Bsi bip 2014 2009

We also o t line why proc s management is diferent and why t hose who have se n or implement ed t he ap roa h so far describe it as ‘ust plain common sense’... This me ns that it has to

System for ISO 9001:2008 and beyond

Pr ce ss Ma na g e me nt Aud itin fo ISO 9 01:20 8

System for ISO 9001:2008 and beyond

Ia n Rosa m a nd Rob Pe d d le

(The Hig h Pe rforma nce Org a nisa tion Gr up Ltd )

Creat ing a Proc s -based Management Sy st em for ISO 9 01:2 0 and bey ond

This se ond edit ion p blshed in t he UK in 2 0

b

BSI

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Lond n W4 4AL

© Brit ish St andards Inst it ut ion 2 0

Fir t edit ion p bl shed b BSI in 2 03

ISBN 9 8 0 58 6 657 4

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For eword

Stan d a rd s such as the ISO 9 0 ser i es ev ol v e an ch ang e to mee t i nd ustr y

req i reme nts Th e i n trod ucti on ofISO 9 01:2 0 crea ted a fun d ame ntal shi ft

fom a set ofrequi reme nts o tl i ne d i n the 19 4 v er si on to the d escr i pti on of

a b si n es mod el , w hi ch prov i d e d a set of o er a ti ng pr i n ci pl es r ather th an a

pre scr i pti v e l i st of cond i ti on s to cov er Th e i n trod ucti on ofISO 9 01:2 0

rei nforc s thi s man ag eme nt ap roa h an cl ar i fes c rtai n mi n or d e tai l s th at

su p rt th i s ap roa h Al l key el ements remai n unch ang ed fom the 2 0 v er si on

The b sines mo el int rod c d in t he 2 0 ver ion was underpin ed b

t he ‘proc s -based ap roa h’ t o managemen which was in real t y a st ep change

from t he 19 4 ver ion of t he St andard I int rod c d t he ide t hat a management

sy st em is a lving en t y ; somet hing t hat c n nev er be ful y d cument ed, made

u of cros -funct ional key b sines proc s es organiz d in such a way as t o

describe t he sy st em it self This sy st em described how t he management t eam

managed t heir b sines and delvered t he b sines o je t iv es – a sy st em based

in t he ‘real world’

Whi st some organiz t ions t ook on b ard t his fundament al shift , far

t oo many, for al sor t s of reasons, saw it as a relat ively minor change and did

lt t le t o realy up at e t heir previo s management sy st em This was exa erbat ed

b many regist rat ion b dies not sup or t ing t he ne d t o make fundament al

adjust ment s and con nuing t o regist er sy st ems t hat were only marginaly

diferent t o t he 19 4 complant ver ions The result is t hat many sy st ems are

not real y considered as valuable as t hey sho ld b senior management wit hin

t he organiz t ions t hat use t hem If t his sit uat ion is t o change – and it must for

belef in t he St andard t o survive – t he int en on of t he y ear 2 0 u dat e has t o

be t aken on b ard b al inv lved in ISO 9 01 This me ns t hose who use it and

This b ok has t herefore be n revised t o inclu e new develo ment s sinc

it was last is ued and t o re-emphasiz t he aspe t s of ISO 9 01:2 0 t hat t he

new ver ion ad res es If y ou have alread creat ed an ISO 9 01 or b sines

management sy st em t hat folows t he principles o t lined in t he prev io s v er ion

of t his b ok, t hen y ou wi not ne d t o make any changes t o ad res ISO

9 01:2 0 If y ou have not , t hen under t anding t his ap roa h wi giv e y ou t he

t ools to make t he St andard an indispensible par t ofy our senior management ’s

t oolkit , helping t hem t o ad res t he b sines sust ainabi it y chalenges al

organiz t ions fa e in 2 0 and bey ond

I is also wor t h men oning t hat t here have be n signifc nt changes in belef

in t he crit ic l imp r t anc of having so nd sy st ems and proc s es t o delver

efe t ive managemen in ot her words, o t comes t hat sat is y cust omer and

ot her st akeholder The f ancial melt down was c used b t he complet e

breakd wn in t he abi t y oflarge mult inat ional organiz t ions and reg lat or

around t he world t o manage sy st ems and proc s es efe t ively This was despit e

hu e b d et s, int el gent peo le and a c s t o t he most senior management

This o vio s example shows us how imp r t ant properly designed

sy st ems and proc s es are I eq ual y demonst rat es t he imp r t anc of defning

and under t anding how t hey are managed and monit ored t o ensure delvery of

o je t iv es, wit ho t det riment al side efe t s W hat has be n cle rly demonst rat ed

is t hat it is simply no longer g o eno gh t o just che k complanc Alt ho gh

t his b ok is not ab ut au it ing t he fa t remains t hat t he sy st ems and proc s es

y ou creat e and manage wi ne d t o be au it ed, not just for complanc b t t o:

• iden fy b sines risks t o me t ing o je t ives;

• au it t he real world, not just t he paper world;

• indic t e what wi hap en not just pict ures of t he past ; and

• au it behavio r t hat delver o t comes not just o t put s

A separat e b ok lo king at au it i g in more det ai is par t of t his u dat ed series

and y ou are enco raged t o review t his as wel The glo al is ues probably

alread have afe t ed y ou and y our management sy st em, and if not c r t ainly

wi , so it is wor t hwhie making sure y ou also under t and some of t he ot her

t ools t hat wi help y ou ad res t hem

Introd ction 1

• Out lines how proc s -based anagement draws onmany t heories

of management t o prov ide a holst ic and pra t ic l ap roa h t hat

giv es real visibi t y t o what is imp r t ant in t he organiz t ion We

also o t line why proc s management is diferent and why t hose

who have se n or implement ed t he ap roa h so far describe it as

‘ust plain common sense’

