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Increasing Business Efficiency with Policies and Procedures
By Sylvia A. Ezenwa, J.D. 
Remember the adage: "location, location, location?" Well, a good location can certainly increase walk-in traffic into a company and, perhaps, reduce certain overhead expenses, like rent, insurance, and taxes. But the real key to business productivity is: "efficiency, efficiency, efficiency
." Efficiently run companies are more productive and profitable than their inefficient counterparts.
Business efficiency is sparked by written policies and procedures. "Policies
" are plans that guide a company in managing its affairs, and "procedures
" are ways of putting those plans into action. Together, policies and procedures should regulate every facet of a company's business operations.
How to increase business efficiency
To be efficient, a company must render the most services and/or manufacture the most products using the least amount of human and financial resources. Therefore, to increase business efficiency, a company's output, in terms of the amount of services rendered and/or products manufactured, must be greater than the cost of achieving that output, where cost is equal to the expenditure of energy, time, or money. Written policies and procedures can increase efficiency by reducing costs. For example, a company policy requiring all new hires to attend a pre-employment sexual harassment seminar may increase efficiency by reducing the litigation costs typically associated with harassment claims.
How to write policies and procedures
The process of writing policies and procedures requires a clear definition by a company of its economic and/or social goals and objectives, followed by the development and implementation of strategies to help achieve them. Therefore, be mindful of goals and objectives when writing policies and procedures for your company, using the step-by-step process discussed below.
Step 1: Divide the company into departments
Start by dividing the company into departments, each with control over a different aspect of business operations. The title of a department should be an indicator of its purpose and scope of operation. Here are some suggestions:
- Accounting (or Finance)
- Advertising, Marketing, and Public Relations
- Clinical (or Patient) Services
- Human Resources
- Information Technology
- Insurance and Risk Management
- Legal Affairs and Regulatory Compliance
- Manufacturing and Production
- Research and Development
- Sales and Distribution
- Building Maintenance and Security
Step 2: Gather information about each department
In each department, interview supervisors, managers, and selected employees who are subject matter experts to gather relevant information about the department and how it operates. That information should include:
- Overall purpose of the department;
- Hierarchy or chain of command of department employees (e.g., lab technician to junior research scientist/engineer to senior research scientist/laboratory manager);
- Job titles and duties of department employees;
- Required equipment, technology, and devices (e.g., computers, software programs, computer-aided design and manufacturing (CAD/CAM) technology);
- Required forms and documents (e.g., sales invoices, employment contracts);
- Applicable local, state, and federal laws and regulations (e.g., U.S. Food and Drug Administration's Good Manufacturing Practices requirements for medical devices; Health Insurance Portability and Accountability Act of 1996 (HIPAA));
- Ways of monitoring and regulating employee conduct, and disciplining misconduct (e.g., video surveillance, grievance reporting and dispute resolution mechanisms);
- Ways of keeping records (e.g., archival on backup tapes or CD-ROM);
- Ways of measuring employee and department productivity (e.g., manufacturing quotas, billable hours, quarterly sales figures); and
- Ways of ensuring computer and data security (e.g., Internet firewalls, antivirus software, adware and spyware removal software, confidential e-mail encryption).
Step 3: Develop policies for each department
Each module of information gathered in Step 2 deals with a particular issue. For each module, simply develop a corresponding policy that briefly states or establishes the issue, and then describes how that issue affects the operation of the department. For example, each department's policies should:
- State the overall purpose of the department;
- Establish a hierarchy or chain of command of department employees;
- Establish the job titles and job duties of department employees;
- Describe the required equipment, technology, and devices;
- Describe the required forms and documents;
- Summarize the applicable local, state, and federal laws and regulations;
- Describe the ways of monitoring and regulating employee conduct, and disciplining misconduct;
- Describe the ways of keeping records;
- Describe the ways of measuring employee and department performance and productivity; and
- Describe the ways of ensuring computer and data security.
Step 4: Develop procedures for each department
Likewise, refer to each policy created in Step 3 and then, develop a corresponding procedure that instructs department employees on how best to accomplish or carry out that policy. For example, each department's procedures should:
- Outline how to accomplish the department's overall purpose;
- Instruct employees on how to abide by the department's hierarchy or chain of command, i.e., how to address inquiries and report concerns to the proper supervisors and managers (include names, titles, and contact information of supervisors and managers);
- Instruct employees, supervisors, and managers on how best to perform their job duties (include names and contact information of in-house training personnel and subject matter experts);
- Instruct employees, supervisors, and managers on how to use equipment, technology, and devices (include contact information of equipment manufacturers and technical support);
- Instruct employees, supervisors, and managers on how to use forms and documents (include templates and samples of forms and documents);
- Instruct employees, supervisors, and managers on how to comply with applicable local, state, and federal laws and regulations (include contact information of applicable government agencies, such as the US Food and Drug Administration (FDA) and Equal Employment Opportunity Commission (EEOC));
- Instruct employees on how and when to report grievances against co-workers, supervisors, and managers; and instruct supervisors and managers on how and when to monitor and regulate employee conduct, and discipline misconduct;
- Instruct employees, supervisors, and managers on how and when to keep records;
- Instruct employees on how to comply with performance and production requirements; and instruct supervisors and managers on how to measure that compliance; and
- Instruct employees, supervisors, and managers on how to ensure data and computer security.
Step 5: Make policies and procedures user-friendly
There are several ways to put policies and procedures to paper. They can be developed and written in-house by salaried human resources personnel, or outsourced to a lawyer, consultant, or policy writer on a contractual basis. But regardless of where, or by whom, they are written, each department's policies and procedures should be user-friendly, meaning that they should be:
- Easy to access—by making copies available both in print (as a bound manual) and online (as a PDF file);
- Easy to read—by using language that does not exceed a high school reading level;
- Easy to understand—by providing definitions of common, industry-specific words or terms, such as legal, medical, or scientific terms; and
- Easy to follow—by providing contact information of equipment manufacturers, technical support, and in-house subject matter experts, plus cross-references to the policies and procedures of other departments.
Step 6: Audit policies and procedures
When the writing process is complete, have an attorney audit or examine each department's policies and procedures to ensure that they comply with all applicable local, state, and federal laws and regulations.
Step 7: Update policies and procedures
Finally, update or revise the company's policies and procedures whenever there is a change in the company's organization, structure, or business operations. Remember to keep track of when and what revisions are made, and to repeat audits after every major change.
Conclusion
Policies and procedures are certainly not a panacea for business failure. However, the increase in business efficiency that is a by-product of writing—and following—policies and procedures will reduce the likelihood of any company becoming yet another failure statistic.
BIOGRAPHY: Sylvia A. Ezenwa is a lawyer, author, and freelance writer based in Superior, Colorado. She is licensed to practice law in the State of Texas. She writes legal articles for trade and consumer publications. Contact her at e-mail:
sylvia@opedge.com
DISCLAIMER: The information in this article is not intended to constitute legal advice. Please consult an attorney regarding your specific situation.
Copyright 2006 Sylvia Ezenwa. Reproduction of any portion of this article in any form is prohibited without the expressed, written consent of the author. 
Table Of Contents - July 2006
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