ISSUES OF INVOLVEMENT OF INTERESTED PARTIES IN STANDARDIZATION FOR COUNTRIES IN TRANSITION by kvaliteta.net

Miloš Jelić MILOŠ JELIĆ Institut „Kirilo Savić“ – Beograd, Serbia milos.jelic@iks.rs

ISSUES OF INVOLVEMENT OF INTERESTED PARTIES IN STANDARDIZATION FOR COUNTRIES IN TRANSITION Pregledni rad/Review Summary The importance of standardization work has steadily increased to become more important than ever today. In transition economies and the developing world, unlike the countries of Western Europe, a different approach to standardization has been applied. Such economies have inherited central governmental control, and major industries were effectively owned by the state. Changes in the economic 'landscape' have triggered changes in national standardization processes in transition countries, introducing voluntary standards and invoking interesting parties to play a major role in the standardization process. Substantial participation of interested parties in standardization activities is not easy to attain, due to objective obstacles that arise: lack of suitable representatives, poor communication, limited financial resources, scant awareness, etc. Grounded on its own industrial and economic background, each country has to find its own structure and way of gaining full participation of interested parties in standardization, thus to meet international principles required for a national standardization system. The paper addresses the standardization structure of the Republic of Serbia established in that regard, and analyses the effects obtained so far. Keywords: standardization, interested parties, stakeholder participation, countries in transition 1. INTRODUCTION The manner in which formal standardization process is organized and the role assigned to various institutions differ significantly among regions and countries. Some countries establish the standardization process in a centralized way having one single body in charge to issue both voluntary and mandatory standards. On the other hand, there are countries with a large number of organizations yielding voluntary standards that may become mandatory if being referred to in technical regulations endorsed by public authorities. Generally, two approaches to standardization may be identified: traditional and new approach to standardization. Traditional approach focuses primarily on domestic issues taking little or no account to standards in foreign markets. Standard institutions are established within the public sector with negligible participation of private sector. Key objectives of standardization are tied with weights and measures as well as health and safety issues. The standardization structure in the traditional approach may be described as static one having little interference with market impulses, [1]. Simply, whatever is to be regulated concerning the product it tends to get the form of standard. The new approach to standardization tries to find the balance between domestic and external focuses. In comparison with traditional one it has an extended infrastructure thus to provide standardization structure to be flexible and dynamic. In the new approach standardization

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Miloš Jelić becomes a public-private sector activity that produces voluntary standards and the whole process is oriented towards international recognition. The new approach focuses more on the specific concerns of industry and commerce. National standards must comply or at least be compatible with international ones and conformity assessment elements need to be recognised internationally. Historically, two main developments took place in standardization at national level. Western Europe countries made first moves in 1920s to consolidate all voluntary standardization work. The efforts were to join separate organizations work within one institution which was to become National Standards Body (NSB). These were usually given to the monopoly status by government decree or statute. In addition, governments have committed to cover part of their costs, provided they act in national interest. However, such a model is appropriate for a large, progressive, technically competent economy possessing a clear understanding of the strategic goals of standardization by relevant stakeholders. Unlike Western Europe countries, a different type of NSB has arisen in the developing world and transition economies. Such economies inherited central governmental control and major industries were effectively owned by the state. Such a landscape required shift from state control to a free market economy which is simply termed as “transition” economy. In such an environment governmental NSBs were established in a way that the staff are government employees while the technical experts come from other state bodies. The major problem the governmental NSBs are facing with is the difficulty to tell whether a standard stands as a technical regulation (thus being mandatory), or remains voluntary in application. Actually, most transition economies have standards possessing both mandatory and voluntary elements causing occasional confusion in legal sense what requires a serious transition process to reach the goal – voluntary standardization, [2]. 2. STANDARDIZATION STAKEHOLDERS IDENTIFICATION 2.1 Stakeholders and interested parties The terms stakeholder and interested party have very close meaning and many authors consider them to be synonyms. To find a clear distinction between these two terms is not easy since even within the same standard series the term interested party has different definition. While in ISO 9000 interested party is defined as person or group having an interest in the performance or success of an organization [3], ISO 9004 sees interested party more from perspective of outcomes[4]. In that standard interested party are individuals and other entities that add value to the organization, or are otherwise interested in, or are affected by the activities of the organization. For example, an organization constructing new block of buildings in outskirts of a town have interested parties in: apartment buyers, its suppliers, local authorities (which have to calculate extra work in their future plans). However, interested party are also people living in next block to town centre direction since they will be (positively or negatively) influenced by works relating to connecting the new block to various infrastructure systems performed by the organization. Stakeholder is a subordinate term to interested party. It means that stakeholder is the interested party who have an effect or may be affected by business operation, [5]. In the previous example, buyers, suppliers and local authorities are unambiguously stakeholders while people living in nearby blocks cannot be regarded as such. There are three grounds on which an individual or an entity may become a stakeholder of an organization. First may be an interest – the situation when a person or a group of persons will be affected by a decision, they naturally share an interest in what the decision will be. On the

