A standard operating procedure is a company wide formalised structure to handle specific operational activities. They are, in the opinion of Ibis, an essential supporting element in the creation of good planning and control within the growing company.

What are the potential advantages of using SOP's?

They standardise the approach of individuals within the company to specific procedures, improving the quality and speed of decision making in key areas – especially in contingency planning and survival and recovery;

They are essential for the enterprise attempting to achieve the maximum of flexibility and intrapreneurialism through decentralisation and the creation of strategic business units as they provide a set of common approaches to problem solving and analysis;

They provide a valuable structure for inter company discussion and development, with a key role in creating a knowledge management base within the organisation, particularly important in cost cutting, competitive analysis and exit planning;

They act to disseminate best practice within the organisation and can be updated as the conditions and legislation require creating a knowledge rich enterprise;

They serve to speed the integration of an individual into the organisation during the induction training phase by making available a library of company wide best practice and company operating procedures;

They improve transparency within the organisation by enabling all employees to see how specific problems are handled in a standard and clear fashion which helps in the creation of shared values;

They provide a clear audit trail in cases of dispute or external investigation where it can be shown that correct procedures were followed and records maintained;

They provide a check list which is action and implementation orientated and identify precisely the individual responsible for their completion; 

They can provide a rapid way to improve the span of control within organisations – removing much of the mundane procedures from management and empowering employees to carry out a whole range of standard activities;

They can provide highly cost effective maintenance training when incorporated into an effective Intranet and checking system. It can also be linked to additional material held within the company and on-line training courses;

They provide the first stage in the creation of knowledge centres within an enterprise, by serving as a means of collecting information which can then be used to develop expert systems, involving software and eventually artificial intelligence;

When key concepts are incorporated into standard operating procedures, such as those listed in the business health check they will lead to greater understanding of overall business operations, important in succession planning.

They can provide valuable assistance to change management policies, by embedding new best practice.

What are the potential disadvantages of using SOP's?

Standard operating procedures can become more and more restrictive and more and more detailed, reducing individual liberty and individual approaches to work;

Standard operating procedures can become very time consuming involving the completion of excessive paperwork;

Standard operating procedures can be extended to cover even the most minor aspects of work, creating a completely controlled environment – ideal for a bureaucratic management style;

Unless updated with new regulatory requirements and best practice they will rapidly fall into disrepute;

Unless they are used by all they will also be seen as part of a system put in place to mollify employees rather than as a key universal management tool. 

What are the characteristics of a good SOP?

The SOP can be shown to have benefits to the employee in improving and simplifying job performance;

That it provides a inclusive framework for decision making rather than an exclusive structure;

The SOP is easily and rapidly accessible to all employees;

The role and importance of the SOP can be easily and clearly demonstrated in the accompanying explanation which details what needs to be done, why it needs to be done and what is considered best practice;

The SOP leads to specific and ideally simple action which can be rapidly documented;

The SOP is part of a company wide training and development programme, and knowledge of the SOP is regularly tested within the organisation through the use of Intranet systems;

SOP's are always used by senior management in the relevant decision making areas, and are communicated in that form to other staff.

What SOP's are essential?

Ibis now has around 65 standard operating procedures developed for different companies. Within this range of material there are core items that all organisations should consider:

SOP's concerned with corporate governance, planning, record keeping, and monitoring;

Of particular value are the SOP associated with the development of the business plan outline which is part of Ibis training;

The knowledge center SOP;

The key performance indicator SOP;

The decision making SOP;

The forecasting SOP;

The new product development SOP;

The market development (international development) SOP;

The competitive analysis SOP;

The corporate governance development SOP;

The survival and recovery SOP;

The consolidation SOP which includes cost cutting methodology;



SOP's concerned with buying and selling including outsourcing;

The purchasing policy SOP;

The marketing mix SOP;

The outsourcing SOP;

Customer investment review, customer service and customer relationship management SOP;

The sales management SOP;


SOP's concerned with safety and security;

Health and safety SOP;

Total preventative maintenance (TPM) SOP;

Security SOP


SOP's concerned with personnel policy and employee development;


Recruitment appraisal SOP;

Disciplinary code and grievance procedure SOP;

Industrial relations SOP;

Recruitment SOP;

Appraisal SOP


SOP's concerned with the standardisation of key operational activities;


Project management SOP;

Management information system SOP;

Risk management and contingency planning SOP;

Investment appraisal SOP;

Labour productivity SOP;

Total quality management (TQM) SOP

When should the company consider the introduction of SOP's?

Some SOP's are in the view of Ibis, central to effective decision making at whatever stage of company development. 

