Organizations today, in addition to ensuring customer satisfaction and loyalty, must also demonstrate to its broader stakeholders a corporate strategy which underscores social, environmental and health and safety concerns. It should demonstrate commitment to continuous improvement in the management of the health and safety, and working environment of their employees; and should take into account the environmental impact of the business operations and its impact upon the communities and society.
A business’s operation in term of what it produces should also be responsible, hence legislation concerning ‘health and safety at work, environmental protection and prohibiting the use of substances hazardous’ have been put in place. Government and other regulatory bodies for instance, Health and Safety Executive (HSE) and the Environment Agency (EA), have also been set up to ensure enforcement of these regulations. Stakeholder expectations with regards to the organisations corporate responsibility in respect to the above legal requirements has grown in recent years and also incorporates factors such as, corporate image, the reputation of the organisation and competitive advantage. Numerous management standards including ‘ISO 9001 (1994), ISO 14001 (1996) and OHSAS 18001’ are put in place to deal with these requirements. Each of the standards outlines the requirements for management systems to enable organisations to control or eliminate its health and safety and environmental risks and to continually improve its performance and the quality of its product, services and operations. The move towards an integration strategy for an organization’s management systems has largely arisen because of Stakeholders’ expectations of continuous improvement, increasingly stringent legislation and greater market demands (Griffiths, 2000).
This essay discusses how an organization can improve its performance in terms of health and safety, and environmental and social impact by adopting a total quality management strategy. It will further discuss how the total quality management system should integrate the aforementioned quality standards to implement a integrated management system.Importance of Integrating Health/Safety, Environment and Social Concerns in Business Operations
The benefits of an effective corporate strategy in improving health and safety measures, and environmental and social impact include an improved financial performance and turnover for an organization. Secondly, it can improve an organization’s relations with its external stakeholders including investors and community, which can subsequently create better opportunities for it to access capital (Scheme, 2012). Thirdly, such a strategy is good for employee relations and can enable a favorable corporate culture (Scheme, 2012). Continuous improvement can also enhance risk management capabilities or an organization. Lastly, it could foster stronger relations with legal regulators (Scheme, 2012).
One of the reasons that make a corporate strategy with health, safety, social and environmental concerns at its core important for a business’s performance is the growing prevalence of social media (Truist, 2012). Such a corporate strategy can help a company create a positive image (Truist, 2012). Moreover, such a strategy can enable an organization to engage with its audience/customers in ways beyond its products or services (Truist, 2012). Another benefit of such a corporate strategy is that it fosters a positive relationship of an organization with governments (Truist, 2012). Companies who continually improve their operation and thus have a positive social perception are better positioned to cope up with government regulators (Truist, 2012). On the other hand, an organization can be faced with a bad public image which can have significant impact on its financial and business performance in case it fails to address these management issues.
It has become very important for organizations to implement and accredit with quality, health and safety systems and environmental due to the increasing pressure from their internal and various external stakeholders. These include governments and regulatory bodies, local communities, customers, workers, and suppliers and business partners. However, organisations require considerable amount of resources to implement and maintain of such systems or to make changes to existing ones. This may have a direct affect on the bottom line of the business corporations. Accreditation with quality standards and acquiring certifications can incur hefty costs. If in-house expertise is not available many companies may need the services of external consultants to assist them in adhering to such quality standards. These costs, for many small or medium sized businesses can therefore be prohibitive. Irrespective of this, organisations have to face the demands of their various stakeholders to ensure a positive engagement with them. These issues greatly affect what firms decide and what they do. Continual improvement to the complete customer satisfaction implies that business corporations should aim at a point where they meet the requirements of quality in terms of environment and safety standards in addition to product and service quality.
It can be critiqued here that adhering to high quality standards has better pay off in long term and thus quality does not incur additional costs. Philip Crosby supports this view in his work titled as Quality is Free (1979). The book turned a light on for many of its readers. The book contended that contrary to the common perception, quality does not add any costs to a product. Indeed adding quality is a break-even proposition at its least and highly profitable at its best since quality always pays off in the long run (Crosby 1979). During the 1970s and 1980s when Crosby proposed this contention, corporate strategies were mainly focused on tasks such as achieving efficiency in manufacturing or improving sales. Corporate managers generally had low priority for quality related issues and similarly lacked experience in such matters. This entire period was generally marred by negligence of quality. However, quality in its various forms has become an integral part of the modern day organizations and an important corporate agenda due to the highly competitive business environment and increased social awareness.
