QUALITY TOOLBOX. Creating a Complete Business Management System. Many organizations have separate environmental management. Integrating environmental,

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1 QUALITY TOOLBOX Creating a Complete Business Management System Many organizations have separate environmental management and occupational, health, and safety management systems. They are defined as being part of the organization s overall management Often, however, organizations do not succeed in making these specialized programs work effectively as part of a business management This is unfortunate, since the types of requirements typically found in a management system are useful regardless of whether you are seeking to manage environmental, health, and safety, quality, or business issues. In fact, it would be best to operate all of these programs as well as similar systems addressing areas such as maintenance, logistics, and security using the same integrated business management Making the Transition to an Integrated System There are a number of steps that management-standard users can take to help make this important transition. Integrating environmental, First, organizations can use a recognized set of principles, such as the eight quality management occupational, health, and safety management into an organization s overall management system principles set out in management standard or the principles the ISO 9001 quality associated with one of the excellence frameworks. These principles provide the foundation for a business management widely used business Second, organizations can integrate performance criteria (derived from a business excellence framework) into management systems. Many business management systems use such criteria to help improve the overall performance of the company. Finally, organizations can use process improvement methods to help internalize continual improvement. Using these proven approaches, it becomes relatively straightforward to integrate an organization s specialized management systems and truly make them part of the business. Once integration is accomplished, it will become easier for the organization to find the (often hidden) value in these management programs, while also helping to improve its business sustainability Wiley Periodicals, Inc. Published online in Wiley InterScience ( DOI: /tqem Environmental Quality Management / DOI /tqem / Summer 2008 / 87

2 The Business Management System Wheel To understand how the integration process works, it is useful to visualize the business management system as a wheel. Individual principles are like spokes supporting a rim made up of performance criteria. Implementation of principles and performance criteria leads to results (or outcomes) that can be visualized as the outermost ring. Together, these parts create a business management system wheel. Business Principles Principles are the foundation for integrating key performance and operational requirements Principles are the foundation for integrating key performance and operational requirements within a results-oriented business excellence framework. the organization). within a results-oriented business excellence framework. They create a basis for sustainable action by all employees and allow for recognition of lessons learned (which in turn can be used to continually improve Sometimes referred to as core values and guiding principles, they are beliefs and behaviors that drive those organizations that perform at a best in class level. Several sets of principles are available. The quality management principles specified in ISO 9001 are: The various business excellence frameworks also include sets of principles. In the United States, the most commonly used framework is the Baldrige National Quality Program. The Baldrige Criteria for Performance Excellence include a set of 11 interrelated principles: visionary leadership, stakeholder-driven excellence, organizational and personal learning, valuing workforce members and business partners, agility, focus on the future, managing for innovation, management by fact, social responsibility, focus on results and creating value, and systems perspective. Some companies prefer the Australian business excellence framework, which contains eight principles: leadership, stakeholders, systems thinking, people, continual improvement, information and knowledge, corporate and social responsibility, and sustainable results. stakeholder focus, leadership, involvement of people, use of a process approach, systems approach to management, continual improvement, factual approach to decision making, and mutually beneficial business relationships with suppliers and customers. Other lists of principles are also available. Moreover, if an organization is more than a few years old, it invariably has its own set of principles that guide employees regardless of whether these principles have been placed in writing. Many larger organizations have formally stated their principles and have made them public. In order to incorporate your organization s principles into a management system, you might 88 / Summer 2008 / Environmental Quality Management / DOI /tqem

