management systems integration: a synergistic

MANAGEMENT SYSTEMS INTEGRATION: A SYNERGISTIC APPROACH Domingues, J. P. T.1,2), Sampaio, P.1), Arezes, P.M1) 1)

Systems and Production Department School of Engineering University of Minho Braga, Portugal

2)

Laboratório Químico Marques Ferreira Complexo Delphi-Bosch Ferreiros Braga, Portugal

[email protected]; [email protected]; [email protected] ABSTRACT Since 1987 organisations have been challenged to discipline themselves in order to achieve a set of goals by implementing management system certification. Customer satisfaction (ISO 9001- quality management system certification), environmental improvement performance (ISO 14001- environmental management system implementation) or improvement of the workplace conditions through regulatory compliance (OHSAS 18001- health and safety management system implementation) are among those goals (Griffith, 2000). Inherent to the Deming “Plan-Do-Check-Act” model (Zutshi et al., 2005), these standards have convergent items and requisites that could be easily integrated. However, management systems integration has been due to a large array of reasons (Sampaio et al., 2008a; Karapetrovic et al., 2003, cited by Sampaio et al., 2008a; Beckmerhagen et al., 2003; Kumaraswamy, 1998; Zutshi et al., 2005; Cichovicz, 1996; Crabb et al., 1998; van der Wiele et al., 2002) the path that organisations have chosen. Quantitative objective data analyses concerning management systems integration are scarce when compared to the number of analyses performed over non-integrated systems data. Due to this fact some questions remain unanswered: Did integration fulfilled the organisations expectations? What were those expectations/motivations? What is the best path/approach for integration? Does integration truly increases management systems effectiveness? Which are the more suitable sub-systems for integration? Integration is just the sum of sub-systems procedures or it represents some add-value? The present paper intends to summarize the main expectations, perceptions, difficulties and advantages related to the management systems integration phenomena and reported in the literature. Keywords: integration, integrated management systems, ISO 9000, ISO 14000, OHSAS 18000

1. INTRODUCTION Integration is defined as “the act or process of making whole or entire” (Wiktionary, 2010). According to Beckmerhagen et al., (2003), “System” defined as an array of interrelated and interacting elements, such as processes, that use various resources to achieve a set of goals. In mathematical language, integration is a fundamental concept being together with the differentiation concept the corner stone of calculus (Wikipedia, 2010). In a social context integration is related to “filling the gaps”, noted as gender, racial or generational, being usual to define big heterogeneous societies like New York as “cultural melting pots”. Human organizations take a lot of work, energy measurable in joules convertible to Euros, in order to defy basic physics laws namely entropy. The visible “iceberg peak” of this subtle war against organizations disorder trend are the management systems. Different authors attempted to define organizational integration. Garvin (1991) relate integration to a measure of the alignment or harmony in an organization (Garvin, 1991, cited by Zeng et al., 2005) and, later, MacGregor Associates (1996) defined it as a single top level management “core” standard with optional modular supporting standards covering specific requirements (MacGregor Associates, 1996, cited by Zeng et al., 2005). Generically, an integrated management system is a blend of two or more management sub-systems. Some authors have their own definition. Griffith (2000) stated that integrated management systems blend together quality, environmental and health and safety procedures in order to demonstrate externally the company’s commitment to deliver a product or service, improvement environmental performance and better health and safety management (Griffith, 2000). Figure 1 illustrates the main characteristics of an ideal integrated management system. Quality

Environment

Health & Safety

Quality

Environment

Health & Safety

Management Procedures Manual

Common elements of standards brought together in considering legislation and management standards (ISO 9000; ISO 14000; OHSAS 18000)

Separate policies for clarity and focus in meeting external influences, integrated internally for meeting holistic needs of the core business. Best practice guidance brought together in multi-functional manual facilitating shared information and practices.

Figure 1: A horizontal cross-functional management system for quality, environment and health and safety (Grifith, 2000)

