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AUTHOR: SIMONE KNIGHT

World Quality Week – 11-15 November 2024

World Quality Week takes place every November. This global campaign raises awareness of the benefits of organisations taking a quality management approach to their operations.

This year’s theme is Quality: from compliance to performance. The timing couldn’t be better for those of us working with Federal Government. We’re now in Quarter 2, 2024-25, so we’ve had sufficient time settling into our Corporate Plans, we’ve finalised our Annual Reports and we are heading towards MYEFO. So how can our corporate documents lift and shift us to achieving high performance? Could a quality management approach be the solution?

Our Roles in Responding to Climate Change

One of our current challenges is how organisations are adapting to climate change. The Government’s push to net zero is also front of mind for many agencies. For those organisations certified or seeking certification under ISO 9001, there is a new requirement in the standard to consider the impacts of climate change as an internal or external factor. This amendment has been effective from 22 February 2024 and aims to integrate climate change considerations into management systems – not only quality management systems under ISO 9001, but also environmental management systems under ISO 14001 and work safety management systems under ISO 45001 (which are the three most widely recognised standards in the world).

Under ISO 9001 organisations are now required under clause 4.1 to assess the impact of climate change on operations to “understand the organisation and its context.” If climate change is identified as relevant to the quality system, it should be treated like other internal or external factors and included in the assessment of risks.

This imperative to address environmental concerns adds another layer of complexity to our operations and this of course, coincides with the Federal Government’s reporting requirements regarding climate change, including the Commonwealth Climate Disclosure requirement to publicly report exposure to climate risks and opportunities and actions to manage them. Under this policy, Commonwealth entities and Commonwealth companies must disclose climate-related information in their annual reports.

An additional amendment to ISO 9001 reinforces this through a new note to clause 4.2 that states “relevant interested parties can have requirements related to climate change.” While this note does not impose extra requirements, it clearly links the ISO 9001 standard to the requirements of interested parties, such as the Government, regarding climate change disclosures.

With that in mind, we should consider how quality management principles and methods allow organisations to respond, creating a culture of process improvement. Quality management can be associated with tools, processes, controls and governance. These elements are all-important, but an organisation’s culture is what will nurture innovation and continuous improvement to achieve high performance. Quality principles and methods not only ensure compliance but also foster learning and agility, to allow organisations to adapt to change more effectively and drive performance excellence.

Act Now

While some organisations will need to be more agile than others when it comes to adjusting for climate change impacts and fulfilling reporting requirements, there are some simple things you can do now to assess your organisation’s position:

Consider how climate change may affect your organisation

It’s important to consider both direct and indirect implications. Some direct implications include changes in weather patterns, rising water levels and government-imposed restrictions that may have an impact on the goods and services that are outputs of your organisation. You may need to adjust how you support human resources, change your physical infrastructure, and start capturing data about climate change related performance.

Indirect consequences may include the introduction of new technologies, shifts in the behaviours of the public and the potential for business disruption as a result of changing weather patterns. You may also experience changes in your supply chain and consumer behaviours.

Assess your risks and opportunities

Remember that not all impacts of climate change need to be negative. As we said above, a quality approach encourages innovation, and climate change may well present the catalyst for designing new practices that create efficiencies and take advantage of new technologies. It may also be an opportunity for a reputational boost for your organisation. Over three quarters of Australians[1] (78%) are worried about climate change and extreme weather events in Australia. Climate action by your organisation may have a positive impact on the way the public responds to your organisation.

Develop an action plan

You may need to update your policies and procedures (including to cover the requirements of clause 4.1), develop and implement training for personnel, incorporate climate change into the governance of decision-making, put in place practices to enable the capture of climate change data, and implement reporting procedures.

If your organisation is ISO certified, auditors may seek evidence that you have considered the issue of climate change. To provide this evidence, we recommend you demonstrate climate change consideration in your organisation’s documentation including by documenting the actions you are taking (your action plan), be transparent with internal and where appropriate, external, audiences about those action plans and ensure they are maintained and kept up to date to reflect the current state of your activities.

Recognise that climate change will involve continuous improvement

Risk assessment and actions relating to climate change impacts will not be a once-off activity. You may need to develop strategies and build performance targets that are reflective of an increasing maturity as your organisation learns to adapt to climate change.

Drive performance

Here are some top tips from the Chartered Quality Institute[2] to harness a quality management approach to drive performance:

  1. Embrace innovation: Don’t just meet compliance standards; leverage quality management to drive innovation and stay ahead of the curve.
  2. Manage risks proactively: Identify and mitigate risks associated with digital transformation and other strategic initiatives to ensure long-term success.
  3. Focus on sustainability: Integrate sustainability into your quality management practices creating products and services that are environmentally and socially responsible.
  4. Promote a learning culture: Encourage continuous learning and improvement within your organisation to adapt to changing market conditions and customer needs.

