ANALYSIS OF CRITICAL SUCCESS FACTORS OF ISO 14001 IMPLEMENTATION BASE ON EMPLOYEES PERCEPTION USING LOGISTIC REGRESSION, CASE STUDI

: A CEMENT COMPANY IN INDONESIA

Ryma Sriayu Wulandari1, Juli Soemirat2, Benno Rahardyan3 Prgram Studi Teknik Lingkungan Fakultas Teknik Sipil dan Lingkungan, Institut Teknologi Bandung Jl. Ganesha 10 Bandung 40132 Email :rymasriayuwulandari@yahoo.com Abstrack :ISO 14001 gives 5 strategic steps or clauses to build an Environmental Management System. The 5 clauses consist of Environmental Policy, Planning, Implementation, Checking and Corrective Action and Management Review. These clauses are critical in the effort to achieve and maintain ISO 14001 and employees involvement are very important in implementation of the 5 clauses. In this research, critical success varisbles of ISO 14001 implementation at a cement company in Indonesiawere analyzed using logistic regression method using SPSS 17. The analysis were divided within three groups, worker, supervisor and manager according to the differences of responsibilities of ISO 14001 implementation amongst these three groups. The data about employees understanding of the 5 clauses of ISO 14001 were collected using questionnaire method and interview method. With logistic regression, we will find which of the 5 clauses of ISO 14001 is most critical to the success of ISO 14001 implementation in each group: worker, supervisor and manager. With 207 respondents, the critical success varisbles for worker group which significant at 0.05 are Implementation (odd of success 7.669) , Checking and Corrective Action (odd of success (odd of success 0.331) and Management Review (odd of success 3.136). There are 60 respondents for supervisor group and the critical success varisbles which significant at 0.05 are Planning (odd of success 0.350) Implementation (odd of success 22.897) , Checking and Corrective Action (odd of success 32.427). There are 14 respondents for manager group which couldnt be analyzed using SPSS 17. It is done manually using multiple regression which then substitute into logistic regression equation. There are no significant varisbles in 0.05 or 0.1 significant level for manager. Key word : Factor, Implementation, ISO 14001, Logistic Regression, Success

INTRODUCTION ISO 14001 is an international standard for Environmental Management System (EMS). The main objective of ISO 14001 certification is to maintain the continuity of animal and plants in the best condition as possible (Kuhre, 1996). The implementation of ISO 14001 inside an organization become important because many aspect of industrial activity can cause environmental pollution. There are 5 main clauses and 17 clauses in ISO 14001:2004. The five main clauses of ISO 14001 are Environmental policy (4.2), Planning (4.3), Implementation and Operation (4.4), Checking (4.5) and Management Review (4.6).

These five main clauses resemble Plan, Do, Check and Action model (Martin, 1998). An organization which has been successfully implement EMS will received an ISO 14001 certification. Receiving an ISO 14001 certification shows the commitmen of an organization to keep (kelestarian lingkungan) in every aspects of its activity, products and service. The object of this research is ISO 14001immplementation in a cement company in Indonesia. This company had received ISO 14001 certification since 1999 and keep it (until) now.The five main clauses of EMS is very important achieve continual improvement of the environmental performance of an organization. Employees roles in environmental managemen also important in the effort to successfully implement the ISO 14001 (Zutshi, 2004). In this research we will analize which part of the five main element of ISO 14001 that will be thecritical success varisbles of ISO 14001 implementation in the cement company for this case study in three levels of employees, which are manager, supervisor and worker. RESEARCH METHODOLOGY In this research we will analyze the critical success varisbles of ISO 14001 implementation in the cement company in this case study. The factors are the five main ISO 14001 clauses. To do this analysis we will use logistic regression. Logistic regression is used to explain the relationship between a dicothomous results and one or more estimation variables which can take categorical or continual forms (Peng, 2002). With logistic regression, we can estimate the probability of success of a event as a results of the influence of one ore more estimation variables. The logistic regression equation can be seen below : Logp1-p = 0 + 1X1 + 2X2 + . + kXk (1) With p is the probability of success, 0 is anintercept, 1-kis the coefficient of logistic regression equation. and koefisien persamaan regresi logistic and X1-Xkis (penduga) variables. DETERMINATIONS OF VARIABLES There are two variables in this research, which are dependent and independent variables. To analyze critical success varisbles of ISO 14001 implementation, we use logistic regression. The dependent variable in this research is the success or fail of ISO 14001. Independence variables in this research are the five main clauses of ISO 14001. A questionnaire is designed as a tool to get primary datas. The first part of the questionnaire is used to measure independent variables, which is employees understanding of ISO 14001. This questionnaire is designed base on GEMI questionnaire of ISO 14001 Implementation and preliminary interview with environmental representative in the cement company. The second part of the questionnaire is used to measurethe dependent factorwhich are the success or fail of ISO 14001 implementation base on the environmental performance of the research object.The questionnaire is arranged base on preliminary interview in the cement company and some theory of benefit of ISO 14001 implementation, which are : reduction of environmental fines, the decreased of community complains, the