Both academic research and personal experience suggest that they become more and more important as the organisation grows in size and more and more operational decisions need to be delegated. In practical terms this suggests that an organisation with more than 30 employees should be considering the formalisation of operating procedures through the introduction and adherence to a complete set of standard operating procedures that are relevant to the demands of the environment in which it operates.

Focusing on key SOP development

As the business plan develops, four components focus the enterprise on which SOP's should be introduced:

The legal review – which identifies where the enterprise is failing to meet best practice – for example in corporate governance or in managing the disciplinary code and grievance procedures;

Successes failures and lessons learnt – which identifies what the enterprise needs to improve in operational performance;

The planning effectiveness review which regularly critically reviews operational performance against targets;

Areas of significant difference between key performance indicators and benchmark levels which become identified during the creation of knowledge centers.

This approach ensures that the enterprise only introduces those SOP's that are essential in the short term without creating overload. Further SOP's can then be introduced as all stakeholders see the advantages. 

The SOP index – assessing what has been done against what should be done

A useful monitoring tool which should be incorporated in the administration knowledge center is the continuous review of what SOP's exist and what should be introduced. This provides a continuous measure of SOP development within the enterprise and allocates responsibility for their creation and maintenance. This SOP index is one of the 80 or so backbone monitoring elements which are a standard component of knowledge center, SBU and business plan development.

A step by step approach to defining the corporate structure, designing the SOP and creating effective control mechanisms will do much to ensure that SOP's work for the enterprise rather than against it. This approach is used in the Ibis training programme for SOP development within the enterprise. In common with other aspects of Ibis plan development, the creation of the SOP focuses on a "bottom up" rather than a "top down" approach.

Three separate elements can be defined, though there will always be a discussion as to which component will be included where. They are:

Structuring for SOP introduction;

Designing effective SOP's;

Controlling SOP's once in place.

The wide ranging implications of the introduction of SOP's and their interaction with many areas within the company make their construction an ideal option for job rotation schemes.

SBU. Dividing the enterprise into operational strategic business units will help to clarify SOP requirements.

Special units. Simplifying structures by removing special units will improve organisational focus and control.

Knowledge center. The creation of knowledge centers within SBU's will further focus the efficiency of information gathering and management.

Team building. Creating teams within knowledge centers will always improve the management of standard operating procedures as there will be a group of individuals that are able to use them.

Quality circles. The existence of quality circles will provide diversity of approach and a regular review mechanism for SOP development and management.

Authority/ responsibility. It is essential that authority and responsibility for maintaining the SOP once created is established.

Skills. SOP introduction must be placed against the appropriate skills background. Complex SOP's require high levels of skills and background understanding to be useful.

Automation. The integration of data with software can significantly improve the ease and the quality of SOP creation and management.

Software alignment. Where the SOP cannot be partially or completely automated the linkage of the team with the appropriate software systems is essential.

Information flow map. The definition of the existing information flow within the enterprise will be important for analysing the way in which the SOP should be positioned.

Business plan creation. The way the organisation operates will be part of the development of the business plan, including the important analysis of successes, failures, lessons learnt. This annual plan will therefore provide a framework for the analysis of SOP requirement and operational effectiveness of those that exist.

Business plan review. The regular review of the plan should incorporate changes to standard operating procedures.

MBO. A management style that focuses on management by objectives will be most supportive of the introduction and maintenance of standard operating procedures.

MBWA. An appreciation of employees operating procedures and requirements will be greatly enhanced by MBWA.

Objectives. Setting objectives for the SOP is essential. What is it trying to achieve? What should it not be expected to do?

Core competence. Any proposed SOP should assist in the improvement of core competence. Where it detracts from this goal, a detailed justification should be made for its introduction.

Critical success factors. The proposed SOP should also assist in the achievement of critical success factors.

Certification. Any proposed or existing SOP should be analysed as to how it supports existing or future certification requirements.

Upside/ downside. Every addition to existing bureaucratic procedures must be justified, and the introduction of the SOP only permitted if the efficiency improvements significantly outweigh the disadvantages.

Benchmarks. Reviewing existing SOP's in use elsewhere will provide useful background material for the enterprise SOP. Circumstances may often mean that an exact copy of an existing SOP may not meet precise operational requirements and so these should be reviewed with caution.

Exact definition of data entry requirement. SOP's only work when there is a common understood language and clear identification of SOP entry requirements. This should be as simple as possible (KISS).

Devil's Disciple. A rigorous analysis of the way the SOP is designed to work is essential to ensure that it will meet its objectives. Are the data entry requirements simple enough? Does it improve operational efficiency or decrease it? Does the SOP take too much time to complete? All these type of questions should be part of this assessment.

Project management. Establishing the tasks, timelines, and milestones necessary for the completion of the initial SOP and its continued management will be the next stage in the design of an effective system.

