Organizational crisis management through resilient management systems

CONTENT:

• Characteristics of resilient management systems
• Organizational crisis management: A practical example
• Organizational resilience needs leaders - not managers
• Crisis management in an organzation: Conclusion
• DQS - Pioneering the certification of management systems

Characteristics of resilient management systems

Regarding ISO 9001, companies use various methods to determine their internal and external issues (section 4.1). In addition to the classic SWOT analysis, a PESTEL analysis or market research is often carried out.Top management looks at the results once a year, usually as part of the annual strategy meeting or the management review. It discusses them and derives measures to ensure the standard requirement is met.

Functional early warning system

However, a functioning early warning system for an organization only emerges from a comprehensive and regular analysis of all the results of various methods and a 360-degree perspective - and enables crisis management to be initiated if necessary. A singular view at a single point in time with the results of an analysis tool does not help. In addition to obtaining employee feedback on internal processes, culture, and challenges, financial and process analyses and competitor and trend analyses are also important. They help identify industry trends and developments quickly, thus recognizing external opportunities and threats early. Through the concerted use of various methods, companies can make well-founded decisions, develop strategic initiatives, and enter crisis management if worse comes to worst.

Proactive risk management

In close connection to this, I always find that resilient organizations have an excellent proactive risk management system that is adapted to the needs of the organization - regardless of whether it is required by law or not. It clearly goes beyond the requirements of ISO 9001, Clause 6.1. It is not seen as an obligation, but as an essential tool for recognizing changes and potential risks early. This means the organization is better prepared for crises across all teams and can act proactively.

For example, suppose that I, as an organization, recognize early on that my framework conditions and demand market are changing. In that case, I give myself time to adapt my offer or develop new offers. One of the most important characteristics of resilient management systems and organizations is that they can act and not just react.

As an experienced auditor and industry expert, I have seen many different companies from the inside. This has enabled me to acquire excellent cross-sectional knowledge, always with my finger on the market's pulse. In audits, I openly address weak points in the management system and possible risks regarding the overall economic resilience of the organization and put these up for discussion. Auditing the management system can thus contribute to an organization's resilience.

Organizational crisis management: A practical example

An example from the construction industry shows how a functioning early warning system can successfully get an organization through a crisis. The heyday of the construction industry was between 2009 and 2016 when interest rates reached their lowest level. The industry boomed, and with it, all the companies that depended on it. The slow rise in interest rates and the increasingly difficult economic situation in Germany and Europe slowly and almost imperceptibly led to a decline in demand. In an audit in 2021, I discussed this situation with the managing director of a real estate appraisal company. Their order situation was still very good, and the company was economically stable.

However, the early warning system had sounded the alarm for the managing director and many employees. The search was on for new services that fit ithe core business but had not yet been offered. In the same year, this new range of services was found, experts recruited, processes developed and integrated into the existing system. By recognizing market changes and their impact on the organization's set-up at an early stage, a corporate crisis was successfully averted - effective crisis management for organizations before the crisis strikes.

Flexibility and agility

No, not every organization that works in an agile way is crisis-proof and resilient. However, flexibility and agility (especially in people's minds) lead to more resilient systems with processes and structures that can be adapted quickly to implement adjustments in strategy and operations promptly to be able to act and react to unexpected events or even crises. Depending on the size and complexity of an organization and the legal and regulatory requirements, significant differences exist in the (realistic) possibilities for flexibility. Nevertheless, I have always found companies with well-established, functioning, and practiced process management more resilient and prosperous, especially in recent years.

Process orientation as an essential entrepreneurial attitude

In these cases, process orientation was an essential entrepreneurial attitude in which all operational activities were seen as a combination of individual or different processes and not as a compulsory exercise that was "checked off" with a holistic process map with described processes. Moving away from silo thinking, the abolition of 'kingdoms' and cooperation across departmental boundaries are key elements here. After all, nobody can or wants to waste resources, for example, by duplicating work due to ignorance and a lack of information about what is happening in other areas.

Implementing this is hard work, does not happen overnight, and definitely goes beyond the requirements of ISO 9001, Clause 4.4 "Quality management system and its processes". Process management is often not seen as an opportunity for all employees but as a threat to the individual.

A component of good process management that should not be neglected is the documentation of processes. The rule here is often: less is more. Suppose I see page-long flowcharts, swimlane diagrams or prosaic descriptions of processes in audits, but the essential information cannot be read from them (or the information can only be found after a lengthy search in other files). In that case, this is usually the first starting point for improvements.

Those who work according to the processes often do not have a uniform understanding of the desired result, common goals and key performance indicators (KPIs), tasks, interfaces, customer expectations, opportunities, and risks—even though the process is extensively documented. Sometimes, employees are not even aware that documented processes exist, and the work steps in the team are based on word of mouth and/or experience.

