1. ©The HPO Group Ltd – Oct 2005 “Business Process Management” The essential building block for the 21 st Century Management System Effective Implementation of Corporate Social Responsibility & Corporate Governance …..to deliver and improve what customers and other stakeholders expect

2. ©The HPO Group Ltd – Oct 2005 Introduction The High Performance Organisation Group Passionate about ‘Business Process Management’ as a Strategic Tool Work with leading players to ensure ‘Best Practice’ Challenge the ‘norm’ – seek out better value-adding solutions Create ‘Tools’ & Approaches that make this ‘Real World’ Provide Online Assessment & Management System Portals

3. ©The HPO Group Ltd – Oct 2005 Work with many organisations building process based systems Organisation’s asking what is CSR / CG & how do we implement? Worked with academic colleagues to define CSR framework based upon systems thinking Established methods to assess CSR / CG effectiveness CSR World Conference in late 2003 to prove research findings BSi publish framework late 2004 Building online CSR assessments and challenging the auditing mix. ‘We would like to share what we have learnt with you’ The steps along the road

4. ©The HPO Group Ltd – Oct 2005 Agenda 1. Where did we start from? 2. Business Process Management & Systems thinking 3. Corporate Social Responsibility & Corporate Governance 4. Auditing CSR – a new way.

5. ©The HPO Group Ltd – Oct 2005 We started with ISO9001:2000 Continual improvement of the business management system Customer Requirements Satisfaction Management responsibility Resource Management Measurement, analysis and improvement Product realization Product output input Stakeholders ‘simple business model’

6. ©The HPO Group Ltd – Oct 2005 ISO 9001 To meet customer, stakeholder requirements Business Management System Performance Excellence CSR / CG But it challenged organisations and the quality industry to think differently

7. ©The HPO Group Ltd – Oct 2005 Business Process Management ‘A practical approach’

8. ©The HPO Group Ltd – Oct 2005 Deliver the service? Service Design & Development? Business Planning? Dept 1Dept 2Dept 3Dept 4 Communicating & winning business? Processes v silos

9. ©The HPO Group Ltd – Oct 2005 KPI 95% Sales Order Processing Supply Chain InstallationSales 95% What the business sees Sections / Depts Departmental - ‘silo’ thinking

10. ©The HPO Group Ltd – Oct 2005 Product & Process KPIs 95%90%85%81% Sales Ordering Processing Supply Chain InstallationSales What the customer & other stakeholders see Business processes run across sites, countries and hierarchies Processes - ‘Joined up’ thinking (the real world)

11. ©The HPO Group Ltd – Oct 2005 Target Actual Variance 75%68%-7% Learn Implement improvement project to change the process Learn Budget Asset useCompetence Knowledge Environmental Teamwork Leadership Culture IT Risk Mgt Process thinking is not just about drawing pictures it’s a management approach Business Process Management

12. ©The HPO Group Ltd – Oct 2005 System structure Multi-level mapping Owner – Most senior person Business Management System A process Owner - Process Owner ‘the what’ A procedure ‘the how’ measure efficiency and effectiveness measure business performance finance, customer, process, innovation Training Guide Photograph

13. ©The HPO Group Ltd – Oct 2005 A Business Management System example

14. ©The HPO Group Ltd – Oct 2005 A Business Management System example World Leader in Testing and Certification

15. ©The HPO Group Ltd – Oct 2005 A Business Management System example

16. ©The HPO Group Ltd – Oct 2005 H&S, environment ISO9001:2000 Risk Mgt Standards ? Management techniques (technical & soft) Market forces System thinking is not just about drawing pictures it’s a management approach Customer requirements Regulatory requirements One Business Management System covering the whole business

17. ©The HPO Group Ltd – Oct 2005 What is Corporate Social Responsibility & Corporate Governance?

18. ©The HPO Group Ltd – Oct 2005 CSR is about effectively balancing the economic, social and environmental needs of all stakeholder and then effectively delivering these. Corporate Governance is concerned with complying with (local) regulatory codes, laws etc. when running a business. What is Corporate Social Responsibility

19. ©The HPO Group Ltd – Oct 2005 9001 9004 Other Standards, Models, Frameworks, Governance requirements, Management Techniques, Professional disciplines related to CSR & general business mgt. Accountability CSR Academy Sigma project Sarbannes Oxley Cadbury All fighting for recognition & use = potential chaos, market confusion and misuse. But none are wrong and equally valid when used in the appropriate place / way. EFQM BPM InstitutesSix-sigma CSR and management model activity

20. ©The HPO Group Ltd – Oct 2005 Consider an ISA Overseas FTSE 350 shares ISA Management Framework inc. Marketing Selling Delivering Fund Management Reviewing Other Investment Vehicles. FTSE 100 Shares Construction Sector Bonds Fine Art Property The ISA Framework manages the use of investment vehicles based upon the customer’s attitude to risk Mixed funds Cash

21. ©The HPO Group Ltd – Oct 2005 9001 9004 Other Standards, Models, Frameworks, Governance requirements, Management Techniques, Professional disciplines related to CSR & general business mgt. Accountability CSR Academy Sigma project Sarbannes Oxley Cadbury EFQM The CSR Framework manages the use of standards, models and frameworks based upon stakeholder needs and business performance CSR Management Framework CSR Framework Measurement & analysis Managing processes, systems & resources Stakeholder engagement Strategic Planning Change Management Driven by: Management & Board responsibility BPM Institutes Six-sigma

22. ©The HPO Group Ltd – Oct 2005 The CSR Framework – from Implementing Effective CSR & CG – A framework Stakeholders Expectations Strategic Planning Measurement & Analysis Management & Board Responsibility Managing Resources, Processes, Systems Managing Change & Continuous improvement Stakeholders Impact Look familiar?……….

