Accreditation Standards and Business Excellence

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Table of Contents

Introduction
Quality Management Accreditation
Environmental Management Accreditation
Conclusion
Recommendations
References

Introduction

Quality and environmental management have emerged as essential topics for all varieties of businesses in recent decades. As such, international bodies have emerged and created a unified set of standards for these matters, offering certification services to companies to help them prove that they follow the latest standards. The procedure is intended to enable the company to perform better through both better internal procedures and the public relations improvement that results from the confirmation. However, some managers still call the process into question, claiming that it does not improve the overall performance of the company. They tend to assert that companies introduce advancements in response to market demands and that an external authority is irrelevant and unnecessary. This literature review attempts to answer the question of the influence of accreditations on a company’s performance.

Quality Management Accreditation

Quality management standards are primarily represented by ISO 9000 and 9001, where the former is a family that includes the latter. The International Organization for Standardization updates them regularly to include the latest findings and respond to current developments. According to Berényi (2018), recent revisions add new paradigms such as stakeholder orientation and risk-based thinking, reflecting recent topics of interest for various businesses. These considerations reinforce the current framework that is based on a set of essential values. Tunjic, Kozina, and Primorac (2016) note that external auditors confirm the accreditation by ensuring that every employee actively participates in quality improvement regardless of the nature of their work. As such, they can see any lacking areas and provide the company with an impartial overview of its progress in the matter. However, the need for external audits may slow the process down and reduce the speed at which accreditation happens.

The ISO 9000 family of standards emerged in the late 1980s in response to the needs of the nations with the most robust economies. They were the primary recipients of the accreditations, while everyone else was left behind and may remain so to this day. Berényi (2018) highlights the tendency by showing the rapid progress of wealthy Western European nations during the 1990s and contrasting it with the generally sporadic and disorganized nature of the process in Eastern Europe. Overall, the study shows that the ISO 9001 standard is becoming less popular, with North America finding it unattractive and the growth in applications in East and Pacific Asia motivated by Western companies’ move there. With that said, the study’s detailed overview is limited to Europe, and the analysis of global tendencies may be inaccurate.

If companies benefit from the introduction of ISO 9000, they should reconsider this stance of general indifference. As such, many researchers have ventured to determine whether the certification improves company performance. Tunjic, Kozina, and Primorac (2016) claim that accreditation benefits companies in all aspects of their operations, regardless of size, both internally and externally. They claim that certification is a necessary step that verifies the quality management system’s effectiveness. Without it, the company may implement a framework but fail to achieve any significant results due to flaws that it may have missed in the process. It should be noted that the study only discusses the metal processing industry and so may not offer a comprehensive overview of all aspects of a business. With that said, the study has a significant sample size, and the results warrant attention.

Small and medium-sized businesses require particular attention, as it may be prohibitively expensive for them to institute a quality management system. Zimon (2017) concludes that while the implementation will generally benefit an organization regardless of its size, the ISO 9001 standard does not account for the needs of smaller businesses. The barriers highlighted in the study include the single-level structure, inadequate finances, inability to secure loans, and limited personnel attraction capabilities. These issues interfere with the management’s ability to introduce change and spread it among the employees. Even after successful implementation, the maintenance of quality management systems can take a significant toll on the company’s finances. Zimon (2016) notes that the study was completed before the publication of the 2015 revision of ISO 9001, which may have changed the situation. Regardless, the results are a cause for concern for many companies, which cannot compete with larger competitors that can afford certification.

All of the studies above have claimed that accreditation is beneficial overall, though sometimes it may fail in the implementation stage. Khan and Farooquie (2016) provide a different view, claiming that ISO 9001 certification did not improve profits and noting that the level of benefits across different enterprise sizes is inconsistent. Whatever benefits occurred after the implementation of the quality management systems may have been incidental and not entirely related to the achievement. The finding calls the motivations of companies in seeking accreditation into question, to which the authors answer that marketing gains and foreign market gains are the primary drivers of adoption. As the study reviews Indian companies, the latter part of the finding is consistent with the conclusions of Berényi (2016) for Eastern countries. As such, small and medium companies should consider whether the public image and foreign gains merit the significant investment required for accreditation.

