Musings On Iims

Musings on integrated management systems Stanislav Karapetrovic

Department of Mechanical Engineering, University of Alberta, Edmonton, Alberta, T6G 2G8 Canada. Phone: +1 (780) 492-9734. Fax: +1 (780) 492-2200. E-mail: [email protected]

Abstract Because of the avalanche of management system standards for business functions ranging from quality and environment to corporate social responsibility, integration of management systems that these standards describe has become a popular topic of research and practice. This paper provides a summary of the most important issues regarding integrated management systems (IMS), including the main problem, the reasons behind it, the differing routes toward a solution, and the meaning of the solution itself. The overwhelming need for a solution points in the direction of a methodology for the integration of internal management systems, not an integrated standard. This paper illustrates one such methodology, and applies it to provide a foundation for and guide the construction of an IMS. Finally, it is argued that the future of IMS rests with the extension of its minimalistic requirements towards a set of comprehensive criteria able to steer the delivery of excellence to all stakeholders. Keywords Management systems, Standards, Quality, Environment, Safety, Social responsibility

The problem Your company has just obtained registration to the ISO 9001: 2000 standard. As the company’s quality manager, you have been instrumental in making a successful transition from the old element-based to the new process-based quality management system, and deservedly you get a pat on the back from your boss. But before you can even start thinking about a vacation, the boss follows up on the pat with the following words: ‘‘Listen, our stakeholders want us to demonstrate a good environmental and safety record. I hear there are standard certiŽcations for that, too. Now that you’re done with quality, how about ensuring that we have those too by the end of the year? And, by the way, you should also look into something for corporate accountability. After those Žnancial scandals down south, I don’t want to take any chances’’. You are devastated, and the following day you have a nightmare resembling scenes from the movie ‘‘The Birds’’ by Alfred Hitchcock. One thing is strange, though. The swarms of birds attacking you have letters written all over them: ISO 14001, OHSAS 18001, SA 8000, IEC 60300

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DOI 10.1108/13683040310466681

Welcome to the new reality of quality, the world of integrated management systems. Unfortunately for you, this world is real. This is the world where you have to address the needs of not just the customer, but virtually everybody who has a direct or indirect contact with your company. This is the world of mushrooming management system standards (MSS), where for each such stakeholder there is at least one MSS covering the minimum requirements for assuring a good relationship with that stakeholder. This is the world where the only way to survive the onslaught of MSS birds is not to run away from them or deal with them one by one, but to tame them. In other words, integrate. But why and how did this world come about?

The reason Generally speaking, the main cause is the expansion of the scope of ‘‘quality’’ in organizations. From the old meaning of quality, namely ‘‘the ability to satisfy the customer’’, this expansion has occurred in two directions (represented by X and Y axes on Figure 1), reecting changes in both the type of the ability itself and the party to whom that ability is provided. The result of these changes can be summarized in the

Figure 1 Integrated management systems and the expansion of the meaning of quality