• An o erv iew of where q ual t y management has comefrom and

how t he proc s -based ap roa h ad oc t ed b ISO 9 01:2 0

chalenges t he principles on which t radit ional q ualt y

management has be n b i t

• A pra t ic l view of proc s anagement t hat dispelst he y t hs

surrounding t he subje t We def e t he su je t and lo k at how

t he t op-lev el management sy st em, b sines proc s es and key

per formanc indic t or c n be st ruct ured t o creat e an efe t iv e

proc s -based management sy st em We also consider t he

implc t ions of t he ap roa h on t he soft er, b t eq ual y imp r t an

organiz t ional is ues ofcult ural change and communic t ions

3 Desig ning y ur manag ement system 3

• Designing y our anagement sy st emis a st rat egic a t ivit y t hat

ult imat ely def es how y our organiz t ion wi be managed t o

del ver it s o je t ives We ex lore t he key st eps ne es ary t o

design t he proc s -based management sy st em and it s a c pt anc

b t he organiz t ion

• Having iden fed t he proc s es t hatmake u t he sy st em t he

next st age is t o under t and t hem in more det ai and par t icularly

t heir cros -funct ional nat ure In designing and efe t ively

implemen ng a management sy st em we ne d t o under t and

t he proc s es, me sure t hem and based on t heir per formanc

improve t hem This comes from t he k owled e t hat not hing c n

be improved if it is not me sured and not hing c n be efe t ively

me sured unles it is fr t ly under t oo

5 Proc d r e desig n – Linking supp rting information to proc s es 5

• The ne d for su p r t ing informat ionis based u on t he ne ds

of t he organiz t ion and t he b sines risks t hat it fa es The

su p r t ing informat ion c n come in many forms, and t his

chapt er wi lo k at proc d res I is, however, fair t o say t hat

unlke t he 19 4 ver ion of ISO 9 01, t here is much more t o

t he ‘sy st em’ t han it s proc d res Proc d res give t he det aied

‘how-t o’ informat ion t hat an organiz t ion fe ls it ne ds t o ensure

it s peo le c n efe t ively and consist en y c r y o t t he a t ivit ies

aloc t ed t o t hem They are not writ t en just be ause we d

somet hing, b t be ause we f d t hem useful and t hey minimiz

risk t o an a c pt able level

• Proc s es are best designed using individ al cros -funct ional

t eams This not only ensures t hat key st eps in t he proc s are not

omit t ed b mist ake, b t it also ensures t hat t here is, at le st , a

degree of inp t from t he manager and st af inv lv ed in a t ual y

del vering and run ing t he proc s es This st ar t s t o creat e real

owner hip b t he t eam I is, howev er, vit al t hat even t ho gh t hey

hav e be n develo ed in det ai b diferent t eams t hat t hey st il

del ver o eral what t he organiz t ion ne ds, and t hat t here is no

• Thi s ai m of ISO 9 01:2 0 i s g ener ate conti nuo si mprov ement

The k ey d r i v er s for thi s are the me surement of your resul ts and

w hat you hav e a hi ev ed Id en fy i ng me sures or k ey perfor manc

i nd i cator s i s qui te str ai g htforw ard , mak i ng sure the org ani zati on

has the r i g ht ones an that they are a ted u on i s another matter

We l ook at d ev el opi ng K PIs that tr ul y d o refe t the proc s es

w i thi n y our sy stem, an henc y our b si nes perfor manc

• Having designed t he sy st em and it s proc s es, andiden fed

t he me sures t hat are g ing t o be used t o manage and improv e

t he sy st em, t he next st age is implement at ion The key a t ivit ies

t hat ne d t o be efe t ively c r ied o t for suc es are examined,

so t hat t he management sy st em be omes just ‘t he way y ou d

t hings’, not somet hing separat e

• There is no d ubt t hat regist rat ion b dies are changing Like

every one else t hey have t o compet e for b sines and delv er

servic s t hat me t t heir cust omer ’ ne ds Wit h t he faiure of

complanc au it i g in t he f ancial se t or t he wider focus on

how au it s t ake pla e has risen considerably In t his chapt er we

ex lore how t o sele t a c r t ifc t ion b d t o help ensure t he same

fai ng t hat afe t ed t he sy st ems and proc s es in t he f ancial

se t or d not hap en t o t he q ualt y and b sines proc s es of

y our organiz t ion

• Thre re l-lfe c se studi es are incl uded show ho org aniz tions

hav e used the ap roa h o tl ined i n this b ok to a hiev e b sines

i mprov ement We also l ook at the pi tfal ls of try ing to implement

a sy stem that refe ts the cl auses ofthe Stand ard itself r ather than

l ook ing fr st at what their b si nes ne ds

The proc s -based management sy st em (P MS) is at t he he r t of ISO 9 01:2 0

and is t he culminat ion ofa long perio of ev lut ion in management t hin ing I

b ids direct ly on t he best develo ment s and, whist not providing a complet ely

new way of managing an organiz t ion, c n signifc n y improv e b sines

per formanc when implement ed efe t ively In par t icular, it ofer an es ent ial

and p wer ful insight int o what real y makes organiz t ions t ick I provides real

visibi t y ofwhat is imp r t ant – t he t hings on which b t h management at t en on

and organiz t ional a t ivit y sho ld focus in order t o be suc es ful I t hen

prov ides t he me hanism t o d t his as a par t of ‘b sines as usual’

The P MS brings t oget her ide s from a large number of individ al

management t heories and pra t ic s, which have t oo oft en in t he past be n

t reat ed as st and-alone init iat ives I prov ides t he ‘glue’ t hat brings t hese

init iat ives t oget her as a cohesiv e whole On t heir own, many of t hese individ al

init iat ives fel shor t of delv ering t he beneft s promised Taken t oget her as par t

of t he PBMS, t he lkelho d of suc es ful del very is great ly increased This

is perhaps not surprising – very few of t he init iat ives realy d st and alone

from ot her eq ualy imp r t ant is ues Inde d, very oft en t here are high levels

of int erdependenc Yo only hav e t o lo k at t he disap oint ment felt wit hin

some organiz t ions when Tot al Qual t y Management (TQM) or Invest or In

Peo le (I P) did not fuly l ve u t o t heir promise In b t h c ses t here are

oft en cult ural, per formanc me surement and organiz t ional is ues t hat ne d

t o be ad res ed in order for t hem t o suc e d – b t how oft en have t hey be n

implement ed wit ho t t his being fuly t ackled or even under t oo ? And what

ot her is ues also ne d t hin ing ab ut at t he same t ime t o fa i t at e t heir efe t ive

So why sho ld t he P MS be diferent ? A number ofvery imp r t ant

reasons spring t o mind, t he prime one being t hat t he P MS is not an init iat ive,

b t a w ay of t hin ing To t his c n be ad ed:

• it de ls wit h t he ‘whole organiz t ion’ rat her t han focusing on improving

individ al par t s;

• it st ar t s wit h st rat eg and forges ln s wit h t he rest of t he organiz t ion’s

a tivit ies;

• it is inclusive, alowing every one t o be inv lved in b t h develo ment

and delv ery ;

• it provides t he me hanism for t rue emp werment of b t h individ als

and t eams;

• it is not a st at ic sy st em – it is alve and mo es wit h changing priorit ies and

ne ds Implement at ion is t he st ar t , not t he end p in

• it is simple and enables ev ery one wit hin t he organiz t ion t o under t and t heir

role and cont rib t ion t o suc es

L ast ly, and perhaps most imp r t an y, t hose who have so far se n t his ap roa h

and under t oo what it is realy al ab ut c l it ‘ust plain common sense’, which

is, as w e al k now, surprisingly uncommon This is a management phioso hy

t hat is ab ut ev ery one wit hin t he organiz t ion, not just t he manager and what

t hey d

If y ou have read t he init ial b ok in t his series, t his v lume wi l provide

a cle r insight int o how y ou c n t ranslat e t he principles it describes int o a

pra t ic l and p wer ful management sy st em, le ding t o b t h b sines beneft and

regist r at ion against t he int ernat ional st andard ISO 9 01:2 0

Sho ld y ou be aiming t o o t ain formal regist rat ion, and y ou have not

y et read t he prev io s b ok in t his series, t hen we recommend y ou d so as it

prov ides fur t her useful insight int o t he St andard it self Alt ernat ively, y ou may

wish t o implement an efe t ive P MS wit ho t o t aining formal a credit at ion

(if so then read on) There is suffcient here t o get y ou g ing on what wi be an

excit ing and i uminat ing ex erienc : def ing y our organiz t ion t hrou h it s key

b sines proc s es, and t hen managing and improving t hem t o delv er en anc d

b sines per formanc o er t ime

1 The process- based manag ement system

If y ou were in t he ‘q ualt y ind st ry ’ d ring t he 19 0s and 19 0s y ou wi

ap reciat e t hat t he develo ment oft he u dat ed int ernat ional st andard on

q ualt y managemen ISO 9 01:2 0 , now ISO 9 01:2 0 , has be n a real st ep

forward I has brou ht q ualt y management t o t he pla e it alway s sho ld hav e

be n – t he very he r t of t he way an organiz t ion is managed Perhaps surprising

t o some peo le, t his change has also unset t led many of t he q ualt y manager

who hav e be n t he mainst ay oft he q ualt y ind st ry in t his perio This change

of emphasis t akes t heir role int o a diferent level of imp r t anc , wit h a ne d for

diferent ski s and compet encies – a chalenge t hat some f d diffcult t o a c p

Unfor t unat ely, it is not only some q ualt y manager who have had t his diffcult y

