#8 – GETTING THE RAISE YOU DESERVE – ELIZABETH LIONS

Elizabeth Lions PixMy client looked at me a long time across the table in Starbucks and said, “I can negotiate for others, but not for myself.  For whatever reason, talking about money really stresses me out”: she said.

This surprised me a great deal.  Highly competent woman, educated and who had an admirable career path.  Certainly well accomplished and in a critical sales role to boot!

“Why is that?” I asked.

“It makes me uncomfortable talking about money.   I don’t want to leave any on the table and want the employer to do the right thing.  Especially around review time.  Certainly, they know all that I do for them.”

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#8 – FMEA OR “FACT MAY ERASE APPROACHES” – UMBERTO TUNESI

I am no fan of FMEA-like risk prevention approaches:  I am more and more convinced that they are neither effective nor reliable, at that.

WHY I DON’T LIKE FMEA?
For a number of reasons:

One:  True human consensus is pure utopia.  In any risk assessment team – from its apparently simplest form, a family, to the most complex company or organization board – when one says “white”, for some inexplicable reasons, all others will say – or at least think of – a different color.  Even “a whiter shade of white”.

Two:  If this opposition-compulsion holds true to determine whether anything is risky or not, it will end up in real personal battles for determining “how” risky it is.  SRA / Society for Risk Analysis demonstrated in one of their papers that men and women perceive risk differently.  And that’s “only” sex: what about age, nationality, culture?  Who would ever live with a six-feet long snake at home?  Only a very, very few, in the western world.

Three:  Rating “how much” risky it is, will end up in destroying the most robust friendships, and partnerships.  Is it a 7 or a 6?  Will it really endanger the end user, or put at stake the process performance?

SWOT = SIGNIFICANT WASTE OF TIME
Therefore, as a USA writer commented that the SWOT approach equals a “Significant Waste Of Time”, any FMEA-like approach is just as formal as the complex forms that have to be used.

Years of third party automotive audits demonstrate that any tier supplier works like this: first, the work instructions; second, the control plan; third, the process flow chart; last – and least – the Design and/or Process FMEA.

Risk assessment?  Maybe a gammon, which is a victory in backgammon reached before the loser has succeeded in removing a single piece!

On the other side of the river there are the tepid ones, for whom maybe even waking up in the morning is a risky activity.  So they fill their FMEAs with 8’s, 9’s and 10’s, even for the highest Cp / Cpk process operations, or the most robust design feature.

In a word, I feel any formal FMEA-like exercise a “Significant Waste Of Time”.

EFFECTIVE RISK ASSESSMENTS
How then, do you come out with effective risk assessments?

Thinking of the key three drawbacks of any FMEA-like approach mentioned above, I would suggest that ONE technician, skilled enough on product and/or process design, drafts a list of risks and just prioritizes them:  what has to be done first, in other words. Then, he or she submits this list to the Risk Assessment & Prevention Team (RAPT, otherwise named Risk Management Team) and waits for the battle between the team members to end.

Here there is an advice to the list drafter, a lesson to be learned: in John Steinbeck’s novel “The Short Reign of Pippin IV”, the to-be-king wins over his adversaries because he keeps silent.

Once the team members have slaughtered each other, he – or she – who stays out of the carnage, wins.

It is no joke: what is highly risky for a daily jogger is routine to the high mountain climber; what is routine to the ultra-sonic war fighter pilot is enormous risk to the car-driving commuter; and so on, and so on.

SOUND RISK APPROACH
The only sound approach I can think of when assessing risk is based on two key inputs:

One:  Use your experience, learn from facts;

Two:  Use your imagination, think as if you were not an expert, dress yourself with naive clothes.

Not to dry your wet cat in a microwave oven  …  And not to abandon your dog on a motorway because he or she barks and pisses …

You see: there are also risks connected to bad use of good technology, and with ignorance, too, or excessive willful thinking: “It will never be like anything else!”.

 

#9 – WHY DO COMPANY’S COLLAPSE? – JIM KLINE

Why do companies collapse?

Risk can be defined in many ways. The most relevant and difficult definition is “The probability of an undesired outcome.” (Chicken 1996)  The most obvious undesired outcome is going out of business. The history of business shows many examples of bad strategic decisions.  Some brought about by hubris and some by the inability to accurately judge the impact of disruptive technology.  Two more subtle problems are the subjects of three books: Producing Prosperity (Pisano and Shih, 2012), Restoring The Innovative Edge (Hage2011), and Inventing the Electronic Century (Chandler, 2001).