Customers nowadays are judging brands more and more based on ‘how’ these have been sources and produced (De Oliveira Matias and Coleho, 2002). This has implications for a wide array of factors that affect the overall quality of various business processes. These include the quality of the goods/services and business functions, and the overall these operations in terms of environment, workers health and safety and ethical standards. The growing influence of these factors is a shift away from just economic sustainability towards economic, social and environmental sustainability. There is generally more awareness regarding how business entities treat the environment and workers. In a step further, a large segment of the consumers are taking these factors as benchmarks for judging the quality of goods/service produced by corporations (Schema, 2012). With the growing popularity of such wider interpretations of quality standards, companies are required to integrate quality related management systems (and related certifications) in their corporate strategy.Management Systems
Adherence to Quality Management Systems (QMS) such as ISO 9001 and ISO 9004 can be considered as a starting point for improving quality. This can then be extended to systems related to the environment, social responsibility and occupational health and safety through systems such as ISO 14001 and/or EMAS, SA 8000, and OHSAS 18001 respectively. Adherence to these standards can be accompanied by the development of the model of quality through a shift from simple quality control system towards a Total Quality Management (TQM) approach (Matias and Coelho 2002). TQM,” is an integrative philosophy of management for continuously improving the quality of products and processes” (Ahire, 1997). This philosophy is aimed towards continuous improvement in all processes.
Total Quality Management
TQM system was put forth by Dr. W. Edwards Deming (Deming 1986). He proposed that by adopting appropriate practices of management, businesses can improve quality while reducing costs (due to the reducing in waste, rework, staff attrition and litigation). According to him, in order to increase quality and reduce costs simultaneously, businesses would have to practice continual improvement and consider manufacturing as a system rather than bits and pieces (Reilly 1994).
Deming proposed 14 points as a framework for transformation of organizations from the present style of Western management to a total quality culture. These points can form principles for continuous development in various business aspects including health and safety, and social and environmental responsibility. The points do not constitute much as an action plan but more of a philosophical code for management. These fourteen points are:“Create constancy of purpose. Adopt the new philosophy. Cease dependence on inspection to achieve quality End the practice of awarding business on the basis of price tag. Improve constantly Institute training on the job. Institute leadership Drive out fear Break down barriers between departments Eliminate slogans, exhortations, and targets for the work force asking for zero defects Eliminate work standards, Substitute leadership Eliminate management by objective. Substitute leadership. Remove barriers that rob the worker of his right to pride of workmanship. Institute a vigorous program of education and self-improvement. Put everybody in the company to work to accomplish the transformation”.
Organizations can implement such a management system to ensure continuous improvement in managing health and safety, along with quality and environmental considerations.
Quality Management System
For realizing this management philosophy, the implementation of a formal Quality Management System (QMS) is a desirable objective. To address these specific corporate goals, organizations seek accreditation to specific standards. The ISO 9000 is one such standard which comprises of “a set of essential elements that enable the design and implementation of quality management systems” (ISO 9001. Generally, the application of these standards will raise the abilities of a company; for instance; improving performance of operations, reputational value, cutting costs, and supplier and sub-contractor selection. Along with the fundamental requirement of quality, many organizations now strive to achieve and demonstrate to their stakeholders a sound environmental performance, by curtailing the impact from their activities, products and services on the natural environment. These environmental issues are considered in the ISO 14000 Standards (Standards for the Environmental Management Systems). These standards, (quality and environment) emphasize on the importance of similar managerial aspects such as top management commitment, leadership and continuous improvement in performance. Moreover, the OHSAS 18001 standard aims to assist organizations in management and control of their health and safety risks and in the overall improvement of the OH&S performance. Organizations with quality and environmental management systems, which are certified, or aspire to ISO 9001 and ISO 14000 standard’s certification should in addition incorporate a system of management of health and safety such as OHSAS 18001. A strong commitment to these standards can advance to a complete corporate strategy by amalgamating all these three standards into an integrated management system (IMS).
Integrated Management Systems (IMS)
An IMS is “the organisational structure, resources and procedures used to plan, monitor and control project quality, safety and environment” (Griffith 1999). Other definitions are comprehensively detailed in Wilkinson and Dale (2000).
The case for integration of the three standards described for quality, occupational health and safety and the environment is now widely discussed in literature and IMS is increasingly seen as part of the organisation’s management portfolio. There are several requirements and points that are common to the three management systems, such as:“system requirements, leadership (management responsibility), management of resources, management of processes, system implementation and monitoring and measuring”
These three sets of standards con be combined under a common underlying principle of continuous improvements based on Deming’s (1982) TQM cycle of Plan-Do-Check-Act. Furthermore, these three sets of standards can share the same managerial resources such as (1) system documentation, (2) business process records, (3) corporate policies, (4) project planning, (5) managerial responsibility, (6) strategy implementation, (7) management controls, (8) communication standards and systems, (9) audits, (10) conformity, among others. With regards to leadership, these standards require process leadership from the top management in order to allocate maximum responsibility to the top management. Regarding prevention, these standards demand the identification of preventative actions for the mitigation of potential `non-conformities’. Concerning continuous improvements, these standards underscore the improvement of management system in a continuous manner. The structure of OHSAS 18001 has been developed to advance compatibility with the quality management (ISO 9000) and environmental management (ISO 14000) systems. This compatibility eases the integration of the three systems in the organization.