– many of t heir senior manager , and ot her peo le wit hin ‘sup or t funct ions’

who now ne d t o be ome inv lved, are also f ding t he change diffcult

t o embra e To ad t o t he confusion, many of t he my riad ext ernal ‘q ualt y

consult ant s’ are also not helping t he change, as t hey provide ‘of-t he-shelf’

sy st ems t o t heir clent s, or ones t hat are delv ered wit ho t t he real inv lv ement

of senior management or al funct ions wit hin t he organiz t ion I is no wonder

t hat t here is st il a real level of confusion ab ut what was realy int ended b

ISO 9 01:2 0 , now ISO 9 01:2 0 , and t he P MS

These problems oft en st em from t he fa t t hat many peo le wit hin an

organiz t ion d not realy under t and how t heir jo s and t heir dai y a t ivit ies

sho ld relat e t o a ‘q ual t y management sy st em’ They perhaps k ow what

such a sy st em has be n in t he past and d not se t hat t hey ne d t o par t of it

su denly be ome so? I is aft er al only an u dat ed ver ion oft he 19 4 st andard

The solut ion t o t his real is ue is t o provide ed c t ion ab ut what t he u dat ed

st andard realy me ns ‘Qual t y management ’ oft he fut ure is in realt y ‘b sines

management ’ Onc t he word ‘q ual t y ’ is repla ed b t he word ‘b sines ’, t hese

problems st ar t t o cle r, and t he way in which every one wit hin t he organiz t ion

sho ld be ome inv lved c n st ar t t o be bet t er under t oo This is t he fr t st ep

t owards improvemen which is a key principle of t he St andard

Hi story pl ay s a bi g part in these perc pti ons Al l too often, i nter pretati ons

ofthe prev i ous v er si ons of the Stand ard hav e sai d that efe ti v e i mpl ementation

d epend ed u on del eg ati on to a qual i ty manag er, w ho w as often a mi d d l e manag er

They w oul d then w or k w ith ‘pro ucti on’ or ‘serv ic d el i v er y ’ manag er s an thei r

staf to cre te a d ocumented sy stem of ‘proc d res’ that d ef e w hat they d o and

how they d o i t – this be ame the core ofthe ‘qual i ty manua T e p r pose of

cre ti ng thi s manual w as to prov i d e a me hani sm to manag e an moni tor these

a ti v i ties, mak i ng sure that they d el i v er the requi red o tpu The ev entual ai m w as

the consistent ap l i cati on of any es enti al ‘i nd str y ’ or other ‘spe ial requi rements’

an the consi stent d el i v er y of prod ucts or serv ic s to customer s

I was oft en a t act ic l and o erat ional role, which in some c ses had l t t le

direct or o vio s relat ionship t o t he st rat egic direct ion of t he organiz t ion W hat

oft en made it wor e was t hat in many organiz t ions t he prime p rp se of having

t he sy st em was t o gain a credit at ion against t he St andard, rat her t han t o del ver

b sines per formanc

I is no wonder t hat in many peo le’s ey es it had be ome discredit ed

and t hat a new impet us was ne ded t o get it ba k on t ra k This impet us

was t he reis ue of t he 2 0 , now t he 2 0 , ver ion of ISO 9 01 – and henc

t he signifc n y diferent req uirement s it cont ained Whist st il pla ing t he

del very of cust omer sat is a t ion as t he focus of t he sy st em, it is much more

spe ifc in creat ing a direct l n bet we n t he cust omer and b sines o je t ives

of t he organiz t ion and t he proc s es t hat have be n p t in pla e t o delv er

t he prod ct s and servic s t hey ne d A fur t her change was t he req uirement for

me surement t hat cust omer sat isa t ion had a t ualy be n a hieved There is

also a key req uirement t o ad pt a proc s ap roa h

The P MS is a management sy st em t hat is based on simple ide s:

• under t and y our b sines proc s es and what t hey ne d t o a hieve;

• monit or t heir a t ual per formanc against set t arget s;

• and t hen improve b t h t he proc s es t hemselv es and t heir per formanc

ov er t ime

The aim of d ing t his is t o me t y our b sines o je t ives

In lne wit h t his ap roa h, ISO 9 01:2 0 req uires user t o under t and

and t hen efe t ively manage t he proc s (es) t hat cont rib t e t owards t heir

suc es Proc s management has be n pla ed at t he core of t his st andard for

one very g o reason – it is considered t o be a best -pra t ic ap roa h t o t he

delvery of b sines per formanc In t he c se of t his st andard, t he proc s es are

primariy focused on t he delvery of cust omer sat is a t ion, and henc it is t he

basis of ext ernal a credit at ion

If only it were t his simple t o delv er cust omer sat isa t ion! Unfor t unat ely,

ev en wit h ISO 9 01:2 0 , a large number of organiz t ions have not realy mov ed

t heir sy st ems on v ery far Many hav e not fuly ap reciat ed t he p wer, imp r t anc

or ful impa t of t he t hinking behind t he St andard, b t have merely t ried t o use

it in t he same way as before Some have t ried t o ap ly it b develo ing proc s es

t hat are based u on t he vario s clauses wit hin t he St andard it self and not what

t he organiz t ion a t ualy ne ds in order t o be suc es ful Ot her have rest rict ed

t heir ‘sy st em’ t o t he cust omer delvery proc s es only, forget t ing t hat t hey c n

st il fai t o delver t heir ov eral organiz t ional o je t iv es, even if t hey sat is y

t heir cust omer More imp r t ant ly, t hey hav e not re o niz d t he cont rib t ion of

ot her b sines proc s es t o t he delvery of t he cust omer ex erienc , or t he daiy

priorit iz t ion t hat g es on bet we n sat is y ing diferent st ak eholder

One d es wonder if t hey have ev er asked t hemselves how long t hey c n

con nue t o sat isy cust omer if they are not also sat is y ing t heir ot her k ey

st akeholder Ev en t ho gh t hey may be ap ly ing t he ‘lett er oft he St andard’ and

gaining t he ap ro riat e a credit at ion, neit her t hey, nor t heir customer , are g ing

t o beneft ful y from t heir inv estment in t he develo ment and implement at ion

of t heir management sy st em In order t o be suc es ful, ov er t ime, t hey also ne d

t o lo k at and under tand t he companion st andard, ISO 9 0 :2 0 , d e itself

for up at e in 2 10, which ext ends t his thin ing b focusing on per formanc

improv ement and inclu ing other ‘st ak eholder ’ wit hin t he management sy st em

In efe t, they hav e implemented a proc s -based ‘ini tiativ e’, l eav i ng the

manag ement of the rest of their b si nes a ti v i ties to be cov ered somew here else

They w il l hav e the same d iffculty that has al way s be n the c se for org aniz tions

that cre te a multi tude ofmanag ement sy stems, w ith separ ate ones for e ch of the

ini tiati v es they wi sh to manage How often hav e y ou se n separ ate manag ement

sy stems for such things as qualty manag ement (ISO 9 01), Inv estor s i n Peo l e

manag ement (VBM), b sines improv ement (BI , etc? How often hav e they had to

compete for reso rc and re og ni tion, sometimes se n to be fg hting ag ainst e ch

other r ather than a ti ng together for the ov er al beneft of the organi zation? How

often hav e they be n se n as the ‘pet ini tiati v e’ of a par ti cular manag er or d ire tor,

who se ms to p r ue t hem witho t t he re l sup or t of t heir cole g es And

how oft en hav e t hese faied t o delver t he t rue value t hat had be n ex e t ed?