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new meaning of quality, which is ‘‘the ability to deliver excellence to all interested parties’’. Along the Žrst direction of change, we have witnessed an extension from the ability ‘‘to satisfy’’ to the ability ‘‘to deliver excellence’’. Focusing on customer satisfaction, which is the main notion of traditional quality assurance, without simultaneously addressing the Žnancial, operational, societal and other aspects of performance, is no longer sufŽcient. Thus, organizations aiming at comprehensive performance excellence have replaced ISO 9000-based systems, which contain only the minimum elements for quality assurance, with business excellence models (BEM), which are able to more adequately address the expanded ability requirement. On the other hand, no longer is the customer the only party to satisfy or deliver excellence to. A typical company must also satisfy the needs of the surrounding community (e.g. eliminate water pollution), employees (e.g. reduce occupational hazards), investors (e.g. do not engage in questionable accounting practices), society (e.g. do not use forced or child labor), and a myriad of other stakeholders. This multiplication of interested parties resulted in the proliferation of stakeholder-speciŽc management systems (MS) to address their diverse needs, which in turn led to the development of new MSS providing the necessary system elements and the guidance for their implementation. Since MSS cannot be developed simultaneously (e.g. ISO 9001 came in 1987, ISO 14001 in 1996 and OHSAS 18001 in 1999), and there is no way of knowing which standards will appear in the future, they must be implemented one at a time. Faced with the need to implement multiple internal systems, companies then basically have two choices: leave these function-speciŽc systems as separate, or integrate them. Given that the current MSS were largely developed to be compatible with each other, and the future MSS will essentially have to follow the same structure as the existing ones, the second choice, i.e. establishing an integrated management system (IMS), makes more sense. The resulting synergy effects and a leaner system without redundancies are but a few additional beneŽts of integration. For a comprehensive account of the overall issues and literature regarding IMS, the interested reader is referred to Wilkinson and Dale (1999, 2002). Having an IMS that covers quality, environmental, safety, and social accountability MSS requirements can also be thought of as the Žrst step towards business excellence. This IMS is illustrated by point B(t0 ) in Figure 1. Much in the same manner as the ISO 9001: 2000 standard may be used as a basis for meeting the criteria of a BEM in the Želd of quality management, an IMS can provide a minimalistic, but still a solid foundation for building performance excellence. This is because it gradually takes an organization from addressing the needs of a single stakeholder, namely the customer, to satisfying multiple stakeholders, which is the premise of business excellence. In addition, such an IMS would strengthen the criteria of existing BEMs with respect to environmental sustainability and corporate accountability, effectively creating a new ‘‘extensive excellence system’’ (represented by point D(t0 ) in Figure 1). As time progresses, new stakeholders (for example investors) and related management systems and standards will be added to the current IMS mix. Point B(t1 ) in Figure 1 represents this new IMS with an increased scope. In the same vain, new abilities will be added to the ‘‘extensive excellence system’’ (point D(t1 ) in Figure 1). Therefore, the time dimension (Z axis on Figure 1) also needs to be taken into account when explaining the reasons behind the development and transformation of IMS. An organization choosing the route of implementing an IMS Žrst, followed by its expansion towards an ‘‘extensive excellence system’’ would follow the A-B-D path illustrated in Figure 1 at time t0 . Another way is to follow the criteria of a BEM Žrst, and then simply ensure compliance with multiple MSS with an internal MSS. This route is

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depicted by the A-C-D path in Figure 1 at time t0 . However, the idea of using an IMS as a stepping stone towards excellence may not be shared by all organizations. Facing the avalanche of MSS, a company may choose to implement an IMS only to satisfy the minimum requirements of the standards. This would leave it at point B(t0 ) or B(t1 ) in Figure 1, depending on the chosen scope of IMS. Therefore, although the proliferation of MSS ultimately caused the emergence of integrated systems, the purpose for which such systems are used may differ from one organization to another. But do the routes from separate to integrated management systems vary, as well?

The route Since some companies will have one or more function-speciŽc MS already in place, while others will not, the starting points on the route towards IMS are not identical for all organizations. The same is true for the ending points, in other words the array of function-speciŽc systems to be covered by an IMS. For example, one company can choose to integrate quality (Q) and environmental (E) systems only, while another may add occupational health and safety (OH&S), as well as corporate social responsibility (CSR) to the scope of its IMS. In most contemporary cases, due to the availability of internationally accepted MSS and the lack of pressure to deal with other issues like risk or Žnancial management, an IMS covers Q, E and OH&S MS. Nevertheless, looking at the recent corporate scandals, it can be expected that corporate and social accountability systems will soon be added to the picture. Because of the sequential development of MSS, as well as the differing needs in terms of the scope of application, the order in which MS are implemented will also vary between industry sectors and even individual organizations. In the manufacturing sector, the sequence of implementation largely mimics the development of MSS: ISO 9000based QMS Žrst, followed by ISO 14000-compliant EMS, and then OH&S MS according to e.g. OHSAS 18001, and so on. However, due to the pressures from a different set of stakeholders, an energy utility may Žrst consider safety and environmental standards, and only after the recent power market deregulation in many countries would they implement speciŽc quality and accountability MSS. Therefore, it can be concluded that the integration routes taken by organizations are largely dissimilar. But are at least the meaning and extent of integration universally acceptable?

The meaning The hierarchical scope of integration is another area showing diverse needs of MSS users. While some organizations require full integration across all hierarchical levels, others may focus their integration efforts on the top and bottom levels only. Such a partial approach makes sense in large departmentalized organizations, where the company’s executives (since they are primarily concerned with the overall business performance) and frontline employees (since they create individual products and services) need a single and fully integrated system. The middle management may still operate separate quality, environmental, Žnancial and other function-speciŽc management systems. On the other hand, complete vertical integration is probably the approach of choice for small businesses, since they typically do not have the resources for the operation of separate management systems. Yet another category of differing demands is the extent to which function-speciŽc systems are integrated. Full integration would mean that the constituting systems lose their unique identities, resulting in a complete amalgamation to a single multipurpose IMS. Consequently, there is a single policy which deŽnes and drives the system across

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functional boundaries, and a single set of processes which share a pool of resources to achieve quality, environmental, safety, accountability and other speciŽc objectives. Partial integration, which is more common, can range from a simple collaboration to alignment and harmonization of objectives, processes and resources of separate MS. For example, a company may draft an integrated policy and procedures manual, but still conduct separate function-speciŽc audits and use resources from individual management systems. Thus, differing perceptions of what integration really means additionally contribute to the overall ‘‘mess’’ that is the research and practice of IMS. But, is it possible to distinguish what is really needed to resolve this mess?

