Does your organization have a Standard Operating Procedure (SOP)?

What is an SOP?

Every organization will have processes for the various activities that are carried out. The processes will include both operational (sales, marketing, etc) and back-end activities (accounting, payroll, administration, etc). Initially when an organization starts small, these processes are easy to carry out and monitor. However, as an organization starts growing, carrying out activities in a systematic manner becomes difficult and monitoring them becomes even harder. In the initial stages certain activities are experimented and they keep changing. Unless there is a uniform set of activities laid down in a systematic manner, it will soon turn out be chaos

An SOP is a detailed manual that explains a set of activities as a step-by-step procedure that includes action to be taken in case of deviation, approval mechanisms, delegation of authority, etc. An SOP can be drafted for all kinds of processes such as marketing, sales, cash collection, vetting of application forms, depositing of cheques, payables, receivables, quality control and the like. SOPs are drafted mostly for activities that are recurring and regular in nature

SOPs are normally prepared in versions since processes have the potential to change from time to time.

Why is an SOP needed?

The existence of an SOP brings about many benefits for an organization. The advantages of a system in place for any organization cannot be denied. When the system is put in writing and when it is continuously monitored, it reaps more benefits. This is exactly what an SOP facilitates. Initially, the system is decided upon and then it is put in writing in a simple step-by-step model. A well drafted SOP will not help much unless it is followed, continuously monitored and revised according to the changing needs of an organization.

One of the biggest advantages of having an SOP is that employees who join the company will have a clear understanding of the processes and the existence of an SOP makes it all the more easier to train them. Many superiors spend a lot of time in training their newly joined subordinates and frequent attrition in some industries makes training all the more time consuming and frustrating. SOPs act as an easy reference for the new employees until they are completely trained.

SOPS help a great deal in internal audit. The time that the management or the management representatives spend in explaining the processes that need to be audited is drastically reduced if there is an SOP. An SOP also helps in keeping a check on the mechanism of delegating authority and also on the approvals

SOPs can even be drafted for something as basic as book-keeping. Even though the usage of paper is reducing on a large scale, many organizations find paper management a difficult tasks. Staff are found to be searching for papers due to lack of proper filing mechanisms. SOPs will be a great deal of help with respect to statutory compliances. Checklists will form part of the SOP and it will help in filing taxes on time and avoid a lot of hassles and mental agony

How is an SOP drafted?

For an SOP to be drafted, processes need to be clearly defined in the first place. Once the processes are defined, the step-by-step procedure needs to be documented by a person who has adequate knowledge in the particular process or activity. The document needs to be reviewed by another person who has sufficient experience in the field. SOPs normally contain a sign-off page that contains the signature of the competent authority that has reviewed and approved the document and the contents therein.

Once the document is drafted, reviewed and approved, continuous monitoring is most important. Continuous monitoring will involve two stages. The first stage being implementation of any change or revision in procedure and the second stage would be to remove any redundant or unwanted process that are no longer required to be followed. The organization should fix up a periodicity for review and make sure that the reviewing happens and the appropriate changes are made. The previous versions of SOPs should necessarily be archived for future reference.

SOPs will be helpful if written in simple language in a step-by-step format. SOPs should be drafted only for areas of operations where it is absolutely necessary. Too many SOPs will complicate things and review and revision will become a cumbersome process, leaving some of the SOPs redundant.

Who should be having an SOP?

Having an SOP will reduce the possibility of errors. It is similar to a prevention mechanism. Instead of incurring a huge cost by deviating from processes and finding out after being hit by a repercussion, it is better that every organization has an SOP with clear-cut processes from the very beginning. Most SOPs also contain the action to be taken on the occurrence of expected problems. In other words, an SOP informs us of the steps to be taken to prevent a fire and also contains the course of action to be taken in case there is a fire.

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