by Peter Holtmann
Audit negotiations can be tense. Presenting and negotiating audit outcomes can be a stressful situation. I wrote this article more as an account of my recent events and lessons rather than a “How To” checklist.
What inspired this article was a high-level business negotiation that I was in the midst of and how it was derailed (and eventually resolved) because of the use of negotiating skills, mine included. “Skills” is the operative word here and the involved individuals’ ability to deploy it.
This also got me thinking about a relatively recent event with an accreditation body that RABQSA International Inc. engaged to extend our accreditation offshore to Latin America. Needless to say there was a language barrier and there were some matters of interpretation of standards and guidance documents, but this allowed me to reflect on how audit findings were presented and how we again reached an impasse of audit outcomes that required a negotiation.
I know that this introduction may lead you to believe that perhaps the issue is with my “skills” of negotiation. It’s a valid assumption. In my own defense, I have successfully negotiated many more successful deals than those I have had to defend or recover from.
My reflections took me to ISO 19011:2011, in particular its clauses pertaining to conducting closing meetings, completing audit reports, and conducting audit follow-up. The standard talks of “confidence in audit conclusions,” “familiarity of the auditee,” “diverging opinions…. resolved,” and “unexpected situations.” It’s great that the standard primes the reader to consider such eventualities. It may give the reader cause to think about the “what ifs” at each audit. But in reality, how often is ISO 19011 referred to during an audit?
I will attempt to blend my ISO 19011 experiences with some insight into what I have dubbed the “five points to a considered outcome.” I am sure if you do a search engine query for negotiation tips you will come up with hundreds of similar pointers. From there you can select any number of combinations that work for you. However, the following five points have assisted me in not only setting up for audit negotiations and presentations, but also during audit negotiations and afterward to analysis the process and results.
Know who you are dealing with in your audit negotiations
ISO 19011’s clause 6.4.9 suggests knowing your audience before an audit and considering whether to conduct formal or informal meetings and the use of minutes. The bottom line is that it’s vital to make an assessment of the vested interests in the room.
The standard states: “The degree of detail should be consistent with the familiarity of the auditee with the audit process. For some audit situations, the meeting may be formal and minutes, including records of attendance, should be kept. In other instances, e.g., internal audits, the closing meeting is less formal and may consist solely of communicating the audit findings and audit conclusions.”
In my own recent encounter it became very apparent early on where allegiances were. When it came time to the disposition and engagement of personnel in future business matters the issues became clouded by the introduction of board members. The intent of proposed business documents, which were designed to regulate business activities, were overridden by a need to ensure that personal feelings were catered to rather than business needs.
This presented a dilemma. How do you ensure that business objectives are realized even when your options seem to guarantee a less-than-sparkling case for business survival? In my recent meeting, it was quickly apparent that the assessors knew less about the standard than the translators, my staff, and the country representative. As a result, it was hard to control the discussions and assure a positive accreditation outcome.
My advice is to spend time at the audit’s opening meeting to understand who the key players are and if they will be present throughout the process, especially at the closing meeting. You will often be asked to operate as a change facilitator or influencer by those not in a position of power. This could be to affect change, point out inadequacies, or make a point about the company’s or an individual’s performance. Be alert to this possibility and measure its significance of this role on the audit outcome.
Effect vs. intent
I can’t stress just how important this concept is when presenting findings. Clause 6.4.9 makes a good point in its last sentence: “If specified by the audit objectives, recommendations for improvements may be presented. It should be emphasized that recommendations are not binding.” Most people may make the leap to the argument of auditing vs. consulting and the need to remain impartial. These are valid points but the key for me here is ISO 19011’s language and the effects it has on people.
If you are a user of Facebook, LinkedIn, Twitter, etc., you may have observed (as I have) their users’ exceptionally poor use of grammar and syntax. I often find that the meaning of the writing is lost in an author’s poor use of words. You either have to decipher the sentence structure or misinterpret the message. Hence effect vs. intent.
Words such as “shall,” “will,” “must,” “always,” and “never” are very strong directives. They are added to standards to ensure that dogma is converted to pragma consistently no matter where it’s applied. When presented in findings, these words order the reader to take immediate action. These words don’t fit the closing meeting arena. You should use words that facilitate discussion, understanding, and confidence in your abilities to assist the client reach a state of improvement.
A poignant example of this is the interpretation of a legal document created to facilitate transfer of control of an outcome to my business. The word “intent” was written into the document. The other party’s board interpreted it to mean “shall” or “must,” but to me it meant “should” or “may.” Many thousands of dollars later, my “intent” turned into a “may” with some “musts” due to a concession on my behalf and my intent to get the job done.
Avoid hostage audit negotiations
This is an interesting concept that is often overlooked. The negotiations I’ve discussed in this article quickly turned personal and threatened our stated objectives. A war of wills pushed the negotiations toward a situation akin to the Cuban missile crisis. Business negotiations should always remain just that: business-like. I know it’s easy to become mired in personal vindications when your intent, honor, credentials, and competence is besmirched but remember that no one wins these arguments.
