If you hire a business consultant to evaluate the day-to-day operations of your business, at some point, they’re going to ask if your company has established processes and procedures. And if you fess up to not having written processes and procedures, they’re going to look horrified, immediately start treating you like a complete business idiot, and insist that you drop everything to create and then document your processes and procedures.
But let’s be honest here, documenting processes and procedures takes time. Your time, staff time, and expensive consultant time. What if that’s not the best use of time for your business?
Now don’t get me wrong, processes and procedures are essential to success in anything you do. Whether it’s a business process like sending out monthly invoices or a personal process like working out, eating breakfast, dropping the kids at school, and then starting your business day. The important thing here is to understand when it is and is not time to focus your valuable time and energy on developing processes and procedures.
So, let’s take a clear look at if you should be shelling out big bucks for a consultant to help you establish processes and procedures.
Let’s start by making sure we have a common understanding of processes and procedures.
What is the difference between processes and procedures?
A process is a series of related tasks that result in a desired outcome. Think of it as a summary statement of the goal you’re trying to achieve. For example, you might want to create a process called ‘onboarding new clients.’
A procedure is a list of the individual action steps taken to achieve a desired outcome. It’s the nuts-and-bolts description of exactly what needs to be done and how to do it. For example, for a client onboarding process, your procedures might include gathering client information, setting them up in your invoicing system, and sending a welcome packet with information your client will find helpful.
The Benefits of Processes and Procedures
While we’re going to discuss when you don’t need processes and procedures to address a business need, there are benefits to having processes and procedures in place.
- Provide a roadmap for daily operations. Processes and procedures create a clear understanding for team members of what they’re expected to do in their jobs. It eliminates confusion and helps hold employees accountable for their duties and responsibilities.
- Ensure compliance with laws and regulations. Even the smallest business must adhere to legal or regulatory requirements put in place by local, state, or federal governments. Processes and procedures make sure that team members understand those requirements and provide guidance ensuring the business is in compliance.
- Provide guidance for decision making. Every time you must stop to make a decision, it costs you time and money. Processes and procedures avoid work stoppage by providing guidelines on what type of decisions can be made at the team member level and what kinds of decisions must interrupt the workflow to bring in others to make a decision.
- Streamline workflow. This is the most obvious benefit of processes and procedures. A clearly articulated workflow enables your business to achieve maximum efficiency.
- Minimize the impact of high employee turnover. Some businesses naturally have high employee turnover. For example, the fast-food industry has an average employee turnover rate of 150% each year. With a higher employee churn rate, documented processes and procedures are essential to quickly train new employees in entry-level positions, and train current employees for promotional opportunities when higher-level employees leave the organization.
- Onboard a lot of new clients. Client experience has become an essential part of organizational success as more and more businesses compete for the same clients. And there are often a lot of moving parts involving different departments when onboarding new clients. Processes and procedures make sure everyone knows what they’re supposed to do. A smooth client onboarding process is essential to establishing brand excellence and demonstrating that you’re a leader in your industry.
- Build a cohesive team. It’s safe to say that many disagreements between team members come from ambiguity about roles, duties, and decision-making responsibilities. Clearly stated processes and procedures can create a more cohesive work environment by proactively eliminating those ambiguities.
When You Don’t Need Processes and Procedures
- The business is experiencing rapid growth. While different industries experience different average growth rates, a growth rate of 25% or more is considered to be a high-growth rate. If a business is growing at a rate of 25% or more, you’re spending most of your time marketing the business and fulfilling customer needs. In this environment, processes and procedures may be change several times a year as the business changes and evolves. In this scenario, investing time and money in creating processes and procedures that will change in a few months doesn’t make sense. A better solution is to leverage communication channels to keep everyone proactively informed of necessary changes to how you get things done.
- You have a small team. Communicating quickly and effectively with a small team is much easier than trying to keep everyone on a larger team pointed in the same direction. And one of the secrets to efficiency is effective communication. If you are aware of tasks/projects that team members are working on and the progress of those tasks/projects, then you can proactively identify and manage developing issues to eliminate bottlenecks. Businesses with small teams may be better off investing time and money in growing the business instead of creating manuals for processes and procedures.
- You don’t have the right people in the right jobs. If someone is in a position in your company who doesn’t have the necessary skills and experience to do the job, there isn’t a process or procedure on earth that will fix that. But, no one likes dealing with a performance problem or someone who’s not the right fit for their job. So, processes and procedures seem like an easy fix. But if the person is not the right fit, you’re just delaying the inevitable. With the right people in the right jobs, they know what to do, how to figure out solutions to problems, and how to work as a team without written processes and procedures. So, if someone tells you that you need to create processes and procedures take a good hard look at your team to ensure that you’ve got the right people in the right jobs.
- There’s a communication problem. When a business has a communication problem, team members complain of lack of clarity about what they’re supposed to do, confusion about who makes what kind of decisions, and blame each other for things not getting done. So, it’s easy to see why people think that processes and procedures will benefit the business. Keeping people proactively informed of what’s happening in the company is an effective way to identify and avoid developing issues. And if you have processes and procedures but have a communication problem, all that time you spent creating those processes will have no impact on your business.
- The business has a leadership problem. Now, before you start bristling and think you’re being told you’re not a good leader, let’s review some of the reasons a company might have a leadership problem.
- The CEO wears multiple hats. Often in small to medium-sized businesses, the CEO is does sales calls, manages client accounts, and acts as the CFO in addition to leading the company to continued growth. And while that might work at first, if your business is growing, it’s just not sustainable. So, in this case, time or the ability to delegate to others is the issue, not your qualifications as a leader.
- The organization has under-developed supporting leaders. When your company starts out, you probably hired people based on the skills and abilities to do the actual job. But as your organization grows, you need supporting leaders to take over some of the business leadership responsibilities, so you have more time to focus on growing your business. You can’t do everything forever, and if you try, you’ll end up feeling exhausted and won’t do your best work.
- The organization structure doesn’t serve the business. Few small businesses focus on the efficiency and effectiveness of their organizational structure. An undeveloped or poorly developed organizational structure directly impacts efficiency and effectiveness. This is not about big titles and who has the most team members reporting to them. This is about pushing decisions down to the people who have the necessary information to make a business decision, so the CEO is free to make higher-level decisions.
There’s no doubt that processes and procedures can benefit an organization – but only when they’re not used as a blanket solution for deeper business issues. So, the next time a business consultant tries to persuade you that the answer to all your problems is documented processes and procedures, take some time to think about the root cause of your business problem. It will be time well spent.