Faiure has not normaly be n be ause of any t hing wrong wit h t he ide s behind

t he init iat ives t hemselv es, b t be ause of t he way t hey were implement ed

A management sy st em is not a set of d cument s eit her in paper form or held

ele t ronic ly Any sy st em is a lving en t y, somet hing t hat is alway s changing

and ev lving, rea t ing t o t he env ironment in which it sit s In t he c se of a

b sines it is t he b sines environment in which it o erat es As t his b sines

environment changes so d es t he organiz t ion; it adapt s and t he sy st em

t herefore changes

Of co r e describing t he organiz t ion as a lving en t y is very conc pt ual

and we ne d t o be able t o make t his real in some way Peo le wi l q uit e righ y

wonder how t his relat es t o t hem and how somet hing t hat lv es c n be managed

or described To help ex lain t his we ne d an example, so le s use t he human

The human b d y is a sy stem that i s mad e u of k ey b d y parts such as

he rt, l ung s, l eg s, etc These b d par ts are i n efe t o r k ey proc s es and are

org aniz d i n such a way to o er ate tog ether to mak e us wor k Thi s str ucture i s the

sy stem an w e/i t w oul dn’t w or k v er y w el l i f o r leg s w ere org aniz d in such a w ay

that they w ere stuck to o r he d !! Our per for manc , i.e the perfor manc of o r

sy stem, c n be me sured an as es ed as c n the perfor manc of o r i nd i v id ual

b d y parts or proc s es This me surement is ag ai nst targ ets such as the number

ofbe ts o r he r t mak es or how hig h o r bl oo pres ure i s If there are r i sk s then

w e ne d to c r ry o t cor re tiv e a tion or improv ements Org ani zati ons a t i n the

same w ay w hen it comes to their sy stem and proc s es They :

• iden fy t hem (key b d par t s in o r example);

• organiz t hem ( o t he organiz t ion works as an ov eral en t y );

• def e t hem t o under t and how t hey work as individ al element s;

• me sure t heir per formanc t o iden fy risks; and

• improve t hem or manage t he risk wit h preven ve a t ion

We co ld t ake t he analo y st il fur t her b say ing t hat d ct or (and we and

ot her d as wel) as es t he per formanc of t he human b d and indiv id al

t hen recommend a t ions t o resolve any is ues Au it or sho ld be fulfl ng

t he same funct ion for organiz t ions b lo king at t he organiz t ion’s proc s es

and iden fy ing risks t o it s efe t ivenes , b t d t hey ? Using t he analo y again,

d au it or real y che k t hat t he legs are not con e t ed t o t he he d? Or if t he

brain is real y under t anding what t he ey es are se ing, or if t he ey es are se ing

what is real y hap ening around t hem? Howev er, not al b d par t s are vit al t o

every one’s suc es This of co r e depends on what y ou are se king t o a hieve,

and peo le oft en le d suc es ful and fulfl ng lves wit ho t ne es ari y having

ful funct ionalt y avaiable t o t hem However, t here are some b d par t s t hat we

al ne d t o have, such as t he brain, he r t and lungs, as t hese are key b d par t s

In t he same way t here are proc s es in organiz t ions t hat are not vit al t o suc es ,

however, t here are ot her which are and it is t hese key proc s es t hat are crit ic l,

ne d t o be iden fed and form t he majorit y of y our management sy st em

Wit ho t t hem being efe t ive, risks l e ahe d

What y ou must remember is t hat what ever y ou d cumen it is not t he

real world, just a descript ion of t hat real world t o help y ou under t and it So

when y ou me sure per formanc , run improvement a t ivit y or inde d au it , it

ne ds t o be t he real world we are considering not t he d cument ed one, i.e what

a t ualy hap ens

Many q ualt y profes ionals are inv lved in c r t ifc t ion au it s and

sele t i g which regist rat ion b d t o use If t he audit or comes int o t he

organiz t ion and asks ‘Can I se y our management sy st em?’ we k ow inst an y

t hat t hey d n’t realy under t and what a management sy st em is, be ause

t hey are alread st anding or sit t ing in it – it is al around t hem! ! I is t he

organiz t ion it self, so it is a si y q uest ion t o ask Of co r e it also shows t hat t he

au it or d esn’t realy under t and ISO 9 01:2 0 We d not aim t o co er t he

complexit ies of au it ing t his ‘l ving’ sy st em in t his b ok, b t it is co ered in t he

companion b ok t o t his series

The P MS is equaly ap lc ble to ev ery ty pe or siz of org aniz t ion – as inde d is

the ISO 9 01:2 0 standard it self The Standard was cre t ed as an inter national

d cument, r ather than star ting lfe as a single nat ional or ind stry standard This

me ns that it has to be c pable of being ap led a ros t he glo e – regardles

of the culture ofdiferent co ntries or for that matter the culture ofdiferent

organiz tions I also ap les to al se tor This inclu es ‘for proft’ b sines es

fom any commercial or ind strial feld, whatev er ty pe of pro uct or serv ic they

sel I also cov er al ty pes of ‘not for proft’ org aniz tions, such as char ities and

of any siz – fom ‘one-man-band’ to multinational organiz tions These

requirements were quite a tal order, and v ir tualy imp s ible for any standard

that was to be w ritten in the way that management st andards hav e historic ly

be n cre ted ISO therefore b it the Standard b bringing together a r ange of k ey

b sines pr inciples r ather than to lst spe ifc detaied ‘thing s’ t hat organiz tions

ne d to d They lo k ed at al ofthe best-pr actic ap roa hes t hat hav e be n

dev elo ed ov er re ent y ear , and considered how they work t og ether for t he

del very of b sines beneft

The ISO 9 0 :2 0 series (ISO 9 0 /9 01/9 0 :2 0 ) was cre t ed fom

t his under t anding of best -pr actic b sines pr inciples, and delber ately left

t he inter pretation of these pr inciples to indiv id al organiz t ions They k new

t hat ev ery organiz tion wo ld ne d t o ap ly them in a w ay t hat w as spe ifc t o

t heir own unique sit uation – no two organiz tions wo ld hav e exa tly the same

interpretat ion There is also t he a k nowled ement t hat organiz tions wi dev elo

ov er time This wi c r tainly inclu e changing b sines o je tiv es and w il

ho efuly also be be ause oftheir incre sing maturit y in ‘proc s -t hink ing’ As

t his hap ens, their management sy st em wi also ne d to change, as wi t he way

in which they int er pret the pr inciples within t he St andard This mov ement is t he

re l me ning of b sines improv ement If the Standard were prescriptiv e ab ut

exa tly what organiz tions ne d t o d in order to comply, then it wo ld be of

ltt le use to dr iv e a relev ant and useful management sy st em in any org aniz tion

