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The Internal Management System Audit – Important Management Tool for the Sustainable

Development of an Organization

European Organization for Quality

Cornelia ButnaruEOQ Operations Manager

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The Internal Management System Audit – Important Management Tool for the Sustainable

Development of an Organization

Presentation agenda:

1.Sustainability – Quality management, one of the core fields of sustainability

2.Strategic development, process oriented measurable objectives, people involvement

3.Process oriented internal audits, valuable inputs for management review, basis for the continual improvement

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Sustainability dimensions and core fields

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Sustainability(conservation of values)

Business culture and ethics Goal: Credibility in the business and in the company

Environment and climate protection Goal: Image profit

Quality management Goal: permanent development process

Leadership Goal: Model and obligingness

Human resources management Goal: Area encroaching work, information and knowledge exchange

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Principles of sustainable value management

• Achievement not of the good but of the better things• Clear and structured communication• Do it properly and talk about it!• All areas bound into the concept of the value

management • Implementing a process of the continuous value-

oriented self control • The leadership should be a model • Self obligation and self commitment of employees• Sustainability formulated and supported by the

leadership

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(Quality) Management Systems and Strategic Management

Goal of (Quality) Management:

Goal of Strategic Management:

Permanent development process of an organization

Design of organization’sdevelopment

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Putting Strategy into the center of the Management process

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Management

Process

Strategy

You can’t manage what you can’t measureYou can’t manage what you can’t measure

You can’t measure what you can’t describeYou can’t measure what you can’t describe

Describe strategy, goals/objectives, performance indicators

Describe strategy, goals/objectives, performance indicators

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Strategic directions

Policy

Objectives

Objectives

Objectives

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The strategic planning process

Strategy Objectives Measures Targets Initiatives

Strategic objective

Measure Target Initiative

Grow revenue

Number of active customers

483,700 Customer Contact Program

Example:

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The Balance Scorecard – translating strategy into action

Measurement is the

Language that gives clarity

to vague concepts.

Measurement is used to

communicate, not to

control.

Strategy can be described

as a series of cause and

effect relationships

The Balanced Scorecard provides a framework to translate the vision and strategy into operational terms upon 4 perspectives

The strategy

Financial perspective"If we succeed, how will we look to our shareholders?”

Customer perspective"To achieve my vision, how must I look to my customers?”

Internal perspective"To satisfy my customer, at which processes must I excel?”

Learning organization"To achieve my vision, how must my organization learn and improve?”

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Objectives development based on the main strategic directions

Which are our main strategic directions? How do we want to attain our main strategic directions?

Potentials

Filter

Financial

Customer

Processes

Strategic directions Strategic objectives

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BSC Advantages

Specifies the business strategy, quantified into operative goals

Reduces complexity and data flood Covers the business-specific connections between the

measures sizes. Binds actions with involved individuals Delivers an overview over the driving factors for the long-

term financial success. Enables the join of all strategic initiatives with the network

thoughts. Promotes transparency and obligingness. Future-capable control and feedback system May be well connected with quality initiatives and change

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StrategyOrganizational BSC

Objectives

Success drivers

ActionsProcesses/Dept.

Individuals

Objectives

Success drivers

Actions

Objectives

Success drivers

Actions

Correlation of actions

Deployment of the strategy until the individual level: focussing on the success drivers

what

what

what

how

how

how

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Alocating objectives to processes, departments, functions

Organization‘s objectives(BSC)

Processes

Departments

Functions

Monitoring of same objective=Processes interactions!

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SMART objectives

• S is for Specific • M is for Measurable• A is for Aggressive and Achievable • R is for Relevant • T is for Time.

