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Clause 9 Performance Evaluation

What we're looking at here in terms of valuation is, we've set objectives, we've identified what we need to monitor and imagine as part of our planning phase, and we've identified what is required in terms of our compliance requirements associated to environmental and health and safety.

We know what we have to monitor and measure. It could be part of our production processing that we have to monitor measure, it could be part of our service provision. It could simply be the equipment that we use in terms of, lifting equipment, certifications, calibrations.

How do we ensure that items are valid for the results that we're trying to achieve?

It could be that we have measuring equipment inside our production line to measure diameters and sizes, and so on. It could be that part of that major equipment could be laser measuring whatever could be itself calibrated, or it could be something that needs to be externally calibrated.

We need to also recognize that there are periods often associated to the monitoring and measurement. And, of course, if we are the ones that are doing the analysis and evaluation of it, and not a third party, how do we go about capturing that and doing that?

When we talk about the analysis and evaluation, that can include of course, associated to our production downtime, our services not being delivered on time. It could be we set ourselves objectives and what we're trying to achieve company wide, and how that's drilled down to specific projects, orders, production lines, etc. What it is that we've identified that we want to monitor, measure and analyse.

One of the key things here is the analysis.

Many companies monitor and measure activities, but they don't necessarily look at the analysis side of it. For example, companies may say that they monitor and measure observation cards, or they may monitor and measure near miss reporting. However, they're missing a trick if they don't then go forward and use that monitored and measured data to analyse it, because the analysis part is really what gives you the data that allows you to drive improvement.

And that's the same from a quality point of view as well. If you just monitor and measure information associated to production down times, the number of scraps, the number of reworks, etc you're missing a trick there in terms of coding that little bit further.

Doing the analysis allows you to identify more areas and areas that require greater attention. You may identify trends that allow you to associate with certain people, with certain equipment, with certain suppliers, that allow you then to take some action. Because ultimately that monitoring measurement you do, you're doing it for a purpose.

A couple of things one is to ensure controls are in place. But the second one is to see where we can improve upon, where we are monitoring measuring output associated to performance, or associated to observations or near misses, what are we getting out of it?

Think about other things as well, let's say from an environmental or a health and safety point of view. If we're delivering toolbox talks on a regular basis, have we got anything to back up? Anything that we can analyse to say ‘Are these toolbox talks being effective?'

Can we see that as a result of introducing toolbox talks, or as a result of introducing

some sort of health and safety interaction, that actually we're starting to see an improvement on our health and safety performance?

It might not be actually in the statistics, but it might be that we are starting to see more engagement. It could be that we're starting to see people get more involved in health and safety and coming up with suggestions and things like that. So, it's whatever works for your organisation in terms of the monitoring and measuring.

There is an area, within the standard that asks you to look at customer feedback. I'm not a fantastic lover or surveys and things like that, my feeling is that it doesn't often feed you with a lot of information that you can analyse and act upon.

Often when you have some of these feedbacks, generally, it's of a positive nature. My feeling is that if my customers are not happy with the services or the products I provide, they're not going to wait until I send them a survey, or ask them for the feedback, they're going to give me feedback. They're going to tell me where things are not right.

Where you might get that type of information that may help you a little bit is maybe when you're in a face to face meeting, where you might get a bit more information about the health and safety performance and how your client sees the culture of the workforce health and safety on the new site that you're working on. Or you might get a feeling from a client and how they see that the service is being delivered. I'm still a little bit sceptical about surveys and feedback and things like that, I think they have their place, but I'm not necessarily sure that they do a lot more than satisfy an ISO auditor.

It's important to recognize that we look at monitoring and measuring the things that are relevant to our business.

What are the things that we want to have control over and therefore monitor and measure?

· Some may be driven by statutory requirements like certifications, and calibrations and so on.

· Some may be driven by our own performance objectives that we've set.

· Some may be driven by contractual or client objectives.

But it is important we recognize that they are based on what's specific to our business. What's needed for our business, and the purpose of doing it is to drive positivity and the fact that we want to deliver good products and services.

But we also want to use that monitoring and measuring and analysis and evaluation to see where there are areas we can improve on.

This is really the area that we can drill down into the cost of error. It is an area that I'm quite passionate about and I believe a lot of companies, if they did a little bit more in it, they could really put financial figures against the cost of error.

We did a couple of projects recently, one with a manufacturing and one for service company, and based on what they believed, in the manufacturing company they thought it was all associated to old equipment that they were using that resulted in their scrap level being quite high. They also believed their scrap level was their cost to their business, but actually there was so much more hidden cost, as a result of the errors from scrap, that we were able to show that there was more than twice the impact of cost on the business. Then by doing some analysis, investing some time, we were able to demonstrate that the biggest area of issue was around human error in the setup of the equipment. One of the issues here, was that the workforce wasn’t aware of it, they didn't know the impact it was having.

Suddenly, they went from, I think it was a 5%, scrap level down to 3.5% level within three months, and that made a difference of something around about 17 grand a month to the business.

They're continuing on that journey, and they weren't really able to do that without getting the data and analysing it.

We did a similar activity with a service organisation, and what we found was the cost of error there was associated to either one of two things,

1. raw material or parts going to the site late, or

2. the engineers not taking the appropriate parts or tools with them.

They weren't really capturing this properly, and when we started to grade these, and put them into ‘buckets’ and analyse it, we suddenly realized that, for every service call that there was a problem, on average, it was costing the company around £750 for each one.

