1. Prioritize problems.  Use the Pareto Principle (80/20 rule) to separate the trivial many from the vital few.  Sure 100 things are going wrong, but if you can concentrate on the most important problems first, some of the rest will just go away in the process.
2. Focus on problems you have control over.  Sort your issues based on how much control you have, for example: full control, partial control or no control.  Focus first on those problems you have full control over and ignore those you have no control over.  You have to fix your department problems first. Don’t try to solve problems in other areas before you have made sure your area is totally under control.
3. Utilize Root Cause Analysis.  Using a structure problem solving methodology like root cause analysis (RCA) ensures you are solving the right problem right.
4. Make decisions with Facts.  Opinions can lead you astray.  Be sure to collect data and make decision by hard facts.
5. Break the problem down.  Big problems are harder to solve.  Break the problem into manageable parts that can more easily be solved.
6. Use your team.  You are smarter as a group than as any one individual so empower your employees to involve your whole team to solve problems.
7. Break out of your paradigm.  Any problem can be solved using the right paradigm.  If you are up against an impossible problem then change your paradigm to find the solution.
8. Obtain objective input.  Sometimes a fresh new look at the problem from someone outside of your area can provide the insight missing to solve your problem.
9. Consider all possibilities.  Solutions that may not have worked in the past may work today.  Don’t get caught in the trap of thinking – if it was tried before it can’t work.  It might just work this time.
10. Hire a consultant. If all else fails, then maybe its time to hire a consultant.  Consultants bring an objective viewpoint free of your internal politics.  Consultants have a wider range of tools to use like value stream mapping.  And consultants have experience solving problems encountered at other companies.

Top 10 Ways Management Solves Problems

Value Stream Mapping

1. Prioritize problems.
2. Focus on problems you have control over.
3. Utilize Root Cause Analysis.
4. Make decisions with Facts.
5. Break the problem down.
6. Use your team.
7. Break out of your paradigm.
8. Obtain objective input.
9. Consider all possibilities.
10. Hire a consultant.

If you are having trouble improving your processes, certifying to ISO standards, or implementing lean, then contact Bizmanualz.  We will be happy to bring an objective viewpoint, improvement tools and experience gained from solving problems encountered at other companies.

First on the list is…

1. Improve your accounting data. Cash is the lifeblood of any business.  Start improving your business by understanding your cash flows.  What products generate most of your profits and therefore your cash?  Develop daily, monthly and yearly accounting forecasts.  Ensure your data is timely and available in real time so you can respond to changes quickly.  Charting your data is one of the seven quality tools.  Consider charting your data to look for trends and then take action on those trends.
2. Price your products and services more appropriately. Pricing is not easy.  Whole books are produced on pricing products.  But there are some simple rules of thumb.  Raise prices on your high quality items and lower prices on your low quality items.  The idea is to focus on customer value not your cost of production.  If your items are high quality then say it with your price.  Don’t be afraid to raise your prices on those items that your customers really like and lower prices on the items they don’t like.  If you are not sure what your customers value, then ask them and they will tell you.
3. Hire the “right” people. Focus your employee hiring process on hiring great attitudes not personalities.  Great people are performers that demonstrate results.  Look past skills on a resume and look for great accomplishments.  Remember, good is the enemy of great so hire great people not people that are good enough.
4. Fire the “wrong” people.  If you have made a mistake then don’t be afraid to fire someone that is not working out.  If it’s not working out you will know it in the first 90 days, so end it now.  Don’t wait for improvement in your finances or their attitude.  Firing should be done sooner rather than later.  Nobody likes to do fire others, but your business health is more important.
5. Develop standards. Products have requirements and so does your business.  Define what “great” is for every job or process that is critical to your business.  Start with a process map and then create policies and procedures for each job or process and use them.  Benchmark your competition and set a higher standard for yourself.
6. Implement controls. Controls start with clearly defined objectives for every job or process that link back to your accounting system and the forecast.  Take time to understand what can go wrong and work to prevent it from happening.  Develop warning flags to indicate when things are going wrong.
7. Focus. A working management strategy requires focus.  Focus on the one thing that will make you great.  Budget your resources to grow your star opportunities and starve your problem poor performers.  Basically, get everything out of the way of your star opportunities.
8. Improve your sales process. Sales is a contact sport so make sure you are getting out in front of your customers often.  Build relationships with customers so they buy again, and again.  If your revenues are not growing then you are not selling. 
9. Understand your marketplace better. The marketplace is not static so expect it to change.  Understand what’s changing in your marketplace and either change with it or be changed by it.  Pay attention to what your marketplace needs and give it to them before your competition does. 
10. Build a strong brand. Your brand leads the business.  A filing brand leads to a failing business Marketing, vision and strategy are key elements of building a strong brand.  Once your brand is built, maintain your brand and what it means by following the other nine points above.  Don’t let your brand suffer or else your business will suffer too.

There you have it.  10 ways to improve your business for the new year.  Don’t delay.  Get started today by ordering policies and procedures in MS-Word templates.

Top Ten Ways to Improve Your Business

1. Improve your accounting data.
2. Pricing your products and services more appropriately.
3. Hiring the “right” people.
4. Fire the “wrong” people.
5. Develop standards.
6. Implement controls.
7. Focus.
8. Improve your sales process
9. Build a strong brand.
10. Understand your marketplace better.

I was afraid I would worsen the mess the company was already in. Employees scrambled to respond to executives commands.  Nobody knew what was expected of them, they complained of not having the materials to do their jobs and they couldn’t get their bosses attention.

I could sense the danger our company was in.  Some talked of quitting.  To the amazement of all my friends, I was now in charge.

“Can she really manage the company?”  I heard an employees whisper.  “No way!”  John exclaimed.  “She’s never managed anyone before in her life.”

Getting Organized

There were no plans or management expectations for any job.  The company had been growing too quickly and there never seamed to be enough time to document anything.  Managers wanted to hire 20 more employees but I didn’t want to throw people at the problem.  We needed to get organized first.

We needed Standard Operating Procedures and an Employee Handbook explaining the company’s rules and programs.  All positions needed job descriptions with clearly defined tasks, reports, and procedures. I spent the next few days searching for some kind of prewritten procedures.  That’s when I found an interesting ad in AICPA’s Journal of Accountancy for a Policies and Procedures Manual.  The ad discussed how to raise employee productivity while reducing common worker complaints.

How I Increased Profits

I then hit upon a plan.  I would use a prewritten manual as a template and have each worker enter the procedures for their position.  To get everyone on board, I would spend one morning each day training every department, explaining my expectations and the incredible value of having a Policy and Procedure Manual.

Imagine something in writing to refer to when someone is ill and you need to temporarily fill their position.  A tool that enables everyone to do more than just their job.  A tool that frees people to take stress free vacations.

Now you can rest assured that every task at every position is covered. Sixty days later, each department had their own Policy and Procedure Manual drafted.  This rough draft alone was worth its weight in gold.

We’re Organized now.  Profits are rising.  Employees are focused.  We didn’t need 20 more employees right away.  Instead I see executives smiling in the hallways – laughing with their employees.  I see the stress lifted and it feels good knowing I made a difference.

Transform Any Business

Business Policies and Procedures

This story is all too familiar for most companies.  Yet you too can transform your business with more productive, happier employees — in half the usual time.  The Business Policies and Procedures Sampler has shown thousands of CEOs, CFOs and other executives how to create more profits from their business operations.

You don’t need special “talent” either.  Just read the list of departments in the panel, decide which one needs to be more productive and let the Business Policies and Procedures Sampler do the rest.  And bear in mind no matter which one you choose the cost is less than a cup of coffee.  Even if you are already an excellent manager, you’ll be interested in this system for quickly developing policies, procedures, and forms.

Now On Sale for 50% Off

If you are sincere about wanting to increase the profits of your business — and you really want happier, more productive employees — order at once The Business Policies and Procedures Sampler. You will save $300 and receive 110 procedures, 124 supporting forms, and other supporting Word files that explain how to write procedures and use the manual.   You will receive this extensive set of policies, procedures and forms noted in the box on the right.

