What’s Wrong with Long Procedures?

The longer you make your procedures, the less likely they will be understood, followed, or used at all.  When your SOPs are too long they lead to confusion.  It can be harder to organize all of the information, it is difficult to keep all of the content up-to-date, and it makes navigation more complex.  Bottom line, longer procedures are hard to follow.  Having people follow procedures is what your SOPs were written for in the first place.  So if your people don’t follow your procedures then why write them?

Business Policy Length

Let’s start with your business policies.  A policy is a guiding principle used to set direction in an organization.  How much space do you need to set direction?  What is the right length for a business policy?

Let’s look at a few examples:

Accounts Receivable Policy

Accounts Receivable Personnel are responsible for the timely preparation, distribution, and collection of invoices to optimize cash flow and customer payments while maintaining accurate records for proper internal control.

Sexual Harassment Policy

The Company is committed to providing a safe workplace free from sexual harassment and as such prohibits the sexual harassment, or gender-based discrimination of any employee.

Warehouse Policy

Warehouse personnel shall count physical inventory on a frequent basis to ensure the accuracy of the general ledger balance.

These three examples are short.  The policy is stated in one sentence.  Of course we could add some meta data to help the reader understand how to apply the policy, find the policy when searching for it in your policy management software, or understand it better.  Adding business policy meta data may increase the length of your policy to one page.

Business Policy Meta Data

Meta Data is information about your content.

• Title: What is the policy going to be called?
• Policy: What is the text of the policy?
• Purpose: Why do we need a policy for this?
• Scope: Who does this policy apply to?
• Responsibilities: Who is responsible for the policy?
• Definitions: Are all terms in the policy clear?
• References: Does this policy refer to other documents?

Business Policies are not Written in a Vacuum

If your business policies are going beyond a few pages then this is probably a scope problem.  You are adding too much information that belongs inside a procedure or work instruction. Your policies set direction.  It’s your procedures that explain “how” to conform to the policy.  Good policy management practices are part of your policy deployment process.  Business Policies are not written in a vacuum, they stem from your business strategy.

Process Procedure Length

A sharply focused business policy helps to develop a sharply focused business procedure.  Long standard operating procedures are very common.  While it may be easier to focus your policy into one sentence, focusing your procedures is a lot harder.  That’s because procedures describe a series of repeatable steps to accomplish an end result.

Process Procedures

Your business procedures describe a process people follow to achieve a specific result over and over again.  Process procedures could be as simple to write as a process map or high level process flow map.  Some companies use process maps as their procedures.  Process maps do not have to be long and frequently are only one page long.

If your business procedures are dozens of pages long then this is probably another scope problem.  You are now adding too much information that belongs inside a work instruction.  What’s important to remember about your procedures is that people must follow them.  Long procedures are hard to follow.  So how do you keep them from getting too long?

Rule of Seven

We use the Rule of Seven to remind us to keep them short.

• No more than 7 procedures to a process
• No more than 7 activities to a procedure
• No more than 7 tasks to an activity
• No more than 7 lines to a paragraph

The Rule of Seven is a simple way to remind yourself that your procedure is getting too long.  It is partly a question of scope.  If you want people to follow your procedures then it is important to break the information up into groups.  These groups are your activities or tasks that must be accomplished.  If you have more than seven groups then it is time to regroup.

Example Business Procedures

What does a short procedure look like?  Check out 19 different sample policies and procedures available for you to choose from to see how you can write shorter business procedures.

Who Needs to Read Business Procedures?

Understanding who is going to read your procedures is important to procedure length.  Your procedures are usually not read by your most experienced workers.  They already know what to do. Your procedures are written for occasional workers that step in for your experienced employees.  So your procedures need to cover the important steps, process criteria, and references to more information.  Procedures do not need to be long.  Use the Rule of Seven to simplify your documentation.  New users require a lot more process details, which belong in your work instructions.

Work Instruction Length

Detailed process steps belong in your work instructions and are used as job aids to remind workers about low level details of the process.  Details include computer screen shots, photographs, data tables, guidelines, and other detailed information.  Separating out low level details from the higher level process description improves the readability, reduces confusion, and makes them easier to follow.  And it also will keep your procedures from getting too long.

Standard Operating Procedure Length

What is the best length for your procedures?  Short.  Don’t try to fit every detail into your SOP.  Instead, use work instructions to shorten the length of your procedures.  Use the Rule of Seven to remind yourself you need to keep it short.  And finally, remember who your readers will be and tailor the information to the reader.

How long should your policies, procedures, or work instructions be?

Writing long policies and procedures documents doesn’t help anyone.  The longer you make your procedures, the less likely they will be understood, followed, or used at all.  Short, simple, and to the point helps to make sure your procedures are used.

Check out 19 different sample policies and procedures to see how you can write shorter business procedures.