Benefits of Integration
An organization may attain a number of tangible and non-quantifiable benefits from the implementation of an integrated management system.
In term of operational management, IMS ensures that the daily operations are being performed effectively without the need for high level management intervention and input, thereby freeing up of management time to concentrate upon tactical issues and focusing on strategic management. Decision making processes are improved as the IMS provides up-to-date information from a single source. It achieves improvement in resource utilisation through reduction in the duplication of processes and procedures and the time spent in the review of documentation; this accomplishes a tangible cost benefit, as opposed to the duplication of effort required for three totally different systems. An integrated system also provides for a higher level of management control than is the case for the management of separate systems. An integrated system overseen by a single person, who has an overview of all the operations of the company and can provide input into the development of the overall goals and objectives of the organization, thereby making it easier to implement changes, rather than the restricted, functional approach in fulfilling individual system’s objectives.
The implementation of an integrated system can also lead to enhanced communications in the organization. By delivering effective IMS training programs, confusion can be avoided that may result in contradictory messages being conveyed through the separate system training programs. Hence employees at all level across different departments can exchange ideas and expertise in the same manner and utilise the same approach.
As a tangible benefit, organisations can realise a positive cost benefits through efficient operational processes and procedures and improved resources utilisation. By keeping the overheads down through these improvements, organisations can maintain market share and achieve competitive advantage. With regards to reputation and corporate image, organisation may also undergo enhancement social perception, as having an IMS demonstrates environmental and social responsibility. In addition to the positive cost benefits illustrated above, another direct cost benefit that can be achieved by integration is in the internal and external audit requirements. Separate management systems require each individual system to have separate internal and external audits. However, since the procedures are amalgamated in the integrated system, this considerably reduces this requirement. Further, by focussing on issues pertaining workers’ occupational health and safety, for example, through the intensification of worker job satisfaction can lead to an increase in productivity which can imply greater efficiency and financial revenue for the organization. Adequate management of occupational health and safety would, thus, also bring a positive influence in shareholder interest and, consequently, in the organization’s suppliers, providing more opportunities for business. Moreover, benefits are also to accrue at the level of product compliance and conformity, bringing satisfaction to customers and a reduction of scrapped material with the implied environmental benefits. One can thus conclude that all the elements interested in the organization would be satisfied.
Difficulties in Integration of Systems
The existing systems of organizations may seem to be sufficient and work well and integrating new approaches in business operations and corporate strategy can threaten the structure and reliability of the current arrangements that may have the support of all within the organisation. The IMS can become over centralised and over-complex and lack the flexibility to consider local needs and constraints, thus leading to employers and employees becoming unconvinced by what they see as a worsening of this scenario under integration. Organisational vulnerability to against change can cause unforeseen consequences during the integration implementation. Furthermore, whilst IS0 9000, the quality management standard and ISO 14001 the environment standard are internationally recognised and certifiable, OHSAS 18001 the occupational health and safety management systems – specification, though certifiable, is not internationally recognised. Health and safety and environmental management are often underpinned by law whereas quality management system requirements are in the main, established by stakeholder requirements (IOSH, 2012)Conclusions
Nowadays, it has become important for business organizations to engage with its stakeholders as part of its corporate strategy. Understanding their concerns and aspirations is considered to be an important prerequisite of a successful and sustainable corporate strategy. With an increased understanding of the stakeholders concerns and aspirations, businesses will be better positioned to capitalize on upcoming opportunities which may include better-motivated employees and good relationship with external stakeholders. In today’s business world, various stakeholders have become active in their demand for a business to become socially and environmentally viable in additional to its economical viability.
In general, an organization can improve its business operations in terms of health and safety, and environmental and social impact by adopting a total quality management corporate strategy. Particularly, an organization can adhere to specific standards such as ISO 9001, ISO 14000 and OHSAS 18001 to pursue a total quality management approach in the area of health and safety, environment and social responsibility. Adherence to such practices and standards can be amalgamated through an integrated management system that collectively dealswith quality, environmental, and health and safety management. The need for an IMS has also arisen as a result of the decision to implement an environmental management system (EMS) and/or an occupational health and safety management system (OH&SMS) in addition to a quality management system (QMS).
IMS as a concept does not, emerge merely from the possibility for a company to exploit existing synergies between different management systems that it can adopt (saving money, time and human resources). On the contrary, it is something intrinsic to the cornerstones of quality, environment and health and safety, namely continual improvement and total customer satisfaction (Salomone, 2008).References
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