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7A – WHAT DO QUALITY AUDITORS NEED TO KNOW? – GREG HUTCHINS

There is a shift and some would even say there is a paradigm shift occurring in business, that impacts quality auditing.  We, as quality professionals and quality auditors, must be aware of the drivers of change and adjust accordingly.  Also, we must adapt to add value, including being able to conduct assurance and analytical assessments that provide senior management and the board of directors with peace of mind.

Specifically, we need to know how to conduct analytical risk assessments, such as:

  • Corporate governance assessments
  • Risk based internal audits
  • Homeland security assessments
  • Customer-supplier assessments
  • ‘Effectiveness’ audits

MOVING FROM DETECTION TO ANALYTICAL ASSESSMENTS
What struck you when you read the definition of internal auditing?  While, ISO 9000  stresses process and ‘effectiveness’ auditing, ISO registrars and most companies still seem to conduct systems or compliance audits.   This is a problem in today’s business environment, where senior management and board of director’s audit committees want more forward-looking, analytical risk assessments.

By its nature, compliance auditing is ‘after the fact’, specifically that it is done after a quality system has been deployed, product has been produced or a service has been conducted.  Also, it is document intensive.  So, some call compliance auditing, a form of detection or inspection.  And, companies are asking: ‘Where’s the value in a compliance audit?’

Analytical risk assessments are now the key element of today’s corporate governance in both publicly-held as well as governmental organizations.  Auditors or assessors must be able to evaluate the effectiveness of internal controls to manage risks.  The Securities and Exchange Commission as well as other regulatory agencies are moving to a risk-based model such as COSO – an acronym for ‘Committee of Sponsoring Organizations.’

ENTERPRISE RISK MANAGEMENT AND CONTROLS
The COSO model has been used for more than a decade to evaluate internal financial controls.  Now this model is being used to evaluate internal operational controls and even regulatory controls.  Compliance is fine for complying with the letter of regulatory and statutory standards, but now the governance bar is much higher as companies must meet the intent or spirit of the requirement.  Quality auditors must be able to conduct ‘analytical’ assessments that evaluate effectiveness, efficiencies as well as the economics of operations.

It all comes down to being able to evaluate the effectiveness of risk management:  COSO defines enterprise risk management (ERM) model as:

“…a process, effected by an entity’s  board of directors, management, and other personnel applied in a strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risks to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.”

There are critical takeaways in the above definition, specifically ERM:

  • Is a process.  It’s a means to an end, not an end it
  • Is applied across the enterprise and at every level
  • Is designed to identify risk events
  • Manage risks according to the organization’s risk sensitivity
  • Provides ‘reasonable assurance’ to the organization’s board of directors and senior management
  • Focuses on achieving the organization’s mission critical objectives
  • Is a continual process of assurance, risk identification, and control effectiveness
  • Is managed by process owners throughout the organization
  • Is applied in strategy development and deployment

ENTERPRISE RISK MANAGEMENT INTEGRATED FRAMEWORK
Today’s quality auditors need to move from detection to analytical auditing.  Quality auditors need to know how to evaluate internal and external controls that manage enterprise risks that result from changing competitive environments, shifting customer requirements, restructuring for growth, and managing the supply chain.

ERM controls or commonly called internal controls are the now the hallmark of good corporate governance because they offer the following benefits:

  • Promote operational efficiency and effectiveness
  • Manage surprises
  • Ensure reliability of financial statements
  • Ensure compliance with regulations and laws.

Quality auditors must be able evaluate the effectiveness of an enterprise risk management consisting of the following eight interrelated components:

  • Internal environment
  • Objective setting
  • Event identification
  • Risk assessment
  • Risk response
  • Control activities
  • Information and communication
  • Monitoring

Bottom LIne:  It’s a new normal for all quality auditors.  What are you going to do?

Bio:

Greg Hutchins PE and CERM (503.233.101 & GregH@QualityPlusEngineering.com)  is the founder of:

CERMAcademy.com
800Compete.com
QualityPlusEngineering.com

WorkingIt.com

He is the evangelist behind Future of Quality: Risk®.  He is currently working on the Future of Work and machine learning projects.

He is a frequent speaker and expert on Supply Chain Risk Management and cyber security.  His current books available on all platform are shown below: