Should My Business Get Certified?

Should My Business Get Certified?

We hear your concerns! Believe me, if I earned a dollar for every time I got asked this I would now be the owner of a small European soccer club.

The question is usually fielded by a business proprietor or a newly-hired manager at an engineering company considering certification after hearing that they needed one. Depending on the business’ context (and whether my team was successful in their last match), the answer could be anywhere on the spectrum of “of course”, “why not” or “don’t bother”.

On a more serious note, for many businesses unfamiliar with ISO Certifications, the question can be a perplexing one. I’ve tried to simplify the decision making process in this article. I hope it helps.

Essentially, there are a few questions one needs to ask.

Is your business operating in a regulated space?

In some cases, certification is almost like an entry ticket to the game – it is a necessity, and a company that does not do so will fail to win contracts or comply with their contractual obligations. In these spaces, the question of whether to certify or not is an easy one. For example:

OFSC Certification is a must-have for builders accredited who wish to undertake contracts for building work that is funded directly or indirectly by the Australian Government. If you are a builder that does not wish to apply for government funded work, an OFSC certification is unnecessary.

AS 3800 Certification is a must-have for companies repairing or overhauling electric motors used in explosive atmospheres (such as mines and refineries).

FDA Certification is a must-have for companies that supply human and veterinary drugs, biological products (including cosmetics), and medical devices to the US market. Should the company wish to supply these products anywhere else, then the FDA is not a must-have.

But…

…businesses should be aware of changes in regulation or industry requirements. This does happen sometimes and can save a business significant man-hours and money.

For example, Insurance Companies used to require Panel Beaters to have ISO9001 certification in order to be a Recommended Repairer. But around 1999, this requirement was removed and it no longer required Panel Beaters to be certified. PQMC notified its 25+ panel beater clients of this new development who in return withdrew their certifications and saved thousands of dollars in certification costs while still enjoying benefits of enjoying their system.

On to the next question:

If your business is operating in a non-regulated space, then the question becomes: Is certification the Industry Norm?

YES – certification is a norm in my space

In some spaces, 70-80% of players in the industry are certified. These businesses often use their certification as a means to differentiate their products/service and increase its perceived value.

Some examples of these are:

Cleaning Companies are not required by law to have any special certification, but they do get WHS certified to improve their chances of winning tenders from councils or major building management companies.

Rail Industry related businesses are not strictly required by law to have certifications but the major rail companies (for example VicTrack or Metro Trains) demand and expect it.

If your company’s sphere of operation is in an unregulated space not requiring certification, it is still beneficial to certify to stay competitive – for branding and marketing differentiation. If the costs of implementing a management system and having it certified can be reasonably absorbed, certification becomes a “must-have” for any serious business bent on growth.

NO – certification is not a norm in my space

While businesses in these spaces may not even derive any advantage from advertising their certification as a point of difference and better brand value, they may want to certify purely to improve the business.

Examples of companies in this space that could benefit from implementing a management system are:

New Startup Companies with 1-9 staff that want to scale-up aggressively will benefit from the implementation of a management system, its clear assignment of functions and internal checks and balances.

Warehousing and manufacturing companies at the scale up stage (opening a new factory or production line) could benefit from a Quality Management System and a Work Health & Safety Plan that formalises their system for everyone to follow and keeps their workplace safe and efficient.

Franchisors will benefit from an Integrated Management System to ensure standards are maintained across multiple franchisee operators.

Fundamentally, management systems will add tremendous intrinsic value to any business. However, certification of these systems in a business that derives no regulatory or competitive benefit is a “nice-to-have”.

Borderline Decisions – Two Case Studies

PQMC was approached by a small metal fabrication business of 4 staff. They were noticing business closures among their competitors and needed advice – to certify or not to certify? Setting up a management system and getting certified in ISO90001 was going to cost them about $4,000. Regulation did not require them to be certified, but because of the modest cost and low risk, they did it and it set them up to win a contract from Australian Post, helping them stay in business and take it to the next stage.

For businesses seeking to sell imported cars, Registered Automotive Workshop Scheme (RAWS) certification came at a high cost. An initial certification alone could cost anywhere between $15-50k (including engineering costs). Every subsequent model to be sold would require a further certification and involve more costs. For a small business with small profit margins, it really comes down to volume. PQMC once had a client in this category and helped them work the numbers to determine that their business model was not going to be viable. Wisely, they took our advice and decided against certification.

The Bottom Line – To certify or not to certify?

For most businesses, the answer obvious and your management consultant should be able to tell you decisively.

For the aspirational and ambitious smaller businesses in which certification is a “nice-to-have”, the cost of developing a management system and getting certified can sometimes be prohibitive. The big question for businesses then becomes: does the benefit for certification outweigh the costs?

In The Costs of Certification – A Reality Check we look at all the costs involved – not just financial.

For now, download this decision tree to help your staff evaluate your management system needs.