In this article we will be covering what exactly makes a management system formal. Before we start it is important to align on the definition of a management system. A management system is the set of management processes a company uses to manage its people, value chain processes, and assets to achieve a particular outcome, or set of outcomes. It is vital to understand that every company has a management system with the main difference between one company’s system and the next primarily being the level of formality. So, the question is not whether your company has a management system, but instead whether your management system is formal or informal.
Informal Management Systems
Formal Management Systems
A company has a formalized management system when they have defined, documented, and deliberately managed their management processes. Although this definition may seem pretty clear-cut, it is a common area of confusion. Many companies believe that management system formality is purely measured by having something documented. This is not the case. Although a company may have documentation – for example, a job posting template as part of an Employee Selection process – that alone does not equal formal. The missing pieces usually are that the processes are not defined and deliberately managed. What we mean by defined is a single framework consisting of mutually exclusive, collectively exhaustive (MECE) processes including auditable standards developed for each process. Below is an example of a defined process that would be found in a management system framework.
Assessing the formality of your management system
Who determines if a management system is formal or informal? In most cases, the initial determination comes from within the company; however, this approach can many times cause more harm than good. The reason is, when a company assesses the status of their own management system they are more likely to see themselves as being closer to achieving a formal management system than actually is the case. Think of it as the inflation that occurs if someone was to grade their own work. This can put the company’s leadership in the dangerous position of thinking they have a high level of formality in their management system when in reality they do not. The only way for leadership to successfully mitigate this risk is to have an experienced and external management system expert conduct a management system assessment using a best in class OEMS as the benchmark.
At Wilson Perumal & Company we believe your management system should be an asset rather than a burden. When done correctly, a formal management system can help you improve your quality, profitability, safety, and environmental performance. WP&C offers free tools to help get you pointed towards the development of a formal management system.