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Metrics Start with Data

“I often say that when you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind; it may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the stage of science, whatever the matter may be.”          – William Thomson, Lord Kelvin

To really understand your business you have to collect data about your business and then transform that data into meaningful information.  Data itself is not information.  Finding trends, patterns, or grouping the data is how you produce information.

Do Your Metrics Have Patterns or Trends?

Trends are good things if they are planned for or a result of actions you initiated.  Good or bad Trends that you have no idea why they are happening are a bad thing and require investigation.  Yes, even good trends require investigation.  Trends that magically rise can also magically fall.  Businesses don’t run on magic.

Do your trends suggest it’s time to adjust your targets?  KPIs which are being met consistently for 90 days or more can be an opportunity to raise your targets to reach higher goals.

Alternatively, metrics you are failing to meet for 90 days or more require action — corrective action.  If you are not sure where to start taking action, consider breaking your problem metric into its components to isolate the underlying causes.

On Time Delivery Process Flow

Let’s say you have a problem with On Time Delivery (OTD), which is very common in any business.  This means you are having trouble getting product to your customer as requested.  You can measure OTD as the percentage of orders that ship on time.

If your OTD goal is 99% and your actual OTD is 82% then you are failing to ship 17% of your orders on time.  But the 82% number does not explain a lot because there are five different elements that each can cause some of the delay: suppliers, purchasing, warehouse, manufacturing, and shipping.

You need to measure what the OTD performance is for each element and combine them together to understand where the 82% is coming from.  If each element ranges from 91% to 99% then every area is doing pretty good, right?  So where do you focus?

• 91% Supplier OTD
• 96% Purchasing OTD
• 97% Warehouse OTD
• 98% Manufacturing OTD
• 99% Shipping OTD

Rolled Yield = 91% x 96% x 97% x 98% x 99%   or 82.2%

It is not an addition problem.  The probability of success of each element is multiplied with each other to get a probable outcome for the chain.  This means that you are only as strong as your weakest link.

When we roll the yield together it now becomes pretty obvious where the 82% comes from and where we need to focus.  Suppliers are on time 91% of the time.  If we work on supplier OTD and get it up to 99% then the rolled yield rises to 89%, which is 40% of the problem solved.

In fact, even if every element was on time 99% of the time, the rolled yield would still only be 95%, which means that the only way to get 100% OTD is if every element is at 100%.  Zero defects is the only solution to 100% OTD.  But you start with the biggest OTD problem, suppliers, and then continuously improve the others over time.  This is what business process management is all about.

Are Your Corrective Actions Impacting Your Trends?

Your corrective action should be improving your results; otherwise you are not working on the right things – the root causes.  Of course you may be faced with an intractable problem at some point in time.  So if you are unable to change the trend with a corrective action, then is it a metric you should even track?  If it is then you need to continue to break the process down into smaller elements and measure each one until you find a point you can leverage.  That is your root cause.

Are Your Metrics Strategic?

Where did your metrics come from in the first place? Your metrics should be linked to your organizational strategy, your quality objectives, and your mission/vision/policy statements.   This is how your policy deployment process is supposed to work.  Unfortunately, it doesn’t always happen this way.  Instead you may end up with too many metrics or not enough of the right metrics.

Too many metrics on your dashboard causes a lot of confusion.  Employees can’t focus on too many things at once. When you have too many KPIs then you have to ask yourself “are the metrics providing meaningful data?”  You may be burying the right metrics with a lot of other metrics that are just noise to the process.

When this happens you have to get back to first principles.  What is the mission/vision/policy you are trying to realize?  Consider breaking down the metrics to the ones that matter.  If you have a very lean, stable manufacturing process that is balanced with even flow, then you should be at 100% OTD already.  This is easy, just measure supplier performance because the rest drops out.

Business dashboards, balanced scorecards, or daily flash reports should change over time as a result of effective corrective actions that improve your metrics.  Plan on revising your business performance scoreboard six or seven times before it is contains meaningful and measurable Key Performance Indicators or metrics.  If your management dashboard is not evolving over time, then don’t be afraid to change the scorecard you are using.  If you are serious about your mission, vision, and policies then remember, what gets measured gets managed.

Download sample policy and procedure templates in MS Word as a starting point to developing your won well-defined processes documentation.

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Policies and procedures are never “done” in the sense that they may be declared “complete” and set aside. These documents represent the “good practices” used by an organization to do its work and evolve as the ways of doing business change.

But establishing a baseline set of policies and procedures to provide the foundation for ongoing development is a task that can be considered “complete” when they cover the core processes the organization uses to do business.

Adopting a standard process for developing policies and procedures reduces the need for recurring discussions about how the process should take place. An organization can adopt a process that works across organizational processes, activities and teams.

