How to Implement ‘Understanding the Organization and its Context.’

This is a guest post by Allen Gluck, president of ERM31000 Training and Consulting in Spring Valley, NY, and an adjunct professor at Manhattanville School of Business in Purchase, NY. He has a master’s degree in leadership from Bellevue University in Nebraska. Gluck is an ASQ member and a member of the U.S. Technical Advisory Group to ISO Technical Committee 176 (TAG 176), which develops ISO 9001, and TAG 262, which develops ISO 31000. He may be contacted via his website: www.erm31000.com or at allen.gluck@erm31000.com.

The ISO 9001:2015 revision is bringing big changes.  This post is designed to assist your organization with the implementation of one of the new requirements: Clause 4.1, “Understanding the Organization and its Context.”

The new requirement reads: “The organization shall determine external and internal issues that are relevant to its purpose and its strategic direction and that affect its ability to achieve the intended result(s) of its quality management system.”

In order to explain how to go about making this determination and clarify the purpose it serves, an introduction is in place.

Although it is not obvious to the casual reader, the new standard alludes to decision-making in three places. The first is a quality principle quoted from ISO 9000:2015, namely “evidence-based decision making.” It is not hard to understand that better decisions are made when they are based on evidence rather than by conjecture.

The second almost surreptitious reference to decision-making is found in Clause 0.1, “Addressing risks and opportunities associated with its context and objectives.” Addressing risks means proactively managing uncertainties. The simple meaning of “managing uncertainties” is that decisions should be made with consideration of the possible positive and negative consequences that the uncertain future may bring.

Finally, in Clause 5.1, entitled Leadership and Commitment, we find a requirement for top management: “Ensuring that the quality policy and quality objectives are established for the quality management system and are compatible with the context and strategic direction of the organization.” Top management’s most basic role is strategic decision-making for the organization.

In essence, all three references require that informed decisions are to be made based on some kind of evidence. Where is this evidence to be found? All the evidence you’ll ever need is available in the context of your organization, whether it be external or internal.

What is the context of an organization? Let’s begin with examples of your internal context. Your company’s vision, mission, strategic objectives and direction, your org chart, SOPs, resources, culture, contractual relationships – these and more, are factors you should consider when making all decisions and when addressing uncertainties about the future.

On the other hand, the legal, social, political, regulatory, financial, economic, key drivers, trends, natural and competitive environment, and perceptions of external stakeholders (or interested parties) are all part of your external context. Each of these factors should be considered in the course of business leadership, when managing risk or uncertainty, and when making decisions that may affect the quality or service you provide.

One of the concerns raised about this new requirement is related to auditing. How can an auditor accurately audit context? What set of requirements does he or she audit against? Furthermore, will an omission from this potentially endless list yield many new non-conformances?

Quality management systems are built on PDCA, also known as the Deming cycle. “Understanding the organization and its context” are part and parcel of this process of continual improvement. As such, it is never complete on the first go-around. Indeed, the new standard states, “The organization shall monitor and review information about these external and internal issues,” which clearly indicates the standard experts’ broad understanding that context is a moving target.

As such, evidence of an ongoing process to establish and understand an organization’s context is absolutely satisfactory to satisfy an audit to these requirements. Only an egregious omission could legitimately be viewed as a non-conformance by an auditor who has trained for proficiency to this standard.

In summary:

  • Quality decisions are no different than any other decisions; uncertainties may help or hinder your objectives.
  • Your best decisions are based on the best available evidence.
  • Most of this evidence which you require is readily available within:

–        your organization’s external and internal context

–        the context and content of your “interested parties”

  • This process is auditable

Thank you to the hard-working men and women of the U.S. Technical Advisory Group to TC 176 for their years of volunteer effort resulting in the new ISO 9001 standard.

2 thoughts on “How to Implement ‘Understanding the Organization and its Context.’”

  1. I think that using QFD tools can be useful to find external and internal evidence to do well making decisions to satisface the clause 5,1 of ISO 9000 2015

  2. Thank you. This article so clearly has explained these principles and approaches in the standard. The language used to explain this really helped me.

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