Myths about management systems put to the test

Jun 17, 2021 Audit

Fact checking the management systems of three leading standards: ISO 9001, ISO 45001 and ISO 14001

Management systems are familiar to company leaders across industries. While they are generally regarded favorably, they are not immune to critical reservations, which have given rise to 6 myths in recent decades. It is worth taking a closer look at and correcting these misconceptions, as they fail to recognize the added value of management systems.

Management systems objectives:

Optimization of processes to achieve targets
Prevention of errors and extra costs caused by flawed processes and decisions
Trust building with customers, partners, employees and regulators
Long-term adaptation of standards based on experience and user needs

Eli Whitney developed the first quality management system over 200 years ago. He had observed recurring problems in his factory that led to inefficient and faulty processes and was looking for sustainable solutions. According to his theories, no process changes should be made without approval, tasks should be distributed only to those with appropriate expertise, and problems and their causes should be solved the moment they occur.

Whitney's ideas were taken up, further developed, concretized and are now internationally recognized. The first management standard to emerge from this was ISO 9001 (quality management standard), published in 1987. The concept contained therein was adapted by an environmental and an occupational health and safety group which developed ISO 14001 (environmental management standard) and ISO 45001 (occupational health and safety standard), respectively. They are now among the best-known and most widely used standards worldwide and are constantly being improved in committees with international participation using a consensus-based approach.

For all their popularity, some myths have developed around management systems, questioning their meaning and added value.

Management systems require excessive documentation and administrative overhead

Historically, this is correct. The first standard, published in 1987, contained 28 documentation procedures based on the needs of users at the time. Since then, audits for management systems have become more efficient.

Fact: Current revisions to the previously mentioned standards do not include documentation procedures and contain the following comments, mutatis mutandis:

the documentation of an organization’s quality management system must contain the information deemed necessary by the company
the organization must document the information necessary for the operation of its processes

But how does top management know which information is necessary and should therefore be documented?

Estimate the cost-risk ratio
Within an organization, there are simple to very complex processes with correspondingly low to very high risk and error potential. Management must make an assessment of which process documentations are worth the effort in order to avoid, for example, potential added costs and image damage caused by quality deficiencies or fines.
Elicit and consider alternatives to documentation
It is not necessary to document every process. Alternative control instruments can also be used to achieve the desired results. Management must therefore ask itself which alternatives can replace documentation. If this question cannot be answered satisfactorily, documentation may be the right way after all.

Conclusion: Documentation optimizes and minimizes an organization’s processes and should therefore be regarded as a tool.

A management system adds no value to my business, but I must have one because my customers want me to have one

If an organization implements a system merely in response to external factors, such as meeting customer demand or regulations, and fails to recognize its value, this myth is true.

Fact: All three of the new revisions call for integrating the management system into day-to-day business processes to ensure a company's success. They are designed to meet the needs of organizations and should be used by management in a way that makes business sense.

If an organization with a standard-compliant management system does not achieve business success, the approach and corporate strategy require rethinking. In this case, the management system can be seen as a helpful control instrument.

Management systems are a cost to my business

Entrepreneurs often focus on the costs incurred by documenting and implementing management systems. At first glance, this factor seems justified, because time costs money and must be spent to record, document and monitor processes.

Fact: According to studies by Harvard University and the Wharton Risk and Decision Process Center, significant cost benefits are realized through implementation.

Harvard found that organizations that used ISO 9001 achieved a 9% increase in revenue over those that did not implement it. Furthermore, the number of employees increased by 10% with an accompanying rise in both employee salaries and profits.1

In its study, the Wharton Risk and Decision Process Center showed that 65% of organizations that had implemented an ISO 14001 management system achieved approximately \$25,000 in cost savings in the first year. For 27% of the organizations, the cost savings were as high as \$100,000.

All users achieved continuous cost savings of at least \$25,000 over a longer period of time. In addition, the organizations' environmental performance improved greatly.2

1 https://business-benefits.org/research/harvard-business-school-confirms-iso-9001-us-certified-companies-perform-similar-non-certified-ones/

2 https://vdocument.in/reader/full/benefits-of-iso-14001

Management systems prevent flexibility and innovation in my organization

In this view, defined rules and processes within a management system are set in stone, and thinking within the organization will now follow fixed paths as a result of documentation, leaving no room for ideas.

Fact: All management system standards published by the International Organization for Standardization (ISO) have been created and developed to provide organizations with flexibility and customization. Within the scope of their requirements, they encourage organizations to adopt an individual design that meets their own needs.

Conclusion: The flexibility and innovation of an organization depends on that organization’s continuous self-analysis and willingness to adapt.

Management systems are not subject to certification, so there is no need for certification

Performing certifications merely to avoid fines and comply with the law fails to recognize the support function provided by a neutral control body of experienced experts. Management systems represent a collection of best practices and accredited certification bodies know them back to front. Moreover, in some industries and sectors, certifications are now required by law (e.g., certification according to the IT security catalog for electricity and gas network operators).

Fact: Independent certification bodies verify the effectiveness of an organization's management system and help optimize it. In the role of a neutral and experienced partner, they assess internal audit processes, management review and corrective measures. They find errors, weaknesses and hidden potential that the organization itself has not identified and may not have been able to identify.

Conclusion: Certification is an opportunity to learn and benefit from experienced, neutral partners with an eye to company success.

Management systems are a fad that will eventually disappear

An organization's management should always critically examine the cost-benefit ratio when adopting a new and untried approach, and it is reasonable to forgo fads.

Fact: As previously mentioned, management system standards have been applied, developed, and detailed in various forms for over 200 years and therefore cannot be considered fads.

The most important component of an efficient standard is continuous review and adaptation with a view to achieving ongoing improvements and remaining up to date. For this reason, international coordination of published standards is carried out on a regular basis, and appropriate changes are made with the help of an experienced committee.

Conclusion: Management systems work, adapt and deliver results and that’s why they endure.

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