Companies are founded in order to provide a needed product or service. To grow and be successful, a company must provide its products and services at a consistent price and quality level. Successful companies follow a list of steps each time to ensure that products and services of consistent quality are produced. These steps are a company’s Standard Operating Procedure (SOP).
Small companies sometimes think that they don’t need this level of detail, so procedures go unwritten and products and services can be inconsistent. Subsequent generations of employees are not trained to the same standards as the first generation, so the service or product suffer, which may result costs increases.
When the steps are written down, the procedures become “standardized.” These steps or instructions are known as Standard Operating Procedures. Writing them down ensures consistency and facilitates training. The written procedures are the basis for the training guide.
While there are some procedures that are standard around the world (such as answering the phone by the 3rd ring with the appropriate greeting), others are unique to an industry, (such as job costing for construction companies), or specific to a business (such as how tomanufacture a bike).
A Standard Operating Procedure can describe the steps of a work process – (partially or entirely), a policy, or a job description.
Some of the symptoms that may indicate the need to develop Standard Operating Procedures are:
- Sales are up but profit is down
- It takes more employees to do less work
- Unexplained drop in sales or customer loss
- Product being returned and/or increase in customer complaints
- Increase in re-work or comps
- Jobs not completed on time or with excessive overtime
- High employee turnover or low morale
- Work not getting done and lots of finger pointing/blaming
- Breakdown in communications
While at first it might seem like a good idea to develop written procedures internally, this can often lead to errors and omissions. It is typical for the person who is writing down the steps of how they do the job to assume that the reader has certain unstated knowledge. These assumed items are usually critical and not-so-common knowledge after all. Additionally, employees may have motives for writing down something different than the actual steps performed. For example, they may omit a step that they know is frowned upon by management yet deemed essential to success. Therefore, following the written procedures will not yield the desired results. For this reason it is best to employ an outside party to document how the actual procedures are being performed and determine whether they should continue being performed in the current manner or whether they should be changed. Standard Operating Procedures can be a company’s road map to success.
At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:
