Managing Essentials

International Order and Progress - Brazil and the ISO 9000

The family of norms around the ISO 9000 was introduced during the 1980s in many countries. ISO is an acronym for International Standards Organization and the norms were intended to standardize procedures in manufacturing and services globally. The introduction of such standards was a logical step in the further development of industrialization from the standardization of structural assets to the standardization of procedures. Basics of structural standardization, measurement units and basic assets, from screws to software handshake protocols have been defined for a long time as industrial norms under the guidance of the famous German DIN-Institute, the Deutsches Institut fr Industrielle Normen. However, not all industrial norms have become truly universal. Still the Anglo-American hemisphere measures in feet and inches while the rest of the world has adopted the metric systems. However, within large geographical areas and economic complexes basic structural industrial assets have been standardised for a long time and globalization, especially in the information technologies, has led to more and more international norms. Structural norms are essential in industry, guaranteeing effective interaction between systems and the global reach of technological assets. As the standard rails allowed steam engines with their wagons 150 years ago to run on every network in the world except Russia, a variety of norms allow nowadays to connect a computer to wireless systems globally. The advantages for the industries with regard to an economy of size are obvious, consequently, norm setting has always been connected to power brokering. The introduction of mandatory hygiene standards had been used in the 1860s to clear the US market of canned meat not only of dubious producers, but also of the competitors of those having lobbied for the norm. Some readers will remember the fierce battle for a video-standard of the 1980s, finally won by the VHS system. Today especially, environmental norms are often set up not only to keep the air clean but also to keep competitors out. The standardization of processes was motivated by three factors. Firstly, in the beginning of global sourcing the major industrial players in the West recognized the need for continuous and intensified quality control. The big car producers in particular outsourcing higher integrated modules had to connect more closely to their now globally distributed suppliers. Exact process definitions were a necessity to ensure the quality of the modules supplied. Secondly, the ISO as an organization was looking for a new field of activity. It had started to lose influence since more and more standards were established by market forces as industrial standards an example being that of the video standard. Such standards do not primarily express the highest level of quality and functionality but sheer market power of one or a few major corporations. Since working conditions and labor standards would be directly affected by process standardizations, the ISO was joined in its efforts by the International Labor Organizational (ILO) and many academic and non-profit organizations interested in improving working life. Finally, the certification process was correctly anticipated by many consultancies as a future bread winner. With this background it is easy to understand that one finds relatively fewer ISO certified companies in the US and Europe than in countries like Brazil. In Brazil nearly all major companies from food producers to airlines proudly sport a sign ISO certified. Many companies in the industrial heartlands felt organized enough to do without it and did not want to have outsiders like certification companies to look at their closely guarded production secrets. For countries like Brazil the standardization

