The 411 on SOP's

Recently, I taught a course in human resource management for a different small liberal arts college. The department chair said, "Use whatever textbook, assignments, and lessons you like. We trust you to use your experience to make the right choices." This was music to my ears. I felt empowered to make decisions that would best benefit my students. But was it the best strategy for the school? Probably not!

The Problem
One of the fundamental questions any business owner needs to address is: “Should we standardize our operating procedures or hire really good people and let them use their best judgment?”

I believe that most, if not all, business processes can and should be standardized.  Here are 15 reasons why.

Organizations that standardize their processes are able to:
1. Ensure that everyone performs the work in the most efficient manner possible.

2. Maintain the highest standards of quality because all employees are required to perform the work in a manner that has been found to produce the highest quality results.

3. Keep labor costs low by hiring the least expensive person who can learn and properly implement the SOPs rather than hiring more expensive, highly educated, and experienced staff.

4. Reduce unwanted variation of the quality of products and services.

5. Make more intelligent executive decisions about the operation of the company since they know how it really functions, not how they hope it runs.

6. Provide senior management with a better understanding of exactly what products and services the organization is actually delivering to customers.

7. Quickly orient new employees to their jobs.

8. Train current employees on the best way to perform their jobs.

9. Create a valuable reference tool that can be used by all employees to learn how other parts of the organization function.

10. Quickly fill in for employees who are absent or suddenly leave the company.

11. Accurately project the costs of raw materials, supplies, travel, and human resources.

12. Attain recognized certifications such as ISO or preferred supplier status by large customers.

13. Clearly establish their brand identity in the marketplace due to their uniformity of operations.

14. Maintain the possibility of franchising the business.

15. More easily sell the organization by promoting proven processes and procedures that, when used consistently, produce profitable results.

What to Do
Organizations that are faithful to standard operating procedures (SOPs) invest time and effort:

• Researching best practices
• Documenting procedures
• Teaching all employees to follow the procedures
• Policing employees to make certain the procedures are followed
• Continuously revising procedures to keep them up-to-date

Here are five basic steps for increasing standardization in your business:
1. Set specific objectives. Ask yourself why you are standardizing. Are you trying to improve efficiency, reduce costs, improve productivity, improve brand awareness, improve customer satisfaction, become less reliant on the judgment of key employees, accelerate the training of new employees, or something else?

2. Establish metrics and conduct a pretest. Once you decide on the objectives, measure what you are trying to improve. Without metrics, you will not know if increasing standardization has helped you improve or not. Develop measures of efficiency, costs, brand awareness, customer satisfaction, training time, and so forth.

3. Create the standard operating procedures. Assemble a cross-section of employees and charge them with the task of identifying the best practices for each process you want to standardize. Ask them to explore the best practices within the organization and in other organizations. Have them codify the standards and experiment with them to make certain they achieve the desired results.

Be sure to develop standards that are detailed enough to provide useful and uniform direction to all employees, while still allowing for free thinking and decision making within set boundaries.

Include procedures for updating and revising the processes on an ongoing basis so that they don't become obsolete as the organization changes. Also include a method to ensure compliance by all employees. Standard operating procedures that aren't strictly followed are useless.

4. Implement the standard operating procedures. Communicate the procedures to all employees. Train them on the proper techniques and make certain that they adhere to them.

5. Evaluate the success of using the SOPs. Repeat the same metrics used in the pretest to make certain that the SOPs are achieving the desired results.  If not, modify them so they will.

Conclusion
Standardization is one of the fundamental principles of business, yet many businesses have not embraced the concept. Most business processes can and should be standardized. 

Although I might not have liked being told exactly what to teach my college students, it helped the college best achieve its objectives. By giving me some, but not total freedom, they were able to best achieve their objective of a unified curriculum across campuses that would pass the muster of their certification evaluators.

Take a look at your own operations. Are you leaving too many processes to chance or to the judgment of employees rather than identifying best practices and making sure everyone is using them?