Companies in all industries, big and small struggle with SOPs. Many people see Standard Operating Procedures as monotonous documents that do not add real value to the company. I only discovered the value of SOPs after something BIG happened in a company that didn’t have SOPs.
What Happened When My Company Didn’t Have SOPs
My first full-time job out of college was at a financial consulting and advisory firm. The owner and founder of the company was my professor and mentor. Although we were a small company (3-4 employees with multiple consultants), we were innovative. We created training and resource platforms for the CFO. We coached CFOs to be financial leaders. Our website moved mountains and connected customers from over 20 countries together. We had a lot of momentum, and we were just getting started. However, the majority of our business processes were not written down and were stored in our owner Jim’s brain.
Then the unthinkable happened… It was a Thursday morning. We had a meeting scheduled to take our coaching program to the next level.
My phone rang…
“Lauren, Jim passed away last night.”
After the shock of losing a friend, valued boss, and former professor subsided, I said these words… “His brain. All the information is gone.”
25 + years of experience, ideas, strategies, processes, and memories… Gone.
And unfortunately, we had not recorded or documented internal processes making it very difficult to operate without the expert.
While it is difficult to anticipate the loss of the brains behind a company, especially at the young age of 60, you need to be prepared by documenting day to day operations, and long term plans and goals.
What Happens When Your Company Doesn’t Have SOPs
When a business has and uses Standard Operating Procedures (SOPs), it is usually a sign that they have defined business strategy and can articulate how they want their business to evolve and grow. It also indicates that the company is sophisticated or at least anticipating becoming more sophisticated. SOPs act like the keel and rudder of a boat which keep the boat or ship sailing in the desired direction.
Companies Become Coracles
Companies become coracles.
What are coracles? And what has it got to do with SOPs?
To answer this question, have you ever seen a boat without a keel or rudder (check out a cwrwgl or Welsh Coracle)? Coracles – an ancient watercraft – are round, flat-bottomed boats with no keel or rudder. They may be fun for playing on a river or catching salmon, but they never or rarely carry more than one person. They are also difficult to paddle in a straight line (some say impossible) – which is always the shortest path between two points.
Business operations without SOPs are modeled after a coracle. They may operate well so long as the person running the company (paddling the coracle) is always there. But if they become ill, die, or simply quit the company, then what happens?
No one else in the company can paddle the coracle.
Many will try. Most, if not all, will fail because it requires a special skill – one that isn’t written down. So the business, just like a coracle without a skilled paddler, will lose direction. Perhaps even go around in circles, until someone grabs a rudder and shouts “enough!”.
Ultimately, we need to define and document how we work, where we are going, and how we will get there.
Companies Don’t Fire The Sacred Cow
Another thing that happens when your company doesn’t have SOPs is that you might have a difficult time firing employees that do not meet certain standards. These employees manage to stick around because they…
- Have been around forever (or at least it feels that way)
- Possess knowledge about essential processes and are often reluctant to share it
- Retain key information about clients and products
Can you picture that person? We like to call them the Sacred Cow. They run havoc in the company because they manifest all the processes and are unwilling to share.
As a result, these individuals often hold what they know over the company’s heads, which makes it difficult to fire that employee.
Silos Form Between Departments
Companies often use SOPs to facilitate cross-department training. Different departments understand how others work and what they need from them. It helps create transparency inside of the business therefore, breaking down the invisible walls in the company.
But when a company doesn’t have SOPs written and a part of the culture, silos form.
Why are silos in companies bad? Silos create division, make it easy to hide inefficiencies, and make it incredibly difficult to make any meaningful change in the company.
For example, I once worked with a company who had multiple offices that needed to be on the same page with their processes and systems. Without SOPS, there was inefficiency in how they conducted business and allowed for operational vulnerabilities that might have major effects.
Operations Stop When Key Employees Are Out
Sick days, vacation days, and life events happen. It’s a natural part of company operation. Without SOPs, operations stop when those key employees are out.
A couple sick days may not hurt your operation. However, 6 months of medical leave, maternity/paternity leave, or winning the lottery and disappearing to an island will have serious consequences on your operation.
Company Disasters Can and Do Happen
When your company doesn’t have SOPs, it creates an opportunity for disaster to occur – some of which are irrecoverable. Although unpleasant to think about, think about companies that were in the path of a natural disaster… Whatever the disaster, if those affected companies didn’t have SOPs to respond to the disaster, then it would be highly unlikely that they would last more than 6 months to a year… If that. Even if in these disasters, no one was hurt (or even died), the likelihood of survival after disasters without SOPS is unlikely.
Company “Innovation” Isn’t Innovating Anything
When you don’t have anything written down, any innovation you try to enact doesn’t really innovate anything. Instead, it’s often reinventing the wheel (and makes more work for yourself). It’s difficult to see what needs improvement. An innovation that isn’t documented rarely gets into production and even more rarely becomes your most successful…
If you innovate something but can’t reproduce it because you didn’t document what you did and how, is that an innovation or a disaster? Only you can decide. That innovation could have been your first, or next million dollar product. But if you can’t recreate it, then it has a business value of exactly $0. Think about it… You may not like to create documentation. You may not even be good at it. But if you don’t do it and don’t create SOPs, then it could be a very costly mistake. To help, we’ve created the Easy-To-Implement Scalable SOP Framework that you can access for free.
When your company doesn’t have SOPs, it creates an opportunity for disaster to occur.