One possible reason why ISO 9000 does not accommodate smaller companies is that it is not the only quality management framework, nor is it sufficient on its own in the modern environment. However, it can serve as the foundation for the implementation of other, more comprehensive approaches. Kar, Yusof, Sorooshian, and Rahamaddulla (2016) provide the idea of total quality management, which is partially similar to ISO 9000 but also significantly distinct from it in a variety of aspects. However, the authors note that accreditation is necessary as the foundation of any other measures and that many companies do not understand this. The paper agrees with Khan and Farooquie (2016) in that companies tend to adopt ISO 9000 in response to market pressures but do not make an active effort to improve. As a result, the accreditation does not bring sufficient benefits to justify the costs for such organizations.

Overall, the ISO 9000 family of standards appears to have emerged in developed countries and spread among most of the companies there. After that, new companies lost interest in the process, but some businesses began using the certification as a marketing tool and a method of verifying that their partners follow basic quality standards. As a result of ongoing globalization and the movement of production to Asia, firms there had to begin adopting the standards due to demands from their partners. However, the original idea was lost, and the certifications now tend to bring few to no benefits. Instead of using ISO 9000 as a framework to ensure that future quality improvement initiatives succeed, companies receive the accreditation and consider the task complete. This approach makes the current version of the standard inapplicable to small and medium enterprises, which are sometimes forced to adopt it despite an inability to support the associated costs.

Environmental Management Accreditation

Environmental management is more relevant nowadays than quality management due to the emergence of sustainability and corporate social responsibility concerns. Berényi (2018) notes that the ISO 14000 family of standards, which represents environmental compliance, is currently gaining popularity even though ISO 9000’s growth is slowing down. This tendency holds despite many similarities between the two sets and their implementation by companies worldwide. The same questions also arise as to whether environmental management accreditation is effective at improving an organization’s financial performance. However, the attitudes of companies regarding ISO 14000 are likely different than ISO 9000, as they choose to adopt it more frequently. This chapter of the literature review will discuss the use of ISO 14000 and the benefits as well as barriers associated with it.

The primary purpose of an environmental management system is to ensure that a company minimizes its adverse influence on its surroundings, with the maximization of profits playing a secondary role. As such, first of all, the review should determine whether ISO 14000 certification helps a business reduce the damage that its operations cause. Farok and Cearcy (2015) claim that most research supports the idea that accreditation helps companies become more environmentally friendly, though some papers disagree. However, they also highlight the standard’s lack of strict environmental performance requirements or continual improvement opportunities, as well as its weak public accountability. As such, ISO 14000 cannot replace regulation and market demand, and companies and nations should be aware of its weaknesses. While the knowledge that a partner is ISO 14000 compliant is beneficial, further measures are necessary to ensure that a firm is environmentally friendly.

Environmental friendliness is generally associated with innovation, as it is easier to make a new solution that has the attitude at its center than to adapt an old one. Radonjič, Pisnik, and Krajnc (2015) conclude that ISO 14000 compliant companies in Slovenia consider the certification highly valuable for the acceleration and establishment of ecological design paradigms. In particular, they work on reducing waste, energy consumption, material, air, and water usage, and the replacement of dangerous substances. These activities help the firms reduce costs while benefiting the environment and are, as such, highly interesting to most companies. It should be noted that the study does not evaluate businesses without the certification and focuses the scope on Slovenia, creating significant limitations for itself. Nevertheless, the results warrant attention due to their potential positive implications.