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Measures/metrics/indicators

The BSC (a balanced report system) adjusts in a balanced manner, the financial indicators with:

• External oriented indicators and internal control indicators

• Monetary and non-monetary indicators • Strategic results indicators and success drivers of

these result oriented indicators • Past and future-oriented indicators • Generic and specific indicators

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Effectiveness and efficiency indicators

.First step: Doing the rightEffectiveness = objective attainmentEffective is an alternative action that leads to the desired goal Second step: Doing it right

Efficiency = expenditure/effort optimization Efficient is an action that leads to the desired goal with use of the least possible

Third step: Considering goal conflictsAn improvement of the efficiency can reduce the effectiveness and vice versa

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Effectiveness and efficiency

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Current situation

ObjectiveInitiativ

e 1

Initiative 2

Initi

ativ

e 3

Initi

ativ

e 4

Initiatives 1 and 2 = EfficientInitiatives 3 and 4 = Effective

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Involvement of human capital

Motivating people, by using in the daily work their :• Creativity• Sociality

and by• Allocating clear, measurable objectives• Allowing (as possible) action freedom

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Being visionary: Being a model:

Showing commitment and courage, setting energies free, promoting talents and innovations

Increasing corporate value:

Managing wellbeing for all stakeholders

TheLeadership Power- House

The not-delegable tasks of leaders

Giving direction and communicating the sense

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The internal audit – important management tool

Top management

Top management

Management team

Process managers+ employees Internal

auditors

Strategy(directions)

Strategic objectives(measures,targets)

Initiatives

Processes objectives + initiatives+resources

Objectives accomplishment In the processes

Strateg

ic plan

nin

g p

rocess

Feed

back (P

erform

ances evalu

ation

)

Intern

al aud

itsM

anagement review

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High impact auditing

Internal auditing is the process by which an organization examines its ability:

• to meet requirements of a management standard (such as ISO 9001)

• to conform with internal procedures and commitments and • to produce effective and efficient results (accomplishment

of planned objectives by minimum possible resources)

and identifies all kind of improvement opportunities

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The process-oriented audit

A process-oriented audit evaluates:• How the process incorporates all elements

involved in the process (human resources, equipments, work environment, operation and control methods, materials and information)

• That the process works• In order to achieve the planned results (the

objectives)

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Performing value added process-oriented audits

Part 1 – Preparation for the audit (critical!)

• Identify all the processes • Review what changed? • Review the audits and performance history • Understand the Process • Identify the "Good" of the process

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Part 2 – Conducting the process-oriented audit

Evaluating by :• Inquiries at all levels of responsibilities, • Observation of activities and, • Collection of objective evidences,

the presence and effectiveness of the planned operation and control activities, within the process, in order to attain the planned objectives

Performing value added process-oriented audits

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Conducting the process-oriented audit (1/3)

. Process planning, organization and monitoring

Assurance of the process needed resources (materials, human, infrastructure, environment, methods, information)

Responsibilities within the process (departments, functions)

Evaluation of the process effectiveness and efficiency – accomplishment level of the process objectives

The process manager

Interview related to:

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Operational methods and responsibilities,implementation (documents, records)

Control activities, non-conforming product,corrective/preventive actions, effectiveness evaluation

Human resources competencies (training, effectiveness)

Infrastructure (maintenance of working places,equipments, monitoring and measuring devices etc.)

Environmental aspects (assurance and control)

Departmental objectives accomplishment (data analysis, communication)

Improvement opportunities of the process and of the resulting product

Departments chiefs/Responsible functions involved in the process

Conducting the process-oriented audit (2/3)

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Understanding of responsibilites to achieve the planned objectives

Performance of operational activites, responsibilites

Performance of control activites, responsibilites colecting and reporting results (inputs, in-the process, outputs)

Understanding of methods (documents) and performed records

Non-conforming products, corrections, corrective/preventive actions

Improvement opportunities of the process and of the resulting product

Employees(operations/controls)

Conducting the process-oriented audit (3/3)

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Results ofInternal auditing process

Managementreview

Continual improvement process

Processes effectiveness(objectives accomplishment)Corrective/preventive actionseffectiveness Improvement opportunities

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The continual improvement process

PlanDo

Check Act

1. StrategyObjectives,Initiatives

2. ImplementingMaintaining

3. ControlVerificationMonitoringAudit

4. Managementreview

StrategyObjectives

StrategyNEWObiectives

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Conclusion

The aim “to be successive the better” may be attained by:

A viable strategy Transposing strategy by measurable objectivesAllocating objectives to processes/individualsMotivating employeesEvaluating by process-oriented audits Analysing results by management review and

taking further actions to improve performances

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59th EOQ Congress 2015

June 11-12, Athens/Greece

www.quality2015.eu32