Why Are Standard Operating Procedures Important?
All of your organization’s tasks are important, but how should Standard Operating Procedures make it on the list of importance for your business?
The reason is simple: without them, your business is at risk. Risk? Yes, significant risk! We will consider a few risk areas that can arise if your business or organization fails to adopt reasonable Standard Operating Procedures.
Let’s dive into some of the inherent risks associated with the absence of Standard Operating Procedures:
- Risk of losing brand identity
- Risk of wasted material resources
- Risk of misused human capital
- Risk of increased labor expenses
Do we have your attention yet? Which of these can you afford to ignore? The answer is obvious. You cannot afford to miss any of these or other risks associated with the absence of well-crafted Standard Operating Procedures.
SOPs and Risk Avoidance
Without well-written SOPs (Standard Operating Procedures), the duplication of what makes your business stand out is at risk of becoming vanilla. As a result, your brand representation will become vague and indistinct in the marketplace.
Imagine
Imagine if an automaker left it to the production line to go online to parts suppliers, gather available parts, and make whatever type of vehicle they saw fit. The team may stumble upon a good car once in and while, but would there be consistency in the design, or would it be so different from day to day that no one would know who made it? What about the features offered on the vehicle? Remember, there are no standards! Without a parts list from approved suppliers, there is no cost control resulting in a clear financial risk to the cost of materials. We will get more into that a little later.
Think
Think about the safety or lack thereof involved in the manufacturing process and the finished product. Would you feel safe with your children in the back seat? The vehicle has not undergone extensive testing of materials, stability, and functionality. I doubt your family will be riding in this vehicle. And finally, will the ‘unique’ design appeal to the market? Perhaps occasionally, those who want to stand out as different will show interest, but will it have far-reached appeal? Not likely!
Conversely, without SOPs to reveal how to create, duplicate, or mass-produce, it is challenging at best. What will result? Quickly, the brand would weaken to non-existence in the consumers’ confidence metrics. The automaker would become a laughingstock and lose its appeal.
The above scenario is far-fetched. However, the principle of risks associated with the absence of good SOPs is the same.
The Point
Many brands that were once dominant in their field are now minimal or nonexistent.
What happened to those once-thriving brands? Many things no doubt contributed to the uncontrolled slide. However, we can use hindsight and see that the ideas and processes that once made them great were abandoned. The operating procedures that were once pillars were not adhered to or altered without being developed with excellent connectivity to the overarching vision of the brand.
SOPs and Economic Impacts
Looking a little deeper into such failed brands’ history reveals that the failure often stemmed from the lack of SOPs that were relevant to the current state of the business or not appropriately utilized to keep the business progressive yet rooted in the purpose or brand.
SOPs that include safety measures will train the employees to move and act safely. The safety features of the SOP will protect employees’ health and safety along with the health and welfare of others in the workplace. In addition, the safety component of the SOP will lead to producing products or services that will provide or encourage consumer or client safety.
Reduction in workplace accidents due to the safety features of SOPs will benefit your bottom line in many ways. First, employee morale or engagement is more significant in a safe environment. No employee is happy when hurting due to a workplace accident. Content, safe employees have greater employee engagement, which results in a reduction in turnover. This reduction in turnover leads to decreased costs. Recruitment, onboarding, new employee training, and the learning curve to productive operations excellence take time and money.
SOPs can lead to fewer accidents which directly impact the bottom line in insurance claims, loss of work, and potential fines and litigation. Without good SOPs the misuse of human capital will be a constant risk factor.
SOPs and Labor Expense Reduction
The absence of SOPs can lead to an increase in labor expenses. How so? What is the common occurrence when assignments are made without explicit instruction on how to accomplish them? The employee literally or figuratively begins to scratch their head and think about what to do. They may ‘Google” it, or they may ask around the office or plant. All the while, time passes by, and nothing tangible is accomplished. Frustration may ensue.
Without an SOP, the same tasks will likely be completed in many ways by different employees, taking a varied amount of time. Wasted labor dollars follow.
SOPs and Brand Identity
True to its core, SOPs standardize what it is you do. The standard approach leads to duplication. Duplication leads to recognition of the product or service you produce. Strong brands have sometimes become synonymous with the item they make. Consider facial tissue. We often call it Kleenex. As though no other brands exist.
A Xerox is what many consider a document copier. Yet, many offices use a variety of other manufacturers’ brands. Customer satisfaction is a result of having a desirable product or service and duplicating it with remarkable consistency. Happy customers lead to a positive brand identity. Strengthen your brand identity by creating and using accurate, well-written Standard Operating Procedures.
So is the risk affordable? Are you willing to roll the dice with your business’s future?
Final Thoughts
We just grazed the surface of potential risks to operating your business without SOPs. There are many more risks to consider.
When is the last time you reviewed your Standard Operating Procedures? Are they current with your practices, products, services, and human capital currently in place?
Get started with Standard Operating Procedures today.
Review the links below to take the next step and begin developing well-written Standard Operating Procedures.
7 Best Practices for Standard Operating Procedures