Seven Secrets for creating Standard Operating Procedures (SOPs)

Seven Secrets for creating Standard Operating Procedures (SOPs)

When John Warrilow, world-renown author and founder of The Value Builder System*, comments on something it’s worth taking notice.

In a recent presentation, John described Standard Operating Procedures as the foundation of a business that is built to sell. Amongst other things, they provide the following for a business-:

  1. The secret to happy customers – by helping to provide your customers with a consistent experience
  2. Minimise the owner’s time spent problem solving – SOPs allow owners to pre-empt most questions employees ask resulting in less staff interruptions therby freeing up much needed business owner time to tackle other challenges.
  3. Help to train confident employees – SOPs give employees clear instructions on what main tasks make up their jobs.
  4. Increase the value of the company – by giving an acquirer more confidence that the business will continue to survive without the owner.

So if documenting your Standard Operating Procedures really does;

  • increase the value of your business,
  • improve profitability from greater efficiencies and productivity and
  • give the owner much needed time to focus on other things,

then why do some owners not invest the time required to put these SOPs in place? From my experience, it comes down to two things, time and money, and fundamentally, knowing where and how to start.

Anecdotally there is enough evidence to support an argument that the documentation of key processes and procedures will increase productivity and efficiencies which in turn will flow through to improved profitability. It’s also clear that any time spent documenting key processes and procedures now will be rewarded threefold in the future. That takes care of the time and money obstacles.

As to how and where to start here are the Seven Secrets for creating Standard Operating Procedures that John Warrilow advises will stand the test of time in your business.

  1. Use Video – If a picture says a 1000 words then a video is worth a million. By creating processes and training material in video format staff will enjoy the learning process and be more likely to retain the information. Such content can be supported by written documentation
  2. Keep your SOPs short – show your employees how you want them to perform a specific task. If you need more than two minutes break your instructions up into shorter video clips.
  3. One touch – the best SOPs are structured so that an individual only touches the process once.
  4. No double data entry – if a SOP requires entering data make sure that a single piece of data or field is only populated once and by a single person.
  5. Clear roles and responsibilities – when designing SOPs make sure it is clear who is responsible for each step.
  6. Make SOPs available where employees need them the most – ideally your SOPs should be cloud based and appear where your employees do their work so they can access them just in time without having to sift through a massive Google drive or Dropbox folder.
  7. Solicit help from Process experts: – just like Finance, Health and Safety and HR, SOPs are now an expertise in their own right. Experts from companies like New Zealand’s Bedrock provide guidance around templates, structures and frameworks which help make such an exercise less daunting

Increasingly I am hearing the message from business owners that they’re working too hard for fewer rewards. The more I research documenting SOPs the more I am convinced that if business owners invested the time they currently spend answering queries from their staff into documenting these processes, the quicker they would regain that lost time to use on more meaningful things in life
The benefits of putting some extra effort over the next few months into starting this process will quickly become apparent, while the longer-term benefits will continue to accrue as these SOPs are developed and introduced.

*The Value Builder System is a cloud-based assessment tool that helps build the value of a company. It has helped more than 55,000 business owners improve their company’s value by up to 71 percent.

What’s your Stress Quotient® – and how can you keep it under control?

What’s your Stress Quotient® – and how can you keep it under control?

Our Winter Pulse Check results showed that while many business owners remain confident their businesses are doing well, there has been a marked rise in those reporting anxiety, stress, and disturbed sleep as operating conditions worsen.

And it’s not just business owners feeling stressed.  The impact of Covid on workplace stress levels has been significant over the past 12 months and media coverage has highlighted the potential financial liability business owners may have if they choose to ignore the signs among employees.

The first step to reducing workplace stress is being able to identify and acknowledge it exists. There are several tools available to do this and it is an area we’ve been exploring for some time, in association with TTI Success Insights and an online tool – called Stress Quotient®  – which helps Kiwi business owners identify, measure and monitor various stress types within organisations and teams. Defining stress as ‘the harmful physical and emotional responses that occur when the requirements of the job do not match the capabilities, resources, or needs of the worker’, Stress Quotient®  identifies seven key workplace stressors that both employers and employees need to watch for.

