by Russell T. Westcott
What is sustainability and why include the auditing of sustainability initiatives within the purview of quality management systems audits? Sustainability articles and books are increasing in number in the realm of management literature. See checklist 1 for a listing of some of the areas that can be addressed under the sustainability umbrella.
Checklist 1: Topics for sustainability initiatives
- Applicable laws, regulations, and standards
- Carbon footprint
- Community support
- Consumer protection
- Corporate responsibility
- Customer relations
- Customer retention
- Employee safety, security, and wellness
- Energy costs
- Environmental conservation and protection
- Equitable treatment of employees
- Ethical behavior
- Facilities costs
- Humanitarian issue
- Litigation and remedial costs
- Organization image to the public
- Organizational management effectiveness
- Political issues
- Process costs
- Process efficiency
- Product/service quality and reliability
- Raw material costs
- Resource usage and conservation
- Stockholder relations
- Supplier relations
- Talent development and management
- Transportation and logistics costs
A significant number of organizations have initiated projects to address sustainability. Starting out, many organizations realize they are facing huge cultural changes, for example:
- A sustainability initiative is a portfolio of projects. The projects within the portfolio have an end date, but the portfolio itself usually has no end date. It’s continual improvement in action.
- Leaders of many organizations have an underlying belief that sustainability initiatives sound nice to have but in actuality don’t make sound business sense, i.e., increase profitability. Meanwhile, many organizations that have adopted sustainable practices as a strategic long-term business goal are demonstrating a measurable competitive advantage and a substantial return on their investment.
- If the organization has in business for a lengthy period of time, its organizational values, modus operandi, and cultural norms will appear intractable, and most will need major change or redirection. The start-up organization faces a less-strenuous journey, as it can incorporate the values and cultural norms leading to sustainability as it grows.
- A very strong, earnest, and visible commitment is required of management. Traditional management mentality of a quarter-to-quarter window on operations and outcomes must be discarded.
- Systems thinking must replace fragmented thinking. Everyone in the organization must understand that everything is interconnected. All employees must become aware of the potential effect of their actions on the entire workplace. Optimization must be an organization-wide goal.
- The organization must subscribe to continual learning and improvement. Sustainability might be considered “quality on steroids”—the Big Q. The organization must see itself transforming into a new entity in which concern for profitability is conditioned by concern for how profits are ethically and wisely derived and deployed for the balanced best interests of all stakeholders.
- Sustainability embraces all the principles identified with ethical and legal behavior; fairness and honesty in interpersonal relations; and concern for the wellness (physical and emotional) of the work force, suppliers, owners, and the community in which the organization operates. Concern and care for the physical resources on which the organization and its neighbors depend is included. Sustainability can be a huge umbrella to protect the organization from causing or receiving harm.
- Sustainability is key in shaping and continually withstanding competitive forces. It should be at the top of the strategy planning list. Everything an organization contemplates or on which it takes action must be aligned with its strategy.
Sustainability concepts and practices must be widely disseminated and followed both within the organization and outside. As examples, consider the criteria for selecting and hiring personnel, choosing suppliers, selecting a site for a new facility, and offering and providing humanitarian assistance for the community. Also consider the practices for safeguarding physical resources, and protecting the safety, security, and well-being of the work force and customers.
Some of the common practices that constitute sustainability are:
- Security, health, and safety of employees
- Ethical and legal behavior at all levels and with all present and potential stakeholders
- Enhanced collaboration with community and nongovernmental organizations
- Supporting a balance of work and other life activities within the work force
- Encouraging and supporting volunteerism
- Encouraging and supporting employee involvement in the decision making that affects them
- Education, training, and development of employees to support sustainable values and practices
- Reduction in waste throughout the organization and environment as a whole
- Correlating the organization’s support of sustainability with the product/service branding initiatives and other marketing actions
- Balancing the concern for risks with the concern for costs
- Championing the support and efficiency of clean energy use
- Extending sustainability values and practices to encourage and assist suppliers in their application
- Building more and better teamwork amongst the organization’s functions, work force, and external stakeholders
Key issues to address when auditing an organization’s sustainability initiatives include:
- Is top management’s support and involvement in promulgating sustainability actions visible, believable, consistent, and enthusiastic?