Interestingly, they were getting somewhere in the range of about 6 to 10 of these per month. Now they are not huge company, 50 employees, so that kind of cost of error is quite significant.

They started driving objectives based on the analysis and evaluation that they did, based on the cost of error, and what they were able to do, is start to see month on month targets improve, trying to educate their suppliers on the impacts and sending them reports showing them the cost, putting non-conformances on their suppliers, looking to actually see if they can get credit from them. Because suddenly, when that starts happening, you're wanting your suppliers to start raising their game as well.

Internally as well, a bit more education.

We did a couple of toolbox talks with them not on health and safety, actually, this time it was on the cost of error. And what we were talking to them about is the impact of not doing the correct checks to make sure things were there, particular if they drive two hours to a site to realise, they don't have what they needed to finish the job.

That type of analysis and evaluation when you have a mature system, is very good to take you further and get more from your management system and part of your internal audit process is actually the perfect place to do this. Remember, internal auditing is not necessarily about what your certification auditor wants to see, they're there to do an audit on you whether you meet the requirements of the standard. Your internal audit process, if you see that you have significant costs due to error, a great function within your internal audit process is drilling down in these areas to demonstrate and identify where the areas of improvement are, and importantly, be able to demonstrate what actions you're taking, and going back and verifying them. Just because it's not auditing against a specific element of the standard, or a specific area of the process, doesn't mean it's not a form of internal auditing. Ultimately, internal auditing, you're doing it for compliance but you're doing it also to be able to demonstrate how you can improve in your performance.

Part of performance evaluation is your evaluation of compliance. We've already mentioned as part of your compliance activities, you've had to identify what you need to comply with. And this may be certain laws and applicable legislation you have to comply with very specific to the work that you do, it could be associated to working at height, working in a confined space, working with certain electrical requirements, whatever it may be, that are set rules and regulations around that and standards.

You should be able to identify that under your planning phase, and you should have been able to identify what it is you have to do to demonstrate your compliance. And this area here now, in terms of your monitoring and measurement, performance evaluation, is how you evaluate that you are complying with it.

How often do you have to evaluate your compliance? How often do you have to check it? Is this something you have to do on every job? Is it something that's periodic?

It's all got to be relevant to your products and services you provide.

What actions?

You need to make an assessment against the applicable regulations. If you meet the requirements, and take any actions necessary to become compliant, if you're not quite meeting the requirements, you need to be built to demonstrate improvements to show that you are becoming compliant or a plan to become compliant. And then there's a maintenance associated to.

What about in terms of changes?

How you maintain those changes, when there is change management that might impact on your compliance obligations, how you maintain the status quo and ensure that your compliance is met.

Evaluation of compliance is quite an important element associated to health and safety and environmental. It's important to recognize that under your evaluation of compliance, you recognize other impacting factors as part of that compliance, that drive changes. There might be changes to certain laws, I think back in 2014, or 2015, there were some CDM construction regulation changes, and as a result of that the knock-on effect of that compliance requirement was quite significant. It had quite significant impact, not just in the construction sector, but also in the supporting fields like architectural and engineering services as well. As well as that there had to be additional competencies, there had to be policies and supporting documentation around that, that companies had to be able to demonstrate how they met these changes associated to that regulation.

This is an example of things where you demonstrate how you evaluate it but also how you maintain it as part of your processes.

Management review, I don't believe it's a requirement that needs to be internally audited. The ISO guys may contradict what I'm saying or should I say I'm contradicting what they're saying. I believe that if you undertake your Management Review effectively, and you can demonstrate the records, of minutes of meetings and actions of it with respect to what's expected from the standards, I believe that's sufficient.

One key thing I would say about Management Review, is I actually believe either the internal auditors or spokespeople for the internal auditors are present at the meeting.

The other thing about Management Review is, I don't believe it necessarily has to be this one meeting that happens once a year. Even once a year thing, I often find that stuff that may have happened 9 or 10 months ago, it can be difficult to address it and talk about it because time can move so quickly.

I'm a great believer of doing a Management Review type meeting every month to every three months, and keeping them quite short and swift. One of the things I like to look at is the agenda, and maybe design your agenda around your business activities. So, if your end of financial year is at the end of March every year, you might want to do a Management Review at the start of March or in February, where you might talk about your training budgets and your staffing budgets or maybe budgets associated to equipment you might need to purchase so on and so forth.

I wouldn’t necessarily say at that stage, that you're focusing on other areas, maybe a quarter before that, and the other three quarters in the year, you might look at your non-conformities and corrective actions etc.

I think management review needs a little bit of a shakeup personally, and I think it needs to get away from this long drawn out meeting.

I was at a client recently, probably the tail end of the year, last year, and they were telling me that they have a two-day management review meeting, where they have different sectors all over the UK that come together to undertake this. But they then told me that actually, well, a lot of the information we actually cover at the management meetings that they do via video conference every month. And I said, “so why do you have the Management Review then, if most of the stuff is captured in your monthly management meetings?”

‘It’s a requirement of the standard.’

Well, actually it's not. It’s a requirement of the standard that you demonstrate results of the outputs of what's expected from the standard, it doesn't say how you have to deliver.

I suggested to them, just scrap what you're doing and the costs associated to that, bringing 15 - 16 people flying them, driving them to one location 2 days down time to talk, often about stuff that they're talking about already.

There's just a couple of elements that they weren’t capturing in their monthly meeting that I suggested they slot in. I think this is something that organisations have to look at but to me, it doesn't really fall into an internal audit requirement.

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