Putting an approved standard process in writing before the major effort of developing policies and procedures begins allows authors, subject matter experts and managers to focus on the policy and procedure content of the documents.

A Process Template

A standard process for developing policies and procedures provides the example for the work it authorizes and directs. The details for developing policies and procedures should apply to this standard process first.

For example, if each organizational activity is to be governed by a policy and directed by multiple procedures, the policy and procedure development process also must include these same components.

The standard process document should include the set of topics and that must apply to all other policies and procedures for the organization. These topics may typically include:

• Document Organization
• Document Format
• Subject Matter Experts
• Document Review
• Document Approval
• Document Publication
• Document Distribution

Document Organization

The required policy and procedures documents for each organizational activity or process are identified. This topic provides guidance regarding the preferred document types and hierarchy to be used.

This guidance, for example, may direct that a policy and a set of supporting procedures are sufficient. On the other hand, authors may be asked to develop a policy, a process or activity description, procedures, and work instructions.

These decisions are guided by the complexity of the organization’s activities and the level of detail required to clearly describe how work is to be performed.

Document Format

Establishing a standard format for policy and procedure documents saves considerable development time. Document formats should be used which help readers easily understand the requirements of the policy or procedure.

Download Free Sample Business Procedure Templates

Professionally pre-designed document templates may provide the most efficient starting point for developing policies and procedures. Organizations should be aware that pre-designed document templates are generic and may need to be adapted to their specific needs.

Subject Matter Experts

Identifying appropriate subject matter experts who provide the detail for the content of policies and procedures helps authors develop complete and accurate documents. A policy statement for this topic may establish the level of cooperation requested of subject matter experts.

Since policies often relate to the strategic objectives of the organization, subject matter experts for policy development should be representatives of appropriate levels of organization management.

Often the most knowledgeable experts for the detailed content provided in procedures are the people who already perform those activities on a daily basis.

Document Review

Policy and procedure documents should be reviewed by a senior subject matter expert who can provide the assurance that the documents convey the level of detail and accuracy necessary.

Policy and procedure documents reflect approved organizational practices, or compliance or conformance with regulatory or certification requirements. Making sure they are complete, accurate and timely is worth the quality control effort needed to get them right.

Document Approval

Policies and procedures, to be effective, must carry sufficient organizational authority to encourage employee compliance. While a sign-off from the CEO may not be necessary, each policy and procedure should be approved at a level of the organization appropriate to the subject matter addressed by the documents.

Document Publication

Criteria describing what actions constitute the act of publication of a policy or procedure should be established. The act of publication directly relates to when the document becomes effective and how it is made available to those to whom it applies.

Document Distribution

To have an impact on the organization, a policy or procedure must be available to the members of the organization. The location of documents, information about who they affect, the ways personnel may gain access to them, and other details about document availability, retention and eventual disposition should be provided.

Organizations that implement a standard process for developing policies and procedures, and follow that process consistently, are far more likely to succeed in producing the set of policy and procedure documents they need within a reasonable timeframe.

Dave Baldwin is principal at Dave Baldwin Consulting. He has extensive experience as a professional communicator, information designer and process consultant. Dave has worked with a variety of clients in the Software, IT, Telecommunications, Manufacturing, Public Safety, State and Federal Government, Insurance and Financial Services industries. Dave may be reached through his website at www.davebaldwinconsulting.com.

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Definition of an SOP — (Standard Operating Procedure)

A written method of controlling a practice in accordance with predetermined specifications to obtain a desired outcome.  SOPs are written steps to explain good manufacturing practices (GMP), plant safety routines, financial controls to secure assets, or IT security measures that employees are to follow.  SOPs are step by step procedures on how to do something that is critical to quality, critical to safe operations, or critical to security.

Why do we need Procedures?

Regulations may require them as part of the compliance (OSHA, SOX, EPA, DOT, FDA).  Some industries have voluntary guidelines that suggest them as a best practice (OSHA VPP “Star” program, ISO quality, GAAP, IFRS, ITIL, to name a few).  Organizations looking to become “World Class”, the best in their industry, demand them as part of defining their standard work.  Company policies, six sigma discipline, or engineering standards determine the need for exacting consistency.

Procedures Protect Workers

Workers who are following established procedures have more confidence that their actions are supported by management, the underlying statutes or regulations, and that they are following industry best practices.  Using standard operating procedures regularly leads to fewer corrective actions.  If there are legal ramifications to your work, then following your procedures reduces liabilities.

Procedures Protect Customers

Customers are entitled to dependable product or service delivery based on established and accepted measures—not on any one worker’s personal values, and not varying from one geographic area to another.

SOPs and Work Instructions

Writing Standard Operating Procedures

Some SOPs may have a two-tiered system that includes both procedures and Work Instructions.  Your procedures provide a general view of the higher level steps, whereas Work Instructions are significantly more detailed.

