Governance & Compliance
Lesson No. 23

Certification – On the Way to Standardized Businesses

by Klaus Demleitner



A certification verifies that an 'inspector', regardless of how authorized, has confirmed the existence of certain standard characteristics: the size and consistency of products or the behavior and performance of human beings. There is now an enormous area which can be certified: and awarded test marks, quality seals, conformity markings, attestations, labels, and so on.

Certification is booming

You want to buy apples for a pie? It's not that simple. Do you want apples from a certified plantation: bio, eco or fair trade? What about the Yellow Transparent, a traditional apple in central Europe? But has it been classified by the EU authorities: the same officials who measure the bend in bananas or the lengths of cucumbers. Not classified, not listed — then perhaps it's not for sale!

But not only apples lend themselves to 'certification'; almost every imaginable product, service and entire businesses can be considered certifiable; especially when foodstuffs, consumer protection or climate saving is involved — which generates ever more standards. These standards must then be audited: not to ensure that they make sense, but to ensure they are being adhered to.

Should we not ask ourselves: are we really unable to judge things ourselves — must somebody always do it on our behalf? And if so, why?

Where certification came from

Standards were created to satisfy a real need for industrial (mass-produced) products so that they fit when joined together: this enabled the universal and widespread use of such products.

These standards include DIN (German industrial standard) for nuts, bolts and spanners — or even simple behavioral rules like "Always drive on the right!" (or left). In both cases the goal was not to introduce foolproof systems — that is illusory — but rather to simplify the work of engineers, technicians and craftsmen — and establish a framework so that drivers can proceed responsibly, carefully and safely on public roads.

Technical quality control has a long tradition, especially in Germany where it is carried out by, among others, the TÜV. One example is the testing of pressure boilers and road vehicles. However, starting in the 1990s a new and completely different practice was imported from the USA — the comprehensive auditing of businesses. This novel approach from the other side of the Atlantic is aimed at determining and documenting the processes within a company: it extends as far as detailing the work processes so that unskilled and semi-skilled employees can be productively deployed quickly to work fault-free as part of a Taylorist production system.

How certification is spreading

Certification has grown into a gigantic market. It provides a steady source of income for innumerable consultants with relevant 'expertise' as well as 'accredited' auditors and certifiers. This new industry is developing its audits even further to generate additional revenue: for example, obligatory pre-audits have been introduced to precede the certification audit itself.

Numerous new certificates are created by a combination of lobbyists, politicians and industry representatives. Fitted out with questionable criteria, certificates become, directly or indirectly, an instrument of power and influence over markets by limiting market entry or, put more simply, by placing would-be competitors at a disadvantage and even excluding them entirely from markets. Other examples are automobile emissions stickers, energy performance certificates for buildings, and energy efficiency certificates for lighting equipment. The list goes on: certificates for foodstuffs, hotel classifications, toys, textiles, timber and, of course, educational qualifications. The latter has given rise to such an expansion of formal qualifications that it appears we have become addicted to titles.

One or the other of these certificates may be well meant and useful. However, what should concern us is the proliferation of cumulative, parallel, and even overlapping certificates. In the case of toys, certification no longer covers just the danger of injuries to children (toxic or sharp edges), but now also claims to prove whether the toy is a valuable teaching aid or not. Textiles must no longer declare merely the material used and its quality; evidence is now also required as on how the cotton was harvested, spun, dyed, weaved, transported and stored.

Certificates can impact upon an entire business: quality (DIN-ISO 9000 ff) and environment management systems (DIN ISO 14000 ff), workplace safety (OHSAS 18001) and so on; in addition to the worldwide expansion of Compliance.

There are many other sub-species: first, a certificate for Business Excellence (DIN SPEC 77224; IBEC Bewertungskonzept für Kundenbegeisterung) (1) and second, a certificate for Corporate Social Responsibility CSR, which is awarded for evidence in accordance with ISO 26000, SA 8000, BSCI, or better still, IQnet SR 10(2). By now, if not sooner, everyone's "alarm bells" should be ringing.

Many managers, mostly in large corporations, actively support this trend and the American-style certified management systems which are becoming standard. This is an ideal playground for managerists, who can employ these substitutes for proper leadership, while staying in their comfort zones — living and working by the motto: "I conform to the system, so I take no risks and make no mistakes. No mistakes, no problems". Complex diplomas and certificates of Compliance, sometimes decorated with lots of PR, suit this managerist attitude. The huge supervisory effort this requires and the corresponding enormous cost, on top of traditional end-to-end controlling systems, is apparently of no consequence – or has become a taboo subject.

On the way to standardized businesses

This description of certification may seem exaggerated. Yet some text books on Business Management imply that the standardized firm is the ultimate goal. But if leadership responsibility is delegated to 'the system' or outsourced to Compliance, and replaced by quality marks and certificates and approval by lawyers, we are already approaching a mechanistic model of the firm. From now on, the conformity of processes and standards are the effective guideline for decision-making and actions. Certification requirements become disempowering and force 'decision-makers' to impotently accept the standards set by certification — which is incompatible with the concept of the empowered citizen or progressive management ideas of employees who are encouraged to think and act entrepreneurially. Standardized procedures limit flexibility and restrict creativity. A programmed working environment leads to de-learning and de-skilling — in an age when we hear so much about lifelong learning and the knowledge society. These are undoubtedly bad omens.

Further negative consequences: intervention and bureaucracy

The mad rush toward certification is taking two routes: one, as more and more certification is linked to laws and statutory regulations. In this way these standards can be instrumentalized and even abused by the authorities. For example, the power to issue motor vehicle emission stickers in Germany has also meant the decommissioning and expropriation of thousands of vehicles; the so-called energy efficiency regulation now means that filament light bulbs may no longer be sold.

They also mean even more bureaucracy. The 'specialist' knowledge of bureaucrats and functionaries means that, due to the of certificates and rules that managers must deal with, they are becoming increasingly alienated from the goods, materials, work processes and employees which are their prime concern. Remote, with no grasp of their real business, they discuss and decide within a meta-world of standards, endorsements, certificates and quality labels. In the background, overseeing this conformance is Compliance.

This explains the behavior exhibited by many buyers at (major) companies. Their decision-making criteria, apart from price, are solely certificates and indicators (test marks, labels, and even supplier balance sheets): surrogates in two respects. It excuses them from needing to understand the products they are procuring (for which they are not qualified); and from the time and effort needed to build relationships of trust with suppliers; something which could be most helpful in difficult situations. In this way, distance is created between buyer and seller with anonymity hiding incompetence although their behavior is still formally correct. In this supposedly standardized relationship of exchange all that counts is, of course, the best (lowest) price. If such comprehensive certification schemes are also forced upon small and mid-size businesses by major corporations or public authorities, as they are, these small firms will be suffocated by the corresponding procedures and formalities — quite apart from the additional costs involved.

Do not overlook these aspects

First: certificates are no substitute for independent thought and understanding.
In a world in which the value of everything is measured by such standards, often the best supplier may be wrongly assessed or not even considered: for example, in Germany, small independent forest farmers have for generations, as a matter of course, practiced sustainable forestry, even though their operations do not have a PEFC seal of approval(3). Other examples: Certain varieties of fruits or vegetables, which find no place in EU or other schemes. Nevertheless, they are liked by consumers and taste fantastic. The number of stars a hotel is awarded often has nothing to do with what guests actually experience. A 'fast internet' might help a hotel to acquire 5-stars, but an outstanding family-owned 3-star hotel without internet will often provide superior service and better meals.

