Does anyone care about measuring SOPs (Standard Operating Procedures) and process documentation when scaling a business?
The answer might seem like a resounding “No.” But to successfully scale, it’s actually a must. Here’s why.
What Are SOPs and Why is Process Documentation Important?
Every business has its specific way of doing things—its own "secret sauce" for success. Over time, companies identify best practices to achieve key objectives, like growth, customer retention, and employee satisfaction. Documenting these processes in SOPs ensures these valuable practices are captured, preserved, and repeatable.
Process documentation and SOPs make scaling possible by standardizing the ways tasks are performed. Our eBook, The Ultimate Guide to SOP and Process Documentation, offers an in-depth guide to building effective SOPs from scratch.
Why Measuring SOPs Is Essential
To scale effectively, you need to know that your SOPs are doing their job. SOP evaluation and regular measurement help ensure they meet business goals and adapt over time. Here’s why measuring SOPs and evaluating process documentation are critical:
4 Reasons to Measure SOPs
Measure SOPs to ensure consistency and standardization
Example: Starbucks maintains SOPs for preparing every beverage on their menu. These SOPs ensure that whether you’re ordering a latte in New York or Tokyo, you get the same quality and taste.
Even if you’re not a global giant, maintaining consistency is critical as you expand. SOPs create a repeatable structure, ensuring customers have the same experience regardless of location.
Measure SOPs to improve operational efficiency
Example: SWAG.com’s detailed fulfillment SOPs streamline operations, enabling fast and accurate delivery for thousands of orders each day.
Measuring SOP performance pinpoints inefficiencies, enabling better resource allocation and smoother operations—a must for scaling.
Measure SOPs tp enhance quality control and compliance
Example: In industries like finance, SOP evaluation is crucial for compliance. Financial advisory firms, like Avior Wealth, use SOPs to maintain compliance and quality standards that protect both the firm and their clients.
For industries with regulatory requirements, SOPs aren’t optional—they’re essential for compliance and avoiding costly errors.
Measure SOPs to facilitate training and onboarding processes
Example: Hilton University’s extensive SOPs expedite new employee training, setting clear expectations and reducing onboarding time. Regular SOP evaluation and updates ensure their documentation stays relevant and effective.
Measuring SOPs’ effectiveness in training can highlight areas for improvement, helping new employees integrate faster and with fewer mistakes. Documentation helps new hires ramp up quickly, saving both time and money by ensuring they know the processes (and their roles) from day one.
Key Metrics for Measuring SOP Success
Okay so you know your should track SOP and Process Documentation but what exactly should you measure?
Like any area of the business, there are a million different type of metrics you could measure but what’s important is to measure the metrics that align your team faster and that have business impact.
Here are the key metrics we advise clients to track with adoption of SOP & Process Documentation;
1. Team alignment and engagement
Why It Matters: Misaligned teams slow down progress, especially during scaling. Regularly measuring SOP engagement helps ensure all team members are on the same page.
The proof: Companies with highly engaged employees are 21% more profitable (Forbes).
Measurement Tip: Conduct feedback surveys to gauge employee engagement with SOPs. This data reveals whether teams understand and value the documented processes.
2. Employee ramp up time
Why It Matters: Fast ramp-up means more of your team members operating at optimum capacity.
Example: Companies that implement detailed SOPs often see a 5-10% reduction in ramp-up time.
Measurement Tip: Track how long it takes for new hires to reach full productivity. Frequent SOP evaluation can help identify gaps, making training even more effective.
3. Knowledge gaps
How many times does a team member search information in your business? How many times do you have to answer the same questions on the same subjects from different team members? Knowledge gaps indicate where SOPs might be unclear or inadequate. Monitoring how frequently employees ask similar questions reveals areas needing improvement.
Why It Matters: SOPs should reduce the number of repetitive questions from team members.
Measurement Tip: Monitor how frequently employees request clarification on procedures. High-frequency questions indicate areas where documentation needs improvement.
By beginning to measure and close these ‘knowledge gaps’ in your business, you’ll be increasing team productivity.
4. Effect on Key Business Metrics (e.g., Customer Churn)
If you work with OKR’s and rocks, then you’re an objective driven organization. This is great because it means you’re measuring the impact of your team’s efforts. But do you pay attention to what happens before and after a certain process is implemented?
Why It Matters: Your SOPs should positively impact overall performance, like customer satisfaction or retention.
Measurement Tip: Compare key metrics before and after implementing an SOP. For example, measure customer churn rates before and after a new customer onboarding process.
For instance, what is the effect on customer churn when you implement a new customer onboarding process? Measuring key business metrics in relation to when you implement new processes will not only help you with process improvement but also will correlate that improvement with the business objectives.
5. Knowledge retained
How do you approach the forgetting curve in team training? Do your team members know what they need to know? Are they equipped in the skills they need to succeed in their work?
Why It Matters: Clear SOPs foster a knowledgeable team. Measuring SOP adherence identifies areas for improved documentation or further training.
Implement methods to monitor knowledge retention and adherance to documented procedures such as periodic audits, quizzes, or interactive training sessions. By doing so, you can identify areas for improvement and also identify what skills your team might be lacking.
Pro Tips for Effective SOP Evaluation
When measuring the impact of documentation, remember to actively seek feedback from employees and stakeholders who engage with the documentation. They can provide valuable insights into the document’s practicality, effectiveness, and areas that need enhancement. Further to that empowering subject matter experts across the business ensures that documentation remains relevant and up to date.
It’s what Toyota calls Kaizen;
Kaizen humanises the workplace, empowering individual members to identify areas for improvement and suggest practical solutions.
This means that feedback received is analyzed and used as a foundation for making necessary revisions. Regularly update your documentation to reflect evolving processes, technological advancements, or organizational changes.
How to measure your SOPs
To understand SOP impact, calculating ROI is essential. Here’s how to measure the financial and time-saving effects of SOP evaluation.
Calculate your ROI
When you’re choosing a documentation & training solution for your team, you want to know what return you can expect.
1. Calculate saving on employee turnover
SOPs that support engagement help reduce turnover, saving costs on hiring and training. For instance, if your annual turnover rate is 10% and each new hire costs $20,000, reducing turnover by 20% saves $40,000 annually.
That’s a pretty tidy sum!
🛠️ For your toolbox: Boost employee engagement and reduce turnover by using a visual knowledge and training platform like Whale. Goodbye boring word docs, hello snackable SOPs complete with fun memes, gifs, images and video.
2. Calculate time cost savings
Effective SOPs minimize time spent on routine tasks. Calculate the monthly hours employees spend managing SOP-related duties, then track reductions in this time post-SOP updates. These savings add up significantly.
Here’s how that looks in numbers:
Hours per month x Hourly wage = Cost per month
For example, an employee in charge of updating SOPs might spend 10 hours per month editing word documents, and another 10 hours answering queries from confused employees — that’s a total of 20 hours spent per month on SOPs. If their hourly wage is $30 per hour, here’s what your sum looks like:
20 x $30 = $600 per month for one employee
Now imagine you have three team members who plan your SOP, one in charge of updating, and two more whose job it is to train employees. Plus, you have ten employees who use the doc each day. That’s a whole lotta dollah per SOP.
By streamlining your SOPs with a smart knowledge platform, you could easily cut those numbers by at least 30%, saving a sweet $180 per employee per month. Nice!
🛠️ For your toolbox: Save precious SOP management time with an all-in-one knowledge and training platform. From automated reminders to direct messaging, keeping track of SOP updates has never been easier with tools like Whale. Plus, employees can learn on the go with our unique Chrome Extension.
3. Calculate employee value
Clear SOPs boost productivity.
Here’s your formula to figure out the importance of SOPs when it comes to boosting employee value:
Let’s say your total revenue is $10M per year.
With high employee engagement making companies 21% more profitable, that’s an extra $210,000 per year in your pocket.
Simple, but effective. 💪🏼
🛠️ For your toolbox: Involve employees in the process by delegating specific SOP management tasks to subject matter experts. With tools like Whale, you can easily manage as many experts and queries as you need, all in one place.
4. Calculate the cost of replacing lost employees
US employers spend $2.9M per day looking for replacement workers. That’s a whopping $1.1B per year. (Yep, you read that right!)
From marketing to onboarding, there are a ton of costs that go into hiring new employees — and if you have to repeat the recruitment process just once, that doubles your costs in one swoop.
But with 86% of employees citing their company’s broken processes as a driving factor for leaving a role, home-run SOPs can save you from breaking the bank by engaging employees before they hit the road.
