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Context of the Organization - What is required by the new standard?

Explained by Koos Gouws

The new version of ISO 9001 which is expected at the end of 2015 contains a new requirement that I believe is going to cause problems for some organizations, and even for some auditors. The new clause 4 is titled "Context of the organization". It has 4 subclauses, according to the DIS standard:

        · 4.1 Understanding the organization and its context
         · 4.2 Understanding the needs and expectations of interested parties
         · 4.3 Determining the scope of the quality management system
         · 4.4 Quality management system

Under clause 4.1 the DIS standard includes the following notes on understanding the context of the organization:
"Note 1 Understanding the external context of the organization can be facilitated by considering issues arising from legal, technological, competitive, cultural, social, economic and natural environment, whether international, national, regional or local."
"Note 2 When understanding the internal context the organization could consider those related to perceptions, values and culture of the organization."
Interpretation of these clauses could be a problem to some, but I believe that the biggest problem will be the techniques that can be used to determine the context of the organization, and who the interested parties are, and what their expectations may be. No longer is this requirement limited to customers.
These requirements point directly to another new requirement in the new standard. The new clause 6.1 is titled "Actions to address risks and opportunities. The standard requires a business risk assessment to be done and it refers back to clauses 4.1 and 4.2.
Clause 6.1.c requires the organization to plan actions to be addressed to "prevent or reduce undesired effects". Clause 6.1 not only addresses the risks identified, but also the opportunities which are identified. The actions which are planned has to become part of the quality management system processes. 
Why is ISO 9001 bothering with these issues? It is because the standard is moving ever closer to being a true business management system. According to Robert B Pojasek of Harvard University, the context of the organization involves its "operating environment". He also states that context matters because it determines the influence and priority of stakeholder roles, and helps to determine how really sustainable programs can be adopted and even whether they can help get the organization where it needs to be. It can influence the objectives and other operating requirements of the organization.

Pojasek states that establishing the context means to define the external and internal factors that organizations must consider when they manage business risks.

To enable organizations to define its context and the business risks and opportunities, several techniques are available. I have selected a few techniques because of the differences in focus of each. These techniques look at external issues and internal issues, and culminate in a SWOT analysis which helps us to identify the risks and the opportunities.
External Issues
        · PESTLE analysis: PESTLE helps us to identify key external influences that could cause the organization to take certain actions. These factors will translate as opportunities and threats in the SWOT analysis.
         · Porter's 5 forces framework: This analysis focuses on the competition in the industry, as well as on buyer power and supplier power.
Internal Issues
        · Resource audit: This technique looks at the resources that are available internally in the organization to analyse key areas of internal capability so that we can identify the resources that will enable business change, as well as those that will undermine such efforts.
         · MOST analysis: This technique is also used to identify internal issues. Its purpose is to:
                o Make it clear to everybody what the organization wants to achieve
                 o Tell us how we are going to achieve what we want to achieve
                 o Help us to identify internal strengths and weaknesses.
SHEQ Management System offers a practical 1 day workshop to assist companies with these requirements. During the workshop the following is addressed with the management team of the organization:
        · Introduction of the management team to the techniques listed in this document
         · Practically using the techniques as a team to discover the external and internal influences of their organization
         · Do a practical SWOT analysis to discover strengths and weaknesses (internal influences) as well as opportunities and threats (external influences) to the organization
         · Definition of the context of the organization
         · A discussion on strategy planning and implementation
         · Linking the outcomes to the business planning of the organization
         · Linking the outcomes to the quality management system of the organization
         · A discussion on performance evaluation
I believe that the new ISO 9001 is more business orientated than ever before. It will help us to have a management system that can be practically used to improve business performance. The quality management system will become more relevant to top management.
Please feel free to contact us if your organization is interested in the workshop, and we will provide you with a quote. 

 Be prepared for the transition to the new version of ISO 9001!

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Somerset West
Cape Town. South Africa

Email: Koos
Phone: +27 (0) 83 306 1757

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