Finding Your WAY: Examine the Business Process Components

When Jim Weichert, the founder of Weichert, Realtors, one of the largest real estate companies in the world with over 19,000 salespeople and over 500 offices, was asked the secret of his business success, he gave a one-word answer: consistency. That means consistency works. Consistency allows him to scale his business. As a result, he has built a solid organization that has endured for almost four decades.

Nothing can be fine-tuned until it’s first consistent. Business process components are strengthened through your understanding of the handful of core processes. These core processes make up your business model unique. You have to make sure that everyone in your organization understands them, values them, and follows them. These components are the most neglected ones, often taken for granted and undervalued by entrepreneurs and leaders. Yet the successful ones see what these components can do for them. By not giving these components your full attention, it’s costing you money, time, efficiency, and control.

High-Level View of Organization

Imagine that you could rise above and look down on your organization. How would it look? What are all of the moving parts? You should take this high-level view from time to time and appreciate what you have. Sometimes you can take what’s been built for granted. To paraphrase philosopher and logician Kurt Gödel, you can’t be in a system while at the same time understanding the system you’re in. In other words, you need to raise your head from time to time and see the system for what it is, whether it’s good or bad. We are normally so buried in the day-to-day struggle that we never take the time to do this. Yet, you’ll see something new every time you do.

A typical organization operates through a handful of core processes. How these processes work together is its unique system. To break through the ceiling and build a well-oiled machine, you need to possess the ability to systemize. This article will help you to systemize what you’ve built. You’ll discover different ways to improve upon your processes, simplify them, apply technology to them, and, most important of all, make them consistent throughout your organization.

Michael Gerber, the author of The E-Myth and The E-Myth Revisited, calls this your franchise prototype. To the degree you can clarify your systems and hone them, you will run your business as opposed to having your business run you. The combination of identifying, documenting, and having everyone follow the core processes of your business is your Way. When you have a clear Way, you immediately increase the value of your business, strengthen your control over it, and give yourself options. From there, you may grow the business, let someone else run it, sell it, or simply take more time off.

Complain of Business Owner

Countless business owners complain about their lack of control or freedom and yet, in the same breath, disregard the value of processes. It’s like the story of the dog sitting on a nail. A gentleman walks up to a farmhouse. At the entrance is an old man sitting in his rocking chair, and next to him is his old dog. The old dog is moaning, so the gentleman asks the old man why. “It’s because he’s sitting on a nail,” the old man replies. “Why doesn’t he move?” asks the gentleman. “Because it’s not hurting enough for him to move.”

Those business owners complaining about lack of control and freedom need to get off the nail and work on systemizing their businesses. In many organizations, people do their jobs however they want, resulting in tremendous inefficiencies and inconsistencies being embedded in the system. If they really saw all the variations, most business owners would be shocked. Many of them are just plain afraid to uncover what’s really going on. They cross their fingers and hope that the organization will keep continuing along.

To systemize your organization through core processes, you must take two major steps. First, you have to document the core processes. Second, you have to ensure that they are followed by all. Let’s start with documenting.

Documenting your Core Process

There are three stages in documenting your Way. First, identify your core processes. Then break down what happens in each one and document it. Finally, compile the information into a single package for everyone in your company.

1. Identify Your Core Processes

To start off, schedule an hour with your leadership team. This is not an assignment to delegate to one person. Take this initial step together so that you’re calling your core processes the same thing. Entrepreneurs tend to claim they already know what the processes are, but the reality is different.

Here’s why. Your leadership team needs to identify and agree on what to call your core processes. Once you start the discussion, you’re going to find you have different names for them and lack consensus on how many there are.

Your core processes typically include the following:

• The HR process is the way you search, find, hire, orient, manage, review, promote, retain, and fire people.
• The marketing process is the way you get your message to your target audience and generate interest in what you do and prospects for your salespeople.
• The sales process is the way you convert a prospect into a customer.
• The operations processes are the way you make your product or provide your service to your customer. There are typically one to three core processes within operations (e.g., project management, logistics, warehouse, distribution, service technicians, account management, service delivery, production, quality control, and customer service).
• The accounting process is the flow and management of all monies coming in and going out.
• The customer-retention process is the proactive way that you take care of your customers after your product or service has been delivered and the way you retain customers so that they continue to come back and send you referrals.

No matter how many core processes you have, you need to identify the ones that address every activity going on in the business. Then list them in one document and make sure that your leadership team is 100 percent on the same page with the amount, the names, and what they are.

It’s surprising how productive this step is. The exercise creates clarity of thought that is then put down in black and white. You will find it to be worth every minute of the hour you spend. You will realize a return on the time invested quickly as a result of everyone immediately speaking the same language.

Now that you’ve identified each core process and have a name for each one, everyone must call each of them by the exact same name from this day forward. Just by calling your core processes by consistent names, you reduce complexity and increase efficiency in the organization.

2. Document Each of The Core Processes

In this step, the Accountability Chart comes into play. The person that is accountable for a certain process takes charge of documenting it. The head of sales and marketing takes the sales process and the marketing process. The head of operations takes the one to three operations processes, and so on. The integrator usually owns the entire project, making sure everyone is clear and on track. To avoid wasting time, make sure you’ve completed the first step of identifying your core processes before you start documenting.

