How to Create Standard Operating Procedures (SOPs) For Your Business, and Why It’s SO Important That You Do
You know why people go to McDonald’s? Because they always know what they’re getting.
There is possibly no harder lesson for an entrepreneur than how to create a series of standard operating procedures for their small business. However, not learning it can hurt your business at the very least, and kill it at the very worst.
Creating SOPs for yourself, employees, or anyone involved in your business almost seems wrong to the entrepreneur, because a large part of it goes against the very reason you became one in the first place — to have ultimate control of what you’re building, with the ability to change it as you see fit. But I’m going to show you how that’s actually a fallacy — Even though you still have that control, a big part of creating SOPs does in fact focus on relinquishing functional control. This sounds frightening, especially if, like me, you have trust or control issues. (The “no one else can handle this like I can” disease.) But functional control different than creative control or directional control. Relinquishing functional control simply means letting go of the day to day busy work to focus on and tackle larger issues within your growing company.
The fact is, if you’re not willing to relinquish the majority of functional control over the day to day running of your business, you’ll spend all your time on those day to day tasks, and never be able to focus on actually growing your business. That’s a problem.
Here’s why you’re still in control: If you create standard operating procedures for specific areas of your business, you’re essentially teaching your employees how to do what you want them to do, leaving no room for error. In other words, you’re creating fool-proof versions of you, which can handle 99% of the day-to-day stuff without fear of a system malfunction.
If you walk into a McDonald’s in downtown Tokyo, the french fries are going to taste exactly the same as if you’d ordered them at the McDonald’s on 34th Street in New York City. Why? Because in addition to the french fries having the same ingredients, every employee at every McDonald’s around the world has been taught the exact same way to cook the fries, based on McDonald’s SOP for fry-making. From how to load the boxes off the truck, to the temperature of the freezer, to how many fries go in the frier at a time, to the temperature of the oil, to the amount of shakes of the salt shaker after they come out of the fryer. End result? Yummy McDonald’s fries, that taste exactly the same, whether you’re at the Golden Arches in Bangkok or in Boise. The directional control of McDonald’s corporation hasn’t been affected, nor has the creative control. The functional control hasn’t changed, either. It’s simply been standardized.
So how do you do it?
Effectively creating (and implementing) SOPs for your business comes down to three basic rules: “Hiring well,” “target fixation,” and finally, “if/then clarity.”
Hiring well: Hire people, not robots.
While this may sound like the antithesis of the kind of people you want following SOPs, the fact is, robots (or “yes-men” employees) lack empathy, a critical cognitive function that is absolutely required in an entrepreneurial endeavor.
In giving employees a series of standard operating procedures, it’s imperative for them to know that while these are hard and fast rules to be followed, common sense can trump these rules when required. (Imagine a car that detects an object in front of it and calculates that you’re not paying enough attention to stop and overrides your foot on the gas, stopping the car before an accident. It’s the same theory.) If you hire well, you can feel confident that your employees will follow your procedures to the letter until a situation arises where doing so would harm the company. Those are the kind of employees you want. If you need to revamp how you think of hiring, do so. Top hotel chains know that they can teach employees how to make bed sheet hospital corners, but can’t teach empathy, so they hire for people, and teach needed skills.
Example: Say you have a situation where someone wants a refund on a product they ordered from you. The SOP might have a list of six criteria that have to be met in order for a refund to be processed. For 99% of refunds, this SOP is perfectly fine. But for the one exception, it could be a disaster. Comcast is famous for this, as they often continue to bill the deceased for cable services, and refuse to budge, creating tons of bad will and PR nightmares. If you’re a small business, “not budging” could be the kiss of death, especially if it’s for a ridiculous reason. Hire smart people who understand that there are times to disengage the SOP autopilot. Added bonus: If they understand that they won’t get in trouble for making their own decisions on when to do this, the chances of employees abusing that power go way down. This was covered with Ritz Carlton in Zombie Loyalists last year.
Focus on “target fixation.”
In any other situation, target fixation is usually a bad thing. When I’m skydiving, target fixation means this: “crap, there’s a tree on my final approach. I should avoid it. OK. Let’s land somewhere else. I need to stop looking at that tree. Damn it, where should I land? And why am I still looking at that tr…” And now I’m hanging from a branch 25 feet above the ground because I didn’t find another place to land. I focused on that stupid tree.
The well-hired employee, however, has perfect target fixation. For them, the target is completing the SOPs in the allotted time, and doing so perfectly, every single time (barring the override situations noted above.) This is what you want. Teaching employees to focus on target fixation does several things:
It guarantees the SOP will be done exactly how it’s supposed to be
It relieves the stress of the boss (you) who no longer has to worry about things not working
It allows for that employee to easily up-train a new employee, while also providing relief in case that employee is no longer viable (fired, quits, gets hit by a pie truck)
Target fixation works in every SOP situation, it does not work in creative or directional control situations. For functional SOPs, however, target fixation is a beautiful thing.
