The Importance of SOPs: How to Maximize ROI with Smart Procedures (+ 4 Real-life Formulas)

In this ultimate guide to maximizing your ROI with smart procedures, we’ll outline the importance of SOPs, how they can positively impact your business, and how to calculate the value of getting it right (+ 4 real-life formulas).

In this ultimate guide to maximizing your ROI with smart procedures, we’ll outline the importance of SOPs, how they can positively impact your business, and how to calculate the value of getting it right (+ 4 real-life formulas).

Knowing the importance of SOPs (Standard Operating Procedures) is the lifeblood to a successful business — because if you get them wrong, the impact can be huge.

In fact, disorganized processes are one of the top 10 employee pain points, with a whopping 67% of employees saying their company’s broken processes prevent them from maximizing their potential.

The outcome of broken processes? 

A drop in productivity and revenue, unengaged teams, and a high employee turnover. 👎🏼

That’s why, whether you’re onboarding new hires or tracking deliverables, your SOPs need to radiate simplicity so your teams just get it.

In this ultimate guide to maximizing your ROI with smart procedures, we’ll outline the importance of SOPs, how they can positively impact your business, and how to calculate the value of getting it right (+ 4 real-life formulas).

Ready? Let’s go.

4 simple ways to understand the importance of SOPs and maximize ROI💰

  • The importance of SOPs: Why you need to get it right
  • #1: Save on employee turnover
  • #2: Maximize time cost savings
  • #3: Boost employee value
  • #4: Know the cost of replacing lost employees
  • Get to know the real importance of SOPs

Ready to invest in a smart knowledge platform to make great SOPs simple? Get in touch with Whale for a free trial!

The importance of SOPs: Why you need to get it right

What is a SOP? Standard Operating Procedures (SOPs) are the must-have set of instructions that outline exactly how to run a task. Whether you’re showing how to build job descriptions or manage entire projects, a clear SOP can help unify tasks so outcomes are the same across every team.

It sounds simple: write a set of instructions that explain how to follow a process.

But every business leader knows that the importance of SOPs goes way further.

A truly great Standard Operating Procedure shouldn’t only explain a process, it also needs to be engaging, simple to follow, and make employees super excited about getting work done. Because when it’s done right, SOPs can have a huge impact on your ROI.

Here’s how a great SOP can impact your business for the better:

  • Uplevel employee productivity: Employees work better when they’re inspired. And an easy-to-read, engaging SOP is super inspiring — making applying your instructions a no-brainer.
  • Boost employee engagement: With 35% of employees feeling their company could do more to improve the employee experience (and 14% describing themselves as completely disengaged), it’s up to business leaders to create experiences that fully engage their employees – and how you create and share SOPs plays a big part in that.
  • Increase revenue: Productivity is the key to boosting revenue, and with simple SOPs your employees will find the following tasks super easy.
  • Improve time cost savings: With easy-to-follow SOPs and a simple updating process, your teams can sidestep time-wasting processes and start clocking up the extra minutes, hours, and days.

1. Save on employee turnover

Every dedicated HR pro knows the importance of SOPs on employee retention — the more engaging your procedures, the more likely employees are to stick around.

But what does that look like in hard numbers?

Let’s kick off by calculating your employee turnover and how much an awesome SOP could actually save.

First off, here’s how to work out your Annual Turnover Cost:

  • Number of leavers (NL) = Number of employees x Annual turnover %
  • Average cost of leavers (C) = Hiring, onboarding, and training costs + Cost of time with role unfilled

NL x C = Annual Turnover Cost

So, let’s say your annual turnover rate is 10% (NL = 10), you spend around $10,000 per person on hiring, onboarding and training, and you lose around $10,000 in lost productivity while the role is unfilled (C = $20,000)

Annual turnover cost: 10 x $20,000 = $200,000

But if you invested in smart SOPs to help reduce employee turnover by even 20%, you’d save $40,000.

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. Maximize time cost savings

This next one is all about reclaiming your team’s precious time.

Start by figuring out how much time goes into creating, updating, and training employees on the importance of SOPs and how to use them. Next, work out how long each team member spends on SOP-related tasks.

Once you know how much crappy SOPs are actually costing you, you can work out how much awesome SOPs can save.

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. Boost employee value

Each employee represents value to your company — but if those employees don’t know exactly what’s expected of them or how to follow certain processes, that value goes way down.

With only around half of all workers knowing what’s actually expected of them in the workplace, smart SOPs offer a crucial opportunity to engage employees and get them super focused on the task at hand.

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. Know 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 spot unengaged employees 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.

Get to know the real importance of SOPs

The importance of SOPs is simple to figure out: without easy-to-follow processes, teams become unengaged, you lose out on revenue, and employees head for the door.

That’s why getting your Standard Operating Procedures right is everything.

With the right tools, you can centralize your SOPs in one beautifully automated system, train employees faster, and get performance insights at your fingertips. The outcome? No more lost productivity, and way higher ROI. 👌🏼

Want to scale your business with killer SOPs employees actually love?

Download our complimentary Ultimate Guide to SOP and Knowledge Management


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