The need Two issues are often confused when discussing the implementation of IMS in organizations, namely the integration of MSS and the integration of MS. Most available literature on the topic discusses the integration of ISO 9001, ISO 14001 and OHSAS 18001 standards, while little attention is paid to providing a methodology for putting the corresponding internal quality, environmental, safety and other systems together (for example, see Wilkinson and Dale, 2001, 2002). Although it is true that the current MSS differ to a certain extent in the scope of application and in the underlying models, those differences are not signiŽcant enough to hinder a relatively easy harmonization of standards requirements. As shown later in the paper, speciŽc inconsistencies in the scope can be resolved either by enhancing the application of less comprehensive function-speciŽc requirements to match the requirements of the more comprehensive standard, or by making the integrated framework exible enough to allow for such differences. Similarly, adopting a common underlying model, for instance the systems approach, can smooth out the discrepancies in the fundamental approaches to the standards, for example the process approach of ISO 9001 and the PDCA approach of ISO 14001. However, the most that various process, PDCA or system approaches can do is to provide a basis for drafting an integrated standard and, perhaps, for documenting a single manual for Q, E, OH&S and other systems. Writing an IMS standard would only really beneŽt the standard writers themselves, since any such standard would be limited in scope to the current function-speciŽc MSS. The emergence of any new MSS, corporate accountability being one example, would then require a substantial revision of this integrated standard. On the other hand, having a single manual for different management systems does not guarantee that those systems actually work in practice or that they are integrated to the point of providing substantial beneŽts to an organization. This only demonstrates a partial (and therefore incomplete) IMS. What the standard users really need is a method that is able to accommodate the inclusion of the current and future MSS and to harmonize the differing MSS requirements. It should also be able to provide a procedure for integrating internal MS, while at the same time allowing for differing initial conditions, routes and ultimate objectives of integration. In other words, building an IMS is like building a house: you need a good foundation to start, and then a good construction process to Žnish. But what method can be used to provide a good foundation of an IMS?

The foundation Integrating the requirements of selected MSS will provide a solid framework for the implementation of an IMS in an organization. There are basically two major sets of differences among the standards that have to be resolved here, namely those in the underlying models and those in the extent of general and speciŽc requirements. Each of these obstacles towards integration will now be addressed. In addition, a systems approach which can be used to remove these obstacles will be illustrated.

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The Žrst difŽculty is represented by the fact that the current MSS are based on two distinct and somewhat incompatible models. International standards related to quality management follow the so-called process approach, which conceptualizes a management system as a set of interrelated processes that have to be systematically guided towards achieving set objectives. Examples of such standards include the agship ISO 9001 for the overall quality MS, ISO 10012 for measurement MS, and IEC 60300 for dependability management. Since assuring product quality is the mainstay of these standards, they all have a ‘‘product realization’’ section which presents requirements for various interconnected processes along the product life cycle, i.e. the quality loop. The other three common sections relate to the elements that drive or support product realization processes, including the policy, objectives, planning and responsibilities given in the ‘‘management responsibility’’ section, various ‘‘resources’’ used to produce a quality product, and the ‘‘measurement, analysis and improvement’’ processes. On the contrary, wider accountability-related standards, such as ISO 14001 for EMS, OHSAS 18001 for OHSMS, and SA 8000 for CSRMS, are all based on the Shewhart’s plan-do-check-act (PDCA) circle, and have Žve main elements: policy, planning, implementation and operation, corrective action and management review. According to the ISO Guide 72, all new MSS drafted under the auspices of the International Organization for Standardization will have to contain the same elements, except that ‘‘corrective action’’ is replaced with ‘‘performance assessment’’ and ‘‘improvement’’.

