ISO 9000 Family of Standards and its Effects on Business

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Introduction

The ISO 9000 family of standards was created in order to help various organizations and businesses to be able to comply with the demands of their customers and other stakeholders. It was first introduced as early as in1987 and has been popular since that time. However, there exists controversy over the issue of these standards’ effectiveness. Even though ISO 9000 allows companies to set their own effective standards of quality, and makes the function of control significantly easier, on the whole, some authors claim, for instance, that it leads to numerous unnecessary bureaucratic procedures and adversely affects the performance of a company.

The Influence of ISO 9000 on Management Functions

ISO 9000 has the potential to improve the quality of an organization’s management, but it also has some important drawbacks. Let us consider how ISO 9000 works in relation to the four main aspects of the control function of management.

Setting standards

It is always hard for companies to set perfect standards (Ramasamy, 2010, p. 142). However, ISO 9000 can help with this task by providing guidelines and requirements for a product, as well as specifying some important aspects of the product’s quality.

Performance measurement

It appears that ISO 9000 should also be able to help to assess performance. According to Wahid and Corner (2009), ISO 9000 is capable of improving the methods for measuring a company’s performance (p. 886-887). On the other hand, Najmi and Kehoe (2001) point out that ISO 9000 does not provide enough means for evaluating the performance of a business’ employees.

Comparing performance to standards

If we adopt the opinion of Wahid and Corner (2009) that it is helpful to use ISO 9000 to measure the performance, then it should be clear that the family of standards should also be of assistance when it comes to comparing the performance to the standards set before that.

Correcting deviations

Whereas the family of standards could have been helpful at the previous stages, many authors agree that when it comes to correcting deviations, procedures provided by ISO 9000 are ineffective. For instance, Wahid and Corner (2009) highlight the complexity of these procedures and state that the staff often try to take shortcuts. Seddon (1997) completely criticizes the whole approach, saying that it is ineffective to assume that it is best to influence the work of employees by imposing various controlling procedures on them. Therefore, it follows that correcting deviation using ISO 9000 procedures ought to be rather ineffective.

ISO 9000: Requirements for Effective Control System and Techniques of Control

Ramasamy (2010) lists a number of requirements that are paramount for creating and maintaining an effective system of managerial control (p. 134). Let us discuss if ISO 9000 can help managers to comply with these requirements.

Feedback. By imposing controlling procedures, ISO 9000 implementation might mean that employees receive at least some feedback.
Objective. As the controlling procedures are prescribed, following them should result in the objectivity of control.
Suitability. Taking into account the article by Seddon (1997), it is arguable that ISO 9000 is unsuitable for dealing with deviations.
Prompt reporting. ISO 9000 should assist with prompt reporting.
Forward-looking. The applying of ISO 9000 includes continuous effort towards improvement (Wahid & Corner, 2009, p. 881).
Pointing out exceptions. The family of standards should help with assessing the scope of deviations.
Flexible. As we already mentioned, ISO 9000 is considered not to be flexible.
Economy. Judging from the popularity of ISO 9000 over the decades, the cost of its implementation does not exceed the profits it brings. Besides, Corbett, Montes-Sancho, and Kirsch (2005) state that publicly traded American companies that implemented ISO 9000 showed significant improvements in financial performance.
Intelligible. The procedures prescribed by ISO 9000 appear to be rather easy to understand.
Suggest remedial action. ISO 9000 recommends how to deal with failures, but the ineffectiveness of these suggestions has been mentioned (Seddon, 1997).
Motivation. Even though the management of companies is often inspired by ISO 9000, it is pointed out that the attitudes of employees towards this system cause problem (Wahid & Corner, 2009, p. 889); therefore, the system might be not very motivating.

On the contrary, Srivastav (2010) claims that ISO 9000 “transforms the climate from dysfunctional to functional,” which should mean that the motivational effect of the system is rather high (p. 439).

As for listed techniques of control (Ramasamy, 2010, p. 135-138), ISO should be helpful while performing statistical control, cost accounting and cost control, audit, budgetary control, and other forms of control which involve documentary component, for the necessity to document and measure various stages and steps of production and activity, are indispensable parts of ISO 9000 procedures (Wahid & Corner, 2009, p. 881). On the other hand, the personal observation technique might even be hindered by ISO 9000 due to the necessity to adhere to numerous documentary procedures.

The Benefits of ISO 9000 to the Control Function of Management vs the Costs of ISO 9000 Implementation

As we have argued, ISO 9000 brings numerous benefits to the control function of management by introducing a large amount of documentation, which allows tracking most of the steps taken by the company. Wahid and Corner (2009) also point out that the implementation of this family of standards improves the controlling aspects of management’s activity (p. 887). Seddon (1997) also states that the implementation of ISO 9000 significantly increases the amount of control that takes place in an organization.

On the other hand, the author argues that the increased quantity of control only leads to a vast amount of unnecessary paperwork, in fact raising the workload of employees by approximately 10-15% even in the early stages of ISO 9000 implementation (Seddon, 1997, p. 165).

In fact, Seddon (1997) reasons that ISO 9000 sub-optimizes a company’s performance, worsens the quality of service, discourages workers, and prevents managers from thinking differently. Taking this into account, it appears reasonable to say that ISO 9000 has an adverse effect on the companies on the whole; however, some studies still claim that its implementation leads to significantly improved profits (Corbett et al., 2005).

Conclusion

To sum up, it should be highlighted that ISO 9000 still causes controversy among its researchers. On the one hand, it allows companies to set their own high standards of quality and strive towards achieving them. It also helps managers to perform control over their firm’s activity. By stressing the importance of documentation and implementing thorough reporting, ISO 9000 allows managers to track a large part of their business’ actions.

On the other hand, some authors claim that the excess amounts of control and documentation discourages workers and significantly increases their workload. And yet, other authors still claim that ISO 9000 allows businesses to increase their profits.

References

Corbett, C. J., Montes-Sancho, M. J., & Kirsch, D. A. (2005). The financial impact of ISO 9000 certification in the United States: An empirical analysis. Management Science, 51(7), 1046-1059. Web.

Najmi, M., & Kehoe, D. F. (2001). The role of performance measurement systems in promoting quality development beyond ISO 9000.International Journal of Operations & Production Management, 21(1/2), 159-172. Web.

Ramasamy, T. (2010). Principles of management. Mumbai, India: Himalaya Publishing House. Seddon, J. (1997). Ten arguments against ISO 9000. Managing Service Quality, 7(4), 162-168.

Srivastav, A. K. (2010). Impact of ISO 9000 implementation on the organisation.International Journal of Quality & Reliability Management, 27(4), 438-450. Web.

Wahid, R., & Corner, J. (2009). Critical success factors and problems in ISO 9000 maintenance. The International Journal of Quality & Reliability Management, 26(9), 881-893.

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