Importance of Standard Operating Procedures

There are many reasons for having Standard Operating Procedures for most roles in the company. SOPs allow an employee to understand the requirements and expectations of their role. They also allow management to measure the performance of that employee in that role. SOPs allow for faster expansion of departments by reducing the training time required of existing employees working with new hires. As there are more people doing the same job, SOPs ensure that regardless of who does the job, it is done the same way, which brings additional benefits from standardization. Customers will see a consistent result from the company if each person they interact with follows the same SOP. For business continuity, SOPs make it possible for temporary help to provide some basic level of help, even if it is outside their department. Of course, it also means replacing an employee who quits or is terminated also becomes easier.

With this many reasons to have SOPs, why is it that I still find only a fraction of companies have them in place? The simple but honest answer is probably that most people don’t associate working on SOPs with increased bottom-line profit or even with increased sales. So using the question, “Does this bring more money to the company?” It is no wonder that SOPs are rare among small businesses. I’ll even go a step further. Even among the Fortune 1000 companies I’ve worked in, quite often, part of what I needed to do was help them develop Processes, Procedures, and Standards. Ideally, every business has all of these, but at the very least, developing SOPs is an important step in allowing the business to grow beyond its current size.

While it is true that I would have a hard time showing how an SOP increased sales, it is quite easy to show, after developing and implementing SOPs, how they increase the flexibility, efficiency, and resiliency of the company. All of which should reduce operating costs, which in turn should increase bottom-line profitability.

The Bob Problem

Another extremely common problem that I see in small businesses is the proverbial guy who knows the answers no one else has. This is often a long-term employee of the company who seems to be the only one with certain knowledge. He may be in IT or Marketing or any other department. I know he is there when I ask questions about different areas of operation of a company during my interview process at the start of a consulting engagement, and the answer is always something like, “Oh, Bob is the only one who would know that.” It happens in virtually every company I visit.

Surprisingly, people are willing to live with the risk of Bob having a stranglehold on certain types of data, although all my other questions can be answered by multiple people.

The problem can usually be traded to two things. First, Bob is notorious for not developing or even adhering to processes. For Bob, everything is done the first time, each time. As my British colleagues would say, Bob is all about bespoke. If everything has to be done from scratch each time, then the person who has done the most from-scratch things will seem very skilled at finding answers. The reality, of course, is that if Bob had developed standard procedures, then he would not have to do everything from scratch, and in fact, others could follow his procedures, and maybe then Bob wouldn’t be the only one who knows the answers.

Second, Bob is always busy. He probably works more than 40 hours a week and sometimes has to come in on weekends. This creates a false persona of someone who cares deeply for the company and is willing to spend his own time for the company’s sake. This is again self-serving because if Bob had developed some standard procedures for doing his job, then not only would he be able to do his job faster and more efficiently, but others would be able to fill in for him when Bob was not around.

When I work with a CEO on improving the company’s efficiency, and I find out about a Bob, I know that Bob’s days are numbered. Before I leave that project, Bob will be looking for another job, and someone probably significantly junior to Bob will easily have taken over his responsibilities and is accomplishing more in less time. Get rid of your Bobs and be sure that every role is defined either before you bring a person in to do that job, or by the first person actually doing that role.

Even if they are not the model of efficiency, it’s important to create a set of SOPs that can then be modified and improved as time goes on. Once the SOPs are created, it will make it much easier to see if a process is redundant and unnecessary. SOPs allow for more clarity within the organization because they show relationships between tasks and how they lead up to the full product and sales workflow. Many employees will not care about the big picture, but it will be much easier to see nonetheless.

Excerpted From The Original

Business Growth Roadblocks: How to use uncommon sense to surpass $5 mil

It’s not always the sales side that is the problem, quite often it is the operations that are keeping a company from growing, but majority of books only address the sales side. This book looks at the most common problems in company operations and how to fix them. The book is written primarily to address companies of $3-5mil with 8-20 employees who seem to have slowed down the growth, and it illustrates how others have grown past that size by changing back end operation.

 

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