Standard Operating Procedures: Why They’re Important to Your Business

In 1998, Pixar’s Toy Story 2 almost did not see the light of day. It was a lesson on the importance of standard operating procedures development and, more importantly, of sticking to established SOPs.

The Near Catastrophe That Was Toy Story 2

Here’s what happened. Someone in Pixar ran an incorrect command at the root directory of the Toy Story 2 project. It effectively told the computer to remove every file in that folder, so most of the film files were deleted as a result.

Did the company have backups? Of course. However, as the employees learned that day, the backups were not working and hadn’t been so for a month.

Fortunately, one of the technical directors of the project had a newborn and frequently needed to work from home. She had made a copy of the project files for her convenience and kept it on her home computer. That’s how they retrieved the Toy Story 2 files they thought were forever lost.

What’s the lesson here? The most obvious one is always to keep backups. However, the incident also shows how vital SOP development is to a business, specifically:

• To have SOPs
• To have the right SOPs
• For every member of the organization to strictly follow SOPs

As you can see, the missing backup files meant Pixar’s SOPs on backing up files might not have been effective in ensuring functioning backups existed. Alternatively, the company employees might have just forgotten to implement them.

It could also be that the company SOPs did not have built-in safeguards against accidental project deletions. Either that or somebody broke protocol and rendered them ineffective.

SOPs: Why They’re Important for Business

As the Toy Story 2 example shows, SOPs can prevent disastrous mistakes and accidents in the workplace. Ground crew members who do not inspect an aircraft according to established SOPs are risking the lives of that airplane’s passengers and flight crew. Likewise, an employee can lose an arm if they or somebody else neglects the SOPs at a meat processing plant.

By standardizing processes, SOPs minimize the chances of errors and deviations that can lead to defects or unsafe conditions. They act as a preventive measure by outlining the correct way to undertake tasks, reducing their associated risks. This is particularly critical to companies in industries where the smallest mistake can lead to the gravest of consequences.

Aside from accident and risk prevention, the following are some of the other reasons standard operating procedures are vital to your business:

• Consistency in Processes and Results

Standard operating procedures lay out in great and specific detail how a company’s processes must be performed. SOPs ensure that tasks are done a particular way every time they are performed, regardless of who is performing them.

Therefore, SOPs are crucial for maintaining the quality of your products and services. Just like adhering strictly to a cake recipe will give you a delicious cake every time you bake, following the same procedures to the letter will ensure the same results. This consistency reduces variations in both processes and results, and this helps:

• Sustain customer satisfaction and trust
• Boost productivity
• Increase predictability and enable forecasting
• Measure performance and identify areas for improvement

• Compliance With Regulations

Many industries are strictly regulated by government agencies and accrediting bodies. For instance, the United Arab Emirates government has strict health and safety regulations for factories and construction companies. By developing its own health and safety SOPs, a plastic pipe manufacturing company can enforce adherence to government regulations.

SOPs can help you avoid legal issues and penalties. They also help you maintain the standards required for certifications and licenses.

• Better Communication

SOPs serve as a reference document that helps clarify the procedures for everyone in the organization. How should files be saved and backed up? How should expenses be accounted for? Where and how should you make changes to company files?

Your company’s standard operating procedures have the answers to these and more questions like them. There is no need for lengthy discussions. Anyone who has a question about the right way of doing anything will get the answer from the company SOPs.

This also makes it easier to establish accountability. Your SOPs are clear on what should be done whenever anyone is conducting a particular task. If your processes do not yield the expected outcomes, you can refer to your SOPs to see which procedures were violated and who was responsible for the transgression.

Overall, SOPs provide your employees with a clear understanding of their roles and responsibilities. This reduces misunderstandings and ensures that everyone knows what is expected of them. Such transparency is vital for fostering a harmonious workplace.

• Efficient Training of New Employees

SOPs are an invaluable tool for onboarding new employees. Do you know how user manuals tell you every function and feature of your new car? SOPs are like that.

They serve as practical employee manuals. New employees review SOPs to know how things work at a company, the steps they must accomplish to fulfill their jobs, what tools they need, where to get those tools, and which people they must talk to and work with.

In other words, SOPs provide newcomers with detailed, step-by-step guidance, accelerating the training process and helping new employees become oriented, competent, and effective more quickly. This not only enhances productivity but also ensures that the quality of work is maintained from the beginning, regardless of employee tenure.

• Retain and Pass on Valuable Expertise

SOPs memorialize and document company best practices and specialized knowledge from veteran employees and key personnel. Company SOPs are created after careful deliberation regarding as-is processes by those who are in charge of executing and overseeing them. They are, therefore, the result of expert insights derived from and informed by experience.

SOPs ensure critical operational insights and methodologies are retained within the company, safeguarding against the loss of irreplaceable knowledge due to staff turnover.

The Strategic Value of SOPs 

SOPs are vital tools of business. They prevent mistakes, decrease risks, ensure consistency, boost productivity and predictability, prevent legal and regulatory pitfalls, and retain inside knowledge and insights. Additionally, they help employees communicate and operationalize their roles.

 

AUTHOR BIO

Mini Madhavan is a Management Consulting Partner at Affility, a comprehensive advisory services firm assisting clients in the UAE and worldwide with IT, risk and management consulting solutions. A specialist Audit and Consulting Professional with over 12 years of experience, Mini is an EY alumnus, a Fellow Member of ACCA who helps Entrepreneurs and Business leaders to accomplish their business goals by planning, optimizing and implementing their business processes.