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Miloš Jelić other hand, it may be a right, which may be either legal, once a person or group has a legal claim to be treated in a certain way or have a particular right protected, or moral, when a person or group considers to have a moral or ethical right to be adequately treated or has own right protected. Finally, ownership may be the reason for constituting stakeholder's role, when a person or a group has a legal title to an asset or a property. 2.2 Standardization stakeholders Whichever stakeholders are concerned the most convenient way to characterize them is by their relationship to the effort in question. Primary stakeholders are individuals and groups that stand to be directly affected (either positively or negatively) by an effort or action of an institution. However, in some cases there primary stakeholders on both sides of the equation; any regulation benefits one group but have negative effect on another. For example, speed limit in a town enhances safety of pedestrians but slows the traffic from a drivers standpoint. Secondary stakeholders are individuals/groups that are indirectly affected by an effort or the action of an institution. In the upper example, open air restaurants located on the street will benefit from speed limit since the noise level will remain low what is very important for their visitors. Finally, there are key stakeholders, who may belong to either of previous groups but they are important within or to institution engaged in an effort. In countries where democratic institutions are not fully developed there may exist influential individuals not belonging to formal array but possessing informal power to prevail in decision making, [6]. If we apply the definition of stakeholder from section 2.1 to a standards body (or standardization process, in general), a standardization stakeholder becomes anyone (person or entity) who can affect or is affected by standards body objectives. A committee constituted of relevant stakeholders is the most frequent mode of stakeholders’ representation in standardization field. Such a committee made up of many different stakeholders meets the principle of openness for representation of all interested parties. In practice, however, many standardization processes are followed by unbalances in stakeholder representation. Some stakeholders may appear to be dominant, while others experience barriers in participation. The problem arises not only for violation of ‘democratic’ principles of openness and consensus in the formal process but also for negative impact on the quality of resulting standards as well as their application. However, increasing stakeholder participation runs the risk that standardization process might become complex and time-consuming, particularly when some stakeholders are not willing to participate in a standardization process. Therefore, the involvement of stakeholders may be obtained by conscious deliberation only [7]. 2.3 Stakeholders identification The first step when one tackles the issue of stakeholders involvement is the identification of potential stakeholders. Starting from the upper stakeholder definition and taking into account that the outcome of the core standardization process is development or revision of standard or a cluster of related standards, the stakeholders may be found among: a) Business companies: This group encompasses producers of raw materials, part suppliers, companies assembling the product, companies involved in product recycling and disposal, transporters and trade companies. b) Public enterprises: They are particularly interested for the standard group belonging to their scope of activities. c) Higher Education Institutions: Educational programs often include certain standards thus interest for standard accessibility and clarity is highlighted.

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Miloš Jelić d) Professional associations: Participation in standardization of an professional association depends on its mission. If it is focused on professional topics rather than member rights and obligation, a remarkable involvement to standardization process may be expected. e) Governmental bodies: This group is usually called regulators. Standards are often referred to in regulation on a local, national, regional or international level. As regulators are directly affected once a standard underwent changes, their involvement in standardization process appears as an important success factor. f) Association of citizens: Such representative organizations, like consumer organizations and labour unions, should make a separate category of organizations. g) Institutes: Standards influence technological innovations and viceversa. They have to create their plans (equipment, procurement) forseeing the standards to be adopted. h) Agencies: Consultants who provide assistance to companies to implement complicated standards may have a special stake in standard creation. i) Chambers and societies: This group encompasses chambers of commerce, trade unions and groups with allied goals. Their position need not match the position of an individual member since they are usually independent in choosing their strategic position. j) Individuals: Generally, individuals may also be regarded as stakeholders. Having in mind that they represent only themselves their effective influence to standardization process is fairly limited.