- Has the overall organization’s culture been described and have the culture changes needed to address sustainability issues been identified and prioritized?
- Are the core values of the organization undergoing scrutiny and continual enhancement to provide a solid foundation for achieving sustainability?
- Are the actionable change plans treated as strategic objectives, measured, and supported with adequate resources?
- Are the sustainability initiative practices desired acknowledged and treated as an ongoing continual improvement effort?
- Have the sustainability projects underway and those planned been incorporated as a portfolio of sustainability actions and plans? Is the work logically sequenced to address the most critical issues facing the organization? Are the reasons for the sequence universally communicated to all affected stakeholders? Have related ongoing projects and practices (e.g., lean Six Sigma, ISO standards certification, quality award efforts) been subsumed within or otherwise linked to the sustainability portfolio?
- Is continual concern for and attention to sustainability principles and practices evident in the agendas of all organizational meetings and imbedded in the design and implementation of organizational change efforts?
- Are there education, training, and communication actions planned and/or implemented to ensure the journey toward sustainability embraces every stakeholder of the organization?
- Have metrics been established, tested, and implemented that clearly contribute actionable information to help guide management in achieving the organization’s strategic sustainability objectives?
- Does every employee of the organization understand the intent and benefit of sustainability to the organization’s growth and the value to all stakeholders?
- Are the people who are tasked to design and implement the sustainability practices trained adequately to apply proven project planning and project management techniques and tools?
- Have contacts been made with organizations that have successfully launched sustainability initiatives? Have the lessons learned from these contacts been documented and disseminated to sustainability project teams within the organization?
Changes in approach to auditing the sustainability initiative compared with quality systems auditing
Although there may be elements of the sustainability initiative that are subject to laws, regulations, and standards the overview and audit of the portfolio of sustainability projects is not a compliance audit. It’s an assessment of the sustainability planning, implementation, and management of the initiative. The focus is on the viable establishment of the organization’s strategic objectives for sustainability and the evaluation of timeliness and effectiveness of progress toward achieving those objectives—and the outcomes from the initiative.
The auditors/assessors involved in evaluating the sustainability initiative must receive special training and acclimatization to C-level perspectives and challenges. Sustainability initiatives reach throughout the organization as well as beyond to the whole environment in which the organization functions. It’s bigger than the Big Q philosophy of the quality improvement and management initiatives.
For those who remember early total quality management (TQM) efforts, three key elements were often missing: elevation of TQM to a top-level strategic objective with resources support, a process for effectively and efficiently implementing TQM, and the identification and measurement of outcomes from the initiative. Sustainability initiatives must not suffer the same neglect. Is there an executive-level champion responsible for overseeing organization-wide sustainability objectives?
Sustainability initiative project teams must be represented by multiple functions and disciplines. Auditors must assess the diversity and adequacy of the composition of the project teams relative to achieving sustainability objectives. Project teams must find or invent innovative metrics to measure their efforts and furnish actionable information for upper management. Input to a meaningful balanced scorecard is desirable. Auditors must assess the timeliness, completeness, accuracy, and overall usability and effectiveness of the measurement processes. Checklist 2 lists some of the measurement topics typically considered.
Checklist 2: Typical top-level topics for measuring sustainability
- Increase in public image
- Increase in competitive position
- Increase in customer retention
- Increase in work force safety, security, and wellness
- Increase in work force retention
- Improvement in employee morale
- Improvement of product/service to embrace sustainability factors
- Reduction of carbon footprint
- Reduction of energy costs
- Reduction of facility costs
- Reduction of raw material costs
- Reduction in transportation and logistical costs
- Reduction in process costs
- Decrease in litigation costs and remedial action costs
- Increased transparency of organization’s operations and results to stakeholders
- Improved communication with all stakeholders
- Results of third-party validation of the organization’s sustainability performance
The organization’s mindset regarding risk must change. Risks should be viewed as opportunities, not just costs. For example, in response to its environmental responsibility, one company redeveloped its product to conserve water, lower process costs, and increase retail shelf space for its other products—a win-win result.
Auditors should be alert to customer costs that aren’t integral to the product or service, e.g., excess space, disposal costs for waste material, or excess inventory that is written-off or discarded.
Attention to supply chains is vital. Auditors should be aware of attempts to outsource sustainability, which isn’t allowed. It may be necessary to outsource functions, but not responsibility. Sustainability issues may abound in poorly informed and monitored suppliers within an organization’s supply chain.
Be aware that organizations often balk at efforts to improve the workplace. The initial investment can pay off in committed employees who tend to improve quality, timely delivery, lower turnover, and reduce other costs such as health care, training, and insurance expense.
Auditors should remember that a sustainability initiative is a major culture change. As such, basic systems such as employee compensation, selection, and hiring; training and development; supplier relations; stockholder relations; customer relations; public relations; and environmental conservation may need to be overhauled.
Suggestions about auditing tools and techniques include:
- Checklists are fine but focus on assessment and effectiveness evaluation rather than compliance.
- Review any documentation that purports to support claims of sustainability:
- Review metrics supporting the claims, especially return on investment.
- Verify that the claims directly support one or more of the strategic sustainability objectives.
- Assess the legitimacy of the claims and the efficacy of the claimed benefit(s) to the stakeholders.
- Review the content and effectiveness of the dashboards/balanced scorecards used by management as they support decision making.
- Include suggestions for improvement in the audit reports and discuss with pertinent performers and management.
- Schedule frequent audits of newly implemented projects (e.g., monthly for six months) and less frequently for stable interventions.
Conclusion
Sustainability initiatives will appear to be more ambiguous than other large initiatives in the early stages of planning and implementation. That will be evident until the groundwork defining the direction, content focus, and strategic objectives have been defined and project planning has begun. If clarity does not emerge from the initial efforts, then project leaders should return to square one and try again. There is too much at stake to plan, implement, and manage sustainability efforts that are ill-defined and appear purposeless, or nearly so.
As each project in the sustainability portfolio proceeds through the strategy development, project planning, implementation, and management stages, care must be taken to ensure that the new project fits within the framework of the overall strategic sustainability initiative. Continual risk assessment, at all stages, is vital to uncover and remedy any potential pitfalls before they affect the journey toward sustainability. Internal and external assessments and evaluation activities should be integrated with the ongoing development of the sustainability portfolio to help maintain the balance needed among portfolio projects and smooth the transformation of the organization.
Despite ample research on sustainability, the change agents in the organizations may initially feel a lack of confidence. The sustainability initiative is and has to be a process defined and developed specifically to meet the needs for each organization. The auditing/assessing function is critical to ensure directionality is consistent with the strategic objectives and that everyone is marching to the same beat.
Of the many resources available, I recommend The Sustainable Enterprise Fieldbook (AMACOM, 2008), edited by Heana Wirtenberg, PhD, William G. Russell, and David Lipsky, PhD. This comprehensive coverage of sustainability includes access to an online gathering place for both experienced and novice practitioners to exchange the latest information, ask questions, and get answers.
About the author
Russell T. Westcott is an ASQ Fellow, certified quality auditor, and certified manager of quality/organizational excellence. He edited The ASQ Certified Manager of Quality/Organizational Excellence Handbook, Third edition (ASQ Quality Press, 2005), and was a co-editor of the ASQ Quality Improvement Handbook. Westcott authored Simplified Project Management for the Quality Professional (ASQ Quality Press, 2005), and Stepping Up to ISO 9004:2000 (Paton Professional, 2003). He is active in ASQ’s quality management division and the Thames Valley, Connecticut section management.
Westcott instructs the ASQ certified manager of quality/organizational excellence refresher course nationwide. He writes for Quality Progress, Quality Digest, The Quality Management Forum, The Auditor, and other publications.
Westcott is president of R.T. Westcott & Associates, founded in 1979 in Old Saybrook, Connecticut. He guides clients in implementing quality management systems, applying the Baldrige criteria, strategic planning, and project management practices.