Good process documentation, on the other hand, provides transparency across departmental boundaries and is the basis for analyzing and improving workflows. If process management is practiced and processes and their interfaces are understood, then they can be adapted and expanded as a matter of course.

No sustainable success without change management

Change management requires courage - the courage to face up to and embrace change at all levels of the organization and not succumb to the "boiling frog syndrome." The initial spark is often a shared dissatisfaction with current performance, concern about future performance, and a clear vision of what the change should achieve.

Few clients in audit practice do not report on the lack of manpower and the often unfulfillable expectations of (especially) younger employees. Recognizing this risk factor for the existence and further development of the management system - and, therefore, the entire organization - is one thing; having the courage to change something in the long term is another.

One of my audit clients, a service company, decided to radically restructure its organization and processes. After reviewing the feedback from employees, it was clear that there would be fewer hierarchies, less departmental thinking, more freedom to make decisions, support when and where necessary, flexible working hours, a focus on work results, more trust and appreciation, and all of this in a new working environment. The management quickly realized that this would require a comprehensive change.

Crisis management in an organization - at which levels?

The biggest challenge here was not the employees but middle management. The client asked me: "Can we maintain our ISO 9001 certification over the next few years if we go through this change process?" My answer was a clear "yes". In the surveillance audits, I kept focusing on the results of the core processes and customer satisfaction, as these should not suffer as a result of the change. The process flows changed minimally, but the responsibilities and KPIs changed all the more. This was because processes were now implemented in cross-functional teams with a high degree of freedom, which were managed by various steering groups.

The topics of organizational knowledge (ISO 9001, Clause 7.1.6), competence (ISO 9001, Clause 7.2), and awareness (ISO 9001, Clause 7.3) became the focus of attention, as the challenges were now those that could only be solved in the medium term. Very good steps were

• the slow development of an internal knowledge database (comparable to Wikipedia) with the active participation of employees,
• the creation of competence roles and competence models with a corresponding personnel development program,
• numerous team measures to strengthen better cooperation and awareness, ,
• and a comprehensive communication strategy for the changes.

Organizational resilience needs leaders - not managers

"If you want to build a ship, don't get the men together to fetch wood, distribute the work, and assign the tasks, but teach them to long for the wide, endless sea."

This quote by Antoine de Saint-Exupéry from "The Little Prince" vividly describes the difference between managers and leaders. Those who manage not only to plan and organize (in the sense of micro-management) but also to ignite the passion and vision that inspire employees will have a team.

This often goes hand in hand with:

• A positive corporate culture that encourages innovation and change,
• Actively supporting the sharing of knowledge and best practices within the organization,
• The integration of continuous learning and feedback to learn from past experiences and continuously improve.

Well-thinking, well-informed, trained and highly motivated employees lead to better decisions and faster reactions, contributing to resilience and the ability to act in corporate crises.

Resilient organization? Approach to the audit

How do I audit this? I listen and observe very closely how the teams and managers interact and communicate with each other, especially in the audit situation. Who answers questions? Are there (sometimes) frightened glances at the boss before one of the employees answers? What happens if everyone in the room knows the question was not understood or the answer was inappropriate? I have experienced many scenarios, from a choleric boss to supportive team colleagues who help as a matter of course, without accusations or punitive looks. Trusting your team, empowering them and subordinating your personal interests to achieve overall success make a leader.

Crisis management in an organization: Conclusion

In my experience, resilient management systems lead to more resilient organizations that find it easier to recognize an impending corporate crisis, take action, and react flexibly to sudden events. Experienced auditors can tell whether and how resilient a management system is by the degree of networking because resilient management systems function like the neural network of our brains.

Regardless of who I audit in an organization, I can tell that the management system is not only known and implemented in individual areas or by selected employees but is anchored in the entire organization, like a network that covers the organization.

DQS - Pioneering the certification of management systems

DQS, the "Deutsche Gesellschaft zur Zertifizierung von Managementsystemen" was founded in 1985 by DGQ (Deutsche Gesellschaft für Qualität e.V.) and DIN (Deutsches Institut für Normung e.V.) as Germany's first management system certification body.

We are the only major certification body to focus on management systems and processes. We have played a pioneering role in this for many years. In 1986, DQS issued Germany's first certificate in accordance with ISO 9001, the world's most important standard for management systems.

In 1991, DQS was the first certification body in Germany to be accredited for ISO 9001/2/3 by the then TGA GmbH (today: Deutsche Akkreditierungsstelle GmbH, DAkkS). Today, our range of services covers around 200 international regulations and national standards. Our claim always begins where checklists end. Take us at our word!

Trust and expertise

Our texts and brochures are written exclusively by our standards experts or long-standing auditors. If you have any questions about the text content or our services, please contact us.