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Four Key Strategies for Management System Integration

 

Integrated management systems have the potential to yield significant business benefits. By looking at multiple aspects of an organization’s operations holistically, an integrated management system (IMS) makes it easier to identify problems, zero in on areas that need improvement, and implement the changes that can have a positive effect on the company’s bottom line.

Once an organization has determined which aspects of business operations are most valuable, assessed the need for an integrated management system, and developed a management system plan or set of proposals that demonstrates the benefits, it is time to begin implementation. Here are four key strategies for how to integrate management systems.

1. Use materiality as a guiding principle. Materiality is a fundamental accounting principle where the information that could influence an economic decision should be disclosed. This principle acknowledges that, in the context of financial decisions, some information is more important than other information. The goal with materiality is to improve the usefulness of corporate disclosures for making decisions. When considering all facets of an organization’s operations, the sheer scope and complexity of a business can be overwhelming. Using materiality will help ensure that your IMS project can garner support from executive management, the board, and other stakeholders.

2. Identify common business processes or elements across relevant management systems. Finding common elements or processes in your internal management systems requires a diligent assessment of corporate policies and procedures. This will entail a top-down review of formally document policies and procedures as well as informal operating practices. A cross-functional team with stakeholders from each functional team will be required. The stakeholders must have a deep understanding of corporate policy and procedure for their respective functions. In many organizations, these stakeholders may be the formal business process owners, such as a manager responsible for process safety, or simply the employee accountable for specific performance objectives.

As part of the assessment, it will be insightful to look at how guidelines are put into practice. The personnel responsible for executing or following the defined corporate processes should be interviewed to find out how corporate guidelines are operationalized. Often, inefficiencies are introduced or gaps between corporate and operational goals occur during the implementation of corporate policies and procedures. This may be an uncomfortable aspect of assessment if it brings to light discrepancies between expectations and actual practices. However, it’s important to communicate that this exercise is about streamlining processes and reducing overhead, and should make day-to-day work easier in the long run.

3. Assess the status of current management systems. There are two techniques that may be used for this stage. One is to reference management system standards such as those created by the International Organization for Standardization (ISO). Even if your organization does not intend to formally implement ISO standards and obtain certification, they could still guide an assessment. For companies that already have established management systems, revisiting the ISO standards can be helpful as well. In 2015, ISO standards were updated to address overlap and inconsistencies across different management system standards in response to feedback the organization received about the difficulty of using ISO for IMS deployment. A key advantage is that a third-party independent body’s published standards provide an objective view that can be used to help overcome internal stakeholders’ resistance to change or bias.

Another technique to assess management systems and help identify commonalities is to use risk management as an organizing principle. This entails examining the management systems from the standpoint of how to identify, assess, and mitigate risk in the organization. By definition, you’re looking at topics — whether environmental, product quality, safety, health, or business continuity — simultaneously. Similar to ISO standards, risk management acts as a unifier, stripping away biases that could be introduced if one looked at the business from separate perspectives. As a result, you might begin to see where there should be one business process instead of three feeding each management system.

4. Identify differences in semantics between management systems. The words we use to describe management systems matter. Semantics play a key role in how commonalities and differences between management systems are perceived. If we don’t define our terms, we risk operating on false assumptions and creating inefficiencies.

For example, ISO 14001, which was revised in 2015, maps out a framework for a company to set up an environmental management system. This standard applies to aspects of the organization’s activities, products, or services that may have an impact on the environment. At the same time, the Occupational Health and Safety Assessment Series (OHSAS) 18001 standard establishes minimum requirements for occupational health and safety management with the aim of reducing workplace hazards. Both standards relate to sources of risk and their consequences. However, one uses the language of environmental aspects while the other uses the language of hazards that apply to health.

The way these two standards are defined, many organizations rely on two separate independent identification processes to look at events and incidents. Let’s say that a loss of containment event occurs and a hazardous substance accidentally leaks into the local waterway. The team assessing environmental impacts may readily identify this as an environmental risk. However, the team responsible for safety assessment may not identify this as a potential source of risk when they assess potential health-related events. Or vice versa. Instead, looking at management holistically creates a more efficient program, pulling what used to be two separate processes into one.

A remarkable generational shift is also happening in the workplace. We hear many executives talking about the loss of institutional knowledge that occurs when industry veterans with decades of experience leave. For those longtime workers, the language makes sense. But the newest members the workforce don’t necessarily have that intuition. They may perceive differences in language as actual differences between standards. Speaking a shared industry language will mean less of a learning curve for them. A well-structured system will produce optimal performance outcomes, even when less experienced people work within it. Integrated management systems ensure consistency and efficiency for years to come.

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.

 

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