3. STANDARDIZATION STAKEHOLDERS ANALYSIS Stakeholder analysis is a process of systematically gathering and analyzing qualitative information to determine whose interest should be taken into account when organization policy or program is developed or implemented. However, once the stakeholders list is completed it doesn’t mean yet that a satisfactory participation of stakeholders has been provided. There are still certain limitations on the way to obtain an efficient and effective standardization process. When all stakeholders are given opportunity to participate it is not for sure that everyone is prepared to reserve time and efforts for standard setting. On the other hand, full stakeholder participation may also make process to be complex and timeconsuming what should be avoided if it does not contribute legitimacy and quality of standard. Following the Salience model of stakeholder analysis [8], the key issue to determine stakeholder participation in the activity lies in stakeholders salience which is defined by three major attributes: - Power: defined as the ability of one actor to do something he would not otherwise have done; - Legitimacy: the level to which individual member and the stakeholder find each other’s action desirable, proper and appropriate; - Urgency: the degree to which stakeholder claims for immediate action. Based on presence or absence of these three variables eight types of stakeholders may be identified in Table 1. It should be observed that all three variables are dynamic variables and each one may change if, for example, a stakeholder makes controversial actions and decisions, or if resources are

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Miloš Jelić diverted from standardization activities. In brief, determining stakeholder position is a process where drawing general conclusions is risky; stakeholder landscape strongly varies from country to country and also is unstable in time. Table 1: Stakeholder typology, [7] Stakeholder type

Present

Absent

Dormant stakeholder

L,U

Discretionary stakeholder

P,U

Demanding stakeholder

P,L

Dominant stakeholder

P,L

Dangerous stakeholder

P,U

Dependent stakeholder

L,U

Definitive stakeholder

P,L,U

Non-stakeholder

(P=Power, L= Legitimacy, U=Urgency)

4. STANDARDIZATION STAKEHOLDERS IN TRANSITIONING COUNTRIES: SERBIAN CASE 4.1 Serbian National Standards Body structure When a country in transition is to decide what national standardization structure will be most appropriate in the inherited economic and social landscape to meet goals in standardization field, one of major determinants shall be to ensure balanced involvement of standardization stakeholders. Serbia succeeded the standardization scheme of former Yugoslavia which was institutionally organized in 1946 and up to 2006 national standards body operated as a federal state entity either being a part of a corresponding ministry or having a legal status of autonomous state institution. When standardization became a function of Republic of Serbia (after separation from Montenegro), national standards body turned into public institution established by the State, namely Institute of Standardization of Serbia (ISS). The operation of ISS is supervised by Serbian Ministry of economy, department of which is in charge for entire national quality infrastructure. Beside issuing Serbian standards and maintaining international cooperation in standardization area, ISS mission encompasses activities on preparing basis for technical regulation and maintaining the information center for providing information on standards and related documents as well. Figure 1 shows the current organizational structure of ISS. Stakeholder participation and its influence on standardization policy is obtained mainly at three levels: General Assembly, Steering Board and Expert Councils, governing standards and other deliverables production. There are two Expert Councils arranged in the way to reflect the operation of international (and European) organizations for standardization; Expert Council for General Fields of Standardization mirrors ISO (CEN) work, Expert Council for Electrotechnical Standardization covers IEC (CENELEC) and ITU (ETSI) operation. Formerly established

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Miloš Jelić Expert Council for Standardization in the Field of Conformity Assessment corresponds to ISO/CASCO (and CEN/CENELEC JTC 1) scope of activities merged in Expert Council for General Fields of Standardization two years ago. Figure 1 – Organizational Structure of Institute for Standardization of Serbia

4.2 Stakelolders representation The Assembly of the Institute consists of 81 Regular members and (at least) 6 representatives of ministries. The government appointed representatives of ministries cover the following areas: construction; mining and energy; agriculture and forestry; economy; science and technological development; environment protection and spatial planning. Participation of stakeholders against the classification given in section 2.3 in managing and expert bodies of Institute for standardization of Serbia is given in Table 2 and Figure 2. It may be noted that all ten groups are represented in ISS Assembly. Since regular membership is grounded on public invitation it may be inferred that ISS Assembly is to be regarded as legitimate, at least due to given opportunity for participation. As far as ISS Expert Councils are concerned, it may be noted that they are virtually governed by four stakeholder groups, namely: business companies, public companies, governmental bodies and institutes. In spite of the fact that four stakeholder groups do not have their representatives in Expert Councils it is not a major shortcoming since their interest for standardization is not expressed through active participation in experts work. However, to determine whether participation of each stakeholder is really effective it appears necessary to assess intensity of the three variables (Section 3), that may be attributed to everyone. Such an analysis might provide pretty confident results once it is tied to a certain standard or cluster of standards. But once it is necessary to enlighten the influence of stakeholder group to general standardization process at national level, when it is not possible to take into account particular position and interests of each stakeholder, the analysis is constrained only to pursue general attitude which prevails in standardization processes. Such prevailing position of each group may be observed and monitored on ISS Assembly, Steering

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Miloš Jelić Board and Expert Council meetings. Table 3 indicates the prevailing positions of each stakeholder group expressed through presence (absence) of the three variables.