I’ve spoken to countless entrepreneurs who have implemented SOP situations in their business, and the “if/then” clarity rule is the most hotly debated. The two sides of the argument are:
I need employees to do their jobs, they don’t need to know why I want things done a certain way
I want my employees to understand the value they bring to my organization, as I believe that will make them better employees. If they feel they’re contributing towards the growth and success of the company, and are rewarded for their work, they’ll be better employees.
Of course, I fall into category two.
It’s here where I, yet again, bring up my favorite story of the baboons at the zoo.
Week 1: Place six baboons in a room. On the ceiling fan, place a banana. Every time a baboon tries to reach for the banana, spray all the baboons with an ice-cold shower. It doesn’t matter who reaches for the banana; all baboons get sprayed. After a week of research, no baboon in the room will attempt to reach for the banana.
Week 2: Take out one of the baboons and introduce a new one to the room. The first thing that the newcomer will try to attempt is to reach for the banana on the ceiling fan. However, he will face great aggression and intimidation from the other baboons, since they, of course, know that the new baboon’s attempt will be followed by the ice-cold shower. (In other words, the old baboons will beat the hell out of the new one.) After a while, the newcomer will stop attempt- ing to reach for the banana, since anytime he does so, he’s beaten up by five old-timers. He doesn’t know why he’s not allowed to have the banana, just that when he tries to grab it, he winds up in a lot of pain.
Week 3: Take yet another original baboon out of the pack, and introduce a new one. Observe the same scenario. Also, observe the newcomer from Week 2 admonishing the new baboon not to reach for the banana.
Week 4: Same thing. Now you’ve got three baboons from Week 1 and three new baboons.
Week 5: Same thing.
Week 6: Same thing.
Week 7: This is where it gets interesting. A brand-new baboon is introduced, and none of the original baboons who were in Week 1 remain. In other words, not one baboon now in the cage has ever been on the receiving end of an ice-cold shower. However, observe how aggressively the newcomer will be “advised” when he tries to reach for the banana.
So why doesn’t any baboon reach for the banana?
“I dunno. Guess we’ve always done it that way.”
In other words, employees who don’t care are the kiss of death for any company, especially a startup.
Employees who care about your company, who care about its health, and who care about building something will not only follow the SOPs to the letter, because they know they’re put there for the benefit of the company, but will also speak up when they feel something could be improved. And that’s exactly what you want — You want the guys on the front lines not to be afraid to report back when there’s something they see could be done better. That’s the backbone of a cohesive company on the road to greatness.
The “clarity” part in “if/then clarity” is simply what it says. Every SOP is completely clear, understandable, with zero ambiguity on any point. As times change, the SOPs evolve, and all parties are updated in real time. Lack of clarity can stop a company dead, faster than a big-rig jackknifing in a two-lane tunnel.
Finally, let’s discuss for a second what’s required of the entrepreneur when organizing SOPs.
“YOU MUST CHILL!” -Lloyd Dobler, “Say Anything.”
It is so important to understand that if you’re setting up SOPs, you’re going to have to follow them, as well. That means that if you have an employee whose job is to answer the phone and deal with inbound customer queries, YOU MUST LET THEM DO THAT. If they worry that you’re going to constantly be interfering, or “trying to help,” or worse, giving them other assignments to do that prevent them from following the SOPs, they’ll wind up being terrible at everything, and you won’t have them for very long. No one wins if you can’t let go.
Alternately, that employee needs to know that when the phone rings, that’s their job. Not to do other things, but to answer the ringing phone. This eliminates any concern from any other employee, essentially allowing them to ignore the phone, and do their jobs to the best of their ability.
My assistant Meagan knows that one of her jobs is to handle my calendar. She has an SOP telling her what flights I like to be on, where I like to sit, how I like to get to the airport (mass transit if possible) and what hotels I prefer. One time, I took it upon myself to book a hotel reservation. Not only did I book the wrong hotel (there were two in the city, I booked the one further away,) but I made her question why I did that. Did she do something wrong? Did I not trust her? Was her job in jeopardy? These were all fears she had, simply because I was interfering.
You’ve hired the right people. Let them do their thing while you do bigger things.
Lastly, be sure to trust that the company can run on its own from time to time. The nice thing about SOPs is that after they’re implemented, tweaked, and running well, you can take the occasional afternoon to focus on yourself, and know that your company is in good hands. Perhaps the best benefit to come from a well managed SOP system is that you, as the entrepreneur, can work at your best, and truly be an entrepreneur, instead of a fireman with no time to build your empire, because you’re constantly rushing to put out the latest flare up.
This article was originally posted on ShankMinds, a business community of 150+ entrepreneurs, who share information, give advice, and help each other be the best they can be, both professionally and personally.