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Category: Articles » Business » Management » Article » Article Code

ISO9000 & Beyond

To be successful, organisations must prove themselves to be indispensable to their customers, be attuned to their employees' needs, be willing to partner with their suppliers, and be considerate of the social, environmental, and safety outcomes of their performance. These rather new and expanded objectives of business operations, are the main pillars of business excellence. Samson and Challis (2002) studied leading international organisations in an effort to determine why some were more successful than others in their pursuit of excellence. They identified a total of 14 principles that served as catalysts for business excellence. The extent to which ... read more

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Samson and Challis (2002) studied leading international organisations in an effort to determine why some were more successful than others in their pursuit of excellence. They identified a total of 14 principles that served as catalysts for business excellence. The extent to which each organisation embodied these principles appeared to be directly related to the speed of its journey towards excellence.

Furthermore, the EFQM Excellence Model, which is used to adjudicate the European Quality Award, and the most frequently discussed model in quality literature (van der Wiele et aI., 1995, 2001), uses self-assessment as a tool to identify organisational strengths, as well as areas in which there exists room for improvement. Its outcome is a structured plan for amelioration, which is subsequently monitored for progress. In addition to this self-assessment component, the EFQM assists organisations with their continuous improvement initiatives by facilitating gauging of progress against measures of total quality management, identification of improvement opportunities benchmarking and organisational learning (McAdam and Kelly, 2002).

Truly effective use of the excellence models for continuous improvement requires the input of management and employees. For maximum benefit, it must be effectively marketed by top management and internalised by the staff of the organisation (van der Wiele et aI., 2000). Also, to be optimally effective, quality improvements should be prioritised and should focus on the results category of a business excellence model such as the EFQM Excellence Model (EFQM, 1999; Seghezzi, 2001), the Malcolm Baldrige National Quality Award (MBNQA, 2002), or the Canadian Framework for Business Excellence (CFBE, 2002).

Quality management 
 
The family of ISO 9000 standards can be regarded as the foundation on which organisations can build their excellence programs. The success of a quality management program that builds upon the foundation of the ISO 9000 system has been said to relate to the original motivation for registration (van der Wiele et aI., 2001). The message is that the added value that an organisation derives from the ISO 9000 standards should be a result of that organisation's motives for, and approach to, implementation (Cobb, 2003; Gotzamani and Tsiotras, 2002; Singels et aI., 2001). Issues such as organisation, internal and external communications, employee awareness of quality, product conformance and customer satisfaction are all addressed within the ISO 9000 system, simplifying management commitment to quality. This can be a driving force to go beyond and achieve business excellence. However, if not done properly, it is also possible that implementation of ISO 9000 may lead to excessive emphasis on the documented procedures and less emphasis on achieving business objectives (Gotzamani and Tsiotras, 2002).

The importance and relevance of quality cannot be overstated. In recent decades, public, private, and third-sector organisations have been awakened to the necessity of creating and ensuring quality in every aspect of their operations. Far beyond "permitting things to run smoothly", an emphasis on quality in management systems is now considered essential to an organisation's prosperity. Globalisation and an enhanced concept of corporate liability are two important societal trends contributing to this emphasis on quality. There are numerous reports in the literature that describe quality management practices and the benefits that emanate from implementation of an ISO 9000 system. Many of these are case studies or reports of the benefits and drawbacks of such systems. The emphasis is on continuous improvement which is beyond simple conformance to the ISO 9000 standards.

The Balanced Scorecard 
 
The Balanced Scorecard (BSC) is an instrument which translates the mission and strategy of an organisation into a broad collection of action metrics and indicators, and which subsequently provides the structure necessary to serve as control and strategic measurement system (Kaplan and Norton, 1996). The BSC is applicable to any type of organisation, albeit with modifications. For example, a BSC for non-profit organisations must be modified to include a mission perspective and any other additional perspectives which provide specific information on social demographic factors regarding the organisation's environment. Viewed as a performance measurement system (PMS), the BSC is not a new tool as PMSs have existed for a long time in all organisations and in most cultures, in one form or another. Hence the novelty of the BSC does not reside in its existence but rather in the attempt to achieve standardisation via conventions and universal rules (Urrutia de Hoyos, 2001).

The BSC's most standardised antecedent is the "tableau de bord" (Mallo and Merlo, 1995), a tool utilised principally by French companies, and whose configuration and conceptual basis is very similar to the BSC. One explanation for the lack of standardisation of PMSs along the line of the tableau de bord and BSC is certainly the lack of publicised information regarding their existence due to its being an excessively strategic tool; due to their strategic nature, organisations are very reluctant to disclose their existence and utilisation.

Development of the BSC 
 
The development of the BSC has gone through three distinct phases.

The First phase 
 
Initially the BSC was intended as a measurement tool, with an operational and tactical focus. It was a collection of indicators arranged by perspectives or key areas, which permitted the identification of the determinants of the performance of a business. The original objective was to overcome the limitations of using only financial indicators. These last only provided information about actual, past performance, and failed to provide information on the drivers of future performance (Kaplan and Norton, 1996). The four BSC perspectives - financial, customer, internal processes, learning and growth - were selected on the basis of the results of a study by David Norton and Harvard University (Kaplan and Norton, 1992).

The Second phase 
 
In the process of identifying indicators for each of the four perspectives, it was discovered that by developing strategy maps, not only could the appropriate indicators be identified, but also management could utilise the BSC for strategic planning. In the first phase, indicators were identified subsequent to the development and definition of the organisation's strategy, and had an operational and/or tactical focus. During this phase, it was discovered that it was not enough to simply identify indicators, it was also necessary that the indicators were extracted directly from the strategic plan. This so as to identify, and explicitly describe, the causal relationships with the organisation's strategy. In other words, the indicators were identified prior to the development and definition of the organisation's strategy, and as such playa key role in the development and definition of the strategy. The act of measurement has consequences that exceed simply providing information on past results. It also directs attention to the future, since the indicators selected by management are 'de facto' those which are important to management. Hence, with a clearly defined strategy, coherently communicated and aligned with change drivers, what was initially an information/measurement tool, and part of the management control function, was converted into a tool for strategic management (Kaplan and Norton, 2000) and a part of the strategy formation process.

The Third phase 
 
The BSC communicates the organisation's strategic plan via maps in which the cause-effect relationships between the different strategic objectives can be visualised. This permits management to utilise the BSC as a tool for change management leading to the achievement of Business Excellence.

Conclusion 
 
This article explored the broad issues related to business excellence and the application of ISo 9000 and the BSC as the first steps in achieving excellence. ISO 9000 and the BSC aim at assisting firms to develop systems and procedures which allow them to achieve business excellence by becoming more customer-oriented. The implementation of such systems requires on-going support from senior management; taking into consideration the role of internal reporting and operational control systems to monitor and proactively adapt to changing business needs.

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