Second: depending only on standards often leads to wrong decisions.
Is the highly-decorated graduate of an 'elite' institute really the kind of employee who will fit into your team? Academic marks alone say little about the capability and suitability of a candidate. Trusting in certification has had fatal consequences for some hospitals, or rather for their patients. As part of the outsourcing craze, hospitals everywhere outsourced cleaning services to 'certified' service providers, in order to cut costs. In doing so, they ignored the fact that cleaning is essential for hospital hygiene and, therefore, cannot be regarded as a marginal activity. It is estimated that in Germany alone each year up to 40,000 deaths are directly or indirectly caused by bad hygiene. It is not enough for someone to disinterestedly run a cloth over a predesignated surface, before signing off a check list. Committed and capable personnel are essential; people who appreciate what is at stake, and who take their responsibilities seriously; people whose work is respected and honored. Real work and committed (not remote) leaders are needed. It should be a cause for concern that, in Germany alone, KTQ (Cooperation for Transparency and Quality in Health Care), a certification business, has 14 major facilities and at least the same number of consulting organizations, which include hygiene as only one of the core criterion for certification, but where a score of 55 percent is sufficient to be awarded their Health Care Certificate. One must ask oneself, how do patients really benefit, if at all, from quality certificates like that?

Such one-size-fits-all schemes for the certification of conformance will also counteract any positive, responsible and creative attitude among employees.

Benefits of quality certificates and quality management systems

If used properly, a Quality Management System (QMS) can enrich an enterprise – even small businesses. However, a prerequisite for this is a solid foundation of qualified, trained, committed and self-confident employees. The positive benefits of QMS with structured modelling of processes and procedures can only accrue if employees are adequately integrated. This will also provide a real foundation upon which the introduction of new employees can be based. It can stimulate independent thought, active co-operation, critical questioning, and in this way, encourage creative forces within an enterprise. Based on technical expertise and common sense, continuous improvement suggestions can be guided into productive channels. Employees who are committed can not only contribute to improved processes and products, and will also help to generate real and significant savings. It is essential that a climate is created which enables and promotes creativity: but this requires leaders who are the opposite of remote managers/managerists. Certificates can be an initial and temporary aid to orientation (but never lose sight of their limitations), for example when selecting suppliers; but as a second step, we must look behind the facade and discover the reality.

The correct dose is crucial

Individual certificates and QMS, if properly employed, can play a valuable role. But, as in other fields, you can have too much of a good thing: in particular, small and mid-size enterprises can be smothered by over-regulation. This is not a trivial issue, because self-interest dictates that whoever promotes or endorses certificates will always claim that their particular diploma or certificate is indispensible.

One thing is clear: the certification of corporate management is absurd. If an instruction manual for 'proper' management did exist, there would be no real need for managers. After all, managers are paid a good salary, based on the assumption that they have the necessary expertise, experience, responsibility and attitude for such a complex assignment. Therefore, why do we need someone else to assess their performance, against a standard check list, to tell them how to do their job?

In fact, plain common sense is best for dealing with standards, norms and certification. A manager must be aware what particular certificates can offer and what not. A standard certificate can never prove that a product is suitable for a particular application or that an enterprise is operating properly. A certificate is, at best, an indication.

Instead, we should ask fundamental questions: what kind of enterprise, what kind of employees do we want; how do we want to behave toward each other, our customers and our suppliers? Derived from this, as part of a certification scheme, standards can be elaborated. These standards can then shape the lasting character of an enterprise: they will determine whether it is bureaucratic, remote, authoritarian, formalistic, or more positively — flexible, innovative, creative, humanist and unique. Based on my own personal and professional experience, I prefer the latter. There will always be openings to modify what may appear to be rigid and inflexible QMSs. Such opportunities must be identified and grasped.

We must progress from form to content — from over-standardization to entrepreneurial leadership.



(1) "Customer delight" is defined by DIN SPEC 77224 as (unapproved translation): the intensively experienced joy of a customer due to expectations being exceeded by surprising means.

(2) A company assessed and certified according to SA8000 has provided documentary evidence of a socially responsible management system. This means the corporate leadership and business activities take into consideration the rights of employees, workplace conditions and basic human rights.

(3) "The Programme for Endorsement of Forest Certification Schemes" (EFC) is a synonym for sustainable forest management, which takes ecological, economic and social criteria into consideration. However, it is not the timber that is certified, but forest management, including the transportation of timber to the forest road. Each enterprise represents a key link in the timber processing chain, from the forest to the finished product. That is why it is necessary for every business that works or trades with timber and wood products to be certified." PFEC