There are some requisites that a company should attend before proceed to the implementation of an integrated management system. Top management commitment, adequate resources, integration of communication and training across the organization, integrated audits (Zutshi et al., 2005), technical guidance, support from customers and employees, and from certification bodies (Zeng et al., 2005) are among those requisites. Others authors cited by Zutshi et al. (2005) reported that the company complexity, closeness of environmental (and health and safety) issues related to the company’s key processes and whether quality management system and environmental (and health and safety) issues are included in the same document are other key parameters affecting the success of an integration process (White, 1999 cited by Zutshi et al., 2005). Several

researches point out a fundamental issue: “At what extent are the management systems integrated in the organizations?” (Sampaio et al., 2008a; Sampaio et al., 2008b; Sousa et al., 2005). Sampaio et al. (2008a) emphasized the subjectivity and the contradictory nature of some ISO 9001 certification research studies. This lack of information was identified in other studies reported where the authors couldn’t make recommendations either in favour or against OHSMS due to the small number of studies (Robson et al., 2007). Some researchers concluded in their studies that safety is a dimension of quality, after everything, the elimination of defects includes elimination of practices of unsafe work (Dumas, 1987 cited by Herrero, 2002), which suggests an umbilical relation between management systems, that is, a full-scale perception of integration. Some efforts have been performed earlier in order to evaluate non-integrated management systems. Costella et al. (2009) reported a method for assessing health and safety management based on the three main auditing approaches (structural, operational and performance) emphasizing the resilience engineering perspective. Zutshi et al. (2005) had concluded that the extent of integration of the different systems would be determined by the culture, nature and size of the business. Beckmerhagen et al. (2003) stated that integrating management systems should enhance managerial and operational effectiveness, suggesting that, the main goal of integration is the resources optimization. The authors converge to the fundamental question raised by Sampaio et al. (2008a) that is: “Whether or not this goal can or has been achieved is still a lingering question” (Beckmerhagen et al., 2003). In 2006, in a longitudinal study, Karapetrovic et al. (2006) reported that 60% of the surveyed companies did present an integrated quality and environmental management systems and 10% of those companies had integrated quality, environmental and health and safety management systems. It is important to point out that 15% of the companies did not have an integrated management system (Karapetrovic et al., 2006, cited by Sampaio et al., 2008a). Saraiva and Sampaio (2010) reported that, approximately, 13 % of the Portuguese companies with 10 or more workers are ISO 9001 certified. However, only 0,54 % of the companies had an integrated quality, environmental and safety and health management system (see Figure 2).

14

12,69

12 P e 10 r c e n 8 t a g 6 e ( %

4

)

1,43 0,81

2

0,65

0,62

0,54

0,19

0,05

0 Qual. (Q)

Envir. (E)

H+S

Others (Non-Int)

Q+E

Q+E+(H+S)

Q+(H+S)

E+(H+S)

Certification Standard

Figure 2: Portuguese certified companies per management system (adapted from Saraiva and Sampaio, 2010).

When we compare the Portuguese reality with the remaining European Union countries in terms of the number of companies with integrated management systems, we verify that our state-of-the art is similar to those other countries. However, it is important to point out that there is still a lot of work to be done concerning the management systems integration. 2. MAIN RESEARCH ISSUES AND ANSWERS Quality, environmental and health and safety management systems are characterized by common key elements (Griffith, 2000) due to the implicit Deming model “Plan-DoCheck-Act” backbone of each individual standard (Crabb et al., 1998 cited by Zutshi et al., 2005; Nee, 2009). Thus we have: 1. 2. 3. 4. 5. 6. 7. 8. 9.

Policy; Aims and objectives; Organization; Documentation; Plans (programmes); Procedures; Records; Audits Review. Plan Environmental policy Environmental acts Legal requirements Objectives and targets Environmental management program (EMP)

Structure and responsibility

Records

Do Structure/ responsibility Training Communications Environmental management documentation Document control Operational control Emergency preparedness

Act/ Improve Management review

Training and communication Check/Correct Monitoring/ measuring Nonconformance/ corrective/preventive action Records Audits

Document control

Figure 3: Similarities PDCA-EMS cycle (Zutshi et al., 2005)

Several authors have reported the difficulty in dealing with separate management systems (Wilkinson et al., 1998, cited by Zeng et al., 2005), pointing out some reasons related to personnel different educational backgrounds and perspectives, the traditional organizational structures that emphasize functional departmentalization (Milliman et al., 2005), the increase probability of mistakes and failures, efforts duplication, increase of bureaucracy and documentation and the negative impact on the employees and

customers (Beckmerhagen et al., 2003). Regardless these issues, all the organizations do present external and internal reasons for implementing an integrated management system. However, usually, there is only one motivation category that is the most important one (Sampaio et al., 2008a). External reasons are mainly related to marketing issues, customers’ pressure, promotional aspects and market share improvement (Sampaio et al., 2009). Entities that seek for “true” organisational improvement and achieve it by management systems implementation and certification are motivated by internal reasons (improvements of productivity, internal communication, internal processes performance improvement, similarity and compatibility between standards) (Sampaio et al., 2009; Karapetrovic et al., 2003, cited by Sampaio et al., 2008a; Zeng et al., 2005). These later companies have experienced more internal benefits from certification (Jones et al., 1997). Obviously, seek for costs reduction, redundancies elimination, regulatory and voluntary standards compliance (Beckmerhagen et al., 2003), synergistic “energies” maximization (Kumaraswamy, 1998) and communication and training improvement are among the internal reasons (Zutshi et al., 2005; Zeng, 2005). Other authors highlight additionally the increase in flexibility, management system openness (Baird, 2000), decrease in registration costs (Cichovicz, 1996) and decrease in disruptions to plant operations (Crabb et al., 1998). Integration raises some concerns too, mainly due to the perception that existing management systems are enough, to doubts concerning the integration add value, to the scepticism of middle management, partly due to inadequate information, past bad experiences with failed quality programs and lack of pressure from customers or competitors to implement integrated management systems (Beckmerhagen et al., 2003). In fact all these concerns are related to organisational change which is a subject that is very well illustrated in the work developed by Murphy, (y. u.). The management systems integration arises some difficulties. Usually, the resources limitation (human and financial resources) is the most common obstacle cited by companies to implement an integrated management system (Sampaio et al., 2008a). Other obstacles commonly cited are the lost of focus on the company core business, lack of relevant expertise to cover all systems requirements, optimization of resources to a specific area and the traditional companies philosophy of having competing staffs to handle the industrial management areas (Karapetrovic et al., 1998; Wassenaar et al., 1999; cited by Zutshi et al., 2005). Inertia from certification and standardisation entities leads to the fact that it was not yet developed an integrated management system standard. Regardless this, some national entities have developed some guidelines for integrated systems implementation, namely, the joint Australian and New Zealand standard (AS/NZS, 1999) and the Norwegian guideline NTS (1996) (Beckmerhagen et al., 2003). The PAS 99 (Publicly Available Specification) merges the common requirements of management systems being used as a reference in order to define an integrated management system. ISO guide 72 provides the following generic indications to develop a management system: 1. 2. 3. 4. 5. 6.

Policy; Planning; Implementation and operation; Performance assessment Continuous improvement Management review

Integration can be achieved by different ways. Wilkinson et al. (2000) concluded that quality, environmental and health and safety systems could be integrated by merging the documentation (aligned approach) or by implementing an integrated management system (IMS-Total quality approach) (Wilkinson et al., 2000 cited by Nee, 2009). Sampaio et al. (2008) stated that integration follows chronologically the same order of standards publication, being this fact confirmed in other studies reported by Karapetrovic et al. (2006). Generically, an organisation could integrate a management system by augmentation, assimilation or ascension (Karapetrovic, 2005). Cited by Zeng et al. (2005), Karapetrovic et al. (1998) proposed three different strategies for integration of quality and environmental management systems:

(1) Establish a quality management system and subsequently an environmental management system. (2) Establish environmental management system and subsequently a quality management system. (3) Establish environmental management system and quality management system simultaneously. Usually, every integration process follows the common steps described in Figure 4.

Separate systems being used at the same time

Common elements have been identified

Common elements have been identified and are being integrate

One system incorporating common elements

Figure 4: Common steps in integration process (BSI group, 2010)

Assessing the management system performance it’s a critical. Performance measurement has been defined as the process of quantifying the efficiency and effectiveness of action (Neely et al., 1995, cited by Sousa et al., 2005). Measurements approaches related to financial results are considered today a narrow evaluation and organisations are using a range of strategies and operations-based performance indicators as a supplement for evaluation (Gregory, 1993, cited by Sousa et al., 2005). It has been stated the increasing interest in the development of theoretical frameworks in the area of performance measurement (Ahmed, 2002) but different authors suggest different approaches. Frameworks, guidelines, processes, models, techniques and principles addressing issues related to the theory and philosophy of measurement,

measurement in practice and specific types of measurement are among those approaches (Sousa et al., 2005; Globerson, 1985; Azzone et al., 1991; Neely et al., 1997; Ghalayani et al., 1997; Bourne et al., 2000; Bititci et al., 2000; Kanji et al., 2002; Makin et al., 2008; Grote et al., 2000;). An approach using multi-attribute fuzzy axiomatic design (MA-FAD) has been recently reported (Celik, 2009). Integrated management systems efficiency and effectiveness evaluation is a scientific problem characterized by its complexity, heterogeneity and turbulence which imply the use of a multitude of techniques and methodologies to solve it. It is common to accept that a well proven method to assess the effectiveness of any management system is auditing (Beckmerhagen et al., 2003). ISO 19011 is the first attempt to rationalize, assess and evaluate specifically integrated systems (Beckmerhagen et al., 2003). Redinger et al. (1998) had proposed a methodology to access the efficiency of an occupational health and safety management system. According to the authors an occupational health and safety management system should be characterized by the following items:

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Management commitment and resources; Employee participation; Occupational health and safety policy; Goals and objectives; Performance measures; System planning and development; OHSMS manual and procedures; Training system; Hazard control system; Preventive and corrective action system; Procurement and contracting; Communication system; Evaluation system; Continual improvement; Integration; Management review.

Alsop et al. (1999) cited by Redinger et al. (1998), had proposed a methodology to evaluate the effectiveness performance of an integrated quality and health and safety management system using, mainly, statistical data analysis with an externally approach based on the number of OHSAS certified companies. The development of a functional holistic model which integrates human factors, safety management systems and wider organisational issues was studied and reported by Bellamy et al. (2008). ISO 9001 certificates per capita indicator was used to develop a statistical model and to perform exploratory data analysis giving valuable information, for instance, that there seems to be a maximum number of ISO 9001 certificates per 1000 inhabitants per country and that the number of certificates is positively correlated with the economic development of a certain country (Saraiva et al., 2003). Other authors, using quantitative models, concluded that in some countries the ISO 9001 certification phenomena was stabilizing mainly due the reduction of the competitive gap between certified and non certified companies (Franceschini et al., 2004). Our goal for this research will be mainly develop a model/framework that allows one to evaluate the following:

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Integration evolution by different countries. Integration success critical factors Integration performance effectiveness and efficiency.

3. CONCLUSIONS AND FUTURE RESEARCH The literature review carried out has shown that there are several important studies and previous research efforts carried out concerning the standards. We were able to identify which are some of the main management systems integration issues analysed in the open literature. The literature review carried out allowed us to identify the following main conclusions: - Quantitative studies based on integrated management are scarce. - Some results obtained seem to be of contradictory nature. - A fundamental concept (definition of management system integration) is not entirely crystallized among the management systems community. - The steps to achieve successful management systems integration are similar to those reported to achieve a unique standard implementation. Additionally there are some specific requisites related to the closeness of the companies’ core business to the environmental and health and safety issues. - At this time, the extent and efficiency level of an integrated management system cannot be quantitative assessed. - Less than 1% of the Portuguese certified companies have an integrated management system (quality, environmental and health and safety) - Separate management systems proof to be difficult to deal due, mainly, to the following issues: employees different educational backgrounds and perspectives, organisational structure emphasizing departmentalization. All the aspects increase the probability of mistakes and failures, efforts duplication, of bureaucracy and documentation. - The main reasons that why companies implement integrated management systems are: productivity improvement, internal communication improvement, internal processes performance improvement, similarity and compatibility between standards, marketing issues, customers’ pressure, promotional aspects and market share improvement. - Resistance to integration of management systems is due to: human and financial resources limitation, lost of focus on the company core business, lack of relevant expertise to cover all systems requirements, perception that existing management systems are enough, doubts concerning the integration add value, scepticism of middle managers and lack of pressure from customers. - There is not available a standard about management systems integration but standardisation and certification entities have issued some guidelines and specifications regarding this subject. The PAS 99 is a reference to organizations that want vto implement an integrated management system.

Regardless of all the efforts and research projects already carried out within the scope of the management systems integration, unanswered questions still remain. Therefore, using this state-of-the-art as a starting point, we suggest the following as interesting topics that deserve a deeper future analysis (see Table 1):

Table 1: Some possible research questions related management systems integration. Question Potential research objective 1. What is the integration market evolution? 1. To estimate the integration market evolution. 2. Which are integration motivations? 2. To identify the main pro-integration motivations. 3. Which are the integration benefits? 3. To identify the benefits from integration. 4. Is there a relationship between integration 4. To correlate between integration motivations motivations and integration benefits? If yes, that and integration benefits. relationship is measurable? 5. What is the benefits perception evolution? 5. To assess the benefits perception. 6. What is the impact of integration on 6a. To describe the extent of integration. organizational performance? 6b. To quantify the organizational performance prior and after integration. 7. What is the impact on financial performance? 7. To evaluate the financial impact of integration. 8. Which is the best way for integration? 8. To identify the best integration model. 9. Does integration methodology vary depending 9. To identify the best integration model according on the nature of the organization? the organisation nature. 10. What are the characteristics of a good 10. To identify the factors that conditioned the integration process? integration success. 11. Which are the critical factors to consider in 11. To identify the critical factors that contributed order assuring an efficient integration? for integration efficiency. 12. Is integrated management sustainable? 12. To evaluate integration sustainability.

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