Maturity Model of Organisations - Administrative Risk Control And CI


Alan Cotterell

Administrative Risk Control And Continual Improvement

The Maturity Model of Organisations

If you question middle managers and tradespeople in an organisation, you will often discover that its history has been quite chaotic. Usually the organisation has started as a one-person business, or has been set up by government in an unplanned manner.

‘Crisis management’ is still the norm in many large organisations, and can be accompanied by a quite undesirable organisational culture.

The use of a systematic approach to management can provide the impetus for the organisation to ‘mature’. The ‘maturity model of organisations is as follows:

Initial level (chaos) - there is no documented management system and ‘crisis management’ prevails.
Managed level - ‘managers’ are employed and the organisation is managed on an ad hoc basis. Duties may be delegated.
Planned level– organisational activities are planned, and a documented management system may be introduced (e.g. Quality Management System).
Integrated level – an integrated management system is implemented to manage critical risk areas (quality, safety, environment, security). Appropriate administrative risk control is implemented for all risk areas.
Optimised level – Administrative risk controls are subject to continual improvement, making the organistion resposive to its external and internal environments. Development is sustainable.
It is considered that many Australian organisations have achieved the ‘planned ‘ level of maturity. Australian Standard 4581:1999 Management System Integration has been published, however most organisations are probably not aware of its existence. Some organisations are attempting to achieve the ‘integrated’ level. No organisation has achieved the ‘optimised’ level.

Continual improvement

Improvement of work practices, where there is no administrative risk control is very difficult. Administrative risk control involves the documentation of work practices as ‘procedures’, this makes the process ‘visible’.

If work practices are not documented, they are subject to change at the whim of managers and others. It is quite common in organisations at the initial and managed levels to manage risk on an ad hoc basis. Managers often make what are properly, policy decisions, often without reference to established standards, and in ignorance of the law, which calls up these standards.

Continual improvement can be achieved as follows:

Active intervention – the manager monitors the workplace, and by inspection determines improvements to processes.
Employee Suggestion Scheme – a system of requesting suggestions from employees is used to return information on problems to management personnel, who theoretically introduce improvements.
Auditing – auditing which is performed intelligently can detect procedural and policy ‘nonconformances’, and by interaction with employees find solutions to problems, which reduce efficiency in the organisation.
Opportunity for Improvement Report – Where there is a documented management system, nonconformance are usually reported using a Nonconformance (Opportunity for Improvement) Report. This report is the mechanism for formally addressing concerns. Certifying bodies usually check to see that the reports are appropriately ‘closed out’, when conducting ‘third party’ audits.
Complaints Handling – Customer complaints offer great opportunities to improve organisational performance, and deliver a better product or service. Australian Standard AS4269 – Complaints Handling provides further information in this area.
Total Quality Management – problem solving, through team based activities, offers probably the greatest means of improving organisational performance. To be effective gains achieved through TQM must be ‘locked in’, by updating management system documentation.
Total Quality Management

The TQM problem solving activity is based on the Plan, Do, Check, Act cycle.

Plan – an improvement to a system or process is planned. This usually involves documenting the process ‘warts and all’, ‘imagineering’ how the process should be performed, and planning changes to the system or process.
Do – the changes to the system or process are implemented on a trial basis, and the results monitored.
Check – the effects of the system or process change are evaluated (using statistics), to see that an improvement has actually been achieved, and that other processes have not been adversely affected.
Act – process and system documentation is updated to ‘lock in’ the changes, and provide a basis for audit. This documentation aspect is known as administrative risk control (which controls operational risk, (quality, safety, environment, security)). It is the subject of the ‘Process Control’ element of AS/NZS ISO 9001.
Nonconformance (Opportunity for Improvement) Report

This report provides means by which system and procedural nonconformances, can be formally addressed by management. Nonconformances can be detected through audit activities, customer complaints or may simply be reported by workers ‘at the coal face’.

It is essential that workers have a mechanism to have their concerns formally addressed, other than resorting to union activity. The implementation of TQM in an organisation should reduce the need for use of the report by team members. However where ‘directive’ management systems prevail, there is often no way for workers to advise the Chief Executive Officer of problems.

This effectively causes ‘lack of control’, over the work activity by the worker, and amongst other things, causes a stressful situation to exist.

An example of this phenomenon occurs in ‘telephone call centres’, where staff may be reduced by management decision, leaving the operator to deal with irate customers, who have been waiting several minutes. It also occurs in hospitals, where medical staff are not empowered to complain about conditions which adversely affect patients.

Industrial Democracy

To date industrial democracy in Australia has been representative democracy, that is, to have concerns addressed by management the worker must join a union, and request the union representative to act on his/her behalf. The use of the Nonconformance (Opportunity for Improvement) Report, and TQM offer a means of implementing participative democracy.

The implementation of participative democracy involves changing the paradigm to one, which is risk conscious, proactive, and empowering. This can be achieved by:

Implementing a documented management system based on AS4581, AS/NZS ISO 9000, AS/NZS ISO 14000, AS 4804 , so that workers can essentially self manage.
Introducing the use of the Nonconformance (Opportunity for Improvement) Report.
Implementing Employee Share Ownership to provide the motivation for workers to improve systems and procedures.

Alan Cotterell

18th September 1999
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