Once the adequacy of the standard from an environmental standpoint has been established, it is critical to understand why companies would be interested in adopting ISO 14000. The financial gain would be the primary cause in a capitalistic system, expressed as either specific benefits to companies that obtain accreditation or penalties to those that do not. Dominguez, Felgueiras, and Varajão (2016) highlight a general attitude to the process as one where the gains outweigh the costs for both small and large companies. The study highlights the resource availability issues, particularly in small companies, a finding that is consistent with the quality management section. It also mentions success factors such as management commitment, goal establishment, training, time investment, and awareness-raising. Overall, it is likely that environmental management’s specific goals, which are more specific than those of quality improvement, allow companies to attain the objective more quickly.

Government promotion is one possible reason why the ISO 14000 standard is more popular than the ISO 9000 family. Among public concerns surrounding pollution and the environment, many nations have taken measures to reduce their overall emissions and other sources of harm. Di Noia and Nicoletti (2016) state that the internal adoption barriers present in many small and medium enterprises may be overcome with the help of state subsidies. Large corporations and private companies do not require the same assistance, as they have sufficient resources to conduct the change. By using subsidies in conjunction with environmentally friendly requirements, nations can ensure that the necessary changes take place without damaging the economy significantly. However, the government still has to support the high cost of the transition, and so, it should plan its resource management carefully.

Sustainability is a trait that is often mentioned in association with environmental friendliness. Businesses that use natural resources too aggressively may deplete them in the future, destroying themselves as a result. Gupta and Racherla (2016) produce somewhat conflicting results, noting that, while regions that have the highest proportion of certified companies perform better environmentally, there is little difference between accredited and non-accredited firms locally. They suggest that a possible reason lies in the motivation why the businesses acquire the certification, which is pressure from overseas partners. After obtaining the confirmation, such companies abandon environmentally friendly efforts and return to their old methods. Nevertheless, there appears to be a relationship between the degree of ISO 14000 accreditation in the industry and its sustainability. To further enhance it, governments or auditors should monitor the certified companies after certification to ensure that they are working to reduce their impact further.

Overall, there is less concern about the effectiveness of ISO 14000 certification than that of ISO 9000, with the most likely reason being that environmental management has tangible goals and results. When implemented entirely and thoroughly, ISO 14000 standards benefit both companies and the environment. However, the two sets of standards still encounter many of the same issues, such as poor suitability for smaller enterprises and a lack of commitment. Most companies undergo environmental management accreditation in response to government regulation or pressure from business partners and have no interest in the process beyond that. As such, without additional monitoring measures, the system contributes little to a business’s operations. Government subsidies are a potentially useful incentive mechanism, but they have to be combined with additional oversight.

Conclusion

Neither quality management nor environmental management certification is sufficient for the complete implementation of its respective area in a company. However, both of these should be considered necessary first steps in the creation of a more comprehensive and robust framework. External auditing allows a company to recognize and address its internal weaknesses before integrating the new approach into its operations. Once this step of the process is complete, the company should implement further initiatives, such as total quality management. Its performance in the chosen area will likely improve as a result. However, many companies view certification as a marketing move or a requirement by overseas partners and only obtain the accreditation for the ability to show it to others. Such firms will generally abandon the initiative shortly afterward, and so, neither ISO 9000 nor 14000 guarantee business excellence by themselves.

Recommendations

Companies that want to obtain an ISO 9000 certification as a step on the path to business excellence should consider a variety of factors. First and foremost is the company’s size and the availability of resources that will be required to make the necessary changes. Smaller and medium-sized companies may not benefit from the accreditation sufficiently to warrant seeking it. They should consider not just the barriers in implementation as related to their size but also the possibility of failure in general. If the management finds that certification is necessary, it should proceed to begin working on the requirements. It is best if it first begins working with ISO 9000 before adopting other quality management frameworks to avoid any persistent issues.

