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From compliance to

performance: assessing

management systems

Do audits help your business perform at its best, with all functions working together? Or are they a mere formality? Alex Fernando explains how a behavioural approach to assessing management systems can raise performance levels

It is easy to consider compliance auditing a ‘necessary evil’ that should be delivered at the lowest possible cost. Although these third-party assessments provide independence, integrity and value, their outcomes are often simply permission to conduct business as usual. What’s more, competitive cost pressures have created a commoditized, streamlined environment where audits focus narrowly on adherence to specific quality, safety, environmental or financial standards. As a result, compliance audits too often leave companies with a piece of paper on the wall and a handful of persistent performance problems and unidentified business risks that can erode shareholder value.

Today, a handful of auditors are developing innovative new methodologies for analyzing the real-time performance of business management systems. At their most fundamental level, these new-age assessments still evaluate a company’s compliance with such internationally recognized standards as ISO 9001, ISO 14001, ISO 13485 and OHSAS 18001. But they go beyond conformity by identifying levels of compliance with – and the effectiveness of – a company’s own established best practices, management processes and business excellence framework. The detailed, customized analysis they generate gives business leaders genuine insight into how effectively their current business management systems are performing and how they can use them to create even more value for customers and shareholders. Importantly, they also provide a road map for the continuous improvement that many standards require and that is necessary to build and maintain competitive advantage.

A high-stakes environment

In recent years, many executives have concluded that audits that focus on published compliance standards cannot guide them to the enhanced business performance their stakeholders expect. To achieve improved performance or true excellence, many have invested in business management systems and have established key performance indicators that measure everything from economic value-added to customer satisfaction. Some have placed additional emphasis on building high-performance, customer-centric cultures.

Though these systems generate pages of performance data, they don’t always provide the big picture view executives need to identify performance trends and opportunities. In many cases, audits that collect historical data don’t reflect the current perceptions and behaviours of stakeholders. Further, information is often collected in different facilities by different people and resides in unlinked databases. And even when data is shared, there’s often no consistent way to aggregate and analyze this data and link it to business objectives and risks. As a result, business leaders are left with stacks of documents that offer little insight into both the root causes of business risk and performance and the capacity of their current management systems to address them.

With so much riding on these results, assessors must apply a higher standard of rigour to both information gathering and analysis. These projects call for an experienced assessment partner that speaks the language of business and understands the concerns of management. They require the scale to execute a consistent process that engages multiple stakeholder groups, across multiple functions, departments, sites and geographic locations. They demand an objective approach that can penetrate political agendas and concerns around confidentiality, and remove biases in both the information collected and the analytical process. Ultimately, they benefit from an engaged business partner that is willing and able to be part of the solution.

A predictive, behaviour-based model

A new model is giving executives a clear view of how their business management systems function and reliable insights into how current behaviours will affect future performance. Unlike traditional onsite audits, which collect numbers and facts, this model begins with a customized, web-based user interface that invites different groups of stakeholders to respond anonymously to statements that describe behaviors and attitudes they observe. By focusing on what people do, how they work together and how effectively they use available management systems and resources, this 360-degree approach can identify real-time performance issues and risks within specific business functions and locations and across the entire organization. As compliance and performance gaps surface, on-site assessors target their follow-up investigation to probe further and collect more specific information.

About the author

Alex Fernando has worked in various commercial and technical roles within petrochemical, manufacturing and service organizations. With his experience in system thinking and risk-based auditing techniques, he leads Underwriters Laboratories Business Improvement Solutions Group across Europe and Latin America. He can be contacted on
+44 (0) 7918 888852 or Alex.Fernando@uk.ul.com

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