What it d es – and d es wel – is t o give a ‘best -pra t ic ’ basis for senior

management t eams t o t hin ab ut how t hey ne d t o le d t heir organiz t ion,

and how t hey c n focus every par t of it on t he delvery of b sines result s

Int erpret ed wel , it c n be t he way in which organiz t ions c n t rans orm t heir

per formanc Int erpret ed badly, it wi l be a mi st one around t he ne k of an

organiz t ion t hat wi q uickly be ome discredit ed and disp sed of Those

resp nsible for de iding how t o use it have t he o p r t unit y, and resp nsibi t y,

t o de ide which of t hese alt ernat ives it sho ld be

One k ey ap roa h prev ail s a ros the w hol e of the ISO 9 0 r ang e of stand ard s –

proc s manag ement I is the fo nd ati on u on w hi ch al l of the other pr i nciples

are b i l t an ap l ied I i s the me hani sm b w hi ch any org ani zati on c n d ef e

and manag e the w ay al l of i ts constituent par ts w or k tog ether to joi ntly d eli v er

their b sines resul ts – the o tcomes that are d el iv ered to thei r customer s and

other stak ehol der s Ap l y i ng thi s pr inci pl e w el is the w ay org ani zati ons c n mov e

fom a departmental ( il o) ap roa h to a cros -functi onal (proc s ) ap roa h and

Equal ly i mp rtant to those w ho w i sh to ap l y other manag ement standard s, is

the fa t that SO 9 01:2 0 is now being used as the basi s fom w hi ch they are

b il t – so g etti ng thi s r ig ht i s es enti al for mov i ng forw ard w ith any of these other

stand ard s i n the future

So, whether y ou are w ishi ng to dev el op a P MS for g aini ng ISO 9 01:2 0

a credi tation, or y ou fe l it i s the ap roa h y ou w ish to use to maximiz y our

org aniz tional per for manc , the mes age sho ld be the same Thi nk b sines fr st,

standard se ond B id the sy stem that refe ts y our b si nes ne d s r ather than

bl i d ly d ev elo i ng a sy stem that foll ow s the i ndi v i dual clauses of the Standard If

y ou d n’t, y ou may w el g et a cred itati on, b t y ou wi ll mi ss o t on the big beneft

– the o p rtuni ty for en anc d and sustainable b si nes perfor manc

2 The process approach

To rec p, t he PBMS is al ab ut :

• p t t ing in pla e t he key b sines proc s es t hat are ne ded t o delver y our

b sines o je t ives;

• managing t heir per formanc ;

• and improving t hem o er t ime

This so nds lke a fairly e sy t hing t o d d esn’t it ? Wel , y es, it d es, b t

many peo le have t ried t o ap ly b sines proc s management in t he past and

have not be n t oo suc es ful The whole ide of managing b proc s has be n

around for a long t ime, b t it is st il very unusual t o se many organiz t ions

ap ly ing it efe t ively as a rout ine way of managing t heir per formanc So t here

must be some c t ch I must eit her be t oo diffcult or it d es not delver result s

This is far from t he t rut h There is no c t ch, it d es not ne d t o be

complc t ed and it c n delv er result s The rest oft his b ok wi t ry t o show y ou

t hat t his is t he c se I d es, however, req uire a number of t hings t o be d ne,

in a lo ic l way, and wit h t he ap ropriat e levels of managemen su p r t and

plan ing Just lke any ot her signifc nt b sines change, it d es not hap en

o ernight and t he ful implc t ions of t he changes have t o be under t oo and

ad res ed as par t of t he ‘change plan’ I is as much ab ut ‘cult ural’ is ues as it is

ab ut ‘pra t ic l’ ones, and if y ou t ry t o change one wit ho t t he ot her, t hen any

a hievement is unl kely t o be sust ainable

I is perhaps useful, init ialy, t o consider why hist ory has not creat ed

reasons why proc s management has not be n efe t ively t aken forward in t he

past are:

• more oft en t han not , proc s management has not be n se n as a st rat egic

is ue – t o be driv en and championed b t he senior management t eam;

• t his is closely folowed b t he fa t t hat when it has, t he whole sy st em has

oft en be n designed in a way t hat was far t oo complc t ed t o be efe t ively

used b every one wit hin t he organiz t ion;

• t he t hird major reason is t hat proc s management has be n se n b many

as only ap lc ble t o t he ‘o erat ions’ or ‘prod ct ion’ par t s of an organiz t ion,

creat ing proc s es focusing only on t hese In realt y al par t s of an

organiz t ion o erat e wit hin proc s es

Proc s management has, for some reason, be ome a t act ic l is ue, a highly

t ech ic l one or only ap lc ble t o par t of t he organiz t ion – and none of t hese

sho ld be t he c se I has t o be st rat egic, pra t ic l and ap ly t o t he whole

organiz t ion Only t hen it wi work

Before y ou st ar t t o t hin ab ut t he det ai of how t o creat e a P MS, y ou

ne d t o under t and some of t he v it al is ues inv lved and some of t he way s in

which t he lkelho d of suc es c n be maximiz d These are:

• senior management inv lvemen

• defning what a key b sines proc s is;

• me surement of per formanc – key per formanc indic t or (KPIs);

• proc s t hin ing v s funct ional t hin ing;

• au it ing t o iden fy t he risks in proc s per formanc ;

• t he management sy st em as a communic t ion t ool;

• cult ural change programme

We wi be co ering a number of t hese in great er det ai in t he lat er chapt er ,

b t fr t we sho ld review some of t he fundament al areas we ne d t o ap reciat e

ab ut t he proc s ap roa h If we get t hese frmly embed ed at t he o t set int o

b t h o r t hin ing and o r change plan, t hen we c n mov e forward wit h t he

det ai ed st eps for implement at ion wit h some con denc Our ex erienc has

shown t hat it is t hese ‘core’ way s of t hinking t hat make t he real diferenc t o t he

suc es of t he ev ent ual sy st em

The P MS is a ‘whole-organiz t ion’ management sy st em, designed wit h t he

ex res int en on ofdelvering t he organiz t ion’s st rat egic o je t ives I sho ld

o er t ime, in order t o refe t t he changing o je t ives oft he organiz t ion I d es

not run alongside any ot her met ho s b which t he organiz t ion is managed – it

is the way the org aniz tion is manag ed Under t anding t his is a fundament al

par t of creat ing t he sy st em correct ly from t he o t set If it is t ho ght ofas

any t hing else, perhaps in t he way t hat many q ualt y management sy st ems

have hist oric ly be n develo ed wit hin t he vast majorit y of organiz t ions,

t hen it wi l fai t o delver t he maximum beneft This is be ause it wi not be

a whole-organiz t ion sy st em There has t o be real reco nit ion t hat it is core t o

t he organiz t ion, not a sy st em t hat is ‘b lt ed’ t oget her wit h ot her management

sy st ems co ering t he ot her is ues t he organiz t ion ne ds t o manage In realt y,

such t hings as he lt h and safet y, EMS, spe ifc ind st ry st andards, et c wi be

embed ed wit hin t he P MS, and wi not be separat e from it To t his ext en it is

t he basis of t he int egrat ed management sy st em I is t he prime b iding block for

manager t o direct and manage t heir organiz t ion

So it’s al ab ut how an org aniz tion w i ll del i v er its o je ti v es In re l ity

it is the me hanism thro g h w hich the seni or manag er s or di re tor s resp nsibl e

for the d eli v ery of perfor manc wi l l manag e their resp nsi bil iti es I c n ot be

efe ti v ely d eleg ated to any one el se to ei ther desig n or r un i t – i f thi s hap ens

then w hat are these senior manag er s an di re tor s d ing w ith their ti me? Str ateg i c

manag ement i s surel y w hat thei r rol e is al l ab ut? There is an absol ute ne d for

this seni or team, an espe iall y the manag i ng d ire tor, or w hoev er i s ul ti matel y

resp nsible for the perfor manc of the ov er al l org ani zati on cov ered b the

sy stem, to full y ‘ow n’ i t I is thei r sy stem, an they ne d to d ispl ay the l ead er ship

ne es ary to mak e it wor k Sho ld they not d thi s, then i t w il l be ome just the

same as one of the fail ures of the past, an not w or th ev en star ting to i mpl ement

