Corporate Governance: How to build organisations and nations with ISO standards
by Ashleigh Cunningham – Wednesday, 6 December 2017
Governance, economic stability, basic infrastructure, health, education and security – these are all factors that, when positively embraced, allow for successfully building organisations and nations.
With the world becoming increasingly interconnected, through modern information, communications and transportation technologies, many people are shifting their mindsets towards becoming Global Citizens – belonging to a world-wide community. ISO standards are a great way for organisations to ensure that they align themselves with the ideals and demands of both the consumer and the business environment, that collectively represent society.
The Global Citizens’ Initiative suggest that a “global citizen is someone who identifies with being part of an emerging world community and whose actions contribute to building this community’s values and practices.”
With a move towards an increased importance of accountability, both consumers and manufacturers are realising the impacts of their choices and actions. Consumers are raising their expectations towards environmental responsibility and seek ethical practice in the business community. Organisations, more than ever, need to adapt the nature in which they conduct business, in order to transform their global impact for the positive, and build trust in their brands, products and services.
This shift is something that ISO standards are able to assist organisations in achieving, ensuring that the potential impacts of the organisation are considered at a strategic level. ISO standards make the cost of doing business quantifiable, which means more responsive and responsible planning towards future growth and meeting consumer expectations. The standards enable transparency about products and best practices for limiting an organisation’s impacts on the environment and the environment’s impact on the organisation.
In past months, we’ve published blog posts on topics surrounding the importance of Good Governance, Sustainability and Leadership, in various industries and environments. This month, we place our focus on combining these factors in order to build the organisation and to build the nations of the world.
The periodic review of ISO 9001:2015 and ISO 14001:2015 has, on this occasion, coincided with a demand by society for more responsible governance to be demonstrated by organisation leaders. This has become uniform through the introduction of the High Level Structure (ISO Directive 1 Annex SL), which seeks to bring consistency in the writing of the ISO management system standards, as well as making it easier for organisations to simultaneously comply to multiple standards or work with an integrated Management System.
One of the little understood benefits offered by the revised ISO standards is the introduction of the Governance Framework. This enables organisations to manage the consistency of business processes, at a strategic level, whilst satisfying the requirements of interested parties, including customers and regulatory bodies. The framework allows management to deal with risk and opportunity, associated with the context and objectives of the organisation – which simultaneously highlights opportunities for improvements and business assurance through 3rd party audits and certification.
From an ISO 14001:2015 perspective, the Governance Framework also assists organisations in dealing with their contribution towards sustainable development – particularly within the environmental, social and economic realms. This is useful in the protection of the environment, as well as balancing socio-economic conditions against responses to changing environmental conditions.
“…governance is the system and process concerned with ensuring the overall direction, effectiveness, supervision and accountability of an organization.” – ISO Secretary-General, Sergio Mujica
Victoria Hurth, Co-Convenor of the ISO/TC 309 working group and ISO’s member in the UK, said: “The benefits of good governance are well evidenced. As well as reducing the risk of bad surprises that can destroy an organization, a well-governed organization is more trusted and attracts talent, which in turn drives performance and investment. The proposed new standard has the potential to increase the number of socially, environmentally and economically sustainable organizations, providing multiple benefits for investors and society as a whole.”
Risk based Thinking
Another addition to the recently revised standards is the concept of ‘Risk-based thinking’, synonymous with the Plan-Do-Check-Act Continuum. This means that an organisation’s top management are expected to demonstrate that they have applied their minds to ensure enterprise-wide threats are properly dealt with. This preventive approach to managing an organisation is therefore expected to permeate all functions and levels of the organisation. In so doing, the likelihood and severity of risk events are significantly reduced and confidence is offered to interested parties.
Risk-based thinking, although not always explicit in the requirements of the standards, needs to be uniformly applied wherever possible. For example, when planning audits, the organisation using risk-based thinking will plan to scrutinise the areas of underperformance more closely. This may reflect in more frequent visits to these areas or perhaps audits of longer duration in these areas.
Similarly, when controlling the performance of suppliers, the organisation will increase the level of control associated with the suppliers of higher impact on its own business goals.
This way of thinking urges the organisation to prioritise its intentions when dealing with matters of governance.
“Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” – Brundtland Report
As we wrote in our blogpost on Sustainable Development, businesses and organisations have an important relationship with the society and environment in which they exist. Whilst some don’t realise this relationship exists, others strive to ensure that the delicate balance of the relationship is maintained. Without doing so, the business or organisation might actually cease to exist.
The fragility is owing to the fact that organisations need to exist amongst the healthy tension of:
- their economic contribution,
- society’s demands of them, and
- with minimal impact on the natural environment.
Whilst balancing these needs, leadership teams also need to consider the impact that the environment (both natural and other) might have on the organisation – hence the importance of Risk-based thinking.
Sustainability needs to be considered both within and outside of the perimeters of the organisation.
Amongst many relevant and important factors to consider in the sustainability of an organisation is the need for a quality culture (specific to ISO 9001:2015). The standard speaks to the need for a quality culture and specifies conditions that ensure that behaviour may be assessed throughout the management structure, at all levels and functions. This approach calls for the correct attitude and approach to be demonstrated by the people under the organisation’s control. More detail on this topic may be found in ISO 9004 Managing for the sustained success of an organization — A quality management approach
As mentioned above, the ISO 14001:2015 emphasises the importance for sustainable development. Its obligations, moral and for conformity to ISO 14001, demand that the organisation influence aspects over which the organisation does not necessarily have direct control. For example, an organisation may use raw materials produced by a supplier that acts irresponsibly. The supplier may employ illegal or inappropriate labour practices that could become public knowledge. The organisation purchasing from such a supplier, through association, will be contributing to the existence of the unscrupulous and may consequently compromise its own brand.
So too do consumers have great responsibility towards being aware not only of their consumption patterns but also about where and how the products/services that they utilise, are produced.
All individuals with an interest in an organisation need to be aware that they are accountable for their involvement with the provision of products / services, as well as the consumption of these.
Great focus, on a strategic level, needs to be placed on concepts such as Good Governance, Sustainability and Leadership. Without these, the sustainability of the organisation, as well as its reputation is at risk.
What can you do?
Erudio Global offer Self-Study Introductory courses on both ISO 9001:2015 and ISO 14001:2015. Each of these courses cover the content of the standards, as well as what is required of the individuals associated with the running of an organisation.
You can find these courses and their synopsis by following this link: https://www.erudio.global/course/index.php
Let us know what you and your organisation are doing to create a sustainable future for our world. You can do this by typing a comment in the field below!
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