One advantage of a two-tiered system is that SOPs change less often, whereas work instructions may need to be changed or updated more frequently due to changes in organizational structure, equipment, or application software.

Designing Procedures

Procedures provide a description of who does what, when.  An SOP characterizes relationships and control measures.  It defines the roles and responsibilities to help workers “find themselves” in the business process.  Procedures clarify different decision points and provide the necessary guidance on criteria to make a decision.

When writing a procedure, make sure to answer the key questions:

• Who does what? (role or person responsible)
• What do they do? (tasks, frequency, to what standard or criteria)
• What is the outcome when they do it? (deliverables, measures, objective results)
• Did you answer what needs to happen, clearly?

Writing Procedures

Begin each procedure step with an “action” verb.  Make sure each step is distinct and make decision points clear.  Procedures use third person language and an active voice construction.  Cause/effect relationships should be clearly defined.  The “flow” of a procedure should move forward over time.  Procedures are not focused on “how to” information, so they should not be too detailed (see work instructions below).

Download free policies and procedures SOP template samples

Analyze your audience and the information they need. Think about who will be reading your procedures. Then define the types of information needed to meet your audience’s needs.  Define the organization of the information to optimize user navigation based on their needs.

Visually distinguish related material so readers can find what they’re interested in fast.  The idea is to keep related pieces of information together.  By breaking the information into related groupings, readers can more easily move from general to specifics quickly.  Remember, most workers know how to do their job and may only need to refer to the procedure for less frequent tasks, error conditions, or decision criteria.

Writing SOPs with Process Maps

During the procedure design phase, determine what tasks need process mapping.  Lay out all the steps currently used in the process to complete that task.  Once a task has been mapped, it should be tested in the field to ensure all the necessary detail has been captured. Process Mapping involves taking each step in the task and making it more efficient and easier to follow.  Once you have finished mapping your process, convert your process map to an outline for easier use in writing your procedure.

Using process maps, graphics, tables, and simple diagrams in your written procedures provide a good visual anchor.  Include the process map developed in the design phase.  Diagrams are a good way to communicate high level and detailed relationships.  Provide reference information as needed for clarity.

Writing Work Instructions

Work Instructions define the “how to” information to complete steps in a task mentioned inside a procedure.  Work Instructions are action-focused.  They may include a “list” of steps, a checklist, or pictures of dials, switches, or computer screen shots with annotations.  Make sure to label the information in a way that tells the user what to expect.  Pictures may speak a 1,000 words but it’s the annotations that clarify the meaning.

Work Instructions focus on “how”—typically on the person new to performing the task vs a Subject Matter Expert (SME).  While procedures usually assume the individual has capability in the general area being addressed – procedures and work instructions are NOT meant to be a substitute for training!

Work Instructions help fill in the blanks wherever information is needed to support processes, procedures, or templates.  Using structured On-The-Job (OJT) checklists demonstrate the proper method of performing tasks associated with a procedure.

The information for procedure or work instruction documents comes from relevant SMEs.  Don’t forget these documents are not just documents; they’re also a way to group important information together.  Procedures and work instruction documents are also auditable for ISO 9001, FDA, financial, or other audits.  If you don’t want it audited, then you may want to consider adding training information that is not auditable.

SOPs and Policies and Procedures

Working in accordance with well-defined Standard Operating Procedures is an important aspect of any quality management system. Your policies and procedures documents are written for Critical To Quality (CTQ) elements within your business with the aim of consistency as the goal.  Your SOPs may have a two-tiered system that includes procedures of the higher level steps and Work Instructions with more details.

Download free policies and procedures SOP template samples that you can use to customize for your organization.  Examples are available from Accounting, Finance, Human Resources, Computer & IT, Sales & Marketing, Disaster Recovery, Security Planning, and more.  Take home  your free sample now.

The post What Are Policies and Procedures-SOP? appeared first on Bizmanualz.

Does Management Use Business Process Management?

From the name of it, BPM sounds like a management discipline.  Yet, when we sit down to document business processes within an organization who is involved?  Typically it is not management or at least not anyone from upper management.

Management takes the approach that the process is static.  Therefore, just have the employees in the process document what they do into procedures.  Yes these are the process procedures, but without management’s involvement what has really been written are work instructions and not procedures.

Management is responsible for company strategy.  Policies are then created to support that strategy.  So management is responsible for translating policy into actions (i.e. policy deployment).

Your procedures should describe a business process in enough detail so that every employee can manage their own process effectively.  Effectiveness is a function of how well they achieve the strategy.  So in order for employees to deliver on management’s strategy, they need to know what the strategy is in terms of their own process results.  It is not enough for an employee to count transactions or hours worked, your employees must account for what was produced or accomplished and then compare those process results to the expected process results that management’s strategy planned.