23. ©The HPO Group Ltd – Oct 2005 What drives the Business Management System? Regulators Environmental Stock Market Delivers Economic, Social & Environmental results that relate to those stakeholders using expert tools The CSR business management system etc. etc. etc. Pressure groups Customers Staff Supply Chain pressures Stakeholders requirements

24. Process based management Process based mgt & Systems thinking programme Management systems development People skills development & culture Learning and change Achieving Business Sustainability Or CSR Corporate Supply Profile programme Information Mgt programme CSR/CG programme Health, safety Programme Sector Specific Programmes. Stakeholder engagement & measurement programme Sarbannes Oxley ©The High Performance Organisation Group Ltd 2003 & 2004&2005 Productivity innovations. Management Development & Leadership programmes. Based on ‘The systems thinking journey’ from “Implementing Effective CSR and CG – A Guide”

25. ©The HPO Group Ltd – Oct 2005 C.3.1 – Communication Processes The Board / management shall ensure that appropriate communication Processes are established with all the organisations stakeholders: -communication takes place between various employee levels…on the effectiveness of the CSR/CG system (much like ISO 9000 clause ) But also C.3.2 - Disclosure – The organisation shall ensure that timely and accurate Disclosure is made on all matters relevant to stakeholders including: -the financial and operating results -major share ownership and voting rights -members of the Board and key executives and their remuneration C.3.3 – Reporting -clearly explain how the performance of the organization -present a balanced …contribution to sustainable development. An example – Section C3 - Communication

26. ©The HPO Group Ltd – Oct 2005 An example – Section F F1 - Managing the system The organisation shall demonstrate that the CSR/CG system includes all requirements and activities of the entire organisation together with all appropriate frameworks, models and standards that are being used. The effectiveness of the CSR/CG system as well as the effectiveness of the elements from which it is built shall be monitored and continually improved. i.e. ISO9001 and a lot more in two sentences

27. ©The HPO Group Ltd – Oct 2005 Other things these stakeholders may need? Sarbanes-OxleyCombined CodeHiggs ISO14001 - EnvironmentalSourcing PolicyCORE Bill 145 Balanced scorecardSix sigmaIntegrated Systems AA 1000 - AccountAbilityInvestors In PeopleSA 8000 – Social Accountability GRI (2002) – Sustainability ReportingISO9001/4 - Qualityetc. etc. etc. If each of these is led by its own specialist there will be chaos Inside an organisation Requirements need to be Strategically Prioritised and Strategically Managed

28. ©The HPO Group Ltd – Oct 2005 Implementing another requirement New requirement Existing Business Management System Performance Excellence So the Business Management System grows and develops

29. ©The HPO Group Ltd – Oct 2005 Owner - Head of ScopeManagement System ProcessOwner - Process Owner ‘the what’ Procedure/Information ‘the how’ measure efficiency and effectiveness measure business performance finance, customer, process, people Training Guide Photograph SOX Env. Mgmt & H&S. Building Regs Higgs Combined Code SOX Higgs Combined Code etc Management System Multi-level Structure

30. ©The HPO Group Ltd – Oct 2005 The CSR / CG Management System – Framework & Guide ‘bulk discount available to the branch’

31. ©The HPO Group Ltd – Oct 2005 9001 9004 Accountability CSR Academy Sigma project Sarbannes Oxley Cadbury EFQM CSR Management Framework Online AssessmentsOnline Management Systems Understand the CSR Framework Building a CSR Process based management system Change using the experts Driven by: Support to Aid Senior Managers BPM Building a CSR Management System

32. ©The HPO Group Ltd – Oct 2005 On Line Assessments January 2004  The High Performance Organisation Ltd the ‘new world’ of auditing is here

33. ©The HPO Group Ltd – Oct 2005 Assessing process effectiveness- The problem-the super auditor? Inputs Outcomes / Results against targets Learn Change Risk Mgt Asset Mgt Leadership Teamwork H&S Knowledge Mgt Information security / sharing Budget Competence Reporting Culture C C C Organisational behaviour

34. ©The HPO Group Ltd – Oct 2005 Demographic & social changes Assessing the CSR System – even super, super auditors Innovation / inventions The law & other regulations Government policy The market for your products Products & services Compliance to regulations Environment / social impact Shareholder value Satisfied customers Brand / reputation Outcomes / results against targets Learn Change

35. ©The HPO Group Ltd – Oct 2005 Impact upon traditional approaches Assessor competence? Numbers available / needed? Cost? Time required? Value already questioned Sufficient evidence? Examples of failure – Enron etc Sample size often small and unrepresentative Compliance not effectiveness focused Inconsistency of application and interpretation Lack knowledge of business & systems thinking. ‘it is not the auditors ‘fault’ they are only human Conclusion - there needs to be other supporting approaches’ Generally

36. ©The HPO Group Ltd – Oct 2005 Truly ‘On-line’ Assessment and Management Solution – the mechanics Set up assessment Create assessment Carryout assessment Secure & Confidential User Registration Monitor Assessment Produce effectiveness / compliance report Tailored Assessment/ define drivers Bring about ‘real’ change to improve effectiveness..realising the opportunity to improve Generic assessment

37. ©The HPO Group Ltd – Oct 2005 Many thanks for letting us share our thoughts with you The High Performance Organisation Group Ltd www.the-hpo.com Rob Peddle – 07957 363365 rob.peddle@the-hpo.com