11 Dec 2008Working Paper Summaries

Quality Management and Job Quality: How the ISO 9001 Standard for Quality Management Systems Affects Employees and Employers

by David I. Levine and Michael W. Toffel

Nearly 900,000 organizations in 170 countries have adopted the ISO 9001 Quality Management System standard. This is a remarkable figure given the lack of rigorous evidence regarding how the standard actually affects organizational practices and performance. Proponents claim that quality programs such as ISO 9001 improve both management practices and production processes, and that these improvements, in turn, will increase both sales and employment. Documenting and training proper work practices can also reduce potentially dangerous "work arounds," and thus could reduce the risk of workplace accidents and injuries. Some critics, on the other hand, point to the potential for quality programs such as ISO 9001 to be detrimental to employees by documenting work practices, resulting in routinization that may reduce skill requirements and increase repetitive motion injuries. This paper reports the first large-scale evaluation of how ISO 9001 affects workers, focusing in particular on employment, total payroll, average annual earnings, and workplace health and safety. Key concepts include:

Companies that adopt ISO 9001 subsequently grow faster in sales, employment, payroll, and average annual earnings than a matched control group. ISO 9001 adopters are also more likely to remain in business.
ISO 9000 adopters subsequently become more likely to report zero injuries eligible for workers' compensation. However, there is no evidence that a firm's total or average injury costs improved or worsened subsequent to adoption.

Author Abstract

Several studies have examined how the ISO 9001 Quality Management System standard affects organizational outcomes such as profits. This is the first large-scale study to examine its effects on employee outcomes such as employment, earnings, and health and safety. We analyzed a matched sample of nearly 1,000 companies in California. ISO 9001 adopters subsequently had far lower organizational death rates than a matched control group of non-adopters. Among surviving employers, ISO adopters realized higher rates of growth of sales, employment, payroll, and average annual earnings. Injury rates also declined slightly at ISO 9001 adopters, although total injury costs did not. These results have implications for organizational theory, managers, and public policy.