Guess what? Small companies differ fundamentally from large ones in more ways than size. While this basic fact won't startle many readers, it does create an entirely new paradigm for quality management system registration.
Like most major paradigm shifts, the move to ISO 9000-based quality management began with large organizations, grew slowly and is now rapidly being forced, with little modification, down the supply chain to smaller organizations. This lack of modification truly is a disservice to them.
Most companies worldwide employ fewer than 30 people. For various reasons, relatively few organizations in this category have adopted this "new" ISO 9000 approach to quality management voluntarily. Because they're usually exploring or adopting typical, large-organization models for ISO 9000, most small companies perceive little benefit, considerable cost and a loss of their competitive quick response to changing customer requirements.
The level of expectation and customer demand for supplier conformance to ISO 9000 standards varies by customer and the various automotive, aviation defense, electronics, petroleum, medical and business sector interpretations. Often, an ISO 9000-based system creates high costs and/or nonvalue-adding requirements for smaller organizations.
These costs are aggravated when small companies adhere to traditional approaches to ISO 9000 implementation that don't embrace current technology, data management, management philosophy or quality methods. Rather than addressing this problem, many so-called experts and registrars fail or refuse to recognize the fundamental differences between large and small organizations.
Small business cultures
A primary difference between large and small companies is management's role and involvement. Typically, top management of a small firm:
Has greater interest and control of the firm through an ownership position.
Is more involved with daily operations in all areas.
Knows all employees and their strengths and weaknesses.
Understands, and can often perform, all activities or processes.
Knows the customer's representatives and understands customer needs and quirks.
Is knowledgeable about the relative strengths and weaknesses of the firm's products/services as well as its competitors.
Is reflected as the firm's alter ego.
Resources, especially personnel, generally are not as available in smaller organizations. Also, overlapping responsibilities or assignments are uncommon because each person has defined activity areas or turf.
Smaller firms maintain a more limited scope in terms of products or services, processes, customer base, geographic market and technology. Exceptions to this tendency include large scope/small organizations such as trading companies, independent manufacturers' representatives, Internet sales firms and consortiums, or the opposite extreme of narrow scope/large organizations such as airlines and governmental agencies.
Adding or letting go of a single person at a small company may create major change and chaos until everyone determines his or her new responsibilities.
Small firm culture is more informal, although not necessarily more relaxed. This translates into fewer written directions and records. People unfamiliar with small company culture often mistake informality for indifference. Nothing could be more erroneous. A small company owner casually requesting a subordinate to perform an activity may convey unmentioned dire effects for nonperformance exceeding those of a registered letter of demand.
Quality responsibility often is deployed in small companies as part of a person's responsibility because the organization may not have a separate quality department or even quality manager. Likewise, quality in certain activities or for certain products can depend on an individual's "special knowledge," as Joseph M. Juran termed it. When that person is unavailable, the firm suffers reduced capability.
This short list indicates the differences between the relationships, activities, communications and control mechanisms of small organizations vs. large ones. Obviously, managing small organizations will differ fundamentally from managing large ones. Does it logically follow that their management systems also will differ? Management systems must reflect large and small corporate natures in order to attain cost-efficiency and operational effectiveness.
ISO 9000: one size fits all
The ISO 9001/2/3 models provide the foundation upon which specific plans are built. Each standard mandates addressing its requirements with a company plan; it doesn't define the content or extent of that plan beyond stipulating that it be "adequate" to satisfy customer and other requirements.
Properly applied, ISO 9000's descriptive approach is ideally suited for small organizations' unique aspects. However, proper implementation can only occur when a company considers not only the standard's concepts, guidance and specific requirements but how all persons and activities within the organization interact. Aligning ISO 9000 concepts to small companies' cultures begins by embracing the ISO 8402:1994 definition of quality, i.e., "totality of characteristics of an entity that bear on its ability to satisfy stated or implied needs." An entity is an identifiable subject such as an activity, product, service, person, system, organization or combination of subjects.
In other words, quality includes everybody and everything that affects satisfactory performance or outcomes. Small organizations' operations aptly meet this description because a miscue anywhere quickly and directly affects most or all employees.
ISO 9000-1:1994, Subelement 8.4.1, stipulates that basic ISO 9000 models may be tailored by deleting, modifying or adding to stated basic requirements. These changes should be agreed to by the customer and specified in contracts. Annex A, item A.4 of ISO 9000-1 defines a quality system as the "organizational structure, procedures, processes and resources needed to implement quality management." Translating this into business terms, companies can modify ISO 9000 models and requirements to fit their situations if their customers agree and the companies satisfy customers' contract requirements.
Satisfying customers and requirements
However, this may not be the end of a small company's ISO 9000 concerns if its management erred from another perspective. A firm may have satisfied its customers but still not meet the ISO 9000 requirement for supporting the company's overly ambitious quality policy. Quite possibly, management established unrealistic targets that exceed the company's capabilities, cultural intents, customer requirements or established practices.
Expectations and requirements are two distinct concepts. Requirements, defined by contracts, drawings and specifications, must be satisfied. Expectations, on the other hand, are typically dynamic, undefined and miscommunicated, and frequently arise as part of a criticism after an activity is completed or a product delivered. Satisfying expectations involves mind reading or fortunetelling.
These various insights can be summarized into four basic trends. First, ISO 9000 must involve most, if not all, of an organization. Second, small organizations' top management must deal continually with contracts, customers, operations, quality issues and personnel, compared with the relative isolation of top management in large organizations. Third, ISO 9000 can be tailored to focus on what an organization does to satisfy contracts, if customers agree. Fourth, success arises from realistic, attainable policies and goals that support customer satisfaction.
