About a half century ago, Edwards Deming and Joseph Juran were asking some questions that sounded ahead of their time: How can companies redesign whole systems to overcome corporate challenges and improve products, service, and the organization?
Did they claim to be sustainable business pioneers? No. Deming and Juran launched the total quality movement to create lean operations, reduce waste, and improve efficiency. Although these ideas may resonate with leaders in CSR, they have not been widely recognized in this field.
But they could be. CSR practitioners grapple with energy efficiency, supply chain metrics, supplier engagement several tiers away, reduced waste, and a strong focus on customer value, which, in the quality world, would be viewed as old challenges put in a new context. These challenges are also relevant to quality given our era of increasingly networked and globalized operations.
Given that both quality and CSR employ a systems approach, encourage businesses to ask better questions, and develop tools to measure and demonstrate improvement, perhaps it is time for more coordination between the two.
There are signs of the quality and CSR disciplines converging, in particular with the release of the ISO 26000 Guidance on Social Responsibility. The international standard encourages companies to make a voluntary commitment to social responsibility and provides common guidance on concepts, definitions, and methods for evaluating those efforts. ISO 26000 will attract the attention of those invested in other ISO frameworks such as ISO 9000.
Like CSR, quality is based on a core set of values, such as “do no harm,” “create zero waste,” “make external costs visible,” and “drive out fear” between management and employees, that were defined by quality gurus like Feigenbaum, Crosby, Taguchi, and Deming at a time, much like today, when resource constraints were a growing concern. Like CSR, quality also has a strong focus on people—not just in terms of customer satisfaction, but related to the quality of working life and employee satisfaction. ISO 26000 makes a more deliberate connection between people and quality management systems with guidance provided for human rights, labor practices, fair operating practices, consumer issues, and community involvement and development.
The two disciplines also share several important concepts:
- Making hidden costs visible: From a quality perspective, hidden costs related to wasted materials, wasted energy, distracted employees, dissatisfied customers, and poorly performing products can amount to 10 to 40 percent of total costs. Similarly, CSR might use lifecycle approaches to highlight costs buried deep in the value chain, like supplier and consumer energy use for the manufacture and operation of products. This idea is already taking hold, with 86 percent of CEOs viewing “accurate valuation by investors of sustainability as important to reaching a tipping point in sustainability,” according to a UN Global Compact report.
- Corporate governance: In quality, senior management holds complete responsibility for quality problems, and quality is made in the boardroom. The majority of quality problems are the fault of poor management rather than poor workmanship. Likewise, CSR success is directly related to CEO commitment.
- Empowerment: “Quality at the source” refers to an approach in which workers are given the authority to stop a production line if there is a quality problem or offer a customer an on-the-spot refund if the service is not satisfactory. Empowerment is also a primary pillar in promoting supply chain sustainability. The promotion of an informed, participatory workplace helps ensure fair working conditions.
- From reactive to proactive: In quality, prevention and continuous improvement are more effective than inspection. And in sustainability, supply chain monitoring approaches used alone fail to address root causes for social and environmental challenges.
- Internal alignment: According to the total quality approach, each department views other departments as internal customers, causing barriers to fall. This kind of cross-functional approach is useful in identifying and managing CSR issues. Both quality and sustainability, therefore, encourage internal collaboration both vertically (from the CEO level to the factory floor) and horizontally (across departmental silos).
Quality as a Role Model for CSR
As the relative upstart to quality (which is three times older), CSR may follow a similar path, moving from executive mandate to corporate function to a set of integrated values. Some even argue that the success of CSR integration will be measured by a diminishing need for a corporate-level CSR or sustainability function—and there are many lessons from the path that quality has taken.
In particular, there are ways that quality has made itself part of business that CSR could do, too. Quality figured out how to make an effective “business case,” and it successfully convinced organizations of the need for deep integration and robust measurement. This includes the tools and practices that have enabled quality to drive business value, demonstrate ROI, and create internal alignment.
Today, CSR and sustainability teams, which are usually housed at the corporate headquarters, remain under-informed about the now mature and refined quality tools and approaches developed to address some of the same challenges. Greater alignment between CSR and quality functions can add momentum to CSR conversations that stagnate over questions such as how to drive performance into supply chains, how to create zero-waste organizations, and how to make changes in energy efficiency, all aimed at increasing customer value. Creating alignment between upstream supply chain activities and downstream customer and consumer value is where CSR struggles and stands to gain from quality.
Ways Forward for CSR Leaders
CSR leaders can begin using quality approaches to advance sustainability by taking some important steps:
- Become familiar with the common tools and approaches (cause-and-effect diagrams, check sheets, control charts, histograms, scatter diagrams, flowcharts, and the Pareto chart) with an eye toward how to apply these to social and environmental issues. There are opportunities to create new value from existing quality methods.
- In making the business case for sustainability, explore how issues can be put into terms of quality, in particular, how perceived quality (governed by customer expectations) links to design quality and how risks, for example, can lead to interruptions in process quality.
- Seek integrated management systems where existing departments such as HR, CSR, and quality are looking at similar issues with very different approaches. In the worst cases, this can lead to different messages to critical external stakeholders such as suppliers.
- For supplier engagement or other initiatives requiring internal alignment, consider selling CSR not to the procurement or another department but to the quality department, which may be the gatekeeper to the systems and enforcement.
BSR’s recent report in partnership with the American Society of Quality, “CSR and Quality: A Powerful and Untapped Connection,” explores in more depth the connection between CSR and quality, and opportunities for increased collaboration.