3 begin with an exercise that evaluates your existing principles by mapping them against a composite of the principles listed above. As you can see from the lists provided here, there is no consensus among the various sets of principles. However, there are some common elements. The sections that follow discuss some key principles in more detail. Leadership by Example Organizational leaders must lead by example and seek to model behaviors that reflect the organization s guiding principles. They should inspire, motivate, and encourage the entire workforce to contribute, to be innovative, and to embrace change. Senior leaders communicate the organization s vision, key objectives, and core strategies. They ensure that these strategies are effectively deployed. The organization s objectives should balance the needs of all its stakeholders. Senior leaders should be responsible to the organization s governance body for their actions and performance. The three sources of principles listed above offer a multitude of best practices for leaders in any organization. Focus on Stakeholders Interests An organization must understand what its markets and stakeholders (not just customers) value, and what they are likely to value in the future. This knowledge must be used to drive organizational activities, products, and services. Value and satisfaction may be influenced by many factors that contribute to stakeholders overall experience with your organization. These factors can be shaped in a positive way by stakeholder engagement that helps to build trust, confidence, and loyalty. In order to build a perception of excellence among stakeholders, your organization must keep up with technological developments that affect your business and be able to match or exceed competitors offerings. You must also respond rapidly and flexibly to changes in stakeholder interests, the environment, and the market. Involvement of People People at all levels are the essence of an organization. Involving them fully allows their abilities to be used for the organization s benefit. The success of any organization depends increasingly on an engaged workforce that benefits from meaningful work, clear organizational direction, and a safe, trusting, and cooperative environment. Helping workers develop their ideas improves the organization s management Successful outcomes promote a shared ownership of the organization s objectives and targets. This approach creates a committed, loyal, productive, and innovative workforce. Attention to workers satisfaction, development, and well-being enhances their performance and working relationships. More importantly, from an organizational standpoint, it improves your ability to meet business objectives and targets. Organizational and Personal Learning In order to build a perception of excellence among stakeholders, your organization must keep up with technological developments that affect your business and be able to match or exceed competitors offerings. Within an organization, learning should not be directed only toward better products and services. Instead, it should include a focus on being more responsive, adaptive, innovative, and efficient. Such an approach to learning can promote business sustainability, enhance performance advantage, and provide your workforce with personal satisfaction and the motivation to excel. Quality Toolbox Environmental Quality Management / DOI /tqem / Summer 2008 / 89

4 An excellent organization makes use of its data, information, and knowledge, using facts to make strategic and operational decisions. Organizational learning can: enhance value to customers through new and improved products and services; help develop new business opportunities; promote development of new and improved processes or business models; reduce errors, defects, and waste (and their related costs); increase productivity and effectiveness in the use of all your resources and materials; and enhance your organization s performance An organization s leaders should stress responsibility to the public, ethical behavior, and the need to practice good citizenship. with respect to fulfilling its societal responsibilities and serving the community. An organization should also encourage personal among learning employees. Personal learning can help promote: a more engaged, satisfied, and versatile workforce that stays with the organization; organizational cross-functional learning; enhancement of your organization s knowledge assets; and an improved environment for innovation. Operating as a Sustainable Organization An excellent organization views itself and the environment in which it operates as a It delivers continual improvement of that system by understanding and anticipating the potential consequences of its activities, products, and services. A system orientation helps the organization ensure desirable outcomes for its stakeholders. Pursuit of business sustainability requires a strong future orientation and a willingness to make long-term commitments to key stakeholders with regard to addressing their interests in the organization s operation. Innovation can lead your organization to new dimensions of performance. It should be integrated into daily work. Systematic processes for innovation should reach across the organization and be supported by ideas from all your stakeholders. Practicing Sustainable Development An organization s leaders should stress responsibility to the public, ethical behavior, and the need to practice good citizenship. They must ensure that the organization protects public health, safety, and the environment. The scope of this protection includes not only operations, but also the full life cycle of the organization s products and services. An organization should emphasize resource conservation and waste reduction at the source. Planning should anticipate adverse impacts from production, distribution, transport, use, and disposal of products. Effective planning should prevent problems, provide for a forthright response if problems occur, and make available the information and support needed to maintain safety, public awareness, and confidence. Good governance (with corresponding management accountability) can help ensure that the organization s broader responsibilities are identified and met. This will lead to an enhanced public image, improved risk management and ultimately environmental, social, and economic sustainability. Producing Sustainable Results Sustainable results represent the outcomes of an organization s sustainable performance. Results should be used to create and balance value 90 / Summer 2008 / Environmental Quality Management / DOI /tqem