A daunting list of potential problems can accumulate for small companies without ISO 9000 or an equivalent systemic approach to quality management. These include:
Future success or survival is threatened should certain individuals be absent for a long period because their critical "special knowledge" hasn't been documented.
Growth is limited or chaotic because activities and responsibilities haven't been captured for easy training or transfer.
Authority boundaries become schizophrenic because they are undefined and depend on who is present at work that day.
Competitive position may erode as other firms become registered and/or current activities aren't regularly monitored, maintained and improved.
Unnecessary processes may exist from habit, superstition or previous need.
Avoidable quality problems arise from accepting contracts that exceed an organization's capabilities.
Tailoring ISO 9000 to small companies
Realizing the advantage of a customized quality system, how does a small organization accomplish it? Two things must be considered when adapting ISO 9000 for small businesses. A small organization's "world of competition" usually represents only two or three long-term competitors who may operate a short distance away. Also, a small firm's top management is personally familiar with most of the organization's functions.
This means the company needs fewer formal reporting links and written communications. A small organization's quality system definition and documentation can be established through simple flowcharts, checklists, graphics, etc. because management stems from personalities and mentality rather than paperwork.
No single, correct, quick and easy approach to implementing ISO 9000 exists. However, there are numerous wrong approaches and ways to avoid or minimize them. Some of these ill-advised methods and their preventive actions include:
Problem--Purchasing a generic documentation program and simply inserting the small firm's name. Almost all purchased software documentation programs are based on traditional, large organization models. The documentation forms cover almost any situation or requirement. These programs can create more problems than they solve for many small organizations.
Solution--Purchased documentation should be used only after thoroughly reviewing the documents and modifying them to reflect a firm's actual operations.
Problem--Using a major customer's or competitor's system design without thoroughly modifying it. A customer's approach usually focuses on a different organization size, structure, processes, products and market sector.
Solution--Your system must take advantage of company personnel's special knowledge, processes and abilities to broaden competition beyond pricing.
Problem--Overdocumentation due to the organization, outside experts and some registrars misapply actual ISO 9000 requirements. Overdocumentation benefits no one and increases the likelihood of nonconformances and document maintenance costs.
Solution--The critical test for documentation adequacy and appropriateness is whether problems exist. If they do, then additional documentation is a candidate, along with other actions.
Problem--Outside resource creating the quality system documentation without extensive internal involvement and internal ownership. Without internal ownership, the system will require constant policing for conformance.
Solution--Internal resources develop the system with optional external guidance.
Problem--Contracting outside quality system development assistance whose competence is based solely on ISO 9000 expertise or certification. No competence in understanding or applying quality methods, techniques and philosophies is inferred by ISO 9000 auditor certification.
Solution--Ensure that contracted resources also possess ASQ CQE status and focus on performance first, then seek conformance. Knowledge must exist before it can be modified.
Problem--Failing to determine the documentation required by ISO 9000 and internal risk management strategies. The standards all require a quality manual addressing requirements and quality system procedures, per Element 4.2.1.
Solution--Probably a small company already has developed most of its documentation, but it's not linked to ISO 9000 requirements. Massive rewriting is seldom required for firms with a good existing system. More often, small firms need to include strategic risk management or special knowledge documentation.
Problem--Restricting documentation to text without taking advantage of graphics and other media. The variation in development time and usefulness of a pure text description and other available media often is significant.
Solution--Rather than setting up, for example, a test description for a complex machine, consider creating a video of the setup person explaining what he or she is doing and why, and describing any special situations to monitor. Flowcharts and digital cameras are great.
Problem--Relying on expert guidance from someone who has little experience with small organizations or systems engineering. Small organizations can respond quickly, even to unforeseen customer requests, so that contract revision, as stipulated by ISO 9000, is almost unidentifiable. A customer often inputs information to a single person, who evaluates and satisfies the entire need. Most or all of the administrative detail follows the fact.
Solution--Small organizations depend on relatively high levels of employee empowerment and flexible control methods seldom found in large organizations. It's vital for small organizations to recognize this in their documentation and quality control plans.
The examples above show that small organizations can create a customized documentation strategy that will provide them with the maximum benefit for a minimum outlay of resources. They'll need documentation only to the extent that its absence adversely affects quality, both current and over time. Also, it must only bridge the gap between an activity's written requirements and the qualifications of the person authorized to perform the task.
Clearly, small organizations can benefit from adopting and implementing an ISO 9000 quality management system. Major perils exist, however, and small firms all too often encounter them if the selected ISO 9000 model is not appropriately modified to address their specific needs. Most difficulties, failures, high costs and inefficiencies result when companies fail to understand the standard's intents and requirements, or when they adopt a model unsuitable for them. ISO 9000 facilitates business operations, and the models serve only as a framework for further development. Remember, too, that numerous shortcuts and benefits available through media and technology can reduce the challenge of creating a customized system.
Companies often encounter resistance from customers and registrars when tailoring a system because it requires considerably greater effort for them to understand and evaluate a customized system. Small organizations truly differ from large organizations and must persist in their goal of being recognized as unique. Implementing a customized ISO 9000 quality management system will help them maintain their competitive advantages of flexibility, timeliness and low operating costs.
About the authors
Douglas L. Berg is engineering group manager for General Motors Corp.'s Powertrain division. William M. Harral is CEO of Arch Associates LLC, a Northville, Michigan, total quality management and business services firm. For more information, contact Harral by fax at (248) 449-5434 or e-mail email@example.com.