They c n, howev er, use the serv i ces of a fa il i tator to help them d ev elo the

sy stem in an efe ti v e an coherent w ay

This fa i t at ion role is p s ibly a new one for some q ualt y manager ,

perhaps renamed as b sines improvement manager or somet hing simi ar,

prov iding of co r e t hat t hey have t he ne es ary ski s and compet encies for

t his v ery diferent role One t hing, howev er, is c r t ain S nior manager c nnot

absolve t hemselv es of t he ful owner hip of t he sy st em This wo ld not be

delegat ion b t rat her ab ic t ion oft heir resp nsibi t ies/derelct ion of d t y

The le der hip and inv lvement shown b t he senior t eam in t he

develo ment and use ofa PBMS has a number of crit ic l efe t s:

• it alows them to design t heir ow n sy stem in a w ay t hat giv es t hem con denc

t hro gh cre t i g the management sy stem they fe l is the most ap ro riat e to

delv er their b sines o je tiv es;

• it st ar t s t hem al t hin ing in t erms of proc s es rat her t han depar t ment s – a

• it creat es t he o p r t unit y for t rue proc s owner hip t o be t aken b

ap ropriat e member of t he senior t eam (we wi discus proc s owner hip

in a lat er chapt er);

• it demonst rat es t he imp r t anc oft he sy st em t o every one wit hin t he

organiz t ion t hrou h t he senior t eam’s inv lvement – it wi not be se n as

imp r t ant if t hey are delegat i g it t o someone else;

• it alows t hem t o relat e proc s per formanc very closely t o b sines

per formanc (again, more of t his in t he lat er chapt er on KPIs);

• it alows t hem t o st ar t t o efe t ively delegat e t he management of ‘lower-level’

a t ivit ies t o manager and supervisor , giv ing t hem more t ime t o focus on

t heir key role of st rat egic management

Defning wha t a key busines pr ces is

Key b sines proc s es are at t he core of t he P MS They are what a t ualy

delver t he per formanc of an organiz t ion There have be n many way s of

describing a b sines proc s , and t hey range from t wo ext remes

• The sing le p oce ss the or – every t hing t hat hap ens wit hin an organiz t ion

is t ot aly lnked t oget her int o a single proc s This single proc s describes

every t hing t hat is d ne t o delver t he key o t comes t hat are t o sat isy t he

key st akeholder

• The ma ny p oce ss the or – t here are a large number of individ al proc s es

wit hin t he organiz t ion, e ch focused on t he delvery of spe ifc det aied

o t comes These o t comes are a mixt ure of delverables t o cole g es wit hin

t he organiz t ion (int ernal) and t o individ als and b dies who are not par t of

t he organiz t ion, such as cust omer , shareholder , et c (ext ernal) Many of

t he proc s es are highly int erdependent and are oft en chara t eriz d b e ch

depar t ment having a number of proc s es t hat are not cros -funct ional

In realt y, b t h of t hese ap roa hes are correct and t here is no right or wrong

B t h ap roa hes c n efe t ively describe t he proc s es of an organiz t ion – it

just depends on how y ou int end t o use t hem When dev elo ing a P MS, t here

is a ne d t o under t and some spe ifc ground rules t hat wi help y ou t o design

it in t he most efe t ive way These ground rules wi prov ide t he key t o get t ing

t he right level ofdef it ion for y our key b sines proc s es, somewhere bet we n

t he t wo ext remes ab ve B t how d we de ide where one ap roa h st ar t s and

anot her ends

As has al re d y be n sai d , org ani zati onal perfor manc i s d el i v ered thro g h

the proc s es that are d ef ed for that org ani zati on, an there ne d s to be a cl ear

l i nk betw een them an the org ani zati on’s b si nes o je ti v es T i s l i nk i s prov i d ed

the k ey b si nes proc s es are so i mp rtant an how they l i nk tog ether w i th the

other si g nifc nt el ements that d r i v e org ani zati onal hi g h perfor manc

Stakeholder req irements

Cu tomer req ir ements

Define an pr ioritize

o jectives

Define proces es to

delver o jectives

Identify proces me s res

Cr eate management

information s stem

Re ort on progres

Fig ur e 2.1 The hig h per ormanc cycle

This cy cle st ar t s wit h a ful under t anding of t he ext ernal environment in which

t he organiz t ion o erat es, which inclu es cust omer ’ and al ot her st akeholder ’

req uirement s From t his, t he senior management c n priorit iz and def e t he

st rat egic o je t ives – in realt y, t hese are t he key t hings t hat t hey int end t o

del ver ba k t o t he v ario s cust omer and st akeholder of t he organiz t ion

Only when t hey have d ne t his are t hey t ruly able t o p sit ively under t and

and describe t he key proc s es These have t o be efe t ively and effcien y

under t aken in order t o delver t hese o je t ives The ln age is absolut ely cle r

and very o v io s if y ou ap ly t his cy cle We wi lo k at t he rest of t he cy cle

lat er on in t his chapt er

The key proc s es form t he highest lev el of t he P MS and provide t he

senior management t eam wit h a met ho of su dividing t he a t iv it ies wit hin t he

organiz t ion int o manage ble element s These key proc s es are def ed in such

a way t hat t he senior management t eam is con dent t hat t hey wi join y delver

t he st rat egic o je t ives of t he organiz t ion if adeq uat ely per formed Be ause of

t his, t hey wi also provide a me hanism for t he senior management t eam t o

review t he o eral b sines per formanc against t he o je t iv es, b me suring t he

Ex erienc shows t hat t here are be twe e n 8 a nd 15 ke y p oce sse s at t he t op

level of a P MS This number provides a level of def it ion for t he a t ivit ies

of t he organiz t ion t hat giv es t he right level ofv isibi t y and management

resp nsibi it y These proc s es ne d t o be defned b e ch management t eam t o

refe t what t hey fe l is spe ifc ly ap ropriat e for t heir organiz t ion (or det ais

on how t o implement t his, se Chapt er 3)

