LRQA Standards Update: Independent studies show conformity assessment delivers tangible benefits

Speaking at a conference in London organized by the International Organization for Standardization (ISO) recently, Marcus Long, CEO of the Independent International Organization for Certification (IIOC), demonstrated the tangible benefits of accredited certification to ISO standards on organizations, and relatedly the impact this has on insurers.

Citing independent academic evidence across several studies, Marcus showed that companies which embraced voluntary standards and complied with their requirements had a better return on capital than their peers, were less risky to insure and therefore should be rewarded with lower premiums.

Long went on to explain that these ISO-adopters also displayed a higher propensity to invest, showed greater inclination to innovate, had higher profitability and spent significantly less time in dealing with other official regulations and regulators. Some of the organizational benefits Long highlighted specifically in relation to quality management system (QMS) certification include:

  • Improved financial performance; Statistical analysis showed that ISO 9000 is directly associated with significant improvements in quality awareness, operations execution, market share, customer satisfaction and sales revenue. Hence, it appears that ISO 9000 can be a valuable strategic initiative for organizations, since it does impact the overall financial performance through enhancements to internal business processes.1
  • Enhanced customer satisfaction; Customer waiting time was on average halved from 20 to 10 days after ISO 9001 implementation.2
  • Better innovation; Certification increases the probability to be innovative of about 25% for small firms and of 15% for the largest firms.3
  • Higher productivity; All positively agreed in favor (72% strong agree/28% agree), using ISO 9001 would deliver enhancements to enterprise quality procedures and consequently productivity.4

Also demonstrating how standards make a difference to workers in Italy, a speaker from the Italian Workers’ Compensation Authority explained that the rolling out of voluntary standards in some sectors resulted in a reduction of up to 40% in the frequency and severity of accidents, leading to a much lower cost of insurance among participating companies.

LRQA is no stranger to the power of independent research as to the value of accredited certification to management system standards, having worked closely with Professor Mike Toffel at Harvard Business School. Toffel’s work within this arena demonstrated that companies which adopt ISO 9001 subsequently grow faster in sales, employment, payroll, and average annual earnings than a matched control group. ISO 9001 adopters are also more likely to remain in business.5

Toffel also referenced how ISO 9000 adopters subsequently become more likely to report zero injuries eligible for workers' compensation. However, there is no evidence that a firm's total or average injury costs improved or worsened subsequent to adoption.

Ultimately, the end recipient of the benefits of conformity assessment is the everyday consumer, who places their trust in the quality and consistency of goods and services that companies pledge to provide through a certification to internationally recognised management system standards such as ISO 9001:2015 (quality) and ISO 14001:2015 (environmental).

Published 15 months ago, the revised ISO 9001:2015 and ISO 14001:2015 standards present organizations with an opportunity to make their management systems and associated supply chains even more powerful and beneficial, to raise their levels of performance and increase efficiency, and to improve customer satisfaction.

Organizations have less than two years to transition to the revised standards. The clock is ticking, and the deadline of September 2018 for both standards is fast approaching.

With all the major ISO standards being revised, LRQA is at the forefront of communicating the changes. We offer a range of assessment services as well public and on-site training courses, all aimed at helping to ensure that organizations worldwide have a smooth transition to the new standards.

For more information about the revisions, email inquiries-usa@lrqa.com or visit www.lrqausa.com/isostandardsupdate.


References: 

[1] Proromos Chatzoglou Dimitrios Chatzoudes Nikolaos Kipraios (2015), ‘The impact of ISO 9000 certification on firms’ financial performance’, International Journal of Operations & Production Management, Volume 35, Issue 1.

[2] Vahid Nabavi, Majid Azizi, Mehdi Faezipour, (2014), ‘Implementation of quality management system based on ISO 9001:2008 and its effects on customer satisfaction case study, International Journal of Quality & Reliability Management, Volume 31, Issue 8.

[3] Giovanni Mangiarotti, Cesare A.F. Rijilloro, (2014), ‘Standards and innovation in manufacturing and services: the case for ISO 9000’, International Journal of Quality & Reliability Management, Volume 31, Issue 4 pp 435-454.

[4] Paul David Denton, Musbah Kharis Maatgi (2016), ‘The development of a work environment framework for ISO 9000 standard success’, International Journal of Quality & Reliability Management, Vol. 33, Issue 2.

[5] Levine, D. I., & Toffel, M. W. (2008, August). Quality Management and Job Quality: How the ISO 9001 Standard for Quality Management Systems Affects Employees and Employers. Harvard Business Review.