When implementing the standard in a company, its employees should understand the particulars of its requirements. Every worker in a company, regardless of their position, has to participate in quality improvement. Furthermore, they should commit to improvement after the certification process is complete to obtain benefits other than the marketing message associated with the accreditation. Lastly, companies should understand that ISO 9000 is not a complete framework but a foundation that enables one to construct additional quality management initiatives. As such, they should consider other approaches such as total quality management after the external audit ensures that there are no issues with the initial changes. They are beginning to adopt such methods before certification is not advisable due to the high possibility of a fatal oversight. Overall, ISO 9000 certification is desirable for a company that intends to achieve business excellence but not sufficient on its own.

While ISO 14000 is significantly different in its focus on top management instead of every employee, it has many of the same issues as ISO 9000. The changes required still require a considerable investment of resources, though small and medium enterprises in many countries can rely on governmental assistance via subsidies. However, unlike in the quality management standard, environmental management methods offer tangible benefits. ISO 14000 provides a specific improvement framework that can be applied to reduce harm to the surroundings, and so many companies that want to be environmentally friendly should adopt it. With that said, the lack of long-term continuation measures and public accountability in the standard fails to guarantee that a compliant company will continue following its requirements after its certification. This tendency is a particular source of concern since many companies nowadays adopt ISO 14000 in response to external pressure from governments and partners that want to achieve a positive effect on the environment.

To achieve business excellence, companies should use measures besides accreditation and require their partners to do the same. The certification is still highly beneficial, as the literature indicates, and improves both environmental and business performance. Innovation is a particularly relevant topic, as it promotes many aspects of environmentally friendly practices. However, top management should commit to the implementation of the standard actively in the company as well as among its partners. It should insist on the installation of additional accountability measures in other companies to ensure that a coordinated effort to reduce waste takes place. Governments should support the implementation of ISO 14000 by providing subsidies to small businesses that work to achieve it. Overall, both standards help companies improve their operations and verify the correctness of their approaches, but they should take additional measures to achieve the best results.

References

Berényi, L. (2018). The spread of ISO 9001 and ISO 14001 management system standards.International Journal of Economics and Management Systems, 3, 11-18. Web.

Di Noia, A. E., & Nicoletti, G. M. (2016). ISO 14001 certification: Benefits, costs and expectations for organization.Studia Oeconomica Posnaniensia, 4(10), 94-109. Web.

Dominguez, C., Felgueiras, J., & Varajão, J. (2016). Environmental management systems certification: Insights from Portuguese construction companies.Environmental Engineering & Management Journal, 15(11), 2383-2394. Web.

Farok, G. M. G., & Searcy, C. (2015). Analysis of ISO 14001: A balanced tool of environmental management system.Research Journal of Agriculture and Environmental Management, 4(11), 483-490. Web.

Gupta, S. K., & Racherla, U. S. (2016). Effect of ISO 14000 certification on sustainability: evidence from the Indian leather industry.The Journal of Social, Political, and Economic Studies, 41(1), 34-50. Web.

Kar, F. W., Yusof, M. A. B., Sorooshian, S., & Rahamaddulla, S. R. B. (2016). Implementation of total quality management and ISO 9000 certification.International Journal of Engineering Applied Sciences and Technology, 1(6), 33-36. Web.

Khan, A., & Farooquie, J. A. (2016). Motives and benefits of ISO 9001 Quality Management System: an empirical study of Indian SMEs.Brazilian Journal of Operations & Production Management, 13(3), 320-329. Web.

Radonjič, G., Pisnik, A., & Krajnc, D. (2015). Product ecodesign in companies with ISO 14001 certified environmental management system.Environmental Engineering & Management Journal (EEMJ), 14(1). Web.

Tunjic, D., Kozina, G., & Primorac, D. (2016). Certification efficiency of quality management system in metal-processing industry according to standard ISO 9001 in the Republic of Croatia. In M. Milkovic, G. Kozina, & D. Primorac, 12th International Scientific Conference on Economic and Social Development (pp. 174-180). Koprivnica, Croatia: Varazdin Development and Entrepreneurship Agency. Web.

Zimon, D. (2016). Influence of quality management system on improving processes in small and medium-sized organizations.Quality Management, 17(150), 61-64. Web.

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