Management system guidance
4.0 Context of the Organization
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4.1 Understanding your organization and its context
You should allow additional time to establish a suitable understanding of the circumstances, and the market in which your organization operates. To be compliant, evidence should be obtained that demonstrates that your organization is reviewing all pertinent internal and external issues at periodic intervals.
To assess whether your organization has a high-level, conceptual understanding of its internal and external issues that affect it, either positively or negatively, its ability to achieve the intended outcomes, you should describe the processes used by your organization to identify internal and external issues and make reference to all objective evidence, including examples of these issues. Examples of organizational issues might include:
- Quality, safety and environmental conditions capable of affecting or being affected by the organization;
- External: cultural, social, political, regulatory, financial, economic, natural and competitive issues, whether international, national, regional or local;
- Internal: organization’s activities, products, services, strategic direction and capabilities (people, knowledge, processes, systems).
You will need to determine and understand the various environmental conditions, internal and external issues, typically experienced in your type of organization that can have positive or negative impacts. Evidence needs to be obtained to provide assurance that organizations will regularly or as necessary review and update their external and internal issues.
The standards do not specify that these internal and external issues, or their monitoring and review, be documented, so there might not be ‘lists of issues’ or records of reviews. However, information can be obtained via interviews with relevant Top management in relation to your organization’s context and its strategic direction, the identified issues and conditions, and how these may affect the intended outcomes of the EMS.
A workshop approach often allows ideas to be shared and provides an effective and efficient way of achieving a valuable outcome. The workshop could simply be a discussion identifying the issues that can be mapped out using Political, Economic, Social, Technological, Legal and Environmental (PESTLE) analysis. This method helps to structure the conversation and will also help to achieve buy-in to what is often seen as a peripheral or niche area.
Collate evidence to provide assurance that your organization is regularly, or as necessary, reviewing and updating its external and internal issues. Although there is no requirement for documented information to define the context of the organization, your organization will find it helpful to retain the types of documented information listed below to help demonstrate compliance:
- Business plans and strategy reviews;
- Competitor analysis;
- Economic reports from business sectors or consultant’s reports;
- Use the ‘SWOT Analysis Template.docx’ for internal issues;
- Use the ‘PESTLE Analysis Template.docx’ for external issues;
- List of external and internal EMS issues and conditions.
- EMS action plans and objectives;
- Annual reports;
- Minutes of meetings (Management review and, e.g. design review minutes);
- Process maps, tables, spreadsheets, mind mapping diagrams.
In addition to reviewing any documented process, the audit approach must include interviews with relevant top management in relation to your organization’s context and its strategic direction, identified issues and conditions, and how these may affect the intended outcomes of the EMS.
Internal issues
Using a SWOT Analysis Template identify and analyze your organization’s strengths, weaknesses, opportunities and threats. Below are typical examples, however each issue will be focused on the individual organization:
Strengths are characteristics of our organization that allow operation more efficiently and effectively than competitors. We consider:
- What does our organization do well?
- What advantages does our business have over other internal sections or external organizations, including competitors?
- What makes our organization different from competitors?
Weaknesses are areas that are recognized as needing improvement. We consider:
- What can be done better?
- What causes problems or complaints (information from root-cause analysis)?
- Which capabilities need modifying, strengthening or divesting for the future?
Opportunities are trends, circumstances or business opportunities that may be taken advantage of. We consider:
- What are the changes in technology or markets?
- What local and global events may be useful?
- What are the changes in customer/societal values?
Threats can be external or internal and are anything that can adversely affect business or operations. External threats could be economic, new legislation or even a new competitor in the market. Internal threats could be a skill or staff shortage within our organization. We consider:
- What obstacles are there for ongoing operation?
- Are there any potential competitors to the business?
- Who might be the new competition?
- Are there any potential changes to staffing, products, services or technology that could threaten operation or business?
Examples of internal issues suitable for SWOT Analysis include:
- Governance, organizational structure, roles and accountabilities;
- Policies, objectives and the strategies in place to achieve them;
- Resources (including human), knowledge and competence;
- OHS culture within the organization and the relationship with workers;
- Process for the introduction of new products, materials, services, tools, software, premises and equipment;
- Working conditions.
External issues
A workshop approach often allows ideas to be shared and provides an effective and efficient way of achieving a valuable outcome. The workshop could simply be a discussion identifying the issues that can be mapped out using a Political, Economic, Social, Technological, Legal and Environmental (PESTLE) analysis. This method helps to structure the conversation and will also help to achieve buy-in to what is often seen as a peripheral or niche area.
What is happening politically in the environment in which we operate?
- Trading policies;
- Funding, grants and initiatives;
- Home market lobbying/pressure groups;
- International pressure groups;
- Wars and conflict;
- Government policies, term and change;
- Inter-country relationships and attitudes;
- Political trends;
- Internal political issues;
- Shareholder needs and demands.
What is happening with respect to ecological and environmental issues?
- General market conditions that affect the business;
- Market direction;
- Environmental issues;
- Environmental regulations;
- Stakeholder/investor values;
- Needs for the organization’s products and services in the market;
- Customer market technology opportunities;
- Competitors and differences between competitors;
- Competitiveness of the organization and what affects its ability to compete;
- Customer problems and complaints with current products and services.
What is happening technology-wise which can impact what we do?
- Maturation of existing technologies;
- Technological developments or trends that affect or could affect the business;
- New product development and potential markets: government, international, resource sector, etc.;
- Productivity improvements through automation;
- Telecommunication infrastructure;
- Online connectivity and digital data.
What is occurring socially and culturally in the markets in which we operate?
- Current or emerging trends in lifestyle and their implications;
- Demographic trends that may affect market size (growth rate, income, population shifts);
- Whether these trends represent an opportunity or a threat;
- Changes in consumer behaviour;
- Increasing environmental awareness;
- Urbanization;
- Consumer demands; personalization and high-end experiences;
- Public demand for transparency and participation in decision-making.
What is happening with changes to legislation?
- Possible changes in regulation/legislation;
- Impacts of these changes on business;
- Stability of government;
- Outsourcing regulations;
- Government bureaucracy – rules and regulations;
- Legal constraints.
What is happening within the economy?
- National and internal financial trends (trends in economic forces);
- Economic trends that may have an impact on business activity;
- Emerging markets;
- Inflation, employment levels, supply;
- Energy available;
- Global financial situation.
Examples of external issues suitable for PESTLE Analysis include:
- Cultural, social, political, legal, financial, technological, economic and natural surroundings including the environment in which the organization operates;
- Who the competitors are and any contractors, subcontractors, suppliers, partners and providers;
- National and international law;
- Industry drivers and trends which have influence on the organization;
- The organization products and services and their influence on occupational health and safety.
Reviewing your organization’s context could include interviews with senior management, questionnaires, surveys and research. Cross-functional input is essential for the specific expertise required to identify the full breadth of issues, such as finance, training, human resources, commercial, engineering and design, etc. Not only will this ensure a broader appreciation of the context but also wider engagement, particularly with those functions not previously involved with the EMS.
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