Business process standardization might not sound exciting but it can be the key to increasing productivity, streamlining operational processes, and freeing up your employees to pursue individual and company goals.
You may be wondering whether it’s worthwhile to standardize business processes. The short answer is yes. At Select Funding, we talk to small business owners every day and there’s no denying the benefits of standardizing business processes. In this article, we’ll explain what business process standardization is, why it matters, and give you nine reasons to do it now.
What is Business Process Standardization?
Business process standardization is a way to document every process that’s essential to keep your organization running smoothly. It’s not uncommon for employees to have no written documentation of what they do. Over time, they may develop new ways to do things and if those insights aren’t shared with others, they may be lost if the employee leaves.
By standardizing practices, you can also optimize them, making sure that everything is done as efficiently and uniformly as possible. Business process standardization helps to streamline work and reduce the risk of inefficiencies and mistakes by making sure that any worker can pick up the slack and complete necessary tasks.
Business processes that should be standardized may include any routine tasks. Examples may include employee onboarding, payroll, manufacturing, file setup, cash application, and more.
9 Reasons to Standardize Your Business Processes
There are many reasons to standardize your business processes. These include red flags that indicate a lack of efficiency as well as benefits that will accrue to your business after standardization.
#1: Your Processes Are Inefficient
The biggest red flag that indicates you should standardize your business practices is a lack of efficiency. Inefficient processes cost businesses money – sometimes a lot of money, which may be lost both in employee time and resources consumed. Mapping and standardizing processes can help to identify and stop inefficiencies and point to potential solutions.
#2: You’ve Identified Revenue Leaks
The next indication that business process standardization might be required is if you have identified revenue leaks in your business. If a process seems to be costing more than it should, then you have an opportunity to save money and increase revenue by optimizing it. In such cases, process mapping should include a detailed analysis of time and resources.
#3: Employee Frustration is High
Are your employees burned out or are you having a difficult time keeping employees at your company? If that’s the case, it’s an indication that employee frustration is high and that may be due, at least in part, to a lack of business process optimization. You can help employees do their jobs more efficiently and leave them time for more interesting work by optimizing work processes.
#4: You Can’t Visualize Your Processes
If you realize that you have little or no documentation of the processes that keep your business running, then it’s time to use business process standardization to change that. Even if your employees seem to be happy and you’re not losing revenue, you can still improve efficiency and protect yourself against employee turnover by auditing and optimizing your processes.
#5: It Ensures Regulatory Compliance
One of the biggest benefits of business process standardization is that it prevents regulatory non-compliance by making sure that employees know what to do and how to do it. Since regulatory infringements can cost you thousands of dollars in fines, it makes sense to do whatever you can to minimize the risks of an infraction.
#6: It Leads to Higher Productivity
Another benefit of business process standardization is that it leads to higher productivity for employees and for your business as a whole. Without standardization, some employees may be taking longer than necessary to complete work. Optimizing practices can save time and money and free up employees to work on more interesting projects.
#7: It Reduces Waste
Waste doesn’t need to be intentional to hurt your business. Sometimes, when processes aren’t documented, they aren’t done as efficiently as they could be. Employees may be using resources, including office supplies, raw materials, and energy, at a rate that’s too high. When you map and optimize processes, you have the opportunity to eliminate waste.
#8: It Maximizes Customer Satisfaction
It should come as no surprise that customers don’t love inefficiency and that inconsistent practices can impact customer satisfaction. One of the biggest benefits of business process standardization is that it provides customers with a consistent experience – and that can lead to higher customer satisfaction scores and better customer retention.
#9: It Improves the Auditability of Your Business
Every business gets audited at some time, whether the auditors come from an investor, a bank, or the Internal Revenue Service. Standardizing your business practices doesn’t just make your company and employees more efficient, it also guarantees that you’ll have a clear audit trail for every process you do.
How to Map Your Business Processes
There are three basic steps required to standardize your business processes. Each step is essential, so be sure not to skip anything.
Step 1: Analyze Business Processes
The first step is to analyze your business processes to determine how things are done now and different ways they could be done more efficiently in the future.
To conduct your analysis, you’ll need to list processes and identify potential duplicates or inefficiencies. You should talk to the people who complete each process and get their input on what they are doing and what they think could be done better.
It’s essential to examine every relevant source of data. In addition to the employees doing the work, that means looking at the effects of each process and why it’s necessary. For example, if you were reviewing your payroll process, you might examine everything that feeds into it: the accuracy of your time clock, if you use one; how employees punch in and out; who delivers timecards to the payroll department, and so on.
You should also ask if there are any places where elements of the process are being duplicated. If employees are handing in punched time cards and filling out a timesheet, your new process should eliminate one or the other to save time and resources.
Step #2: Create Standards for Each Process
After you have reviewed and analyzed each process, the next step is to create a framework and documentation to make sure that the process is done in the same way each time it is required. In other words, you’re not just creating a written standard, you’re also implementing that standard in practice.
We suggest creating a process workflow to complete this step. The process you create should include each necessary step in the task. You may ask for input and assistance from the people who routinely complete the process. It may be useful to have more than one employee write down the steps they use and compare them. That way, you can pick the most efficient and appropriate option for the standardized process.
As you complete the process of creating standards, keep an eye out for opportunities to automate repetitive tasks. While automation won’t be the answer for everything, it can do a great deal to speed up processes and at the same time, free employees to work on more interesting and important work to help your company grow.
Step #3: Continuous Improvement
The third and final step is to keep yourself and your employees in the mindset of continuous improvement. You should begin by having an employee who is not familiar with the process go through it and identify any areas of confusion. Then, update the standard process accordingly. Your goal should be to make your standards so easy to understand that a new employee with no experience can complete the process without difficulty.
After you have completed your standards, keep an open mind. You can keep an eye on the process efficiency by tracking KPIs and using the data you collect to make sure that your standards still apply – and that they’re being used in an efficient manner. When your business requirements change or when you identify an inefficiency in a process, you should revisit it, remap it, and revamp it until you get the desired results.
What is the Difference Between Business Process Standardization and Business Process Integration?
You may have heard about business process integration in conjunction with standardization, so let’s talk about the differences and how these two things can work together to improve the efficiency of your business operation.
Business process integration involves synchronizing important processes between departments in your company or with external partners, including suppliers and financing sources, to maximize efficiency and keep the lines of communication open.
When there’s a disconnect between departments, it can lead to inefficiencies and miscommunication that can impact your bottom line. Integrating key operating procedures, such as new client onboarding, can minimize mistakes and create a smooth and enjoyable experience for the customer. That, in turn, can help with CSAT scores and customer retention rates.
Both standardization and integration play a role in maximizing efficiency and minimizing waste. When you map business processes to standardize them, you should be thinking about how and when each process integrates with others. That way, you can streamline everything at the same time.
Do You Need Funds to Standardize Your Business Practices?
Business process management is one of the best ways we know to eliminate inefficiencies and waste and ensure consistent quality. The process isn’t complicated but it does require time and resources.
Do you need financing to help you improve your business efficiency? Select Funding is here to help! Click here to read about our small business financing options and get started.