The foundation The main problem in using either the process or the PDCA model individually to provide the basis for an IMS rests with their divergent objectives. While the principal idea of the process approach is to link multiple processes to achieve a common goal, the aim of the PDCA approach is to continuously improve each process by repeating a Žxed set of activities. In other words, the PDCA model applies to one process, and the process model applies to many. However, since their goals are complementary, an obvious solution is to combine the two approaches under one ‘‘roof’’. That roof is the systems approach, presented in Figure 2. An IMS is conceptualized as a single set of interconnected processes that share a unique pool of human, information, material, infrastructure and Žnancial resources in order to achieve a composite of goals related to the satisfaction of a variety of stakeholders. Depending on the prevalent goals and stakeholders, the IMS designed in this way forms a particular function-speciŽc management system. For example, if only customer satisfaction is important, the IMS is reduced to a QMS. There are six major processes within an IMS, ranging from the determination and review of goals, through planning and design, acquisition and deployment of resources, system implementation and control, to the evaluation of goals. Each of these processes may be continuously improved using the PDCA model. More detail on the systems approach is provided in Karapetrovic and Willborn (1998) and Karapetrovic (2002). The second difŽculty is exempliŽed by the differences in general (i.e. common) elements of the standards, as well as in standard-speciŽc requirements. For instance, while all MSS demand adequate employee training, speciŽcations regarding the determination of training needs, the scope of training activities, as well as the establishment of training procedures and records vary from one standard to another. In addition, standards may have a set of requirements unique to them, for example

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Figure 2 The systems approach to integrated management systems

SA 8000 contains criteria regarding child labor, discrimination and freedom of association requirements. However, these differences can also be harmonized using the systems approach. Figure 2 illustrates the alignment of the requirements of ISO 9001: 2000, ISO 14001: 1996, OHSAS 18001: 1999 and SA 8000: 2001 standards. To illustrate how general requirements can be integrated, let us look at MS policy, objectives and targets as an example of a core IMS element. Function-speciŽc policies are discussed in sections 5.3, 4.2, 4.2 and 9.1 of ISO 9001: 2000, ISO 14001: 1996, OHSAS 18001: 1999 and SA 8000: 2001, respectively. Objectives are covered in 5.4.1, 4.3.3 and 4.3.3 of the Žrst three standards, while they are not explicitly addressed in SA 8000. Finally, only ISO 14001 discusses targets. Requirements common to all standards, such as the ones to include a statement of commitment towards compliance and improvement in the policy, and to regularly review the policy, should be identiŽed and integrated Žrst. Then, broader requirements of one or more standards should be used as the least common denominator for the integrated requirement. For example, the IMS criteria should include a publicly available policy, as all three standards not related to quality require this. In the same manner, Q, OH&S and CSR targets should be included in the integrated target element, although the

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respective standards do not speciŽcally require them. Finally, standard-speciŽc requirements may be left as separate modules within an IMS, or may be integrated within each of the six major elements of an IMS (see Figure 2). For example, criteria regarding child labor from SA 8000, along with the other criteria speciŽc to this standard, can form a social responsibility module of an IMS, or can become a part of the common framework (i.e. the overall policy includes a statement on child labor, procedures to deal with prevention are planned, and so on). Therefore, MSS requirements can be integrated without much trouble. But how can a company actually implement an IMS?

The construction A generic process for the integration of internal management systems, which takes into account the diverse needs and circumstances of organizations wanting to implement an IMS, is presented in Figure 3. The process is initiated by specifying the