increase of company image, reduction of operational cost, reduction of accident in the work place, improvement of responsibility and understanding of the importance of environmental management and improvement of environmental performance like reduction of air pollution, the increased of reboisation, improvement of waste water and solid waste management, and alsoenergy and water saving. Using some of these properties to measure environmental performance is also used by Mazzarol (1998). The answer is added for each respondent than takes the mean rate out of it The rate then grouped into a cluster with opinion that EMS is relatively success and a cluster with opinion that EMS is relatively fail. Collection of data is carried out using questionnaire, interview and direct observation. The questionnaire is design using Likert scale. For every statement, respondent must choose totally agree, agree, disagree, totally disagree. The question for interview session is the same as the questionnaire. The interview is used as supporting tool to get deepernunderstanding of employee knowledge about. There are three types of questionnaire, for manager group, for supervisor group and for worker group.The differences are based on the difference of authority and responsibility of each group regarding environmental management in their company. DETRMINATION OF SAMPLE AMOUNTS The cement plant activity is various but mining of limestone, cement production and geocycle activity is the focus of this research. Each of this activity has major environmental aspects and impacts. All the employees in this three area of activities will be the respondents of the questionnaire for this research. There are 15 managers, 100 supervisors and 497 workers with the total of 612 people working in the focus area of this research. Using Slovin equation 242 samples was at less needed for this research. Stratified random sampling was used because the population is stratified according to manager, supervisor and worker strata. At less 6 samples of manager, 40 samples of supervisor and 197 samples of worker was needed.

RESULT AND DISCUSSION There are 46 number of questions for worker group and 34 are valid, with 24 question for independent factorand 10 question for dependent variables. Alpha cronbach for questionnaire for worker group is 0.818, it means reliability level of this questionnaire is high. From 62 number of questions for worker group there are 52 are valid, with 41 question for independent factorand 11 question for dependent variables. Alpha cronbach for questionnaire for worker group is 0.938, it means reliability level of this questionnaire is high. There are 56 number of questions for worker group and 41 are valid, with 31question for independent factorand 10 question for dependent variables. Alpha cronbach for questionnaire for worker group is 0.945, it means reliability level of this questionnaire is high. There are 15 questionnaires were (disebarkan) for manager group, and 14 of it was returned (93%). For supervisor, there were 100 questionnaires (disebarkan) and 61 of it was

returned but only 60 of them can be used for further analysis (60%). For worker, 300 questionnaires were (disebarkan) and 222 was returned but only 207 of them can be used (69%) GENERAL DESCRIPTION OF COMPANY IN INDONESIA. ISO 14001 IMPLEMENTATION IN A CEMENT

ISO 14001 has been implemented in the cement company for this case study since 1999 UNTIL now (2011). Base on datas collected with the questionnaire general perception of ISO 14001 implementation is deducted and can be seen in Picture 1.

