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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
.
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
.
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
Time7
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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
.
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
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