Policy Deployment

This means, the strategy deployment process must translate management strategy into policies that the workers can use to develop process procedures and process actions (work instructions).  Management is responsible for half of the process – strategy and policy.  Management is also responsible for reviewing process results against strategic objectives and taking action on unplanned results.

Management Process Actions

Changing process results requires a change to the system design.  It is not about working harder.  It is about working smarter.  Management provides resources for change.  Management is responsible for the strategy and business policy.  So management must be involved in BPM change management.

Who is Documenting Your Business Processes?

IT processes are analyzed and developed by systems analysts.  In manufacturing it might be a quality or manufacturing engineer.  These two areas have clearly defined roles to assign your business process management too.  Why is that?

For many people in business, Process Management focuses on the production and distribution of goods, services, and information.  In other words, it is a production, operations, or IT function.    But the concept of process management goes beyond supply chain management, information systems, or manufacturing operations.

Business processes include sales & marketing, accounting, human resources and the rest of the organization.  All business processes are part of a system of processes that interact to ensure orders are turned into cash.  All business processes must be aligned with the organization and tie back into strategy, the province of senior management’s strategy deployment process.

Business Process Documentation

When you first ask your employees to document business processes you end up with policies and procedures, work instructions, and forms describing the work that employees perform.  It tends to be very transaction oriented and focused on the work.

When you ask your employees to look at your business as a series of processes, then you end up with process maps, process interaction diagrams, and subject matter experts involved.  The process documentation is better, focused on the process, but it is still missing how each process interacts with the other in a system of processes and delivering the strategic results.

But if you really want your employees to manage their business processes, then you will need Key Performance Indicators (KPI), measures for strategy attainment, and a workforce team with upper management involved as a member of that team ensuring that business processes are managed for results.  Isn’t that what business process management is all about — management managing and delivering results?

Download free samples of department policies and procedures in Microsoft Word templates.

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Accounting Period-End Review & Closing

An orderly, timely and comprehensive review of all general ledger accounts should be performed or directed by the CFO on a regular basis to ensure an accurate representation of the company’s financial statements.

Typically, all financial accounts are reviewed and then closed out as of the company’s year-end.  These practices are aimed at ensuring that the financial accounts are accurate, and if not, are properly adjusted to make them accurate, prior to closing.

What is an Accounting Review?

An Accounting “Review” refers to the procedures involved in examining the financial statement balances at any given period to ascertain their accuracy.  Accounting is a double-entry system.  Thus, each business transaction has two equal sides.  Your review ensures everything is in balance.

For example, paying an expense decreases cash on the balance sheet and increases an expense on the income statement.  Getting paid for a service or sale increases cash on the balance sheet and increases revenue on the income statement.  Because of this interdependency, the accuracy of the income statement is dependent upon the accuracy of the balance sheet.

Balancing the Balance Sheet

The balance sheet accounts are measured at a moment in time, like a snapshot.  They reflect a total of items at any particular time:  a total of cash, accounts receivable, inventory, fixed assets, accounts payable, debts, investments and earnings retained in the company.

The income statement accounts are measured over a period of time, like a movie.  They represent the sum total of transactions: sales, purchases, payroll, etc.  The difference in sales less all related expenses equals the net income or loss for the period of time being measured.

Balance Sheet Accuracy

It is easier to prove the accuracy of the balance sheet.  Adding up how much each customer owes the store or reconciling cash to the bank statement is a much simpler process than attempting to add up each individual sales transaction on the income statement.  For this reason, more time is actually spent on proving the accuracy of the balance sheet.

Once the balance sheet is proven, the income statement, in total, must be right!  The only errors would be misclassifications, (i.e.: the phone bill could be incorrectly posted to the rent expense account).

The accounts of the income statement are generally reviewed for reasonableness by comparing amounts to prior periods and analyzing ratios.  However, the accounts of the balance sheet are compared to actual totals of items counted (cash, receivables, inventory, payables, fixed assets, etc.).

Accounting Review Responsibilities

It is the responsibility of the CFO, controller or accounting manager to understand these concepts and to take the initiative to keep the financial statements as accurate as possible, regardless of how much an outside accounting service is utilized.

CFO is responsible for creating and reviewing all period-end activities to ensure the period-end financial statements accurately reflect the results of the Company’s activities.  The CFO should be familiar with the specific software procedures for keeping the prior year open until all final closing adjustments have been made and approved by the CFO.

Accounting is responsible for gathering all documentation required to complete the period-end closing and completing all ledger adjustments.

Closing the Open Period

“Closing” is the process of advancing from one month or period to the next or from one year to the next.  In most computerized accounting systems the periods are closed by executing a menu command.  Monthly closings usually involve nothing more than entering the next month and responding to the program’s suggestion to print various month-end reports.  Even after moving to the next month, many accounting systems allow the user to return to previous months to enter or edit transactions.