If t here are t oo few proc s es (les t han eight ), t hey wi be very diffcult

t o manage efe t iv ely be ause t hey wi e ch hav e t oo large a sco e, t oo great a

range of a t ivit ies and t oo many o t comes A smal number ofproc s es also

prov ides a v ery lmit ed view of per formanc a ros t he ful spe t rum of what

is imp r t ant t o t he organiz t ion, wit h t oo lt t le visibi t y of key per formanc

element s Ift here are t oo many key proc s es (more t han 1 ), it be omes very

diffcult for t he senior management t eam t o se what is st rat egic ly imp r t ant

among st t hem Inevit ably, some of t he o t put s from t he proc s es wi be much

more st rat egic ly imp r t ant t han some oft he ot her , b t which ones sho ld be

monit ored at t his lev el? This realy me ns t hat t hey wi co er areas of proc s

t hat sho ld belong t o mid le and junior manager t hat sho ld not be of direct

management conc rn t o t he senior management t eam

As we are dev elo ing a P MS, the key proc s es wi be def ed to cov er

al a ti v ities that the organiz tion under tak es – ev ery thing that is inclu ed

in t he ‘sco e’ of the manag ement sy stem and the resp nsibi ty of the ‘owner ’

of the sy stem Unlk e most prev io s qualty management sy st ems cre t ed for

manag ement sy stem standards, it wi not be restr icted to the o erational,

pro uction, manufa tur ing or pro uct /serv ic delv ery functions I ne ds to

cov er al functions and al elements of the org aniz tion’s plan ing and o er ational

cy cle – al the way fom gaining mar k et int el genc to le rning and improv ing

based on the results a hiev ed I sho ld also inclu e al of t he ‘su p r t’ proc s es

ne es ary to ensure the other core a tiv ities c n be consisten y delv ered I

includ es al proc s es that are req uired to delv er the organiz tion’s o je tiv es

Examples of t he proc s es t hat co ld mak e up a ty pic l PBMS co ld be:

• under t anding t he market ;

• b sines planning;

• dev elo ing and en ancing prod ct s and servic s;

• win ing b sines ;

• delvering prod ct s and servic s;

• me suring per formanc ;

• improving per formanc ;

• managing peo le;

• managing as et s;

This is not to say that these wi be y our organiz tion’s management sy stem or

su p r ting proc s es As we hav e se n, the mo el ofhigh per formanc we hav e

be n discus ing for ms a cy cle and so the management sy stem’s proc s es sho ld

also form a cy cle and be org aniz d within a famewor k that descr ibes how the

b sines w or k s Ear lier in t he b ok we used the b d as an analog y, and in this

c se t his cy cle is the major b d par t s ar r anged in such a way as to mak e the

organiz tion wor k Such an example is shown below I is quite str aightforw ard to

iden fy y our own proc s es, and therefore the management sy stem, and it d es

not hav e to be complc t ed In fa t the simpler the better ( e Fig re 2.2 below)

Fig ur e 2.2 Example of a basic system

Not ic how t his d es not use St andard jarg n spe k b t t he organiz t ion’s

lang age As wit h any sy st em, management sho ld be able t o describe t heir

sy st em in t heir words In t his example such an ex lanat ion co ld be:

Firs ly the re is a p oce ss tha t d e fne s how we u d e rs a nd wha t our

cus ome rs a nd othe r pe ople we ha ve to sa tisfy ne e d fr m us As we ca n’t

the se a re prioritiz e d so tha t we k ow wha t is the be st mix Fo e xa mple ,

cus ome rs ma y wa nt some thing , but tha t ma y me a n ba nkruptin the

compa ny in o d e r to d e live r it! ! We the n d e cid e wha t our busine ss

o je ctive s a re , wha t re source s we ne e d , bud g e ts, v lume s, e tc a nd tha t

is busine ss pla nning , which ne e d s to b d one be fo e d e ve lo in our

p od uct a nd the n ma rke tin a nd se lln to our cus ome rs Once we ha ve

o d e rs, we the n d e live r p od uct a nd se rvice s to our cus ome rs We the n

monito wha t we ha ve d one b f d in out how sa tisfe d our cus ome rs

a re , a ud itin ourse lve s a nd p od ucin our busine ss re sult Afte r

re vie win the se re sult we d e cid e wha t imp o e me nt ne e d to b ma d e

to e ithe r d e live r the o je ctive s we ha ve se t o e nha nce our o je ctive s

Ofcourse we o e ra te in a cha ng in busine ss e nvir nme nt a nd this a lso

ne e d s to b re che cke d a s it a lso d rive s cha ng e s to our o je ctive s

Whis this busine ss cycle is ta kin pla ce we ma na g e our re source s, i.e

pe ople , IT, buid ing s, sup le rs a nd mone y e tc to e nsur the y e ffe ctive ly

sup ort the d e live ry of our cycle

Of co r e, t his must also me t t he req uirement s of ISO 9 01:2 0 Simply

iden fy ing t he key proc s es and organizing t hem wi co er t he most imp r t ant

clause, 4.1 Ot her clauses are co ered b def ing t he proc s es in more det ai If

y ou have rev iewed t he St andard or read t he Und e rsta nd in ISO 9 01:20 8 b ok

in t his series t hen y ou may wel not ic t hat t he key element s in t his descript ion

are in fa t clauses or clause req uirement s For example ‘Fir t ly t here is a proc s

t hat def es how we under t and cust omer and ot her peo le’s ne ds…’ relat es

t o Clause 5.2 b t is ex res ed in t he organiz t ions words I is imp r t ant t o

remember t hat when designing a sy st em y ou must t hin ab ut t he organiz t ion

and it s sy st em fr t and t hen use t he St andard t o iden fy any gaps and ensure

t hat what y ou have prod c d me t s t he req uirement s

R emember – Go d sy st em design is ab ut t he b sines fr t and t he

St andard se ond and making sure al element s ft t oget her t o form t he sy st em! !

A sy st em sho ld never be a lne r lst of proc s def it ions, and t his won’t or

sho ldn’t me t t he St andard’s req uirement s – or realy be regist ered

Mea sur ment ofper forma nce – K P I s

When t he P MS has had it s proc s es def ed in t he way o t lined ab ve, wit h

proc s es t hat wi join y delver t he st rat egic o je t ives of t he organiz t ion,

t hen it is p s ible t o review organiz t ional per formanc b lo king at proc s

L ooking onc again at t he high per formanc cy cle ( e Fig re 2.1) and

folowing it fur t her round from t he proc s es, we se t hat KPIs are t he next

it em As e ch proc s has be n def ed wit h t he main p rp se of del vering

some spe ifc o t put t hat cont rib t es t owards t he st rat egic o je t ives of t he

organiz t ion, we ne d t o be able t o me sure t he delvery of t hese o t put s in an

ap ropriat e way These me sures, or ot her indic t or of per formanc , prov ide

us wit h st rat egic KPIs for e ch proc s wit hin t he PBMS – in efe t , t hese KPIs

show us whet her t hey have delvered what t hey were def ed t o d We wi have

creat ed a me surement me hanism t hat alows us t o review not only t he o t put

per formanc of t he proc s es t hemselves b t also, b lo king at t he KPIs of al

of t he proc s es t oget her, t he st rat egic per formanc of t he organiz t ion

This is not t he only element ofKPIs t hat we ne d t o under t and b t it

is suffcient for o r current ne ds We wi ret urn t o t hem again lat er on in

Chapt er 7 t o discus how t hey c n be def ed and t he ot her t y pes of KPIs we

wi ne d for t he ful management of t he proc s es

Mea sur ment ofper forma nce – Aud iting

This b ok is not ab ut t he det ai of audit ing, b t we d ne d t o under t and t he

imp r t anc of it t o per formanc me surement As we have alread se n, sy st ems

and proc s es are l ving en t ies, t hey are t he real world in which we work and

o erat e Au it ing is a me sure ofper formanc in t hat it sho ld ident ify areas of

nonconformanc and b sines risk t o t he a hiev ement of proc s and sy st em

o je t iv es For example in o r basic sy st em y ou wi l se t hat t here is a proc s

c led Win ing B sines

The proc s we are au it ing is shown in Fig re 2.3

Au it s ne d t o t ake pla e at t wo levels and audit ing t his proc s is no diferent :