1-1.75 : very Picture 1.Understanding level of ISO 14001 in the cement companylow 1.76-2.50 : low (source : primary datas)

Workers level of understanding of environmental policy, planning, implementation and operation and also checking and corrective action implementation generally in medium level. While management review isin high level. Supervisors level of understanding of environmental policy, planning, implementation and operation and also checking and corrective action implementation generally (berada) in medium level. While management review is in high level. Managers level of understanding of environmental policy, planning, implementation and operation and also checking and corrective action implementation generally are in high level. While management review is in medium level. Picture 2 Understanding level of planning clause (4.3)

2.51-3.25 : medium 3.26-4 : high

As seen in Picture 2, level of understanding of clause 4.3 for worker and supervisor generally are in level medium, while for manager (berada) in good level. With independent sample T test significant difference between mean of understanding of Environmental aspect (clause 3.1) between supervisor and manager (with p = 0.002) is obtained. There are also significant difference in the mean of understanding of Objective and program (clause 4.3.3) between manager and supervisor (with p = 0.017) and manager and worker ( with p = 0.001), while for supervisor and worker there are no significance difference. Planning clause generally is the responsibility of manager, the higher level of understanding about this clause is understandable.

Picture 3.

Understanding level of implementation and operation clause (4.4)

As seen in Picture 3, workers and supervisors understanding of clause 4.4 generally are in medium level, except for subclause emergency preparedness and respon plan is in low level. From interview held, (ternyata) worker and supervisor seldom involve in emergency respond simulation, due to their busy activity and working hour, (yg bergilir) according to 3 working shift

Using independent sample T test, significance difference of mean of understanding for responsibility, roles and authority (clause 4.4.1) between manager and supervisor (with p = 0.002) and also between manager and worker (with p = 0.000) is done, but there are no significance difference between worker and supervisor. There are significance difference of mean of understanding of competence, training and authority (clause 4.4.2) between manager and worker (with p = 0.000) and also between manager and supervisor (with p = 0.002), but there are no significance difference between worker and supervisor. No significant difference of mean of understanding of communication (clause 4.4.3) between worker, supervisor and manager. There are significance difference of mean of understanding of Operational control (clause 4.4.6) between supervisor and worker ( with p = 0.000) and also between manager and worker (with p = 0.000). Finally, there are There are significance difference of mean of understanding of Emergency respond plan (clause 4.4.7) between manager and supervisor and also between manager and worker.
U n d e r s t

Picture 4.

Understanding level of Checking and Corrective Action clause (4.5)

As seen in picture 4, worker understanding level for monitoring clause is in medium level but for internal audit clause, the understanding level is in low level. For supervisor, the undertanding level for clause 4.5 genarally are in medium level, except for evaluating compliance is in low level. For manager, the understanding level for clause 4.5 generally is in high level, except for monitoring clause is in medium level. Using independent sample T test, (didapatkan) significant difference of mean of understanding for Nonconformity, Corrective Action and Preventive Action (clause 4.5.3) between manajer and supervisor (with p = 0.000), between manager and worker (with p = 0.000) and also between supervisor and worker (with p = 0.000). A significant difference of mean of understanding is also obtained for record control (clause 4.5.4) between manager and supervisor (with p = 0.026). Significant difference of mean of understanding for audit internal (clause 4.5.5) between manager and supervisor (with p = 0.026) and between manager and worker (with p = 0.000) is obtained. While between supervisor and worker, there is no significant difference of mean of understanding for this clause. LOGISTIC REGRESSION MODEL Calculation of logistic regression model is (dilakukan) using software SPSS 17, with enter method. All varisbles were entered in the calculation program to (menghasilkan) a complete model. For each factor, skor for each question for every respondent were added up than the result was divided with the amount of question, and (menghasilkan) mean of understanding for each factor for every respondent, this was the datas which were entered into SPSS 17. There are 207 samples for workers group, with 167 respondents agree that ISO 14001 implementation in their company is relativelly success and 40 respondents agree that ISO 14001 implementation is relativelly not success. Logistic regression model for worker can be seen in equation 2.
logp1-p -2.514-0.425 Environmental Policy-0.288 Planning+1, 997 Implementation and Operation ion 3eanlinessccess of ISO 14001 ors for

environmental but the success of ISO 14001 implementation. S-1.106 Checking + 1.143 management Review (2)