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efforts were a blessing. In fact, ISO standardization and certification might be seen as an industrial byline of the countrys credo expressed on its national flag Ordem e Progresso. The core of the standardization, following ISO 9000 or the numerous less demanding norms surrounding it, is to give a defining order and timeline to the processes, to quantify the qualities and fix the personal responsibilities connected to each step. It is the process of certification which is regarded as helpful since all procedures are reflected and often reengineered in its course. The ISO approach is in contrast to other Total Quality Management (TQM) approaches generic and not prescriptive. Every process can be certified as long as it is well structured and documented. The resulting documentation can be regarded as a blessing and a curse. As the standards and procedures laid down are a significant help they can be a hindrance when problems arise which are not covered. Documentation may block or outlive a lively day to day search for best practice. But TQM and ISO certifications share a central element in the creation of benchmarks and benchmarks are needed to measure and consequently improve performance. Do certified companies perform better? Effects of TQM and certification on productivity and profitability have been the object of a variety of studies from the late 1990s on. Results are equivocal and a lot of methodological problems make the interpretation of findings complicated. In a study for Brazil by Lima and colleagues no impressing effects were found. However, a positive impact is often reported in management surveys and these are empirical supported by Corvett and colleagues who analyzed the financial performance of several thousand publicly traded US companies in the years after certification. This comparative meta-analytical approach showed strong financial performance advantages for certified companies. Also the hope that workplaces improve and accident rates decline received support, as a recent study by Levine & Toeffel indicates. Cultural and political factors contributed to the popularity of the ISO norms in Brazil. It is a country of historical cultural and ethnic diversity which only in the late 1980s started the move towards democracy after the burden of a military regime including a state controlled economy. The ISO 9000 was embraced as a tool of industrial renovation. Further a project run together with Germany to construct the first nuclear plant in Brazil made the need for quality control evident. Finally, Petrobras, Brazils state controlled oil and gas giant, required suppliers to be certified. These forces made Brazil a frontrunner in certification: In 1992 only 36 companies were certified; one year later the number increased to 177 and five years later over 1,700 companies were certificated. The ISO Survey for 1999 reported that the milestone of over 5,000 certified companies had been reached and passed. However, it is India and China, not Brazil but that should become the rising stars of the manufacturing and internet industries in the early 21st century. The most important reason is most certainly population size. Within the BRIC countries Brazil is one of the least populated. However, another reason is that the progress in standardization stopped short of politics. Brazil made significant progress with regard to reducing corruption but bureaucracy remains a major hindrance for the growth of small businesses and foreign investment. Labor laws are in many cases well intended trying to protect and extend the rights of the working people after many decades of neglect and disregard. And a myriad of small laws has grown into a jungle in the last two decades. These factors, together with problems in taxation and infrastructure, placed Brazil as number 126 of 183 countries in the Doing Business Report 2011 by the World Bank.

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Laws exemplify the difficulty in reorganizing defined procedures and structures on a bigger scale. Once implemented they are difficult to revoke and the existence of laws, often hundreds of years old, is a regular favorite in tabloids. As for ISO certification the positive impetus is in part compensated by non intentional bureaucratic consequences. A further problem is that the standardization of structures is often easier and at first sight more convincing than the standardization of processes even if they are the most important element. A significant advantage of process standardization is that these processes allow for differing structures. A prominent and frequently discussed topic recently is the introduction of standardized barrakas on Brazils beaches. Some of these beach restaurants were ramshackle structures with kitchens and restrooms not meeting modern standards, and perhaps it would have been preferable to certify and control the hygiene procedures and allow them to upgrade the facilities to maintain their individuality with regard to design and character. Now less attractive uniform structures are erected but they distract the focus from the more important processes inside. Brazils business world has been at the forefront of certification for twenty years now. That commentators like Deena Kamel Yousef assess the current situation carefully as beckoning and Brazil has fallen back within the BRIC group is mainly due to the fact that the legislative, social and infrastructural framework did not keep up with these efforts. Maybe also the full term president Lula had the impression that the country needed a push when he inspired the applications for the upcoming Soccer World Cup and the Olympics in 2016. Both applications have been successful and it would be desirable for the country not only to enjoy the short great games but to combine the efforts made for them with a long- term programs for debureucratization. Such a program could give Brazil what it has had for decades in soccer; a lead in the world with regard to business development.
Corbett, C.J., Montes-Sancho, M.J. & Kirsch, D. A. (2004). The Financial Impact of ISO 9000 Certification in the US: An Empirical Analysis. www.managing-essentials.com/2cw Levine, D. I., & Toffel, M. W. (2008). Quality Management and Job Quality: How the ISO 9001 Standard for Quality Management Systems Affects Employees and Employers. UC Berkeley: Institute for Research on Labor and Employment. www.managing-essentials.com/2cx Lima , M.A.M., Resende, M. and Hasenclever, L. (2000). Quality Certification and Performance of Brazilian Firms: An Empirical Study. Intl Journal of Production Economics, 66, 143-147. www.managing-essentials.com/2cy Opportunities in Brazil beckon (Deena Kamel Yousef) www.managing-essentials.com/2cz