• At one level t he au it sho ld iden fy complanc is ues such as inst anc s

when a t ivit ies are not c r ied o t Alt ho gh t his is imp r t an and

oft en crit ic l in highly reg lat ed ind st ries, it is ‘low level’ and t act ic l

and t herefore of relat iv ely low value when compared wit h t he st rat egic

informat ion avaiable from t he level described below

• At anot her level t he audit sho ld ident ify risks t o t he a hiev ement of

o je t ives, i.e why t he proc s exist s This is more st rat egic and t herefore

more imp r t ant t o t he wel-being of t he sy st em and t he proc s Of co r e

t he o je t ives wi depend on t he organiz t ion b t an example is shown in

P erforma ce

driv er

5 Sales fore astin is acc rate and manag ed 3 3

9 Performanc is manag ed ag ainst in ivid al sales targ ets 37 9

10 Customer u d rstand what we can and wi d lv r 3 9

Fig ur e 2.4 Diag ram of sales obje tives and risks

Yo wi se t hat t his relat es direct ly t o sales t arget s and what t he organiz t ion is

se king t o a hiev e From t he informat ion t he manager c n se where t he risks

t o t he a hievement of t hese t arget s are (t he lowest scores) and t herefore c n

d somet hing ab ut t hem Usual y manager work in number and graphs, so

if audit dat a c n be present ed t his way it is bet t er as it focuses at t en on e sier

on where improvement is best made We f d t hat informat ion relat ing direct ly

t o t he delvery of t heir o je t ives helps embed t he management sy st em in t he

This dat a c n be analy sed in more detai, for example, prov iding data based

u on the depar tments and peo le inv olv ed in the proc s (the left hand side of

t he proc s def ition shown in Fig re 2.3 ab v e) These c n be benchmar ked

in order t o identify where p t en al risk s or inefe tiv e per formanc exist – i.e

where t he we kest ln is t hat prev ents the proc s fom being efe tiv e – it is this

t hat ne ds t o be t he subje t of improv ement a tiv ity

In t his example:

• au it scores at 4 % represent ‘OK per formanc ’, i.e complanc ;

• scores ab ve 4 % indic t e increasing levels of efe t ivenes of a t ivit ies in

delvering t he o je t ives;

• au it scores below 4 % indic t e areas ofrisk or nonconformanc s t hat ne d

t o be ad res ed

How t hese scores were a hieved, t he au it ap roa h and how t o int erpret t he

result s is o t side t he sco e of t his b ok, alt ho gh it is useful here t o se t he

result s of t his ap roa h and how it wi provide higher-value audit f dings and

rep r t s The remainder of t he as es ment rep r t is shown below (Fig re 2.5)

R ESULT BY PER FORMANCE DR IVER

Overal Result: 34.8 %

Unclas if d Result (More th n 2 % of p rforma nce drivers a re b low th

minimum level)

Althoug h your ov rall averag e result may have reach d th minimum re uire to achie e a

classif d result , th re are a sig nif ant n mber of in ivid al areas where performanc has

not reach d this le el T he ov rall result is th refore u classif d, and does not me t h

req ireme ts of th framework bein assese

Overview of Result a ains P erforma ce Drivers

P erforma ce

driv er

5 S les fore astin is acc rate and manag ed 3 3

9 Performanc is manag ed ag ainst in ivid al sales targ ets 37 9

10 Customer u d rstand what we can and wi d lv r 3 9

PER FORMANCE BY MAIN INVOLVEMENT GROUPS

Peo le t akin part in this assesme t were aske t o id ntify th ir main in olv me t

T he difere c in perc ption betwee th se g roups measured ag ainst th performanc driv rs is shown below

You can:

• Consid r th se difere c s and where th y may affe t performanc , this may id ntify risk areas

• Re iew any spe if eleme t s wh re in ivid al g roups have a low result

• Un ertand any real g aps bet wee th perception of diferent g roups

Manag e or lead a sales team 27 6% 2 6% 37 6% 2 2% 2 % 2 6% 2 7 % 3 4% 1 7 %

Manag e th ov rall proc s 2 4% 2 2% 4 3% 2 8% 3 8% 2 % 3 6% 31.5% 27 1%

Bu prod cts and servic s

File n me: 2 0 -017 9_ Ver t ical Bar Gr ap _ 01b.e s

Manag e or lead a sales team

File n me: 2 0 -017 9_ Ver t ical Bar Gr ap _ 01b.e s

Manag e th ov rall proc s

File n me: 2 0 -017 9_ Ver t ical Bar Gr ap _ 01b.e s

Bu prod cts and servic s

File n me: 2 0 -017 9_ Ver t ical Bar Gr ap _ 01b.e s

Carry out sales

File n me: 2 0 -017 9_ Ver t ical Bar Gr ap _ 01b.e s

Ma age a d market prod ct s

a d servic s

T he larg est difere c s are lkely to in icate that th re may be busin s risks T he most

sig nif ant are:

diference

5 Sales fore astin is acc rate

and manag ed

Bu prod cts and

servic s from ABC

Carry out sales

PER FORMANCE DR IVER S W ITHHIGHE T SCORES – AR EAS OF STR ENGTH

L iste below are th strong est areas Wh re th y are abov 6 % th y may be consid red as

a streng th

9 Performanc is manag ed ag ainst in ivid al sales targ ets 37 9

2 Sales teams buid efe tiv relationships 3 1

Analysis:

For each of th se streng ths, reviewin th diferen es betwee each d partme t/ team/ fu ction

may in ic te wh re furth r improv me t could be made Wh re a ‘%’ is shown without a

n mber this in icates this d partme t/team/ fu ction were not aske about this performanc

PERFOR MANCE DRIVER S W ITH LOW EST SCORES – AREAS OF IMPROVEMENT

L iste below are th weakest areas, whic in icate a o p rtu ity for real improv me t

R esult by Dep r tment/ Fu ctions/ Teams

Wh re a g roup is not shown th y were not aske ab ut this performanc driv r

P erforma ce dr iver

Reg ional commercial manag er - 2 4 % 17 3 %

R esult fr Main Inv lv ment Gr ou s tak in p r t

Wh re a g roup is not shown th y were not aske ab ut this performanc driv r

Ma age a d market prod ct s a d servic s

N.B Althoug h this analysis wil u doubte ly be useful, you would f d t hat furth r insig hts int o where you can improv

performanc would be provid d by in reasin t he le el of participation by folowin g roups:

Sales Iberia %

STATEMENTS THAT INDICATE POTENTIAL R ISK

A sig ifca nt level of p te tia l risk is in ica te for th folow in s a teme t use in

th a sses me t:

Information about our prod cts and servic s is commu icte to c stomers 2 %

Improv me t s t o this proc s take place to e hanc performanc 2 %

Sales leads g en rate from trade fairs, exhibitions and confere c s are manag ed 2 %

A hig level of p te tial risk is in ica te for th folow in sateme t use in

th as es me t:

Credit and f ancial risks in d alin with c stomers is manag ed 3 %

T he org anization u d rsta ds what its c stomers n e 3 %

T he org anization u d rsta ds what th c st omer req ires be on what is

act ually spe if d

T he c stomer ag re me t d f es th servic s to be d lv red 3 %

Sales records are maintain d with c stomer information 3 %

KPIs are use to manag e this cros-d partme tal proc s 31%

Sales proje ts, dire t marketin and promotions are manag ed 37 %