The yearly closing is more rigorous since it involves re-setting all income statement accounts to zero.  Once a year is “closed”, some accounting systems do not allow the user to go back or open a closed period to make changes.  So be careful, once the period is closed, it is official and any adjustments that are required will need to be made in the current or next open period.

The financial statement is the most important management tool in financial accounting.  An orderly, timely and comprehensive accounting review of all general ledger accounts will ensure an accurate representation of the company’s financial statements allowing for comparisons from one period to the next.  Everyone in management should understand their financial statements and what they mean for the company.

Developing and accounting policy and procedure for Period-End Review & Closing helps to communicate the steps involved in review and closing, the responsibilities for each step, and should provide metrics for a timely closing process.  Download a free sample accounting policy and procedure to use as your own starting point to developing your own accounting policy manual.

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The plan for a process audit is to start out with some general process audit questions in order to determine what the scope of the process is, what the purpose of the process is, and how the process operates.  Now that we understand what the definition of the process is, we can focus on process management audit questions.  Then later we can drill down into product realization specific audit questions.

General Process Audit Questions

When auditing a business process it is important to determine how much process planning has gone into the creation of the process and the system of processes that it belongs to.  Many business appear to throw their business processes together with so little planning that it is no wonder why it is so hard to achieve planned results.

Business process planning means that each element of the process has been determined.  As an auditor we want to understand how much the process participants (employees) understand about their process.  Using SIPOC + PDCA is a good place to start.  The first two questions revolve around process definition.

1. (ISO Clause 4.1) Describe the business process you operate and how it relates to the other processes needed for the quality management system?  (i.e. Turtle Diagram, Process Map, flow diagram, other)

SIPOC

i.      What (S) Suppliers do you have for your process?

ii.      What (I) Inputs are needed for your process? (materials, information)

iii.      What (P) Process steps transform the inputs into outputs?

iv.      What (O) Outputs result from your process?

v.      What (C)Customers receive outputs from your process?

PDCA-SIPOC Overlap

PDCA

i.      (P) Plan: What Policies, procedures, forms, records and other information have been developed for your process?

ii.      (D) Do: What data do you monitor or collect?
(8.3) What is a process defect or nonconformance? How is it documented?

iii.   (C) Check: What criteria, objectives, KPIs, or target requirements do you compare to the data?
(8.4) How do you analyze your process data?

iv.      (A) Act: What actions are taken to (8.5.2) correct or (8.5.3) prevent process defects, waste or nonconformances from occurring?

2. (ISO Clause 4.2) How are these documents and records controlled?

Process Management Audit Questions

A well-defined process will have answers to all of your SIPOC and PDCA questions.  Next we want to understand how the process we are assessing relates to other processes within a system of processes – your process system.  The linkages within an ISO system stem from your quality policy and quality objectives, which are two key results of your management commitment. The next seven questions revolve around process system management.

3. (ISO Clause 5.3) What is your company Quality Policy?

4. (ISO Clause 5.4) What are your company Quality Objectives?

i. How do your process objectives relate to your quality objectives?

ii. How often are your company quality policy and objectives reviewed?

5. (ISO Clause 6.2) What skills and trainingare necessary to operate this process?

i. (6.2.2e) Where are the training records for your process?

6. (ISO Clause 6.4) What kind of safety, security, and environmental precautions do you use at the company?

7. (ISO Clause 8.2) How do you know your customer is satisfied with your process outputs?

8. (ISO Clause 8.4) Can you describe the latest analysis of your process and systems data?

9. (ISO Clause 8.5) How do you know your corrective and preventative action process is working?

Product Realization Specific Audit Questions

An effective process management system is obviously well managed; otherwise it would not be effective.  Next we drill down into manufacturing (or service) specific questions to understand what the production system looks like.  The last six questions revolve around product realization or manufacturing management.

10. (ISO Clause 7.2) What are the customer requirements for an order that moves through your process system?

11. (ISO Clause 7.1) What is a process system defect or nonconformance?

i. How do you test for process system defects and make sure nonconformances don’t happen?

12. (ISO Clause 6.3) What equipment do you use to operate this process?

i. (7.6) How is it calibrated?

ii. What do you do if you find it is out of calibration?

13. (ISO Clause 7.5) What process controls are in place to make sure nonconformances don’t happen?

14. (ISO Clause 7.3) How do you use design input, review, verification, validation, and change records to ensure your process system outputs meet requirements?

15. (ISO Clause 7.4) How do you communicate your process input needs and/or problem materials to purchasing?

The PDCA process approach is all around us.  It is used for business process planning, BPM, and to determine the ability of the process system to achieve planned results — process effectiveness.  We do this using a process audit, which starts with general process audit questions, expands to process management audit questions, and ends by drilling down into product realization specific audit questions.  ISO process auditing is all about process effectiveness and the ability of the process system to achieve planned results.

