Issue 11 – Clause 4.1: Understanding the organization and its context
Clause 4.1: Understanding the organization and its context
What’s new in Clause 4.1?… We covered Element 10.0 (the final Element) in my last Newsletter (ISO 9001:2015 Newsletter Issue 10), and now as promised I plan to start back at the beginning and delve into each of the Clauses in more detail. Clause 4.1 is brand new in this 2015 edition of the Standard and I discussed it at a high level back in Newsletter Issue #3.
Let me start by making an observation regarding Clause 4.1… I find it interesting that the word “context” is nowhere to be found within Clause 4.1. This is not normal since typically the words in the title of the Clause are almost always repeated within the Clause itself. Normally you’d expect the wording to be something like “The organization shall determine its context, etc, etc”. Basically Clause 4.1 never really asks you to state what your “context” is but rather asks you to determine what internal and external issues impact your organization.
Here is another important fact, the phrase “documented information” does not exist within Clause 4.1, so you are free to simply verbally describe how your Strategic Planning process (or SWOT activity) functions. Even if some companies keep a record of these activities they can state that this information is considered proprietary and confidential. If the Auditor sees this as a gap and wishes to pursue this further, they will be faced with demonstrating that a lack of “documented information” in this area somehow makes this particular QMS process, ineffective (see Clause 4.4.2).
This is a good example of how this new Standard differs from the old one… Auditors will now need to swim upstream and downstream (and within) each process (with perhaps only verbal evidence along with their own observations), in order to assess whether the process is functioning, functioning as planned, and functioning effectively. Many Auditors will find this to be a challenge, especially when sitting across the table from the business leaders in the company.
The new Clause numbering…
Section 4 – Context of the organization
Section 5 – Leadership
Section 6 – Planning
Section 7 – Support
Section 8 – Operation
Section 9 – Performance evaluation
Section 10 – Improvement
Clause 4.1: Understanding the organization and its context – So what does context mean? Notes 2 and 3 try and help by making suggestions however I view “context” as a statement made by top management that describes the “business” that the organization is engaged in and also includes a description of the external and internal factors that affect or impact how they operate.
If your company practices Strategic Planning then a lot of what Clause 4.1 requires will be addressed within that process. Additionally, if your organization engages in SWOT analysis (which was discussed back in Newsletter Issue #4), then the output from that exercise covers the internal issues (Strengths & Weaknesses) as well as the external issues (Opportunities & Threats) quite nicely. If your organization then develops action plans (or Strategies) based on the SWOT analysis then that will become perfect evidence for Clause 6.1 (Actions to address risks and opportunities).
However, many companies may not be able to make reference to any formal Strategic Planning process, which makes complying with this Clause more challenging. The first thing to do is determine if your organization has any type of meeting where they discuss what the business challenges will be for the upcoming year and where goals/targets might be set. If this type of meeting does occur then make reference to it either in your Level 1 Quality Manual (which I suggest you retain… revise it of course but still retain it) or within a supporting Level 2 Procedure. Be sure to explain how this meeting covers both internal and factors impacting your business for the year ahead.
If for some reason your organization simply does not conduct any type of business planning meeting at the beginning the fiscal year then you will need another option or alternative for handling “context”. This alternative approach first assumes that you will not scrap your current Quality Manual (even though it is no longer an ISO requirement). Secondly, you need to be prepared to re-write a portion of your Quality Manual so that it includes a “Business/Strategic Planning” section which describes how your business planning activities look at internal and external issues. An easy approach you can use within this new section of your Quality Manual would be to create two tables, one listing Internal Issues and one listing External Issues. You’ll need to re-visit this new Quality Manual section at least once a year (perhaps at a Management Review Meeting), so that the information regarding “context” can be updated for the next year (or re-confirmed as is).
There can obviously be many other approaches that will work, since every company is unique, with each performing various degrees of “formal strategic planning”. So as always, how you address “context” depends very much on how your current annual business planning process works (or doesn’t).
Be sure to watch for our next Newsletter issue where we will cover another section of ISO 9001:2015…
PS: Don’t forget to look at the Q&A section below for some final thoughts…
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ISO 9001:2015 Essentials + Gap Audit
This combines the ISO 9001:2015 Essentials Session with a Gap Audit – This approach is used to assist organizations in launching their transition efforts for this new ISO Standard. This event accomplishes two things: a) it provides education on the new ISO 9001:2015 Standard for your key personnel (i.e. internal auditors; etc.), by highlighting the differences from the 2008 version; and b) assesses the gap from where you are today to where you need to be to achieve compliance to this new ISO Standard. Training certificates covering education on the new ISO 9001:2015 Standard, as well as issuing of a Gap Audit Report for distribution to your Top Management, are the two deliverables from this event. On a final note, a closing meeting can be arranged with key individuals so they can hear first hand the results of the Gap Audit that was performed. PS: We’ve also done this session with just the QMS Management Rep attending, which allowed them to quickly get up to speed on this new Standard, as well as to see how much of an effort the transition will be… and of course they receive their own Training Certificate as part of this event. This also allowed them to avoid traveling offsite to get the training they needed anyways, as evidence for their Certification Bodies.
Q: How do you audit Clause 4.1 of ISO 9001:2015?
A: For Clause 4.1, an Audit checklist should cover these areas:
– Does the company perform a business planning activity during each fiscal year? If yes, when does it take place? Who attends? Any evidence to demonstrate it took place for the current fiscal year? For the last fiscal year?
– What typically comes out from an annual business planning activity (outputs)? What goes into the process (inputs)? What key steps take place? How long does the whole process take to complete?
– Are business targets or goals set each year? How is that done?
– What are the external factors/issues affecting the business? What are the internal factors/issues affecting the business? Do they ever change? Are they monitored/reviewed/updated?
– What is the Purpose of the organization? Is that described/stated anywhere?
– What is the Strategic Direction of the organization? Is that described/stated anywhere?
(Make sure to interview more than one person and obtain examples for the items listed above)
Until next time…
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