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Baldrige Winners Outperform S&P 500 Again

February 28, 1997

The "Baldrige Index" for 1996 outperformed the Standard & Poor's 500 for the third year in a row, according to a study prepared by the National Institute of Standards and Technology (NIST). The fictitious index is made up of winners of the Malcolm Baldrige National Quality Award.

NIST "invested" a hypothetical $1,000 in each of the five publicly traded, whole company winners of the Baldrige Quality Award and a percentage of $1,000 in the parent companies of nine subsidiary winners. The percentage represented the number of employees the subsidiary has as a percentage of the whole company's employee base. An equal amount was hypothetically invested in the S&P 500 at the same time.

NIST found that the group of five whole company winners outperformed the S&P 500 by 3.5 to 1, achieving a 380 percent return on investment compared to a 110 percent return for the S&P 500.

Meanwhile, the group of all publicly traded winners (which includes the five whole company winners and the parent companies of winning subsidiaries) outperformed the S&P 500 by about 3 to 1, a 325 percent return on investment compared to a 112 percent return for the S&P 500. NIST studies in 1994 and 1995 also found that Baldrige Award winning companies outperformed the S&P 500.

NIST also conducted a similar investment study for the 48 publicly traded companies receiving site visits as part of the Baldrige Award application process. That group outperformed the S&P 500 by 2 to 1, achieving a 167 percent return on investment compared to an 83 percent for the S&P 500.

A copy of the two-page study is available from the NIST Baldrige Award office at 301/ 975-2036 or fax a request to 301/ 948-3716. It is also available on the Baldrige Award's World Wide Web site at http:// www.quality.nist.gov