I believe the authors of ISO 19011’s clause 6.6 had this in mind when they wrote: “The audit is completed when all planned audit activities have been carried out, or as otherwise agreed with the audit client (e.g., there might be an unexpected situation that prevents the audit being completed according to the plan).”
“Or as otherwise agreed” means you don’t get to exercise your will over the client because you are in a position of power. For most audits you are there at the request of the client. Dragging the client into unwelcomed or unprepared situations means a loss of satisfaction by both parties and could result in you losing a client.
Sensitivities come to the fore when there are noncompliances. Be diplomatic, be supportive, and most important be facilitative. Clause 6.7 says, “The conclusions of the audit can, depending on the audit objectives, indicate the need for corrections, or for corrective, preventive, or improvement actions. Such actions are usually decided and undertaken by the auditee within an agreed timeframe.” What this doesn’t say is that the client should discuss and agree to corrective actions. Imposing corrective actions that the client cannot or will not be able to meet results in yet another loss of confidence and satisfaction. Incremental improvement may be the best answer.
Keep the goal in sight
This may be the simplest philosophy on the list. Simply stated: ensure client satisfaction, deliver audit process, and demonstrate confidence in your competence. To quote clause 6.4.9, “If applicable, the audit team leader should advise the auditee of situations encountered during the audit that may decrease the confidence that can be placed in the audit conclusions. If defined in the management system or by agreement with the audit client, the participants should agree on the time frame for an action plan to address audit findings.”
Another way of viewing this is managing expectations. The client expects to achieve certification through demonstration of compliance. The auditor expects conformance to the standard through documented and demonstrated evidence of past activities that indicate future performance. What happens when these don’t align? In this case, it’s important to remember that it’s the auditor’s job to help his or her client achieve its goals. This is a much better position to work from than, “Well, the standard states this and you are clearly in noncompliance, so I am going to recommend suspension of certification until you can get your stuff together and sort it out.” Believe it or not, I have heard auditors make this statement to clients and feel as though it was appropriate.
In my own negotiations, I was pushing hard for immediate accreditation but we had a number of perceived corrective actions that impeded it. We discussed these corrective actions for approximately three hours, sometimes quite heatedly. My team was clearly frustrated with the process and so were the accreditation body’s assessors.
I chose to agree to some of the corrective actions as good opportunities for improvement and stand firm on other points. The final result was a small list of corrective actions that were quickly acted upon and closed out. We achieved our goal and the accreditation body felt vindicated. We all won.
Agreeing to disagree is not a strategy
When you arrive at an impasse with a client, both parties have failed to fulfill their duties. That’s a harsh position, but if auditors are to be facilitators of change, they must demonstrate value to the client. Therefore, they must strive to achieve a positive outcome.
Clause 6.9 tells us, “Any diverging opinions regarding the audit findings or conclusions between the audit team and the auditee should be discussed and, if possible, resolved. If not resolved, this should be recorded.”
I have seen this clause enacted on many occasions, and it doesn’t work as often as it is successful. Know that every effort should be made to achieve a positive outcome. This doesn’t mean that you dilute the requirements of the standard, turn a blind eye, and overlook unsafe, illegal, or unethical behavior. There are many regulatory avenues you could take when you’re confronted with this kind of thing.
If you find yourself facing a problem client, it’s most likely early on in the audit process. Stop the audit, reconvene the audit team and the attendees from the opening meeting, and make it perfectly clear that the audit cannot proceed until resolution, repair, or rectification.
If it comes to the end of the audit and the client won’t sign the audit report, refer him or her to your certification review committee, to your accreditation body, or to a mediator. The issue may be clashing personalities, differing interpretations of the standard, or self-serving purposes of the auditee.
We have mechanisms such as independent arbiters, complaints and appeals committees, and objective committees for just such reasons. It’s no failing to use them. In fact, in many cases it shows a higher level of professionalism and a willingness to reach satisfactory outcome. By even knowing that these resources exist and can be used should give the auditee greater confidence in your knowledge and competence as an auditor.
My eventual choice to use my legal counsel to mediate the final discussions of this process wasn’t easy. It cost a lot of money but it said to the other side was that I was prepared to invest in the audit negotiations. The result was a reasonable set of documents that ensured that the transaction was completed on time and achieved our goal, plus my board was satisfied that two years of effort and cost weren’t lost.
About the author
Peter Holtmann is president and CEO of RABQSA International Inc. and has more than 10 years of experience in the service and manufacturing industries. He received his bachelor’s degree in chemistry from the University of Western Sydney in Australia and has worked in industrial chemicals, surface products, environmental testing, pharmaceutical, and nutritional products. Holtmann has served on various international committees for the National Food Processors Association in the United States and on the Safe Quality Foods auditor certification review board.