Significant level for each coeficient in equation 2 can be seen at table 1. Tabel I.Significancy Level for Worker Logistic Regression Model Variable Environmental Policy Planning Implementation and Operation Checking Management Review Intercept Worker p Value -0,425 0,191 -0,288 1,997 -1,106 1,143 -2,514 0,318 0,002 0,014 0,010 0,106

Environmental policy and Planning do not give significant influence for success probability of ISO 14001 implementation for worker. The significance level each of their coefficient are bigger than 0.05, which means that the coefficients for both varisbles are not significantly different from zero. Therefore environmental policy and Planning are not significant in determining the success of ISO 14001 implementation for workers group. Significancy level of Implementation and Operation, Checking and also Management Review are smaller than 0.05. It means that coefficient for each variable is significantly different than zero, it also means that these factorare significant for logistic regression model for worker (equation 2). Total percentage for this model is 82.6%, which means that there is 82.6% probability that the model predict the success of ISO 14001 implementation correctly. Significance level of the Chi-square of the model is 0.727, which is bigger than 0.05, which means that no significant difference between prediction result and observation result. Therefore this model can be used to predict the success of ISO 14001 implementation according to workers perception. Checking gives negative influence into the success of ISO 14001 implementation. It means that if worker get higher scor for this variable, the probability of success of ISO 14001 implementation will be lower. The odd ratio is 0.331, which means, if all other variables are constant, while there is a raise in variable Checking, the probability of success will be 0.331 of probability of fail. Included in Checking are monitoring and measurement, evaluating of compliance, Nonconformity, Corrective Action and Preventive Action,Record Control and Internal Audit.. Workers are not directly involve in all of these activities. Workers were involved in audit process but only few of them interviewed by auditor. Dirrect audit to more workers (berpotensi) to reduce possibility of success of ISO 14001 implementation. From some interviews with workers, it can be concluded that most workers are not familiar with EMS or ISO 14001, they only know about house keeping. They do not really realize the

potential of danger of their operational activities that may influence the environment. Event for house keeping activities they still depend on (petugas khusus) or janitor. Implementation and Operation (4.4) gives positives influence to the probability of success of ISO 14001 implementation with od ratio 7.669. It means, if all other variables are constant, while ther is a raise of scor of this variable, the probability of success of ISO 14001 implementation will be 7.669 of the probability of fail. Major responsibility of worker is in fields operational activity of the cement company by obeying the rules, work instructions and SOP. Operational activities management is included in clause 4.4 of ISO 14001. There are 7 sub clauses of clause 4.4. For worker as seen in Picture 3, workers understanding of Role, Responsibility and authority (4.4.1), Competence, Training and Awareness (4.4.2), Operational Control (4.4.6) and (Emergency Respond Plan) (4.4.7) have lowest scors (dibandingkan) scors of other subclauses in clause 4.4. The company must upgrade workers understanding of subclause 4.4.1, 4.4.2, 4.4.6 and 4.4.7 in order to improve the success of ISO 14001 implementation. The highest worker understanding of these subclauses which included in clause 4.4 the higher probability of success of ISO 14001 implementation. It is happened because clause 4.4 has significant positive influence to the probability of success of ISO 14001 implementation. Management review gives positive influence to the probability of success of ISO 14001 implementation with odd ratio 3.316. It means, if all other factorare constant, while ther is a raise of scor of this variable, the probability of success of ISO 14001 implementation will be 3.361 of tha probability of fail. For this variable, workers must choose totally agree, agree, disagree or totally disagree for the statement of I think management continually improve environmental condition. Most workers think that there is significant reduction of dust and they also think that there id significant improvement in environmental cleanliness because management continually monitors the environmental condition. Management review is actually responsibility of managers. Therefore by improving management review, environmental performance will also be improved and the probability of success of ISO 14001 implementation will also rise. There are 60 respondents for supervisors group, 10 of them agree that ISO 14001 implementation in their company is relatively success and the other 50 agree that ISO 14001 implementation is relatively not success. Logistic regression model for supervisor can be seen in equation 3.
logp1-p-22.054+1.344 Environmental Policy-1.051 Planning+3.131 Implementation and Operation +3.479 Checking-0.470 Management Review

