“A brief written presentation that winnows fact from opinion is the basis for decision making around here.” Ed Harness, Chairman, Procter and Gamble
Some fledging entrepreneurs tell me that writing a policy manual is a waste of time – a luxury of the corporate and institutional world. Their excuse is that they have a business to run and no time to write “sophisticated” policy statements or a manual with page after page of rules and regulations that many employees read with as much gusto as you would the fine print in your insurance policy.
Oh, what a cynical view, one not far from the truth if you look at the bloated bureaucracies of some of our largest businesses and institutions. It is no secret that levels of management grow to the size of the budget. It is no secret that there is a profession of “management analysts” who spend their careers developing the fine print that most of us have difficulty understanding and get bored with after the first paragraph.
But let us not condemn the printed word in running your business because bureaucrats need jobs. You need a book of your rules, your regulations, and how you want things done. While none of us is indispensable, if you fell ill and had to step away from the wheel for a time, you would wish you had a policy manual – better titled your “how-to book.” Such a document could well save your business from veering off your chosen path.
Errors and misunderstandings by your employees can waste your precious dollars. Do you need a better reason to invest the time in putting your ways of doing business – your successful ways – on paper? A handbook of instructions and guidelines that will help your employees prevent your profits slipping away with unnoticed mistakes.
While I can not present you with a “how-to” set of instructions within the limits of this column, I can hit upon some of the important areas of activity you should put on paper (or your hard drive, but print it out, too, just in case) – activities that, if mismanaged, lead to errors and losses. As you begin the process, ask yourself: “If I became ill or suffered a serious accident, do I have a set of instructions to insure my business will be managed as I wish?”
To get you started here are a few important topics that are well worth your time writing about:
1.Job Descriptions. The beginning of any “how-to manual.” If you have employees, you must have a clear understanding of what it is you are paying them to accomplish. Otherwise, why hire them? Do your employees know their responsibilities and authority? Do you know? I wrote a column about writing job descriptions; e-mail me if you wish a copy.
2. Employees. What are your policies on promotions, raises and benefits vacations, sick leave, maternity leave, education and retirement? To avoid misunderstandings, agreements with your employees must be spelled out on paper. If you won’t put a promise in writing, don’t make it. You have enough challenges to overcome without disgruntled employees.
3. Organization Charts or Tables of Organization. Does everyone in your company have a clear understanding of their authority and those they must answer to? Organization charts are diagrams with little boxes displaying the chain of command you created. If such charts are new to you, pick up a copy of any basic management text and you will find many examples that will be helpful. Such organization charts are helpful as it gives you a “photograph” of the structure of your business or “who reports to whom and who does what.”
4.Credit and Collections. What are your rules about credit references? How long do you extend credit or your terms? How do you collect past due monies? E-mail me if you wish for a copy of the article I wrote about getting your money. It may help you.
5. Inventory Control and Purchasing Policies. Who has authority to spend your money? Do you use purchase orders and who do you permit to issue them? Do you have dollar limits without your approval? Do you have a policy to verify vendor prices, and incoming shipments to your purchase orders? What and who determine your inventory requirements?
These are but a few of the subjects your manual should contain. Start with your basic areas and add and revise as your business grows and changes – and it will, taking on its own personality. But don’t leave it to chance. A policy and procedures manual may well become one of your most important intangible assets. Remember, without such instructions, in your absence, you are forcing your employees to second-guess your wishes, or run your business as they see fit.
As your business succeeds, you will experience new and unforeseen situations not in your “how-to book.” However, if you have prepared well, you will have covered your major activities. By the way, a surprising benefit of creating your manual will be how much you will learn about your own business. Good and bad.
Article © Copyright 2002 Dr. Paul E. Adams. Syndicated by Paradigm News, Inc.