  1. DEMAND: While today’s employees may want challenging tasks to maintain their engagement and motivation, it is important that demands do not exceed the ability to cope. Workplace stress tends to build as demands and responsibilities increase. Stress can be directly tied to poorly designed jobs, excessive workloads and talents and skills not matching the work. The goal is to have a balance between demands and time.
  2. EFFORT/REWARD BALANCE:  Having purpose or job satisfaction is an important factor in any job. High effort without satisfying one’s need for rewards can lead to workplace stress. Rewards come in many forms; recognition, helping others, gaining knowledge, personal growth, structure or compensation. High effort in the workplace is essential but must be matched by the reward that the individual desires. Workplace stress arises when there is a significant disconnect between needs and rewards.
  3. CONTROL: A feeling of powerlessness is a universal cause of job stress. You alter or avoid the situation because you feel nothing can be done. Common sources of stress at work include complaints of too much responsibility with too little authority, being involved, not being heard and no one understanding what you really do. Workplace stress increases as one’s degree of control decreases. The goal is to have a balance between responsibilities and personal control.
  4. ORGANISATIONAL CHANGE: Organisational change affects people differently. While some people welcome it, others become apprehensive and stressed at the mere mention of change. Organisational change can be defined as any change in people, structure, technology or procedures and can vary in degree and direction, produce uncertainty and initiate both stress and opportunities.
  5. MANAGER/SUPERVISOR INFLUENCE:  Common reasons given for stress at work include lack of effort from your employees or self-imposed pressure on yourself. Most people don’t realise that stress is a part of every job. That’s why, when you are working under reasonable demands you can get the job done more efficiently. However, when you do things that go beyond normal pressure this can cause stress.
  6. SOCIAL SUPPORT: A lack of support from colleagues and leadership can lead to workplace stress. A supportive environment is one where leadership provides clear and consistent information and co-workers stand ready to assist when needed. An environment that promotes positive working relationships and addresses unacceptable behaviour promotes productivity and employee engagement.
  7. JOB SECURITY: People worry about many aspects of their jobs, but most of the fear comes from job security. Job insecurity comes from the fear of job loss and the associated unemployment implications. Stress can also originate from a lack of advancement or being promoted too slowly. People also can have a concern with being promoted too quickly to be successful in the job.

By measuring each of these seven key workplace stressors, we can focus on the things that are within one’s control without having to make huge changes or rethinking career ambitions.

There’s a well-known saying: What gets measured gets managed so it may be time for NZ businesses to start measuring organisational and individual stress levels. Not doing so may overlook important health and safety issues in the workplace.

If you think Stress Quotient® could be a valuable tool to identify, measure and monitor stress levels in your organisation please get in touch with me or one of The Alternative Board team.

Confidence and motivation fraying for some SMEs, survey shows

Confidence and motivation fraying for some SMEs, survey shows

Article by Marta Steeman – Senior Reporter – Stuff Limited

The stresses and strains of handling Covid-19 disruption is taking its toll on the confidence and motivation of a good chunk of small businesses, a new survey shows.

The Alternative Board’s Pulse Check Autumn 2021 shows business confidence is still high among 46 per cent of the 271 member and associates who responded to the survey but a substantial chunk, 39 per cent, are “just ok” and have no room for more lockdowns.

The Alternative Board is a business development, coaching and mentoring organisation for small to medium-sized businesses and has about 300 members here. There are about 15 franchise operators around the country.

The Alternative Board North Canterbury managing director Steve Wilkinson​ said the Covid aftershocks of shipping delays, higher prices and difficulty finding suitable staff seemed to be fraying the high levels of confidence reported in the summer.

Continue reading on Stuff

Article first published in Stuff 14 May 2021.

Americas Cup shows innovation is a process

Americas Cup shows innovation is a process

As we marvel at the speed and agility of the four America’s Cup teams on Auckland’s harbour this weekend, it is interesting to reflect on how they got there and how they continuously innovate and improve.

To innovate you need an open and collaborative process and sometimes, businesses of all types rest on their laurels and forget the creativity and passion that got them started. Many years ago, Edward De Bono developed the Six Hats thinking process to encourage productive discussion and innovation in organisations, rather than blame or arguments. The Thinking Hats take away ‘right and wrong’ and encourage people working in a team to take different views.

First is the ‘Blue Hat’ that facilitates or conducts the process and keeps the team on track.

The ‘White Hat’ analyses – for example, it produces the engineering data which helps the high performance teams work out how to get the boats to go faster.

The ‘Green Hat’ is the creative hat full of alternative ideas – who else would have thought of leg-powered bicycle grinders on our boat in Bermuda?

The ‘Yellow Hat’ is the sunshine – full of optimism, it looks for benefits. In our Bermuda bicycle example leg muscles are larger than arms. This gave the AC50 grinders more power to supply the hydraulic systems which raise and lower the foils and pull in the huge wingsail.

The ‘Red Hat’ is the intuition hat, driven by emotion. “My gut feeling is this will or will not work.” Intuition is often built on complex judgement based on years of experience and may be an art rather than a science.  Boatbuilding is an art and it is worth reflecting that, in business, restructuring often fails because the human element, the emotion, is not properly taken into account.

The ‘Black Hat’ is the caution or critical judgement hat. Engineers try to make sure the loads on these boats are safe. Get it wrong and death is a real possibility. However, imposing too much health and safety too early can kill creativity.

The boats we see in January and February will be very different to those we see this weekend. The ‘Blue Hat’ will oversee continuously trialing and optimisation on the water – proof that innovation is a continuous process.