Figure 3 Flowchart for the implementation of integrated management systems

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integration objectives, as well as by determining the feasibility and scope of an IMS. For example, top management may decide that integrating documentation is as far as their company should go, without necessarily combining other resources. On the other hand, they could also determine that a complete amalgamation of Q, E, OH&S and CSR systems should occur. In any case, it is the responsibility of top management, with the help of functional managers, to determine whether integration is desirable and feasible. A decision not to integrate is always an option, albeit not a very beneŽcial one. The second step is to choose an integration model that will serve as a foundation of an IMS. The systems approach would be appropriate, but it is not the only model that can be used. It is reasonable to expect that, if an organization has been involved in formalized quality assurance or management for a long period of time, it may decide to apply the process model of ISO 9001: 2000, and in effect integrate environmental and other systems ‘‘into’’ the existing quality system. Such an organization would then also be familiar with the PDCA model and would have probably already used it in its continuous improvement efforts. Similarly to the initiation step, the third step requires the collaboration of top and middle management, as they must decide which functions (e.g. Q, E, CSR) to include in the new and integrated system, as well as which standards to use as the IMS criteria. Typically, each function is covered by at least two MSS. For example, ISO 14001 and EMAS schemes are alternatives in the environmental management domain, while SA 8000 are AA 1000 represent the choices for CSR. In quality management, different sector-speciŽc standards (e.g. QS 9000 for automotive and TL 9000 for telecommunication industries) can be selected as alternatives to the generic ISO 9001 model. Once these function-speciŽc standards are chosen, their requirements should be integrated to provide a set of reference criteria that the IMS can be measured against. This measurement process will be undertaken by an IMS audit. While the integration of MSS requirements using the systems approach was discussed in the previous section, it should be noted that some national standardization bodies have already drafted integrated standards for Q, E and OH&S, which may provide further help in undertaking this step. A gap analysis against the integrated criteria should subsequently be performed. It can be expected that identiŽed gaps will be larger in the areas not covered by a management system before, for example, in environmental management if only ISO 9000 standards were used. However, the purpose of this analysis extends beyond looking for functional gaps into identifying linkages among function-speciŽc systems, as well as targeting existing redundancies and possible synergy effects. Another purpose is to serving as a test bed for future IMS audits. The gap analysis is followed by the alignment and integration of IMS documentation, as well as of function-speciŽc goals, processes and resources. The extent of integration (full versus partial, harmonization versus amalgamation) can be decided at this time, by essentially stopping the process when the desired elements have been integrated. Nevertheless, to experience a full spectrum of IMS beneŽts, it is desirable to at least align goals, as well as crucial resources and processes. While the need to align function-speciŽc goals is fairly obvious, harmonizing resources, even though they may not be fully integrated, will improve cooperation and communication among systems, as well as provide signiŽcant savings by minimizing multiple uses across functions. The same is true for the alignment of shared processes, such as planning, auditing and performance measurement. As opposed to a set of separate functionspeciŽc audits, for example, an integrated audit has the ability to identify linkages, redundancies and synergies among the systems that form an IMS. Such an audit can be conceptualized as a subsystem of the underlying IMS, using the same model as

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illustrated in Figure 2. For instance, integrated audit objectives, scope and feasibility are Žrst determined, followed by audit planning, acquisition and deployment of audit resources, implementation which includes conducting and controlling the audit, and Žnally the evaluation stage, involving the audit report and the follow-up actions. An additional beneŽt is that the integration of these support processes also facilitates the integration of management systems themselves. For instance, a company may decide to link function-speciŽc performance measures, such as the defect rate for quality, amount of waste generated for environment, and the number of workplace incidents for safety, with the overall performance measures, such as proŽtability and market share. Because the latter are bottomline measures which indicate the performance of a company as whole, fostering the linkages between the function-speciŽc and overall measures will make the advantages of an integrated system more evident. Regardless of the chosen extent of integration, the last step of the integration process is continuous improvement of the IMS. This can be done both in the quantitative (i.e. adding other MS as new MSS become available) and qualitative (i.e. moving beyond a minimalistic IMS towards comprehensive business excellence) manners. But does the integration effort ever stop?

The future The integration of management systems is really about two things: standards and internal systems that these standards describe. If both are considered, the ultimate goal of integration can be deŽned as ‘‘one standard, one system’’. However, this paper argues that a better goal is ‘‘many standards, one system’’. Since management standards keep emerging like mushrooms, any effort towards an integrated standard that would cover all the current ones is useless. Due to the divergence of needs regarding the purpose, extent and sequence of integration activities, what is required is a generic methodology that is able to meld function-speciŽc requirements of the current and future standards, while fostering a meaningful integrated system that can be tailored to meet the needs of a speciŽc organization. The systems approach provides one such methodology. Unfortunately, even if the Žnal outcome of integration is a single and fully amalgamated system, this standardized system can only be as good as the reference standards it is measured against. Therefore, comprehensive business excellence is the next target for integrated management systems. But how this transition can be accomplished is yet to be discovered.

References Karapetrovic, S. and Willborn, W. (1998), ‘‘Integration of quality and environmental management systems’’, TQM Magazine, Vol. 10 No. 3, pp. 204-13. Karapetrovic, S. (2002), ‘‘Strategies for the integration of management systems and standards’’, TQM Magazine, Vol. 14 No. 1, pp. 61-7. Wilkinson, G. and Dale, B.G. (1999), ‘‘Integrated management systems: an examination of the concept and theory’’, TQM Magazine, Vol. 11 No. 2, pp. 95-104. Wilkinson, G. and Dale, B.G. (2001), ‘‘Integrated management systems: a model based on a total quality approach’’, Managing Service Quality, Vol. 11 No. 5, pp. 318-30. Wilkinson, G. and Dale, B.G (2002), ‘‘An examination of the ISO 9001: 2000 standard and its inuence on the integration of management systems’’, Production Planning and Control, Vol. 13 No. 3, pp. 284-97.

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