5 for key stakeholders. By maintaining such value, your organization builds loyalty, contributes to growing the economy, and plays a positive role in society. To meet the sometimes conflicting and changing aims implied by balancing value, organizational strategy must be closely tied to stakeholder engagement. This will help ensure that the organization s plans and actions meet the differing needs of a range of stakeholders, while avoiding adverse impacts to any of them. The organization must have effective ways to communicate its priorities (both short-term and longer-term), monitor actual performance (using business excellence framework criteria), and provide a clear basis for continually improving results. Successful organizations are able to make judgments about the balance of outcomes to be achieved across their key stakeholder groups. They also reflect that balance in developing and monitoring the value delivered by their sustainability strategies. Sustainability Performance Criteria Business excellence (or sustainability performance) criteria can be integrated directly into management system requirements. Usually, organizations add these criteria as their management systems become more mature and begin to deliver sustainable results through better use of principles. The six business excellence criteria are: Leadership Strategy and Planning Information and Knowledge People Stakeholder and Market Focus Process Management and Innovation These criteria are discussed in more detail in the sections that follow. Leadership Even with a strong leadership principle, it is still important to include some leadership requirements in the integrated business management The business excellence frameworks offer some well-worded suggestions in their sets of leadership requirements. These suggestions indicate that the more you do, the closer you will come to best practice in the area of leadership. The first set of leadership requirements addresses how leaders at all levels create and communicate the organization s vision and principles and how they practice these principles themselves. Practices included in this area could include any or all of the following: implementing and maintaining good governance; recognizing the role of senior leadership in demonstrating desired behaviors; promoting a competency-building system to improve leadership; and developing an effective business management The second set of leadership requirements addresses how to develop a culture that supports leadership attributes and helps people achieve objectives. Practices can include: communicating values centered on principles; establishing behaviors that demonstrate the promotion of principles; encouraging creativity and innovation; and promoting ways for the organization to absorb change and respond to opportunities. Successful organizations are able to make judgments about the balance of outcomes to be achieved across their key stakeholder groups. Quality Toolbox Environmental Quality Management / DOI /tqem / Summer 2008 / 91

6 The third set of leadership requirements focuses on centering the organization at the nexus of its operations within the community (and larger society), the environment, and the economic fabric of its locality. Practices can include: demonstrating that the organization has a strong environmental, health, and safety program; exhibiting legal and ethical behaviors; demonstrating social responsibility and good citizenship ; maintaining transparency and accountability in the organizational governance system; and addressing operational risk management Business excellence frameworks have many very good suggestions for practices that can help improve the planning of a management through a business management During the stakeholder engagement process, the organization can independently survey stakeholders to determine how effective management has been in fulfilling these requirements. Strategy and Planning Since a business management system places substantial emphasis on the plan-do-check-act cycle, it is prudent to specify how the planning phase of the business management system will be conducted and how it will be continually improved during each act sequence in the program. Elements of the strategy and planning performance criterion address how an organization should use a business management system to plan for sustainable success, what its core business strategies will be, and how to align the organization using its business principles. Several recommended practices can help an organization remain focused on sustainability into the future, while offering meaning to its stakeholders and to people who work within the organization. Practices could include: defining the business management system s objectives and targets as they relate to the organization s overall purpose and direction; developing action plans for each objective and target and ensuring that adequate financial and other resources are available to support these efforts; establishing how action plans will be deployed and ensuring that resources to accomplish the outcomes will be specified in each action plan; establishing which results will be monitored and which indications of improvement will be sought with respect to each action item; creating a means for using lessons learned to harness knowledge gained to continually improve implementation of the business management system; and ensuring that preparedness and contingency planning are adapted to making any necessary midcourse corrections during implementation of the strategy. Many organizations do not pay adequate attention to this planning sequence and fail to use formal action plans when implementing a business management system s program. Business excellence frameworks have many very good suggestions for practices that can help improve the planning of a management Information and Knowledge Every organization should use the information and knowledge it gains to achieve organizational objectives and targets. To accomplish this, the organization needs to have efficient and effective processes to acquire, analyze, apply, and manage information and knowledge. Unfortu- 92 / Summer 2008 / Environmental Quality Management / DOI /tqem

