Reasons why you should develop your own Standard Operating Procedures

My management philosophy places a great emphasis on standard operating procedures (SOP). This document is tedious and time-consuming to develop, but once in place, can save your company a lot of costs and decrease operational inefficiencies. The common misconception is that a small-scale company doesn’t require SOPs, and this is where the problem initially starts. Years later when they try to scale up their business, they’ll realise that reverse engineering is almost impossible or too costly as the operation processes are too badly intertwined. This bottleneck is the major cause of why many companies fail to scale despite having great products.

SOPs ensure consistency across an organisation and it streamlines the tasks to be executed. A great SOP is more than just a list of tasks that has to be executed accordingly. It needs to fulfil these few aspects below to actually be truly beneficial to an organisation.

  • Precision

This attribute can be achieved by asking the 5W1H questions – Why? When? Who? Where? Which? How (much)? These details have to be as accurate as possible so that when you show them to a dummy, it will be able to understand and execute it without further instructions.

  • Risk Management

If a risk can be anticipated, steps and countering methods can be written down to mitigate the risk and to guide the employees on the appropriate approach when the issues arise. This also intends to minimize discrepancies within the business such as thefts, damaged items, fraud, system incompatibility and etc.

While the top management might be able to highlight risks which are not necessarily obvious to the employees working at the frontline, they could miss out on the lower-level risks which are only known to the employees. This kind of risks should never be ignored as they could induce a huge direct or indirect costs and they’re much easier to mitigate.

I find interviewing the employees under an environment where they’re given enough room to think to be particularly useful to identify these minor risks. Sometimes, to be able to spot these risks, one has to be highly intuitive.  A risk analysis can then be done by creating a risk table which essentially consists of the severity, the cost of the consequences and the probability of the risks to happen. Pareto Principle or the 80/20 rule can then be used to further optimize the spending on risk mitigation.

  • Hierarchical Structure

A list of person-in-charge and their roles and responsibilities should be included in the documents. This is essential in the case when escalation of decision-making is inevitable. It also maps out the reporting relationship within the organisation which will increase the efficiency of communication and enable faster reaction in the face of crisis.

  • Up-to-date

The SOPs of a company should always stay updated to fit the business needs and requirements. If strictly following the SOPs incurs greater costs to the business, the validity of the SOPs should be questioned and the top management should take time to revise the SOPs. Companies should nurture an environment in which employees are encouraged to voice out their own opinions on how their routine work can be done more efficiently and effectively.

I always use the ‘elephant with matchstick legs’ metaphor to address the state of a company which the business internal processes and controls can no longer support its progression. Documents like the policies and procedures and SOPs are supposed to handle this problem, but they’re often overlooked or underenforced. If you’re having problems managing the performance of your employees, try developing and enforcing the SOPs. You’ll be shocked at how effective the SOPs are in tackling this issue.

A Month into My Job as a Change Management Manager

Carlos Ghosn a.k.a. Le Cost Killer which literally means ‘The Cost Killer’ is a prominent businessman who had steered Renault and Nissan from their darkest days to the state of where they are today. Unfortunately, he has become a sacrificial lamb as the Japanese government retaliated against the hostile takeover of Nissan contrived by the French government.

Ghosn was ‘airdropped’ to both companies when they were in a dire state. He turned the situation around, paying off massive debts and the companies soon became profitable within a few years time. On the Chinese news platform Jinri Toutiao and the Chinese equivalent of Quora – Zhihu, some people regarded his work as downright effortless and attributed his success to his boldness when it comes to cost-cutting. Since he was airdropped into the companies, he was not afraid to lay off employees and conduct the sell-off of unprofitable businesses. He had also achieved cost reduction through process optimization.

I personally admire his courage in revitalising the companies, bringing them back to recapture the global automotive market share. The company which I am currently working at now is haunted by operation inefficiencies, chaotic hierarchy, security loopholes and mounting-up-costs. In the last month, my team and I had been restructuring the organisational hierarchy, centralising recruiting process to avoid improper recruitment, enforcing the recording of work done to ease monitoring process and making it compulsory for the business leaders of each division to prepare constructive reports for the group managing director. Over the next few weeks, we are going to revise our company policies and procedures to ensure firm control over our business operations.

