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Three Necessary Steps Toward an Integrated Management System

Viewing EHS management systems and enabling information management systems as one and the same is a prevalent misunderstanding. But failure to distinguish between the two could actually lead to missed opportunities and a lack of understanding about the actual performance of a company’s EHS efforts.

Management systems are the policies, procedures, and processes that a company has put into place to achieve specific objectives. For example, an industrial company’s management system might include processes for environmental impacts, safety, and quality. ISO provides management system standards that embody best practices based on a consensus of experts, individually addressing aspects of business operations such as environmental impacts, health and safety, and quality. These many management system standards share common elements such as how to manage nonconformity through corrective and preventative action.

Integrated management systems (IMS) are the ways a company manages those policies, procedures, and processes across multiple, interrelated aspects of their business — for example, the ways that same industrial company tracks a vehicular incident that results in hazardous waste that must be properly handled and disposed, the environmental impacts due to the accident that released into a nearby river, employee and community exposure to hazardous chemicals, and a missed shipment to a customer. An IMS looks at multiple aspects of a business’s operations in a holistic way rather than as independent issues; this helps a company identify problems, pinpoint areas for improvement, and implement changes that improve operations that can directly affect the bottom line.

Many companies implement information management systems to operationalize their management systems for EHS, quality control, and compliance. These information management systems enable the disciplined execution of corporate policies, procedures, and processes. A critical misunderstanding can arise, though, when the management system and information management system are thought of as one and the same. Information managements systems are certainly developed to support management system standards, but they are ultimately just a tool. The corporate management system is the roadmap for the business to follow, and information management systems (and people) need to conform to that roadmap. If the corporate management system is conforming to the tools that you use, corporate objectives may very well be compromised. The important point is that management systems themselves do not require technology at all.

Management system implementations are often pursued with singular focus and the result is often isolated and siloed programs. Such siloed programs pose risks in part because a single incident does not affect just a single aspect of the company. Going back to our earlier example, the vehicular incident touches environment, health and safety, quality and supply chain. The ramifications are quite extensive and would typically need to be addressed by multiple management systems. For example, management systems based on standards such as ISO 14001, ISO 45001, ISO 9001, and ISO 28001 would all individually apply.

Without an integrated management information system that pulls together all of these operational facets into a singular program, that one vehicular incident would need to be addressed separately in each management system. This means redundant and potentially less effective management of an adverse incident. Even more critically, when looking at the business from a holistic, managerial perspective, the risks and consequences may be fragmented or incomplete. Thus, it’s more difficult to fully understand the performance and risk associated with the business. Implementation of siloed information management systems can contribute to this challenge and even exacerbate it. But that’s a topic for a future discussion.

An IMS reveals an overall picture of how that single event affects the company in all areas, giving management an understanding of the true impacts across numerous business facets. Leadership is able to gain more meaningful insights into the business to modify behaviors within the organization effectively, driving performance improvements across all areas. An IMS also enables companies to operate more effectively with fewer redundant efforts and investments in business processes. Perhaps the biggest benefit of an IMS is improved comprehensive management visibility to operational risk across all facets of a business. Since risk affects both the reputation and financial foundation of a company, a holistic view across all systems can be vital. The discussion then can shift to assess how best to enable the management system, and this is where technology and information management systems enter the picture.

To determine if an IMS is a logical next step in your company’s EHS management and tracking, consider the following three steps:

1. Determine which aspects of business operations are most valuable. Corporate leadership needs to identify which are the most material to performance, and marshal appropriate resources to address those management systems. One way to get a read on the concept of materiality is to look at the Sustainability Accounting Standards Board’s extensive heat map showing the most material aspects to operations by sector and industry. An oil and gas company, for instance, that has had a specific, steady rate of catastrophic events over the past 20 years might overlook the full effects of non-catastrophic events if management systems are siloed. Catastrophic events are an accumulation of actions; with disparate management systems, a view of the individual, specific actions that led to the event may be hard to determine. With a holistic view of each individual event, however, the company could see patterns in the events leading to a catastrophic event, allowing them to pinpoint where they need to focus time and attention in order to lower the rate — and do so without an increase in spending.

2. Assess the need for an integrated management system. Evaluate how common elements across current management systems could be addressed holistically. Look at which systems already exist, whether they are formally defined, and how they’re being executed. Then identify where the risks and opportunities in the business are based on that initial assessment. During this evaluation, recognize that the language used across different management systems will likely be different; however, the systems will be addressing the same underlying issues. For example, environmental aspects, hazards, and off-spec products are all sources of risk viewed from different perspectives. Common risk management practices thus provide a holistic perspective from when to evaluate your management systems and determine where integration can yield the greatest benefits.

3. Develop a management system plan or set of proposals that demonstrates not just the qualitative benefits but the financial ones. When those messages are put in context for the executives who control the budget, they are more likely to attract attention and support. Make the business case practical rather than emotional. Base it on sound logic with the clear benefits presented in terms of dollars and cents.

At the end of the day, this work is grounded in the need for organizational change, and positive organizational change directly affects a company’s financial performance. By deploying an integrated management system, money and time get invested in the right areas, making companies more resilient and financially successful.

Jeff Ladner has been helping corporations drive operational excellence and effectively manage operational risk for 20 years. He leads the Sphera solution strategy, helping corporations enable their management systems. Focus areas include environmental performance, personnel and process safety, product stewardship, supply chain management, risk assessment, and change management. Mr. Ladner holds a B.S. from Purdue University in chemical engineering and an MBA from the University of Delaware.

 

Jeff Ladner
 
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