountability, and trust.
They are also involved in deploying strategy and are recognized for the contributions they make.
Criterion 4: Creating sustainable value
Long-term success and financial viability are enriched by purpose, strategy, and customer segmentation.
Sustainable value also means the organization acknowledges that stakeholder needs may change over time.
That is, products, services, and solutions may need to be adapted.
Criterion 5: Driving performance and transformation
Requiring the organization to successfully deliver business operations while reacting to internal and external change.
This allows it to deliver for today while preparing for tomorrow.
Results
Criterion 6: Stakeholder perceptions
What are the personal experiences of stakeholders after dealing with the organization?
These perceptions can be obtained from surveys, focus groups, media reports, customer feedback, or external recognition.
Successful organizations continually meet the needs of stakeholders and can analyze past and current performance to measure progress.
Criterion 7: Strategic and operational performance
Lastly, how effectively does the organization fulfill its purpose, achieve its strategy, or create and deliver value?
Does it understand the cause and effect relationships that impact performance?
Current performance, measured by financial and non-financial models, should give clues to future performance with a relatively high degree of certainty.
Drawbacks of Using the EFQM Model:
While the EFQM Model is a valuable tool for organizational assessment, it has some limitations and potential drawbacks:
1. Complexity:
The model’s comprehensive nature can make it complex and challenging for organizations, especially smaller ones, to implement fully.
2. Resource-Intensive:
Conducting a thorough assessment using the EFQM Model can be resource-intensive in terms of time, expertise, and data collection.
3. Subjective Assessment:
The model’s assessment criteria can sometimes be subjectively interpreted, leading to variations in scoring.
4. Focused on Excellence:
The EFQM Model is primarily designed for organizations seeking excellence and continuous improvement, which may not align with the goals of all organizations.
5. Lack of Industry Specificity:
The model is not tailored to specific industries or sectors, which may limit its applicability in certain contexts.
When to Use the EFQM Model:
The EFQM Model is valuable in various strategic planning and performance assessment scenarios:
1. Organizational Excellence:
Use the model when your organization aspires to achieve excellence and continuous improvement in all aspects of its operations.
2. Performance Assessment:
Incorporate the EFQM Model into your performance assessment and benchmarking processes to identify strengths and areas for improvement.
3. Strategy Development:
Use the model to align your organization’s strategy with its mission, vision, and values, fostering a culture of excellence.
4. Quality Management:
Apply the model to enhance quality management practices within your organization.
How to Use the EFQM Model:
Implementing the EFQM Model effectively involves several key steps:
1. Familiarize with the Criteria:
Become familiar with the nine criteria of the EFQM Model, understanding their significance and interrelationships.
2. Self-Assessment:
Conduct a self-assessment within your organization, involving stakeholders at various levels, to evaluate the organization’s performance against each criterion.
3. Identify Strengths and Weaknesses:
Identify strengths and weaknesses based on the assessment, using the model’s criteria as a framework for evaluation.
4. Develop Improvement Plans:
Develop improvement plans and strategies to address weaknesses and enhance strengths, focusing on continuous improvement.
5. Implementation and Monitoring:
Implement improvement initiatives, monitor progress, and track results, making adjustments as necessary.
6. External Assessment (Optional):
Consider seeking external assessment or recognition through EFQM awards or assessments to validate your organization’s excellence journey.
What to Expect from Implementing the EFQM Model:
Implementing the EFQM Model can lead to several outcomes and benefits:
1. Excellence and Continuous Improvement:
The model helps organizations achieve excellence and fosters a culture of continuous improvement.
2. Performance Enhancement:
It identifies areas for performance enhancement and provides a structured approach for addressing weaknesses.
3. Strategic Alignment:
The EFQM Model aligns organizational strategies with its mission, vision, and values, ensuring coherence and focus.
4. Quality Management:
It enhances quality management practices, leading to improved products, services, and customer satisfaction.
5. Benchmarking and Best Practices:
Organizations can benchmark against best practices and learn from other organizations on their excellence journeys.
6. External Recognition:
Achieving excellence as per EFQM criteria can lead to external recognition and awards, enhancing an organization’s reputation.
In conclusion, the EFQM Model is a valuable framework for assessing and improving organizational performance and quality. While it has its drawbacks and complexities, understanding when to use it and how to apply it effectively can lead to excellence, performance enhancement, and strategic alignment.
By following the steps outlined in the framework and recognizing its potential benefits and drawbacks, organizations can leverage the EFQM Model to enhance their pursuit of excellence and continuous improvement.
Case Studies
Siemens AG:
Purpose, Vision, and Strategy: Siemens, a global technology conglomerate, used the EFQM model to refine its vision and strategy for sustainable development. They set ambitious goals related to reducing environmental impact, increasing energy efficiency, and fostering innovation.