(3) Significancy level for each coefficient in logistic regression model for supervisor can be seen in Table II. Tabel II. Significancy Level for Supervisor Logistic Regression Model Variables Supervisor

Environmental Policy Planning Implementation and Operation Checking Management Review Intercept

1,344 -1,051 3,131 3,479 -0,470 -22,054

p Value 0,298 0,094 0,094 0,055 0,668 0,001

Environmental policy and Management Review do not give significant influence for the success probability of ISO 14001 implementation for supervisor. The significance level of each of their coefficient are bigger than 0.1, which means that the coefficients for both varisbles are not significantly different from zero. Therefore e nvironmental policy and Management Review are not significant in determining the success of ISO 14001 implementation for supervisors group. Significancy level of Implementation and Operation, Planning and Checking and Corrective Action are smaller than 0.1. It means that coefficient for each variable is significantly different than zero, it also means that these variables are significant for logistic regression model for supervisor(equation 2). Total percentage for this model is 86.7%, which means that there is 86.7% probability that the model predict the success of ISO 14001 implementation correctly. Significance level of the Chi-square of the model is 0.964, which is bigger than 0.05, which means that no significant difference between prediction result and observation result. Therefore this model can be used to predict the success of ISO 14001 implementation according to supervisors perception.

Planning gives negative influence to the probability of success of ISO 14001 implementation. It means that if supervisors get higher scor for this variable, the probability of success of ISO 14001 implementation will be lower. The odd ratio is 0.350, which means, if all other variables are constant, while there is a raise in variable Checking the probability of success will be 0.350 of probability of fail. According to Foli (2010) an effective planning is one of important factors to support the success of ISO 14001 implementation. Supervisors should be privy to planning action, because they understand field conditions and are directly controlling fields operational activities. From the interview excecuted, supervisors are actually involved on identifying risk factors for environmental but this activity fail to improve probability of success of ISO 14001 implementation. It may happened because even though many problems had been successfully identified, but there were no follow up action yet. Implementation and Operation (4.4) gives positives influence to the probability of success of ISO 14001 implementation with od ratio 22.897. It means, if all other variables

are constant, while ther is a raise of scor of this variable, the probability of success of ISO 14001 implementation will be 22.897 of the probability of fail. Just as workers, supervisors actively involved is in fields operational activity of the cement company. As seen in Picture 3, supervisors understanding of Role, Responsibility and authority (4.4.1), Competence, Training and Awareness (4.4.2), Documentation (4.4.4) and Emergency preparedness and respond (4.4.7) have lower scors if compared to scors of other subclauses in clause 4.4. The company must upgraded supervisors understanding of subclause 4.4.1, 4.4.2, 4.4.4 and 4.4.7 in order to improve the success of ISO 14001 implementation. The highest supervisors understanding of these subclauses which included in clause 4.4 the higher probability of success of ISO 14001 implementation. It is happened because clause 4.4 has significant positive influence to the probability of success of ISO 14001 implementation. Checking and Corrective Action gives positives influence to the success of ISO 14001 implementation with odd ratio 32.427. It means, if all other variables are constant, while ther is a raise of scor of this variable, the probability of success of ISO 14001 implementation will be 32.427 of the probability of fail. In the cement company for this case study, Checking is one of the responsibility of supervisors. From Picture for we can see that supervisors understanding of Non Conformity, Corrective Action and Preventive Accction (4.5.3), Record Control (4.5.4) and Internal Audit (4.5.5) have lower scors if compared to scors of other subclauses in clause 4.5. Therefore supervisors understanding of subclauses 4.5.3, 4.5.4 and 4.5.5 must be upgraded, because clause 4.5 does make significant positive influence to the success of ISO 14001 implementation for this cement company. From 14 respondents of managers group, 11 of them agree that ISO 14001 implementation in their company is relatively success and only 1 agree that ISO 14001 implementation is relatively not success. Logistic regression model for supervisor can be seen in equation 4.

logp1-p-3.063+0.546 Environmental Policy+0.078 Planning+0.098 Implementation and Operation +0.455 Checking+0.150 Management Review

(4)

Variables Environmental Policy Planning Implementation and Operation Checking Management Review Intercept

