The Application of Business Excellence models in the Australian banking and chemical industries

The primary driver for an organisation to adopt Business Excellence models is to improve profitability and become more competitive. When examining the adoption of business excellence practices in the Australian banking and chemical industries, contradictory results were found. In 2011, the four major Australian banks had a combined profit of over $23 billion. This profit was a record and, in the era of the global financial crisis, represented a spectacular result. During the same time, the chemical industry reported an estimated $1.6 billion profit. Today, the banking industry employs approximately 210,000 people. The chemical industry employs approximately 83,000 people. If we were to measure industry success as the amount of profit generated by an employee then the banking industry will have a profit to employee ratio of $110,000 compared with the chemical industry of $20,000. Even though the banking industry had not adopted as many of the Business Excellence practices as the chemical industry, it seemed to perform significantly better financially. When examining business excellence models (whether they are the Australian business excellence awards, the Malcolm Baldridge Awards, or EFQM), it was found that none of these models included the degree of competition and the amount of regulation as key factors that determine an organization’s likelihood of success. The Australian chemical industry was highly profitable when it had barriers in the form of duty and tariffs but as soon as these barriers were removed, competition eroded profits. This and other external factors such as globalization caused a gradual decline in the chemical industry in Australia. Replication of Business Excellence research conducted in Europe is currently underway to validate its finding within the Australian business environment. In this study, a Structural Equation Model will validate the EFQM factors and compare these with a new Business Excellence model that will include competition, regulation, and organisational agility.