The world’s most iconic businesses all have one thing in common: they understand the value of successful working systems, which consist of three related but entirely separate elements:
- Policies
- Processes
- Procedures
For an effective working system, all three elements are key and are dependent on each other to form a cohesive basis for business operations.
Let’s discover the differences between policies, processes and procedures and why effective systems need all three elements.
The Difference Between Policies, Processes & Procedures
A policy contains the rules, beliefs and guidelines of a company or certain outcomes and drives processes and procedures.
A process flow is a high-level view of how things or outcomes get done.
Procedures contain the detailed steps of the actions that are needed to complete the process and comply with the policy.
Related: What is Business Systemisation?
In business, policies cover many aspects of the business operations. For example, you have a policy for clocking in for work, a policy that stipulates that you must wear smart casual clothes in the workplace and a policy that you can not use the company credit card without approval.
Policies are rules and provide a framework for tasks. A clear example of policies that frame the task is in the areas of workplace health and safety. A task could be to move boxes from one location to another.
The policies that guide this task dictate the way in which the boxes are to be moved. The policy states that boxes must be moved in the manner described in the safety manual to avoid injury.
Keeping to the same analogy, based on the policy, the process would be moving boxes from one place to another when goods are to be dispatched.
The process might be called the Pick and Pack Process. There would be many steps involved in the process, such as reading the dispatch docket, selecting the items from the shelves, checking the quality of the item, selecting the correct postage box etc. The process explains “What” to do, not “How” to do it.
If you were to create a procedure for your Pick and Pack process, it would contain detailed steps of the tasks you’d need to perform in order to achieve the desired outcome. For someone to follow the process, they require detailed steps.
For example, the procedure for selecting items may look like this:
Selecting items for dispatch
- From the docket, read the code to locate the goods in the warehouse.
- Check that the item number on the box is the same as the item number on the docket.
- Sign the docket showing that the numbers match.
- Take the items to the dispatch counter. If the items weigh over 5kg in, use the conveyor belt to send goods to the dispatch bay. Follow the health and safety policy for correctly handling goods.
3 Key Ingredients to a Successful Working System
Policies are often written into processes and procedures or are available separately, such as in an HR/Employee Handbook. If they are separate, refer to the policy in the written process or procedure by stating where to find the policy or linking the documentation.
Why Use The 3 P’s in Your Business
Every company, starting from the very first employee that comes on board, develops its own culture – its own way of doing things and its own personality.
You will want to make sure your business develops the kind of culture you want and that the culture is not formed “by accident” because then it is difficult to break later on down the road.
Having all three policies, processes and procedures allow employees to operate with more autonomy, and they are happier as it is clear what they need to do.
To ensure your business runs as efficiently as possible, all employees must fully understand and be accountable for all relevant policies, processes and procedures.
To ensure that your business is running as efficiently as possible, all employees must fully understand and be accountable for all relevant policies, processes, and procedures.
Documented policies reinforce the culture and avoid mistakes that can cost you in many ways, including reputation. For instance, a social media policy may state that no employee can post to social media without making it clear that their thoughts are their own and not the company’s.
Processes show employees how a certain outcome must be achieved and helps create consistency in customer experience. It’s how franchises keep the experience the same, no matter which branch, located anywhere in the world, a customer frequents.
Procedures help everyone in a business to know exactly what’s required of them and include step-by-step instructions. Nothing is left to chance, so company standards are maintained. Built into the procedures are the “How” things get done, how things are done in your business, and adherence to the “How” is the policy.
If a trades company have a policy that after every installation of air conditioners, the surrounding area must be cleaned up, the procedure stipulates that a vacuum cleaner is used for the floors and a soft cloth is to be used to wipe down the unit.
Procedures also help businesses measure staff performance and increase productivity because the way of doing things is documented, and anyone can access the documents to find out how something must be done.
3 Key Ingredients to a Successful Working System
Here are some more examples:
Policy: Products are dispatched within 24 hours of placing the order.
Process: The dispatch team prepares the order, dispatch manager monitors the quality.
Procedure:
- When an order is received, the dispatch team member checks the order form to confirm stock using the operations app.
- The dispatch team member receives an alert that an item is to be picked from stock. The item/s are located and delivered to the packing area; a forklift is used for heavy items.
- Items are packed and double-checked against the order.
- Packing address labels are attached, and packages are moved to the courier pick-up area.
- Order dockets must be signed and placed in the orders tray when complete.
Policy – Everyone is responsible for washing up and clearing away used items in the staff kitchen.
Process – Clean up used items in the staff kitchen
Procedure –
- Wash up cups and other crockery and utensils using the green cloth next to the sink and washing liquid located under the sink.
- Dry up all items with a tea towel located next to the microwave.
- Place all dry items in the wall cupboards and drawers.
Policy – All passwords must be stored in LastPass. Do not share passwords outside of LastPass. Do not write down passwords or keep them in electronic notebooks.
Process – Log into the company CRM using LastPass
Procedure –
- Go to the CRM website and click “Log in”. LastPass will detect the login details and auto-populate the fields in the login boxes.
- Click “Enter”.
Developing effective policies, processes, and procedures eliminates mistakes.
Developing effective policies, processes and procedures eliminate mistakes.
Using The 3 P’s To Create a Business System
Your first order of business is to select a task/activity that you want to document. Let’s use social media marketing as an example.
The policy you develop for social media management would include rules and guidelines for anything that gets uploaded to social media sites. The first rule might never be to upload anything that contains swear words. Another rule could be that no offensive pictures are to be used.
Related: Why Businesses Worth Millions Are Built With Efficient Systems
The process is a high-level map of how to manage your social media accounts. It will outline the tasks needed to be carried out to keep social media accounts current.
Lastly, the procedure will document the exact steps to take to manage social media accounts. Included will be exactly what will happen from concept and strategy right up to uploading posts and responding to interaction.
Conclusion
To scale, every business needs systems. A system is the combination of policy, process and procedure.
Start by creating a policy in one aspect of your business; the policy is your set of rules and guidelines. Outline the main steps; this is your process. From there, document the exact steps that someone (a team member, supplier or client) can follow to complete the task.
If you want to grow and endure fewer growing pains, it’s time to start creating systems. Not sure where to start? Systemisation of your business isn’t something you can do alone.
For expert advice, book a time to chat and let’s talk about how you want your business to work for you.