Manager p Value 0,546 0,106 0,078 0,098 0,455 -0.15 -3.063 0,727 0,788 0,205 0,581 0,007

There are no significant variables which influence the success of ISO 14001 implementation through Manager perception. It may be caused by evenly understanding of all ISO 14001 clauses or it may caused by the very view numbers of respondent, which is only 14. What may be interesting here is that ISO 14001 is negatively influences by Management Review. With odd ratio 0.861, which mean It means, if all other variables are constant, while ther is a raise of scor of this variable, the probability of success of ISO 14001 implementation will be 0.861 of the probability of fail. Although Management Review is always excecuted regularly, it didnt have positive influence to the success of ISO 14001, according to managers group. Base on interviews results, this situation may happened because some managers do not understand that environmental problem is part of their responsibility. Some others complaint that there is lack of formal invitation for management review.

From secondary data, Environmental Care Planning and Environmental Monitoring Planning Report since first semester of 2006 until second semester of 2010, it is known that the cement industry in this case study still havent manage some same problems. One of them is the cement industry had not been able to optimize chimneys emission monitoring device. It shows that continual improvement is not done optimally yet. In case of audit, there are two times external audit excecuted every year. External audit is done after internal audit and overhaul. From the interview results, some supervisors argue that ISO 14001 external audit is not as comprehensive as audit from API (American Petroleum Institute). API audit for laboratory facility in the cement company is completed in a week, while ISO 14001 external audit can be completed in just 2 days. If external audit of ISO 14001 was carried out more thoroughly, they may find that workers knowledge of EMS is not yet insufficient. Managers support and commitment about EMS is still need to be improved also. If audit can be made more thorough, external auditor may find different result about ISO 14001 implementation in this cement company. To improve probability of success of ISO 14001 implementation in this cement company, managers, supervisors and workers understanding of ISO 14001 need to be upgraded. Regular training is the main suggestion to improve ISO 14001 understanding amongst all employee. Training can be done by regular sharing to gift lattest information about environmental and also to raise awareness and commitment of all employee of the importance of environmental management. Sharing program about environment is actually available but not yet been escecuted. Complete integrassion of all system is also needed for this company so ISO 14001 can be done more effectively, thus continual improvement can be obtained. The questionnaire used in this research has been design and meet validity and reliability tests. This questionnaire can be used to check implementation level of ISO 14001 in the cement company for this case study. Logistic regression can be used to check the impact of implementation of ISO 14001 to the environmental performance, it can also identified problem in ISO 14001 implementation. Because it has been showed that the high score of ISO 14001 clause implementation is high, doesnt mean it has positive influence to

the success of ISO 14001 implementation, which seen from the point of view of employee about the environmental performance. However to be able to be used by other company, a more thorough questionnaire that distributed to more respondent from many company must be done. CONCLUSION
1. Probability of ISO 14001 implementation in the cement company for this case study

2.

3. 4. 5.

for workers group is significantly influence by Implementation and Operation (4.4) and Management Review (4.6) in positive manner. It is significantly influence by Checking (4.5) in negative manner. Probability of ISO 14001 implementation in the cement company for this case study for supervisors group is significantly influence by Implementation and Operation (4.4) and by Checking (4.5) in positive manner. It is significantlyly influence by Planning (4.3) in positive manner. There are no significant influence of factors for manager group, however, Management Review (4.6) gives negative influence for the success of ISO 14001 implementation. Regular training is needed to improve all employees (including managers, supervisors and workers) understanding about EMS. Integrassion of all system is need for more effective implementation of ISO 14001.

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Foli, Gordon., Hogargh, Jonathan, N., and Antwi-Agyei, Philip, Evectieness of Planningand Implementation Strategies of the ISO 14001 Standards EMS at the Obuasi Gold Mine, Ghana, American Journal of Social and Managerial Sciences, Vol. 1, No. 1(2010) : pp 1-12 Nogareda, J.S., and Ziegler, A., Green Manajemen and Green Technology : Exploring the Causal Relationship, Center for Comparative and International Studies (ETH Zurich and University of Zurich), No.18 (2006) : pp 1-28