7 nately, however, many business management systems do not take full advantage of their monitoring and measurement component. The first element of the information and knowledge performance criterion examines how the organization measures, analyzes, aligns, reviews, and improves its sustainable performance and results through the use of data and information at all organizational levels. It further examines how the organization systematically uses the results of management reviews to evaluate and improve its processes. An organization must ensure the quality of needed data, information, software, and hardware and make certain they are available for use by the organization s workforce, suppliers, business partners, collaborators, customers, and other stakeholders. The second element of this performance criterion examines how the organization can create value through proper and judicious use of knowledge. Knowledge needs to be consolidated and shared across the organization. The organization must use its knowledge to support decision making, stimulate innovative thinking, and ensure success and sustainability. People/Workforce This performance criterion examines how an organization engages, manages, and develops its workforce to utilize people s full potential. It is not enough to tell workers what to do. Instead, they need to be directly involved in planning and implementing the organization s management program. People reach their full potential when they are properly aligned with the organization s overall business mission, its strategy, and the action plans associated with its management They should be able to follow their leadership s example with respect to each of the principles included in the foundation of the business management The first element of this performance criterion addresses how the organization engages, compensates, and rewards people in order to achieve sustainable results. The organization is encouraged to create a work environment that is engaging, positive and open, and safe and secure. It should also foster creativity and help unify the efforts of the people who work in the organization. A successful organization develops people to achieve high performance and uses the results of its efforts to continually improve. The second element of this performance criterion addresses how the organization manages workforce capability and capacity to accomplish work while aligning business needs with people s expectations. The organization should seek to attract people who are capable of growing with the business, place them in the right roles, and then manage them appropriately. Stakeholder and Market Focus This performance criterion explores how organizations engage stakeholders to determine their interests, requirements, needs, and expectations. An organization must use its understanding of the market in determining how to employ its knowledge, how to manage relationships with stakeholders, and how to deliver increasing value. Most business excellence frameworks focus specifically on customers. However, much of the information presented in the frameworks can be used to improve satisfaction (and understand the nature of dissatisfaction) among a much broader range of stakeholders. People reach their full potential when they are properly aligned with the organization s overall business mission, its strategy, and the action plans associated with its management This performance criterion tends to be the most difficult one for organizations to integrate into their business management systems. Many Quality Toolbox Environmental Quality Management / DOI /tqem / Summer 2008 / 93

8 organizations put off this step until their management system becomes more mature. In the interim, they may focus on stakeholders internal to the operation and on key outside stakeholders such as regulators, suppliers, and customers. Process Management and Innovation This is the final performance criterion in the business excellence framework. It is the focal point for key systems and processes in terms of delivering products and services. An organization needs to examine how it encourages innovation and continual improvement By focusing on sustainable results, the organization can maintain and improve in all areas covered by the business excellence framework performance criteria. in its processes while also managing the risks inherent in its operations. The organization needs to determine its core competencies and processes in order to deliver stakeholder value and achieve organizational success and sustainability. It must also provide for business continuity in the case of emergencies. Sustainable Results The results (or outcomes) category of a business excellence framework provides a results focus that encompasses both the organization s own objective evaluation and its stakeholders evaluation of its products and services. Results include outcomes for each of the following: products and services, stakeholders and markets, workforce focus, process effectiveness, and leadership. By focusing on sustainable results, the organization can maintain and improve in all areas covered by the business excellence framework performance criteria. Results should provide real-time information in order to facilitate evaluation and improvement of the processes, activities, products, and services that are within the scope of the organization s business management The improvement process needs to be accomplished in alignment with the organization s overall business strategy and market conditions. Process Improvement Once an integrated business management system has grounded its operations (using the organization s principles) and has adopted practices from each of the business excellence framework performance criteria, it needs to drive continual improvement using its own brand of process improvement. Organizations differ in their choice of process improvement methods. Some favor lean. Others prefer using Six Sigma methodology. No matter what process improvement method is used, however, it is important that continual improvement not be outsourced to value stream managers or black belts. Instead, these process improvement specialists should be invited to work within the business management It has been my experience that process improvement is the area that tends to require the greatest amount of attention within organizations. So how can your organization go about promoting process improvement and incorporating it into a business management system? One way is through a program aimed at addressing the organization s objectives and targets. Some organizations are inclined to create separate silos for this purpose, but that is not really necessary. Instead, the organization can simply create and implement formal action plans with active involvement by employees and assistance from lean and Six Sigma techniques. These plans 94 / Summer 2008 / Environmental Quality Management / DOI /tqem

9 automatically create a demand for process improvement and use the results of past events to demonstrate continual improvement within the business management Lean and Six Sigma are also very helpful in corrective and preventive action programs. I often recommend that programs in these areas be combined with the organization s objectives and target program, under the management of lean and Six Sigma specialists. A business excellence framework s performance criteria and results elements can help these specialists demonstrate the value of their efforts both within the organization and to stakeholders outside the organization. Conclusion By effectively integrating principles, business excellence performance criteria and results, and process improvement into an integrated management system, an organization can create a complete business management Such a system can form the foundation for the organization s journey to business sustainability., PhD, is a senior associate with First Environment in Boonton, New Jersey. Dr. Pojasek s most recent book is Making the Business Case for EHS (Business & Legal Reports, Inc.), for which he received the APEX writing excellence award. He also is the recipient of the 2006 award for pollution prevention from the Canadian Pollution Prevention Roundtable and the 2006 P2 Champion Award from the National Pollution Prevention Roundtable of the United States. He can be reached by phone at or by at Quality Toolbox Environmental Quality Management / DOI /tqem / Summer 2008 / 95

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