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 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 and exit planning;
They act to disseminate best practice within the organisation and can be updated as the conditions and legislation require;
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 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.
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;
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, record keeping, and monitoring;
SOP's concerned with buying and selling including outsourcing;
SOP's concerned with safety and security;
SOP's concerned with personnel policy and employee development;
SOP's concerned with the standardisation of key operational activities such as contingency planning, risk management, new product development, and investment appraisal;
Other SOP's will depend on organisational circumstances.
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.
At what stages of planning are SOP's most valuable?
The Ibis planning platform has been developed to answer three basic questions:
Where are we?
Where do we want to be (and when)?
How are we going to get there cost effectively?
Standard operating procedures have a role to play at each stage. They can structure initial analysis of key areas of operation such as competitive analysis, they are central to certain types of strategy (particularly consolidation or cost cutting), and are of enormous value in the implementation of planning decisions. Their essential role is to ensure that best practice is expanded and maintained, thereby gaining greater competitive advantage. This of course means that standard operating procedures should be continually reviewed and updated, incorporating new approaches and technologies where relevant.
To review what standard operating procedures should be incorporated into your planning platform, Ibis offer a no-obligation review of your current planning platform. E-mail Ibis today
