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The Alternative Board Blog

Why Your Business Needs Standard Operating Procedures

Aug. 26, 2021 | Posted by The Alternative Board

Running a business is a costly, time-intensive process. Costs and time can grow exponentially if an organization lacks a system whereby products are made, or services rendered in a consistent manner. The quality of a company’s offerings may falter, leading to user complaints and possibly an exodus of customers.

To prevent this dire outcome, savvy businesses rely upon standard operating procedures (SOPs) that help ensure operations are maintained in a dependable way. It’s just one of several compelling reasons why your business would benefit from SOPs.

Simply put, a standard operating procedure is a system of instructions (usually written down) that outline the specific rules everyone should adhere to within the business. It can apply to virtually all aspects of operations, as well as to decisions made by your executive team.

Other benefits include:

Dependable outcomes

When labor and products are organized in a consistent way, “everyone is following a standardized procedure to produce results,” notes the outsourcing firm Solvo Global. Without such procedures in place, “it’s easy for employees to forget key steps, make mistakes, and slowly lower the quality of what you produce.”

Monitor quality

Your customers expect the highest quality in your products or services all the time. If you hear from customers that quality varies, it’s time to institute a fully detailed SOP to prevent this from happening. A series of clearly defined steps enables employees to avoid missing any key actions that detract from your promise of quality.

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Strengthen employee training and engagement

In some organizations, employees don’t have a precise understanding of their job duties or how to go about achieving desired results. These problems can originate as early as the employee’s first day on the job and left unaddressed, can last throughout his or her service to the organization.

Using SOPs, on the other hand, clarifies what operating processes are necessary to follow, and how each person’s efforts contribute to the success of the business. This in turn helps make the employee performance management experience more fulfilling for both employees and their managers.

Employees understand what constitutes outstanding performance and can focus on those activities, rather than flounder around hoping their work meets expectations.

SOPs also facilitate compliance with organizational, state, and federal safety guidelines. Knowing how to work safely (as a result of established SOPs) can significantly reduce the incidence of employee injuries, another source of potential costs and liability.

Avoid loss of institutional knowledge

Employees come and go, and when they leave, they often take valuable knowledge of organizational processes with them. Lacking SOPs, there’s no way to replicate this lost knowledge, forcing businesses to “reinvent the wheel” on a regular basis. That is just too costly and time-consuming for most businesses to sustain.

On the other hand, “documentation of job processes survives employee attrition due to retirement and resignation, and allow your company to carry on as usual,” notes Intuit Quickbooks. You may have difficulty replacing a knowledgeable employee, “but comprehensive well-written SOPs ensure that your valuable business processes stay with your business.”

Want to learn more about standardizing your operations? Check out “What an Operating Plan is and Why You Absolutely Need One.”



Read our 19 Reasons You Need a Business Owner Advisory Board


Written by The Alternative Board

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