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Miloš Jelić Table 2: Stakeholder groups participation in ISS managing and expert bodies, [9] Stakeholder group

Business companies

Public enterprises

Institution of higher education

Professional associations

Governmental bodies

Associations of citizens

Institutes

Agencies

Chambers and Societies

Individuals

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Miloš Jelić Figure 2: Stakeholder groups participation – graphical interpretation 35

ISS Assembly

20 15 8

Steering Board

Participants per group

25 20 15 10 5

Stakeholder group

2 0

Stakeholder group

GFS Expert Council

25 20 15 10 5 5

3 0

25 20 15 10 5

3 0

ET Expert Council

Participants per group

4 2

2 0

Stakeholder group

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Miloš Jelić Table 3: Prevailing positions of national standard stakeholders in Serbia Stakeholder group

Possessing

Prevailing position

Business companies

P,L,U

Definitive stakeholder

Public enterprises

P,L,U

Definitive stakeholder

Institution of higher education

Non-stakeholder

Professional associations

Non-stakeholder

Governmental bodies

P,L,U

Definitive stakeholder

Associations of citizens

Demanding stakeholder

Institutes

L,U

Dependent stakeholder

Agencies

Demanding stakeholder

Chambers and Societies

Discretionary stakeholder

Individuals

Dependent stakeholder L,U (P=Power, L= Legitimacy, U=Urgency)

It may be noted that only three groups may be regarded as definitive stakeholders thus requiring no additional actions for their effective participation (business, public enterprises and governmental bodies). Dependent parties (institutes and individuals) do have access to standardization process but still lacking power to have expected influence in it. Chambers and Societies also have access to the process but they are neither strong to exert an influence nor have defined position in relation to standardization process. Association of citizens and agencies are represented in the ISS structure and they are maintaining pressure to speed up the process of standard development and harmonization. However, lack of relevant knowledge and questionable legitimacy may impede their successful participation. Finally, as for institutions of higher education and professional associations, they don’t share particular interest to take part in standardization process. Although they have representatives in ISS Assembly and one representative in an Expert Committee, they are lacking legitimacy, do not claim for urgency and finally do not possess power to notably influence standardization process. 5. FURTHER DEVELOPMENT It is well known that future stakeholders (deliberated to join efforts in national standardization) might be expected from interested parties who recognize their material interest on the content of national standards or have the potential to improve the effectiveness and acceptability of the standards and allied products. On the other hand, standards to be developed will be worth pursuing once the benefits to the majority of stakeholders are perceived to outweigh the costs of their development, [10]. Generally, standards are positioned lower than necessary on the agenda of major stakeholders in Serbia. Therefore, strategy for future development will be in coordinating efforts to overcome previous shortcoming. The strategy should encompass three sets of activities. First, a raising awareness program directed to all interested parties is needed. A typical consumer does not perceive a clear difference between standard and regulation. Moreover,

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Miloš Jelić even among stakeholders there is wide-spread but limited perception that standards are basically aimed for industry. Therefore, raising awareness program shall at first elucidate reasons for participation of key stakeholders which will consequently lead to satisfactory balance among interested parties. Second, each stakeholder in future will have to secure own legitimacy in standardization work. Frequently, in current practice, representative organizations (e.g. consumer bodies) demonstrate loss of national focus in their positioning which may result in conflict within the same interested party what makes standardization process less efficient. Third, the new standardization process (grounded on stakeholder participation) requires more resources than the governmental model did. This means that everyone has to be aware of the fact that it will charge additional financing. Finally, it will pay off once it becomes evident that the benefit from “stakeholders” standards outweighs these supplementary costs. REFERENCES [1] Henson S., Standards and Trade: An overview, Guelph, University of Guelph, Ontario, 2004 [2] Jelić M, Krstić I, The enhancement of stakeholder role in national standardization structure, VII International Conference „Standardization, prototypes and quality", Zlatibor, Serbia, 2010, pp.13-20 [3] ISO 9000:2005, Quality Management Systems, Fundamentals and Vocabulary [4] ISO 9004:2009, Managing for the sustainable success of an organization – A quality management approach [5] Freeman R.E, Strategic management – a stakeholder approach, Pitman, Boston, 1984 [6] Jelić M, Sistem menadžmenta kvalitetom, VŠSS »Beogradska Politehnika«, Beograd, 2013 [7] Vries, H, Verheul H, Stakeholder Identification in IT Standardization Processes, MISQ Special Issue Workshop, Rotterdam, 2004 [8] Mitchell R.K et al, Toward a theory of stakeholder identification and salience: defining the principle of who and what really counts, Academy of Management Review 22, pp. 855-886, 1997 [9] ISS – official records, December 2013 [10] Noth R, Stakeholder participation: Getting everyone on board, (panel discussion), 29th ISO GA, 2006

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