When documenting the processes, you should follow the 20/80 rule. That means documenting the 20 percent that produces 80 percent of the results. In other words, document at a very high level. You should not be creating a 500-page document. The 20/80 rule gives you the highest return on your time invested. The trap many organizations fall into is wasting valuable time trying to document 100 percent of everything. If you document 100 percent of a core process, it might take 30 pages. If you document the most important 20 percent, you should need around six pages.

The following is an example of a documented process:

The HR Process (Example)

Step 1: The Search

• Define role/job description/salary (the seat)
• Decide search medium
• Begin search
• E-mail 20 sphere/peers

Step 2: Interviewing

• Screen résumés
• Initial interview/profiling tools
• Second interview
• Check references
• CEO interview/core values speech

Step 3: Hiring

• Eight-hour on-the-job trial
• Decision
• 90-day trial

Step 4: Orientation

• HR policy/review employee manual
• Benefits review/forms
• Position training
• CEO orientation (company story/culture)

Step 5: Quarterly Reviews

• Manager fills out the People Analyzer in preparation for the review
• Follow the review checklist
• Review the People Analyzer
• Document the review and have it signed by all parties
• File review with HR department

Step 6: Termination

• Three-strike rule with documentation
• Terminate upon third strike
• Contact legal counsel
• Meet with employee/have HR present
• Exit interview
• Document termination and have it signed by all parties

Step 7: Ongoing Benefits Management

• Employee Fund management
• Bonus plan
• Health insurance
• Employee files

In the end, each core process will run between 2 to10 pages. Operations processes are usually the longest. Don’t be totally constricted by the 20/80 rule. Include whatever you feel is necessary. Just make sure you keep it simple.

“We’ve Always Done It That Way”

Once you start to document, you’re going to uncover some hidden bones. Some steps will be in place that doesn’t have to be. You won’t understand how the heck they ever got there in the first place. When you ask why, you’ll hear responses such as, “Well, we’ve always done it that way.”

A man was once with his wife’s family for Thanksgiving. During the preparation of the meal, he observed his wife cutting the back of a ham off before putting it in the oven. Curious, he asked her why she cut the back off the ham. She responded, “It’s tradition. It’s the way we’ve always done it in our family.” Her mother had just arrived, so he took the opportunity to go over and ask why they cut off the back of a ham. She said, “It’s tradition. It’s the way we’ve always done it.” Fortunately, his wife’s grandmother was there as well, so he went to her and asked the same question. She replied, “Once upon a time, the pan was too small, and it was the only way to get the ham to fit in the pan.”

Your people doing things because they’ve always done them that way is not good enough. With the opportunity to build a well-oiled machine, you must now be able to show them a better way. As you simplify, most of the time you will find that your core processes are too complex. By documenting the process, you will find many opportunities to dumb them down by eliminating redundant steps and taking out any confusion & complexity.

The goal is to streamline. Eliminate steps, condense steps, and put checklists in the place where possible. You should make your processes bulletproof so that no one can screw them up.

3. Package It

Good news! Now that your core processes are documented, Step 3 is the easiest of all. Here’s where you take all of the great work you’ve done in Steps 1 and 2 and package it. The titles of your core processes now become your table of contents. Each documented process in Step 2 becomes one of your sections. You put them in a binder or on your company intranet. On the cover, put your company name followed by the word “Way.” If your company name is the ABC Company, then it should read “The ABC Company Way.” Your Way is now ready to use for reference and training. That’s when the real magic happens. Now, everyone in the company can be trained to follow the correct process.

Followed by All

When everyone follows their process, it’s much easier for managers to manage, troubleshoot, identify and solve issues, and therefore grow the business. The clear lines of process enable you to let go and gain more control. Your business now becomes more scalable, which means that you can add more customers, transactions, revenue, and employees while reducing complexity.

In order to implement this crucial step, your leadership team must be convinced that everyone should follow one system. To convince your people to follow the process, your leadership team needs to be committed. If you are all committed, it will work. If you’re not, it won’t. “Do as I say, not as I do” is not effective management. Remember, that most of the time this step fails because the owner or owners are not willing to follow the process.

Assuming you’re convinced, then the next step requires you to convince your people. You have to consider their point of view. If you didn’t see the value in following a process before, how can you expect your people to see the value now? What you need to show is how the new system will create efficiencies to make their lives easier and the company more successful. If you have the right people in the right seats, they will see the value, appreciate it, and benefit from it.

You can schedule a company meeting to share your Way or share it at your next quarterly company meeting. Also, you need to retrain everyone to have a common understanding of the processes during effective implementation.

With this, you will have options with your business: to grow it, step away from it, sell it, maintain it, franchise it, or duplicate it in another city. Whichever option you choose, your organization’s value has increased. Your organization will be worth more as a result. This is what people that purchase businesses are looking for: a turnkey system. For instance, the owners of Image One were approached by a billion-dollar publicly traded company in the same industry and eventually sold to them. The president of the division at the time, who previously worked for Jack Welch at GE, said that Image One was one of the best-run companies he’d ever seen.

Remember, with the mastery of the Process Components, you’re closing in on achieving your destination. (Excerpt is from “Traction” by Gino Wickman).