Organizational Culture and Leadership: Siemens promoted a culture of integrity and innovation, with leadership committed to ethical conduct. They implemented a comprehensive compliance program and encouraged employees to participate in sustainability initiatives.
Engaging Stakeholders: Siemens engaged with various stakeholders, including customers, suppliers, and communities, to gather feedback and align their activities with stakeholder expectations. They also established partnerships for sustainable solutions.
Creating Sustainable Value: Siemens focused on creating sustainable value through its products and solutions. They developed energy-efficient technologies, such as green buildings and renewable energy systems, to address global challenges.
Driving Performance and Transformation: Siemens continuously improved its operational efficiency and agility. They invested in digitalization and automation to adapt to changing market conditions and customer demands.
Stakeholder Perceptions: Siemens conducted regular surveys and assessments to gauge stakeholder perceptions of their sustainability efforts. They used the feedback to refine their strategies and communications.
Strategic and Operational Performance: Siemens monitored key performance indicators related to sustainability, such as carbon emissions reduction and resource efficiency. They integrated sustainability metrics into their annual reports and financial disclosures.
Unilever:
Purpose, Vision, and Strategy: Unilever, a multinational consumer goods company, embraced the EFQM model to redefine its purpose around sustainable living. They developed the Unilever Sustainable Living Plan, which set ambitious sustainability targets.
Organizational Culture and Leadership: Unilever’s leadership emphasized the importance of sustainability and ethical business practices. They encouraged employees to drive innovation in product development and sustainable sourcing.
Engaging Stakeholders: Unilever engaged with a wide range of stakeholders, from farmers and suppliers to consumers and advocacy groups. They initiated dialogues on responsible sourcing, waste reduction, and fair compensation.
Creating Sustainable Value: Unilever focused on sustainable product innovation, including reducing the environmental footprint of its products and promoting healthier lifestyles. They launched initiatives like the “Dove Self-Esteem Project.”
Driving Performance and Transformation: Unilever pursued operational excellence by optimizing manufacturing processes and supply chain logistics. They invested in renewable energy sources and reduced water consumption.
Stakeholder Perceptions: Unilever monitored stakeholder perceptions through surveys and social media monitoring. They responded to feedback and communicated their sustainability progress transparently.
Strategic and Operational Performance: Unilever tracked sustainability metrics, such as greenhouse gas emissions, waste reduction, and sustainable sourcing. They integrated sustainability reporting into their annual financial reports.
IKEA:
Purpose, Vision, and Strategy: IKEA, a global home furnishings retailer, used the EFQM model to align its purpose with sustainability. They set a goal to become “People and Planet Positive” by 2030, focusing on circular economy principles.
Organizational Culture and Leadership: IKEA fostered a culture of sustainability, with leadership emphasizing responsible sourcing, energy efficiency, and waste reduction. They encouraged co-workers to contribute to sustainability initiatives.
Engaging Stakeholders: IKEA engaged with stakeholders such as customers, suppliers, and non-governmental organizations. They initiated programs like “IWAY” to ensure ethical and sustainable sourcing practices.
Creating Sustainable Value: IKEA promoted sustainable products and services, including energy-efficient lighting, sustainable materials, and furniture recycling programs. They aimed to make sustainable living affordable and accessible.
Driving Performance and Transformation: IKEA invested in renewable energy, energy-efficient stores, and sustainable supply chain practices. They aimed to achieve a positive environmental and social impact.
Stakeholder Perceptions: IKEA conducted regular surveys and feedback sessions with customers and co-workers. They used insights to improve sustainability initiatives and communication.
Strategic and Operational Performance: IKEA tracked sustainability performance metrics, such as renewable energy consumption, waste diversion, and circular product design. They integrated sustainability reporting into their annual reports.
Key takeaways
The EFQM model is a management framework helping organizations manage change and improve performance. It was created to help European businesses become more competitive and has since been tweaked and adapted.
The EFQM model encourages businesses to answer three questions around direction, execution, and results. These questions form the structural component of the framework.
The EFQM model also features seven key criteria distributed across the three structural components. These include purpose and strategy, culture and leadership, stakeholder engagement, sustainable value creation, performance and transformation, stakeholder perception, and strategic and operational performance.
What are the key questions the EFQM model asks?
The three questions the EFQM model asks revolves around the following:
The EFQM model is used by many organizations, including businesses, government agencies, and non-profit organizations. It is prevalent in Europe, where it was developed, but it is also used by organizations worldwide. The EFQM model is a widely recognized and respected framework for assessing and improving organizational performance. Many organizations use it to help them achieve excellence and become more successful. It is often used with frameworks and models, such as the Balanced Scorecard and the Six Sigma methodology.
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IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
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Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