Let’s break it down to figure out the importance of SOPs:
First off, work out how much it costs to advertise, hire, and onboard a new role.
Let’s say you spend an average of $4K per new hire on these tasks. If your new employee is one of the 20% that leave a role within the first 45 days, that’s $4K down the drain and another $4K lined up to rehire, leaving you a cool $8,000 out of pocket.
The solution? Keep hold of new hires by fixing broken processes with an awesome knowledge training platform.
🛠️ For your toolbox: Tools like Whale can help you $2.9M per day with a backend dashboard that shows exactly who’s opened what. So, if an SOP isn’t working for your team, you’ll know about it.
Tools and Technology for Effective SOP Evaluation
Implementing SOPs isn’t just about documenting processes; it’s about leveraging the right tools to make that documentation effective and measurable.
Here are some key features to look for in SOP management software:
- Centralized Storage: Accessible, real-time documents improve accessibility and collaboration.
- Version Control: Keep your SOPs up-to-date with automated version tracking.
- Workflow Automation: Streamline processes and reminders for document updates.
- Analytics Features: Track engagement with SOPs and identify areas needing improvement.
Real-Life Example of Effective SOP Evaluation: Toyota
In 1997, Toyota made history by unveiling the world’s inaugural mass-produced hybrid car, the Toyota Prius. This groundbreaking vehicle marked a significant departure from traditional gasoline-powered cars, representing a remarkable leap in technology.
Despite encountering numerous challenges, such as concerns over the high costs associated with hybrid systems and uncertainties about consumer demand, Toyota persevered.
Fueled by a steadfast commitment to a more sustainable future, the company relentlessly worked to enhance and perfect the Prius.
Today, the Prius stands as an immensely popular and globally recognized brand, boasting a remarkable milestone of over 10 million units sold worldwide.
So, what does Toyota’s 1997 launch have to do with SOPs and measuring process documentation?
A lot. Toyota’s dedication to constantly refining its processes directly impacted its bottom line. Measuring and improving your SOPs and documentation can do the same for your business.
Challenges in Measuring SOP and Process Documentation
Despite the evident benefits, measuring SOP and process documentation effectiveness comes with challenges. Common obstacles include resistance to change, lack of resources, and difficulty tracking adherence.
This is why we often recommend working within an operating system that prioritizes business goals and also gives a level of accountability for both individuals and the business as a whole.
Bottom Line: Measuring SOPs Matters
In the dynamic landscape of businesses today, having a clear roadmap is essential. SOP and process documentation provide this roadmap, ensuring that the business runs smoothly, efficiently, and with minimal errors.
However, merely having documentation in place is not enough; it’s about having the right documentation that works for your organization’s unique needs. And then measuring it.
By measuring the effectiveness of SOP & Process documentation, organizations can adapt, grow, and thrive.
So, invest time, effort, and resources in creating and measuring your SOP and process documentation. Your business’s efficiency, consistency, and overall success depend on it.
Get documenting & training NOW
FAQs for Measuring SOP Effectiveness
Why is SOP evaluation important?
SOP evaluation is essential for ensuring that processes remain effective, consistent, and aligned with business goals. Regular evaluation enables you to make improvements that drive efficiency and scalability.
How often should I measure SOP effectiveness?
The frequency of SOP measurement depends on your business needs, but quarterly or biannual reviews are common. For high-impact processes, monthly evaluations may be beneficial. SOPs should be tied back to business objectives.
What are the best tools for SOP measurement?
SOP software like Whale helps you measure the effectiveness of SOPs and business documentation in your business.
Leverage AI to gain instant insights on team performance, helping you monitor assignments and track progress effortlessly.
Whale is the fastest way 🚀 to get your team aligned.
What metrics should I track when measuring SOPs?
Key metrics include employee alignment, knowledge retention, ramp-up time, impact on core business KPIs, and engagement. Tracking these metrics can reveal the effectiveness and efficiency of your SOPs.
How often should we update or review our SOPs?
SOPs be evaluated regularly.
SOP review and evaluation is a necessary part of continuous improvement. Ensure you use a software which offers review cycles so your subject matter experts review SOPs automatically.
While there is no fit-for-all frequency for the assessment of SOPs, at the very least annual reviews should be conducted unless there are;
- External changes – Changes in the business environment
- Internal changes – business process changes
- When any scope of improvement in SOPs becomes necessary