Critical path. The project will provide information on the existence (or otherwise) of a critical path which will determine the structure of completion of the SOP.

Management information system review. The management information system must be able to deliver the data necessary for the completion of the SOP. The mnemonic SATURNS will assist in the identification of the necessary key components of the MIS.

Resourcing. Does the creation of the SOP require additional resources? A resource analysis will be derived from the project management plan.

Audit trail. Once the structure of the SOP has been designed, the audit trail which identifies the key completion components can be completed.

Access/ storage. The output of the SOP will also need to include a clear definition of access/storage which will feed back into the information flow map.

Explaining the SOP requirement. Building into the SOP an explanation of why it is relevant and important will significantly improve the overall rate of use.

Links. With the availability of mass storage devices within the enterprise, the ability to provide relevant links (including for example best practice video) should also be incorporated into the design of the SOP. Documentary material can also be provided either on line or as hard copy; relevant legislation is most important.

Legal review. As standard operating procedures are effectively legal documents as they lay down rules and controls for employees, a legal review is an essential part of their development.

Testing. Prior to introduction, the SOP should be rigorously tested to ensure that it is fit for purpose.

Contingency plan. Links to the contingency plan will need to be created prior to introduction, to ensure that responses to failure can be effectively managed.

Approval. The SOP should be signed off at senior level.

Internal supervision. Regular internal supervision of SOP performance will identify potential problem areas, requiring review.

External verification. Where the SOP is central "mission critical" to certification requirements or customer contracts, external verification of key elements should be included.

Model answer. The creation of a model answer as part of the SOP background material will provide a clear target against which performance can be judged.

Training. Including SOP's throughout the three training components (induction, maintenance, development) will assist in SOP completion and control.

Recruitment. Integrating the requirement to use SOP's into the recruitment process within the Seven Point Plan will improve the potential for successful management.

Mentoring. Mentoring choices during the early stages of induction and for particularly complex projects (such as new product/service development, mergers and acquisitions, exit planning) will greatly improve the chances of success.

Appraisal. Integrating the successful use of SOP's as an appraisal component will focus the individual on the need to use the SOP system.

Impact analysis. Including the role of the SOP within the enterprise as part of overall impact analysis will identify changes that may or may not be needed for their effective operation.

Customer/ supplier/ internal satisfaction. Customer, supplier, internal satisfaction surveys will all identify areas that require attention.

Mystery shopper. The use of a mystery shopper system improves the identification of specific areas of SOP success and failure.

Customer complaints. A properly managed customer complaint system will identify areas requiring attention within the current or future application of the SOP system.

Random inspection. The random inspection of operational performance and the completion of relevant SOP's will be an important element in control.

In common with other Ibis on-line questionnaires, this quiz is only designed to provide an indication of the overall picture of a particular element in company planning and control. In common with other questionnaires, the question is always: "Does the enterprise/ organisation meet best practice?"

Your score:

Score: 400+. Perfect, but then you knew that.

Score: 300 -400. SOP introduction will function, but quality is likely to suffer.

Score: 200 – 300. SOP introduction is unlikely to work without major attention to operational management.

Score < 200. SOP introduction will fail.

More information on the way in which Ibis can contribute to your business plan development is provided at Advantage Ibis 

More information on the Ibis approach is also available on the FAQ page..

[ Home ] [ Advantage Ibis ] [ Ten-Best-Investments ] [ F A Q ] [ Business Plan Outline ] [ Start Up Quiz ] [ Mentoring ] [ Business Plan Training ] [ Business Plan Game ] [ Entrepreneur's Quiz ] [ Business Concept Quiz ] [ Investment Case ] [ Start-up Analysis ] [ Established Business Quiz ] [ Effective Planning ] [ A Marketing Tool ] [ High Growth Plan ] [ Business Monitoring ] [ Virtual Office ] [ Operating Procedures ] [ K P I ] [ Contingency Planning ] [ Change Management ] [ Survival & Recovery ] [ Planning/Implementation ] [ Corporate Governance ] [ Risk Management ] [ Business Health Check ] [ Knowledge Centres ] [ Articles ] [ Exit Planning ] [ Cost Cutting ] [ Competitive Analysis ] [ Controversial Case ] [ Ibis Shop ] [ Other Useful Sites ] [ Site Map ]

08 December 2011 04:38:36

Ibis Associates

European office La Vieille Loge, La Milliere, 86700, Romagne, Poitiers, France

Tel: 0033 (0) 5 49 87 80 76

E-Mail: Info@ibisassoc.co.uk

Site designed and maintained by Associate Internet Promotions  
© 2012 Alan West All Rights Reserved