Improving Profits by Better Management Control

Aspects International Ltd specializes in helping organizations achieve ISO 14001 through consultancy and training. Many of our consultants also have experience of ISO 9001:2000 and also work as auditors for leading certification bodies. Recently we completed a review of the benefits organizations are gaining from achieving these standards. The result of the review was disappointing in that few companies were improving profits.

A number of key reasons were identified:

  • Too much focus on documentation and not enough action.
  • Ineffective internal auditing.

By action we mean improving operational control.

It also requires management to specify accident/ incident and emergency conditions
that may occur when control is lost.

The concept of “continual improvement” is introduced in ISO 14001.
In the context of control mechanisms continual improvement is the ability of
management to change the specified set of conditions to deliver improved business
performance and reduce environmental impact.

Statement of the problem
Unfortunately as an ISO 14001 consultant starting an implementation project
or as an EMS Lead Auditor I find that management have frequently not clearly
specified what they mean by normal and abnormal operating conditions and often
have difficulty identifying all risks. In other words management generally and
genuinely believe that they have good control of the business activities and
are consequently very surprised when this is shown not to be the case. If management
do not have these different operating conditions clearly defined then there
can be a gradual loss of control leading ultimately to a major emergency.

Consequently it is also surprising that as an EMS Lead Auditor I find the vital
step of deciding the degree of control is often omitted in the process of deciding
which aspects are significant. The result can be that certain aspects are rated
as not being significant and are consequently not included in the environmental
management system.

A simple model of management control
A simple model of management control (Figure 1) has been developed to help management
understand the importance of determining the degree of control and the immediate
benefits that can be gained. The model indicates that when control is significantly
lost an emergency or incident may result and control will be extremely difficult
to regain. On the other hand through a process of setting higher and higher
standards with regular management review world class competitiveness can be

Developing criteria for assessing control

Table 1 – Using criteria to assess control


or in part

Is the activity controlled bya documented procedure (or SOP.)
or a work instruction?
Has training been provided for theManagement andOperators?      
Is there good supervision byMicroprocessor control orSupervisors
close to the activity?
Have performance criteria been specified for the EquipmentManagement
& operators?
Has the time been specified for the Activity orProcess step
How is the activity or process maintainedPlanned maintenance
schedule orReactive (fix it when it breaks)?
How is the performance of the activity or process reportedSenior
Is non-achievement of internal standards investigated &
corrective & preventive action applied?
Are improvements actively sought byManagementWorkforce?      

Above are nine questions that can be used to assess control within an organisation.
However management should add more specific questions. Fifteen questions is

Quick fixes and improved profits
Here we can combine the ISO 14001 approach and the new ISO 9001:2000 with its
commitment to continual improvement. There is now at long last a powerful management
tool to achieve business improvement in all areas; environmental, quality, health
& safety and financial. Significant benefits generally accrue from this
quick exercise of determining the degree of control. This mechanism is set out

  • Setting internal standards of performance better than customer expectations
    and competitors ability.
  • Improving monitoring and measurement to provide management with more data
    about the effectiveness of their control systems.
  • Raising nonconformances any time any where by anybody can change cultures
    within an organisation but by careful analysis of the root cause of the nonconformance
    can lead to detailed new objectives and targets being set.
  • Improved internal audit checklists more focused on identifying opportunities
    to improve and less on documentation errors.
  • Regular top management review should review the standard of operational
    control and set new objectives to achieve.

All of the above combine to make a powerful mechanism to achieve continual
improvement of the organisation’s business.

The need to improve audit methodologies
For both ISO14001 and ISO9001:2000 Certification Body audit teams are finding
that many organisation’s are failing to derive real benefit from the internal
audit process. After 2-3 years of having their ISO certificates few if any nonconformances
are found and management lose interest in the audit process and possibly even
maintenance of the management systems. The main reason is that the internal
audit is still focusing on documentation and not the achievement of objectives
and the identification of new opportunities for improving systems and processes.

We are seeing many companies worldwide seeking to improve their internal auditors
skills by sending them on a 5 day ISO 14001 Lead Assessor Course. Management
has realised often with encouragement from their Certification Body that they
are not getting as much benefit from their internal auditing as they should.
They may have a well documented system but is it delivering business benefit
by increasing profits?

To gain financial benefits management must seek to improve operational control
through the setting of objectives and targets and a regular review of their
achievement followed by the setting of higher standards. The internal audit
is a powerful tool to drive continual improvement but it requires auditors trained
to much higher standards than at present.

Barry F P Little FIEMA, EARA reg. Principal Environmental Auditor, EMS and
QMS Lead Auditor
March 04

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