Some of the divisions are already under life support but I feel like there is a general lack of understanding of the current state and the sense of urgency. It is the culture of Sarawak that has been holding the top management back. The need to portray our company as being humane and considerate prevents us from taking immediate action. This is made worse by the fact that we have not done much on corporate branding when it comes to recruitment so far. In other words, we have a problem with acquiring talents. I metaphorize this as stopping a dying person’s blood transfusion process. I personally would suffer a serious burnout of enthusiasm if I do not get to work with competitive people.

I really hope that I can turn the company around before I leave as this would have been an impressive accomplishment on my resume. Perhaps after a few more months, I’ll be able to write a more informative and comprehensive article on change management. That’s it for now, ciao!

 

 

Abel

Traits of a True Leader

In an organisation, opinion is like a two-edged sword. Too little of it and you will have a non-functional group; too much of it will turn your group into something not less than ants without any direction. This is the reason why we need someone who is able to prompt a discussion within a group of people on top of being able to listen to the opinions of the people in order to make the best decision — a leader. But, to be a true leader, it certainly takes much more than being able to lead as your other capabilities are also being assessed. Let’s proceed to answer the question of the century: what makes a successful leader?

Being able to understand the strengths and the weaknesses of the team members

A leader must be equipped with a certain amount of human resource knowledge. This idea is similar to the talent management system being taught at most of the business schools. Frankly put, a good leader will have to act like a bus driver who must be able to get the right people into the right seats on the bus so that he can drive it safely and efficiently. In any organisation, a person who sits in the wrong seat is a waste of resources and time, apart from possibly deterring the right person from doing what they are good at. By not taking any action to solve the aforementioned problem, a ‘leader’ is actually being selfish because he is wasting the employee’s time and opportunity to possibly land on a more suitable job offer. Before you could even realise, your organisation would already have lost the perfect opportunity to make a major leap.

Let even the smallest voice be heard

In a team, inevitably, there will be some people who hold their ideas too dearly and they refuse to listen to the other members, especially those with a shy and quiet nature. To be able to filter out the noises and to get to know the opinions of every member before an unbiased decision can be made is something that we would expect from a true leader. If a leader is a noisemaker himself, then I would like to send my deepest condolences to the organisation that he is involved in, because this would mean that it will not be long before everything falls apart. A leader does not necessarily have to be the smartest person in a team, as long as he is willing to listen to the other people before making any decision.

Lead with an iron will, speak with humility

In the business world, a true leader needs to have an iron will to be able to convince the shareholders that he has the capabilities to deliver what he has promised. An iron-willed leader can also pave ways for the organisation and be more ‘wolf-like’ rather than ‘sheep-like’, which is essential for the survival of any organisation. On the other hand, he needs to stay humble to be respected by his teammates. A leader who speaks with humility is also more likely to show his results through his actions rather than his words. As we always say, action speaks louder than words.

Look out of the window, look into the mirror

A leader will always look out of the window when he is giving credit, and look into the mirror when something goes terribly wrong. This might seem to be counterintuitive at first, but if you really look into it, it makes perfect sense. A leader receiving credit on his own not only is despicable, but he also traded away the trust of his fellow teammates. If he credits his teammates instead, it acts just like rocket fuel, encouraging his team and motivating them to go a mile further while working for their own organisation. By looking into the mirror, a true leader will have to take full responsibility for a catastrophe even though he might not even be involved in it. By doing so, he can prove himself to be trustworthy and dependable within his organisation and this can make the good workers stay for a longer time. Right people are the most valuable assets of an organisation, to lose them is just another way of sending your organisation to its own demise.

These are a few uncommon traits which inexorably propel a common ‘leader’ to become a truly world-class leader. Jim Collins even went as far as classifying them as the Level 5 Leaders to attribute their uniqueness.

 

That’s it from me this time.

 

Talk soon,

Abel

 

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