As a small business owner, you’ll be wearing many hats – De Bono’s colourful collection and the Captain’s Hat too, as you steer your enterprise through the choppy waters of 2020 and beyond. A start up business is often born from a Green Hat creative idea, or from an optimistic Yellow Hat applying someone else’s crazy thinking. Bridging the ‘valley of death’ and not running out of cash in a start-up requires a big Blue Hat to navigate uncharted territory. Often it takes many years – and continuous innovation – to get your business model right.

I am currently working with a customer whose Black Hat thinking began an innovation process, building an automated system that manages lead generation and marketing through to sales, operations, accounting and pricing. Any information technology system implementation requires all the hats to get it to work, and because of the new automation his net profit margins are now much higher than his competitors.

As your business matures, it is easy to become stale – competitors whittle away your super profits and you continue to cut overheads. If you look at breweries, beer is in decline, and they have had to develop or acquire new categories to achieve growth or sustain profits. Innovation and creativity is the lifeblood of your business and is underpinned by your passion for what you do. Keeping your creativity alive is essential, as is innovation because, if you stop innovating or let your creativity stagnate, you can end up like Kodak.

Kodak was so blinded by its success in selling film it completely overlooked the disruptive potential of the digital camera invented by Steve Sasson, one of its engineers, in 1975. However, the real disruption occurred when cameras merged with phones and people shifted from printing pictures to posting them on social media. Kodak missed the trend and had to deal with the resulting consequences.  

So remember as you watch the boats fly through the harbour this weekend, every captain must innovate, be prepared to change course and adapt – or run the risk of losing the race.

How do you grow your employees during a skills shortage?

How do you grow your employees during a skills shortage?

Skilled workers are getting harder to find – as our Spring Pulse Check revealed. The big question is how do you keep your employees happy and engaged so they’re not tempted to head somewhere new?

In pre-COVID times a pay rise might have been just the thing to keep them onboard but as times get tougher that may not be feasible. How do we tackle this tricky topic in these difficult days?

Pay and conditions are top of the list for many employees but in today’s world people look for more from their employer including the opportunity for personal and professional growth. Excellent internal communication is vital to ensure your employees know what is going on and that they feel listened to and understood. Small businesses frequently report that their staff are like family but sometimes, as can happen in any family, people don’t talk to each other enough and problems arise.

All businesses – small or large – must remember that while employee engagement is important, the employee experience is now a critical consideration. The employee experience has a number of different aspects, internal communications being one, with the others including training and development, recognition of their work, how change is managed, flexibility and a sense of purpose.

You may not be able to provide a pay rise at this point in time but the other aspects of the employee experience are within your grasp.

Focus on training and development and, again, if budgets are tight, look for help and support through schemes like the Regional Business Partner Network. Communicate constantly – keep your employees briefed on the changes and challenges the business may face and celebrate the wins. Recognise their efforts – it could be as simple as publicly acknowledging a job well done – but let them know you appreciate their skills and abilities.

After our year of working from home, working through disruption or not working at all, we all understand the need to keep people engaged when the organisation is operating remotely and there are many approaches to help with this but don’t forget to maintain the good communication habits you cultivated during the crisis and stay connected to your employees.

If you find you can’t recruit someone who has the skills necessary to support your business look to your existing staff – there may well be someone already working for you who is willing to grow and is capable of doing the job but they will need you to invest in the extra training or development to undertake the role and, of course, pay them appropriately for their work. 

Above all, be a trustworthy employer. Your employees will be looking to you to lead them through this period of time and effective communication, a good employee experience and a demonstration that you care will help keep your ‘work family’ together and growing happily.

Credit issues are on the rise

Credit issues are on the rise

Our recent Business Pulse Check showed 7% of respondents have experienced more late payers and defaults, while 4% are struggling to pay creditors. In recent client coaching sessions, I am also noticing that there is an emergence of fiddly credit issues that are starting to take up a little more time for both business owners and their credit staff.  These issues range from company liquidations, more creative excuses for not paying, down to just not paying on time, or paying later than normal. In some cases, the debtor has grown their exposure with the company over recent months without any further analysis of the increasing credit risk.

In a paper I wrote earlier this year on the Changing Face of Credit Risk I emphasised the need to continue to be vigilant with your credit control processes and procedures.

With the Christmas break coming up it is critical that everyone makes sure they have robust processes in place for collecting outstanding debts – including pro-actively following up overdue amounts expediently. Anything left outstanding on Christmas Day is unlikely to be paid until late January, with the resultant impact on your company cashflow at a time when it is most needed.

In the meantime I would suggest you remain focused on the following:

  • Watch for changing signs with any clients i.e. increased exposure/delays or excuses in paying.
  • Where appropriate be pro-active in updating Terms of Trade, particularly in cases where you may not have personal guarantees and exposure is increasing.
  • Use credit checking more regularly for clients who are showing different patterns in their payments.
  • If appropriate, consider registering under the PPSR register.
  • For clients showing changes in trading/payment patterns consider putting in place credit watch processes.
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