Successful companies don’t make it up as
they go along.
For your business to be successful, you
need a set of policies, procedures and systems.
Whether written or not, every company
has policies. Policies cover things like whether a product can be
returned, under what circumstances an employee will be fired, how long
an employee needs to be on the job before being eligible for health
insurance, and whether company computers may be used for personal
emails. Here are some guidelines:
• Keep your policies simple, clear, and
as few as possible.
• Don’t create a policy for everything, but do create them for important
A good time to develop a policy is when
someone asks for the first time, “What’s our policy for ...?” If you
don’t have an answer and you expect the question to come up again in the
future, you may as well develop a policy to cover that situation.
Discuss among the management team or, if appropriate, get an attorney
Procedures and Systems
Can you imagine a fast food restaurant
that allowed each employee to decide how to make a burger? Or a bank
without formal processes for accepting a deposit?
I’m not suggesting creation of
unnecessary red tape or nonsense. I am suggesting that …
• once someone spends the time to
figure out how to do something, it’s a waste to let other employees
spend the time (also known as “money”) to figure it out again.
• it is irresponsible to let the company’s know-how go out the door
daily at 5PM.
• you don’t want important business processes to be done “Jim’s way” or
“Judy’s way.” You want important business processes done the company’s
• the only path to consistent product and service quality is to have
simple, clear procedures and systems.
So, what’s the difference between a
procedure and a system? I can probably best explain by example.
Let’s take hiring. You might have a
procedure for conducting an interview. (I use the word “procedure”
pretty loosely. It might just be a simple checklist. In my mind, a
procedure is anything in writing – even in pictures – to guide the steps
someone takes to accomplish a task.) You also have a job application and
a form asking for the applicant’s approval to perform various background
All of these checklists, procedures and
forms make up a hiring system.
Please don’t get hung up on these
terms. Feel free to give these things different names. The important
concept is documenting:
• what you do
• who does it
• when it gets done
• how it gets done in sufficient detail to ensure quality and
consistency, and prevent duplication of effort.
Let’s look at another example that can
help make my point. Suppose you start a store and are the only employee.
In the early days, you’ll be doing all kinds of tasks ... some simple,
and some complicated. One task might involve buying and restocking
product for sale in your store.
Let’s say you hire a new store sales
employee, Kathy, and you want her to take over the purchasing process.
Your training choices include:
• Show her how you do it, and hope she
takes notes or has a good memory, or
• Type up a simple procedure and give it to her while she’s being
Which do you think will work out best?
If you go the route of most small
businesses – which is to show rather than write a procedure – eventually
Kathy “gets it.” She starts doing the job, becomes good at it, and over
time probably adopts new approaches to the job that you don’t even know
about. These changes may impact important things like your cost or
delivery lead times. But, none of her improvements get written down.
After a year on the job, Kathy quits.
All of this knowledge that Kathy gained – which belongs to you –
walks out the door.
So you hire her replacement and show
him how to do it the old way. You haven’t been involved in purchasing
for over a year. Kathy handled it. You don’t know anything about all the
changes she made to the process. You’ve lost a year’s worth of important
business knowledge ... because nobody bothered to write down a few
simple bits of information.
So, even if you’re the only employee,
take the time to write down what you do and how you do it. Put it in
your computer and print it out. By the time you have your first
employee, you will probably have a good start on an procedures or
operation manual. Think how much easier it will be to train your folks
and how much smoother the operation will run.
Remember: Successful companies -
like yours - don’t make it up as they go along.
Bill Collier is
a St. Louis-based business coach, consultant and speaker. He is the
author of the book “How to
Succeed as a Small Business Owner … and Still Have a Life.” His
website is www.collierbiz.com,
and his email is firstname.lastname@example.org
You may reprint this article in its
entirety as long as you include the full by-line that appears at the
bottom of the article.