What’s Coming Next in the World of Quality Management?

Some emerging quality management issues which may well form part of the next amendment to the ISO standard (expected for 2026 implementation) include:

Why Choose Sententia?

At Sententia Consulting, we believe that quality management provides organisations with a framework that is valuable in supporting improvements in operations to achieve high performance.

We understand that not all organisations are pursuing ISO certification, and we take a pragmatic approach to support organisations to implement quality practices that are fit for purpose. We can help you stay compliance and future-ready with our expertise.

If you are interested in learning more about how Sententia can help you, please see www.sententiaconsulting.com.au or email us at sententia@sentcon.com.au.

[1] www.climatecouncil.org.au from a recent survey conducted in March 2024.

[2] https://www.quality.org/WQW24

 

AUTHOR: TAMMY CHO

Portfolio governance is generally understood in the field of project, program and portfolio management. However, it is becoming increasingly important in public administration as a mechanism for supporting cooperative and robust governance across the range of entities within a Minister’s portfolio.

In our recent work, we have seen portfolio governance functions established to provide strategic advice and guidance to the portfolio Secretary and portfolio entity counterparts in relation to complex shared risks and issues that impact the achievement of whole-of-portfolio objectives. In some ways, portfolio governance (and the relationship between the department of state and other portfolio entities) shares similarity with the relationship between holding and subsidiary companies that can be observed in the private sector. However, the legislative and policy frameworks applicable to the public sector create complexities that weigh into the equation when considering the need for and suitability of establishing a portfolio governance function.

Developing and Implementing Portfolio Governance

The nature, role and focus of a portfolio governance function is not well defined and, when they do exist, the role tends to be highly bespoke. To make it easier to understand the utility and implementation of the concept, we have outlined some key points you should consider.

  1. Understand why portfolio governance is relevant and important in your context.
  2. Understand your portfolio’s governance risk profile, and where things are likely to go wrong.
  3. Understand the strategies and operating model that would work for your portfolio.
Q1: Why is robust cross-entity governance important?

To successfully design and implement a cross-entity governance function for your portfolio, you and your key stakeholders need to understand and agree why the concept is important and relevant. One underlying source of authority for Commonwealth entities is the Public Service Act 1999. Specifically, s 57 of the Act imparts a range of duties to Secretaries of Departments, including in relation to collaborating and maintaining clear lines of communication within the portfolio, and ensuring strong strategic capability for considering complex, whole-of-government issues across the portfolio. Additionally, the Commonwealth Risk Management Policy requires entities to understand and manage shared risk. This is relevant to governance risks and issues which are likely to require shared oversight and management across portfolio entities.

The underpinning premise of why portfolio governance is important to your context will drive the concept’s design and drive for implementation. Therefore, it is important that this is clearly defined and tested with your stakeholders.

Q2: What does your portfolio’s governance risk profile look like?

It is important to consider and assess the risk profile of your portfolio to inform the design and areas of focus for your portfolio governance function. In particular, understanding your portfolio’s potential sources of governance risk, known issues, organisational capability and capacity, and degree of shared responsibility or management for governance components are key considerations. It is also important to recognise that this risk profile can change across different types of portfolio entities (with consideration of their mandate, how large or small they are, and so on). The governance risk profile can also change as the public administration landscape and priorities shift. Becoming familiar with what governance risks and issues are more significant and how and when they may lie outside your risk appetite, is a key step to effectively designing a portfolio governance function.

Q3: What strategies and models should you employ?

Organisations that are leading implementation of a portfolio governance function can employ different strategies and operating models to manage, seek assurance, and maintain communication with portfolio entities in relation to portfolio governance risks and issues.

While there is no one size fits all, there are a spectrum of approaches, with varying degrees of centralised influence and control – ranging from a light-touch, advisory and facilitative approach, to a much more highly centralised and controlled approach between portfolio entities. The approach must carefully consider the preferred balance between the degree of oversight exercised by the department of state (or other leading entity), with the autonomy of portfolio entities and their accountable authorities. Other relevant factors that influence the preferred approach also include:

Regardless of the model selected, the articulation of roles and responsibilities (both of internal and external stakeholders) is vital to effectively set expectations and operationalise portfolio governance.

If you are looking to examine what portfolio governance arrangements would best suit your organisation, Sententia Consulting’s experienced governance and risk consultants can assist. Our personnel have unparalleled experience and exposure with public sector portfolio governance functions, and also have an understanding of how analogous relationships in the private sector have been designed and operate.

Contact our portfolio governance experts today.

Mark.Harrison@sentcon.com.au

0408 661 325

Tammy.Cho@sentcon.com.au

0405 201 747