1. European Organization for Quality
The Internal Management System Audit – Important Management Tool for the Sustainable Development of an Organization
Cornelia Butnaru
EOQ Operations Manager 1 1 1 1 1

2. 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 2

3. Sustainability dimensions and core fields
Business culture and ethics
Goal: Credibility in the business and in the company
Environment and climate protection
Goal: Image profit .
Economical success
Sustainability
(conservation of values)
Protective treatment of resources
Sociality
Human resources management
Goal:
Area encroaching work, information and knowledge exchange
Quality management
Goal: permanent development process
Leadership
Goal: Model and obligingness 3

4. 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 4

5. (Quality) Management Systems and Strategic Management
Permanent
development
process of an
organization
Goal of
(Quality) Management:
Goal of
Strategic Management:
Design of
organization’s
development 5

6. Putting Strategy into the center of the Management process.
You can’t manage
what you can’t measure
Management
Process
You can’t measure
what you can’t describe
Strategy
Describe strategy,
goals/objectives,
performance indicators 6

7. Continual improvement process
Vision
Strategic directions
Objectives
Objectives
Objectives
Policy
Continual improvement process
Mission
Time 7

8. The strategic planning process
Strategy Objectives Measures Targets Initiatives
Example:
Strategic objective
Measure
Target
Initiative
Grow revenue
Number of active customers
483,700
Customer Contact Program 8

9. The Balance Scorecard – translating strategy into action
The strategy
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
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?”
The Balanced Scorecard provides a framework to translate the vision and strategy into operational terms upon 4 perspectives 9

10. Objectives development based on the main strategic directions
Which are our main strategic directions?
How do we want to attain our main strategic directions?
Strategic directions
Strategic objectives
Financial
Customer
Filter
Processes
Potentials 10

11. 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 intents 11

12. Strategy Correlation of actions Deployment of the strategy
how
Correlation of actions
Organizational BSC
how
Objectives
Success drivers
what
Actions
Processes/Dept.
how
Objectives
Success drivers
what
Actions
Individuals
Objectives
Deployment of the strategy
until the individual level:
focussing on the success drivers
Success drivers
what
Actions 12

13. Alocating objectives to processes, departments, functions
Organization‘s objectives(BSC)
Processes
Monitoring of same objective =
Processes interactions!
Departments
Functions 13

14. A is for Aggressive and Achievable R is for Relevant T is for Time.
SMART objectives
S is for Specific
M is for Measurable
A is for Aggressive and Achievable
R is for Relevant
T is for Time. 14

15. 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 15

16. Effectiveness and efficiency indicators.
First step: Doing the right
Effectiveness = objective attainment
Effective 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 conflicts
An improvement of the efficiency
can reduce the effectiveness
and vice versa 16

17. Effectiveness and efficiency.
Initiative 1
Objective
Initiative 2
Initiative 3
Initiative 4
Initiatives 1 and 2 = Efficient
Initiatives 3 and 4 = Effective
Current situation 17

18. 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 18

19. The not-delegable tasks of leaders
Leadership Power- House
Being visionary:
Being a model:
Increasing
corporate value:
Showing commitment
and courage,
setting energies free,
promoting
talents and innovations
Giving direction and
communicating the sense
Managing wellbeing for
all stakeholders 19

20. The internal audit – important management tool
Strategy
(directions)
Strategic planning process
Feedback (Performances evaluation)
Top
management
Top
management
Strategic objectives
(measures,targets)
Management review
Management
team
Initiatives
Internal audits
Processes objectives
+ initiatives+resources
Process managers
+ employees
Internal
auditors
Objectives accomplishment
In the processes 21

21. 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 22

22. 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) 23

23. 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 24

24. Performing value added process-oriented audits
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 25

25. Conducting the process-oriented audit (1/3).
Interview related to:
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 26

26. Conducting the process-oriented audit (2/3)
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 27

27. Conducting the process-oriented audit (3/3)
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) 28

28.  Results of Internal auditing process Management review
Processes effectiveness
(objectives accomplishment)
Corrective/preventive actions
effectiveness
Improvement opportunities
Management
review
Continual improvement
process 29

29. The continual improvement process
Strategy
NEW
Obiectives
3. Control
Verification
Monitoring
Audit
4. Management
review
Check
Act
Plan Do
2. Implementing
Maintaining
1. Strategy
Objectives,
Initiatives
Strategy
Objectives 30

30. Conclusion The aim “to be successive the better” may be attained by:
A viable strategy
Transposing strategy by measurable objectives
Allocating objectives to processes/individuals
Motivating employees
Evaluating by process-oriented audits
Analysing results by management review and taking further actions to improve performances 31

31. 59th EOQ Congress 2015 June 11-12, Athens/Greece www.quality2015.eu32