Download free examples of policies and procedures from each policy and procedure department manual.  Examine 19 different samples to see how easy it is to use Bizmanualz pre-written templates.  Or call to inquire about ISO Auditing, ISO Consulting, or ISO Training Services for your organization.

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• Ensuring that employees are paid a fair wage for their efforts, combined with a benefits package that compares favorably with standards for businesses similar to yours;
• Respect is important to employees — they need to know their efforts are appreciated;
• Respect for their management team; and
• Having a sense that they will be individually and collectively treated in a fair, lawful manner.

Employee Performance

The company can communicate employee appreciation through performance appraisals, or performance reviews.  Employees want the opportunity to hear how they are doing in comparison to what you expect from them and how they might compare to other workers in similar functions.  Developing individual and group performance standards is an essential ingredient in employee relations and retention.

Performance standards should be clear, concise, consistent, and in writing.  Effective performance appraisals are objective, assesses employee potential, identify opportunities for improvement, allow for compensation review, and can be used to identify training needs.  They can be a powerful motivator for the employee, if used correctly.

The employer needs to decide on how they will administer base pay and incentive or bonus programs, as well as when pay and performance will be reviewed with the employee.  Most compensation packages (in small to mid-size companies) include Salary + Incentives + Benefits.  A reasonable and common relationship is Salary (65%) + Incentive (5-8%) + Benefits (27-30%).

Employee Benefits

The compensation function falls under wage and salary administration.  This includes establishing pay rates and grades, establishing job classifications for pay, compliance with state & federal minimum wage laws and annual reviews of your company’s position with regard to pay and benefits as compared with national and local businesses similar in nature.  Market salary surveys can be purchased and will provide valuable comparative information on a local, regional, national, and line-of-business basis.

Another key employee relations ingredient is deciding which benefits to provide.  Legally required benefits include:

• Social Security;
• Medicare;
• Unemployment insurance;
• Workers’ Compensation (insurance for work-related injury);
• Federal and/or state leave laws (e.g., FMLA); and
• Continuation of group health insurance coverage after termination (e.g., COBRA).

Insurance programs are normally offered to employees (and are sometimes mandated by law).  Most plans for employee insurance benefits include medical, hospitalization, vision, dental and life insurance.  The company, the employee, or a shared form of contribution by both the employee and company may pay for the insurance program.

Other benefits may be included, though they are not required by law, as additional incentives. (Generally, if such benefits are offered to one employee, they must be made available to all employees, in accordance with anti-discrimination law.) These benefits include:

• Retirement and pension benefit plans (e.g., 401K);
• Employee stock ownership plans (ESOP);
• Defined benefit plans (a monthly pension payment upon retirement); and
• Defined contribution plans (money periodically deposited by the company into an employee’s individual retirement account).

Other benefits include payment for time not worked (e.g., vacation, sick leave, long-term disability (LTD), holidays, bereavement). It is important to note that employers are not required to give any Federal or state holiday as a day off, with or without pay. However, all employers are required to excuse employees for military leave and jury duty (and in some states, time off to vote); review your state laws for exceptions.

Companies with generous benefit plans might also include legal insurance, tuition reimbursement, payment toward credit counseling or psychological counseling, and reimbursement for parking and transportation.

Benefits are very important to the employee.  Your benefits program sends a direct message to your employee community — it tells them how much you value them.  It tells them if you think of them as assets or liabilities.

All of these issues are covered in the Human Resources Policies, Procedures, and Forms manual from Bizmanualz. It provides a great start for any growing company.  It’s well researched, covers the core human resource management issues, provides guidance and sample forms, and even includes a sample Employee Handbook.  Check it out the free HR sample policies and procedures and let me know what you think.

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What is The Process Approach?

A well defined business process is made up of a series of steps used to transform inputs into outputs.  This business process transformation is depicted using a SIPOC diagram (see graphic).

SIPOC and PDCA

SIPOC PDCA Diagram

The SIPOC is an acronym for Supplier (S), Inputs (I), Process (P), Outputs (O), and Customer (C).  Every input to your process has a supplier that provides it to the process.  Your business process converts the inputs into an output for a customer.

The graphic also has a red “feedback” line from the customer back to the process, which we use to compare the feedback to the processes objectives.  Your customer’s feedback is critical to developing a controlled process.  Without feedback and criteria you end up creating a “ballistic process” instead of a controlled process.

Ballistic processes blindly transform inputs into outputs.  By adding process criteria, targets or objectives with feedback you transform a ballistic process into a controlled process.  The goal of managing your business processes is to have controlled processes that are designed to achieve your strategy.  Process feedback is what we measure, monitor and take action on to achieve control.  Process criteria are what we compare the feedback to for that control.

