Business schools teach that having a standard operational procedure (SOP) manual is a best practice. Over eight out of ten companies use formal policies and procedures manuals, a survey of over 1,000 business owners found. But less than three percent of workers actually use their company’s SOP manuals after their initial training period. This is a mistake that fails to take advantage of the important benefits that SOP manuals offer. Having your standard operating procedures documented makes it easier to train new employees, saves time, makes your business more scalable, reduces your liability risks and adds market value to your company. Here’s a closer look at some of the reasons your company needs a documented operations manual.
Training New Hires
The most widespread use of operational manuals is training new employees. Having employees study the company’s SOP manual during the on-boarding process is an excellent way to familiarize new hires with a company’s policies and procedures. It can increase training efficiency by anticipating frequently-asked questions new employees have, which reduces the amount of time other employees need to spend answering questions.
One company that makes highly effective use of its SOP manual to train new employees is Apple. When an Apple Store hires a new employee, the employee receives training from a Genius Training Student Workbook. The workbook provides a comprehensive guide to understanding customers and ensuring customer satisfaction. It covers everything, from how to empathize with customer concerns and troubleshoot common problems to what language to use. All new employees must complete a training course based on the workbook before they are allowed to represent Apple to customers. The training includes role-playing exercises to practice the procedures taught in the workbook. This detailed training procedure helps explain why Apple Stores have such a strong reputation for customer service and why Apple is one of the top companies in the world.
Another big benefit of an SOP manual is saving time. When new employees have reference material available, they know where to go when they have questions, enabling them to get answers more quickly and wasting less time. At the same time, they don’t need to ask as many questions of other employees, saving these workers’ time as well. Additionally, a standard operational manual saves time for experienced workers who have questions or need a review.
Technological documentation provider Radcom describes a case study of a large manufacturing company that illustrates how a training manual can better leverage company time. The manufacturer was losing veteran workers due to retirements and plant closures, resulting in years of accumulated knowledge lost. The client needed a way to preserve this invaluable knowledge and avoid the enormous waste of time that would have resulted from new employees trying to relearn this information from scratch. To capture this knowledge for future employees, the company followed Radcom’s recommendation to create a comprehensive training manual to serve as an initial training and ongoing reference resource. Radcom compiled the manual by interviewing veteran workers, reviewing existing instructions and photos and participating in procedures so as to better observe the processes to be documented.Business Loans from $5,000 to $500,000—Apply Now
Making Your Business More Scalable
A documented operations manual can also make your business more scalable. When your procedures are documented for reference, it’s much easier to implement the same procedures on a larger scale or at other locations. Expanded staff or employees at other branches can simply replicate the same procedures already in place instead of trying to reinvent the wheel.
One company that has met enormous success using standard procedures to scale up is McDonald’s. In 1954, paper cup salesman Ray Kroc visited a San Bernardino restaurant run by Dick and Mac McDonald and was impressed with how many drinks they could mix in a short time using a new product he was selling called the Multimixer. He also noticed that the McDonald brothers operated very efficiently by using a limited menu, which enabled them to focus on delivering high-quality and fast service for a small number of items. Kroc realized he could study and standardize the restaurant’s procedures for reproduction across the country. Kroc became the McDonald brothers’ new sales representative, and by 1958, the company had sold 100 million hamburgers. Today, McDonald’s is a multinational empire and one of the most-recognized brands in the world, thanks to the scaling method pioneered by Ray Kroc.
Another major reason for creating a standardized operations manual is to reduce liability. If one of your employees or customers suffers financial loss or injury because of one of your products or services or because of a procedural or safety issue in the workplace, one factor courts will use to assess liability is whether you had standard procedures in place to prevent problems. Having a documented SOP manual is one of the best ways to demonstrate that you took adequate procedural cautions to comply with regulations and take adequate quality control and safety measures.
Since your manual can have legal implications, it’s wise to have your legal counsel and other experienced professionals assist with planning and reviewing your manual. A poorly-written manual can expose you to liability risks, says the Lawyers Mutual Liability Insurance Company of North Carolina. The National Federation of Independent Business’ Legal Foundation provides an online manual template that companies can use as a basis for creating their own procedural handbook.
Adding Market Value to Your Company
A final reason for having a documented operations manual is to add market value to your company. In the event you ever sell your business, your successor will need to know how to take over your operations. Providing documentation is one of the easiest and most efficient ways to assist your company’s new owners and their staff in learning how to run your operations. You can feature the existence of your operational documentation as a selling point to add more perceived value in the eyes of potential buyers.