PDCA and the Process Approach

PDCA is an acronym for Plan, Do, Check, Act.  If we overlay the “P” of PDCA with the “P” of the SIPOC diagram we get an easy graphical acronym for all of the elements that need to be present to ensure a complete business process management definition.

PDCA-SIPOC Overlap

The PDCA elements remind us that business processes need Plans (criteria), along with Doing (feedback data), an important Check step (comparison of feedback to the criteria), and finally Actions that are derived from the feedback we receive and how close we are to the criteria.  The action step provides the needed correction to demonstrate the process is under control.

The Business Process Management Process Approach

Add the two together and the SIPOC + PDCA acronyms make a complete set that reminds us of all of the elements that are needed to demonstrate that business processes are managed.  The process approach to BPM is all about creating controlled processes using PDCA and SIPOC to define, measure, monitor and control.  That is business process management in action.

Download free examples of policies and procedures from each policy and procedure department manual.  Examine 19 different samples to see how easy it is to use Bizmanualz pre-written templates.

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Business Process Management (BMP) Defined

Managing business processes requires a complete understanding of the process.  How are your processes determined, defined, and communicated?  How are your processes monitored, measured, and controlled to deliver planned results?  When an auditor comes in to assess your business process management they are looking for four things.

1. Are company processes defined?
2. Are organizational processes monitored?
3. Are workplace processes measured?
4. Are your business processes controlled?

Company Process Definitions

Business Processes

Your company processes can be defined using a number of methods.  The simplest is to use a process map to depict your main business processes, the sequence and interaction of each process step in a business process, or to communicate the process conversion steps that occur to turn the process inputs into outputs.  A well defined process means to identify the main elements of the process: the process owner, process inputs & outputs, key process steps, and criteria, measures or requirements.  When we are talking about PDCA (Plan, Do, Check, Act), process definition is part of the (P) planning step.

Organizational Process Monitoring

Just having a process defined is great but, your process is intended to produce a result too.  Your shipping process is intended to distribute your products to your customers.  Someone needs to monitor the process to make sure that your products are getting to your customers.  Usually this is the process owner or somebody in management.  Process monitoring ensures the process produces outputs, but it may not ensure that the process produces good output or achieves the planned results.  Process monitoring is part of the (D) Doing step in PDCA.

Workplace Process Measures

To achieve planned results you must measure the process and take actions to move wayward processes into producing good outputs.  What does “producing good outputs” mean?  It means you must measure the right stuff.  Monitoring your processes is important but if you don’t measure the right things then you may not get the right results either.  Measuring requires that you have a target or goal defined.  Common goals include On Time Delivery, % order complete and accurate order fill rates. Measuring is all about comparing your collected data to the target.  Process measures are part of the (C) Check step in PDCA.

Business Processes Control

Are your processes effective?  Process control is all about taking action to ensure your process is effective and achieving planned results.  This means you have to have a defined process in place that establishes that  the process is monitored, your process is measured against a target, and you have the ability to take action to correct your process from producing bad results.

Process control is the goal of any process measurement activity.  It is the focus of the process approach of the ISO 9001:2008 quality standard.  Process control is part of the (A) Act step in PDCA.  If you are intent on real business process management, then business process control is what it is all about.

Making Business Process Management Easier

Many business processes are poorly defined, but this can be fixed.  Start by creating process maps for all of your core business process.   Creating process maps is the first step to improving your business process management.

Most business do not do a very good job of monitoring their processes.  Do you know what all the defects are that can and do occur with your core business processes?  Using your process maps to identify critical data to monitor is the next step in your business process improvement journey.

If most businesses do not have process maps and do not monitor their processes, then how did they determine the measures for their business?  And if the measures do not come from your process maps and your monitoring, then what kind of a measure is it?  Predominately lagging measure of success like revenue, profit, or inventory turns.  What you need are some leading indicators of success like new customer formation, repeat business (which leads to lifetime customer value), or sales cycle closing time.

Your PDCA cycle culminates in taking appropriate action, but what’s appropriate is relative to the measure of success you are following.  Follow the wrong measures and your perspective of appropriate actions changes.  Finding measures to your business is a lot easier once you have followed a PDCA path of define processes, monitoring processes, and then measuring your processes.

Controlled Business Process Management

The whole journey builds on itself and requires that you follow each step.  Skipping steps may feel like you are saving valuable management time but in reality, you will end up following measures that will lead you to take less appropriate actions over time and thus cost you more in the long run.  What’s hard about business process management is understanding what appropriate actions are that you need to take to correct your processes back towards achieving planned results.

Don’t skip steps.  Plan, Do Check, and Act appropriately.  Achieve planned results.  That’s the formula for business process success.  Download free sample policies and procedures to see how it’s done.  Then order department policies and procedures that you need to improve business process results in your company.

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