No-Risk 30-day Money-Back Guarantee

Act now before it’s too late to gain the benefits of this special offer.  If you’re not completely satisfied then return it within 30-days for a full refund.  How can you lose?  Start practicing how to Manage by Procedures by ordering the Office Procedures Bundle that is now on sale for 50% off during the month of December.

1. Work harder— find ways to increase your task focus.

Work when you are working.  Spend less time socializing and focus on what you need to get done today.  Focus on the tasks at hand and don’t wander into new tasks, multi-task, or get distracted.  The key is to focus and not waste your precious time at work.

2. Work Faster—find ways to pick up your work pace.

Develop a work rhythm and maintain your tempo (in lean we call it your takt time).  Find ways to increase your tempo and get on with the job at hand.  If you are tired or slowing down, then stop, and get a cup of coffee.  Keep your tempo up, up, up.

3. Work on Higher Value Activities—find ways to prioritize your tasks.

It’s important to understand what tasks will bring you more results.  Think quality over quantity.  Less is more.  Doing fewer higher value tasks will increase your productivity more than performing a greater quantity of low value tasks.  Using a visual management system can help focus your company on what is adding value.

4. Do The Things You Are Better At—find ways to focus on results.

You probably are better at the things you like doing.  As a result you get better at those things and do more of them more often.  So focus on what you are good at and you will be more productive.

5. Group Your Tasks—find ways to focus on related tasks.

Focus.  Don’t multi-task!  Group related task together and do them at the same time.  Answer your email, make phone calls, or write letters together at a designated time.  By constantly switching between tasks or stopping to read email, you will lose small amounts of time that make up the “switching costs”.  You will lose time because you have to wrap you mind around a new task and understand where you left off.  This learning curve time is waste and can be eliminated by grouping related tasks.

6. Work Smarter—find ways to simplify Your Work.

AS the number of steps to a task increases, so does the complexity and therefore, the time required to complete the task.  This is called the Law of Complexity.  Find ways to remove steps and reduce task complexity.  This simple process improvement plan will greatly increase your productive work.

7. Work Longer Hours—find more minutes in the day.

Arrive 16 minutes earlier, leave 16 minutes later, and spend 16 minutes less time at lunch and breaks created 48 minutes a day or 4 hours a week, which increase your available time by 10%.  Use this time to get organized for work and plan or review your day.

Every day you should review your day’s results to learn how to focus your time on the higher value tasks you are better at.  Use your extra time to plan, review and focus.  This is all part of Plan-Do-Check-Act (PDCA) that drives continuous improvement in a learning organization.

Seven Ways to Increase Your Productivity at Work

1. Work harder— find ways to increase your task focus.
2. Work Faster—find ways to pick up your work pace.
3. Work on Higher Value Activities—find ways to prioritize your work.
4. Do the Things You Are Better At—find ways to focus on results.
5. Group Your Tasks—find ways to focus on related tasks.
6. Work Smarter—find ways to simplify Your Work.
7. Work Longer Hours—find more minutes in the day.

Implementing a system of policies and procedures will help any organization get organized, focus on the work at hand, group tasks, and as a result, work harder and smarter.  Download free sample procedures to see how its done.

The Waldo A. Vezeau Award for Technical Achievement in the Field of Quality was established in 1971 to honor the St. Louis University Professor, a pioneer in the St. Louis Quality field, for his work in demonstrating and expanding the pursuit of technical achievement in the field of quality. A perpetual award by the St. Louis ASQ section, it is handed out each year if a candidate is nominated.

Mr. Anderson received the Vezeau Award for his work in designing training classes, creating presentation materials, and publishing articles on quality.  He has developed training materials for teaching lean principles, policies and procedures writing, process design, innovation in design and engineering, ISO 9001 internal auditing, and aligning systems of processes.  He has published hundreds of articles online at www.bizmanualz.com in his weekly blog on process improvement and quality management systems.

“Chris’ work on Quality and Process Improvement has been invaluable to the St. Louis quality community,” said ASQ St. Louis Section Chair John O’Reilly. “He helped bring the ASQ World Conference to St. Louis and for years grew the St. Louis Spring Quality Conference to become a major event here in St. Louis.”

Last year, Mr. Anderson received the Kaufman Award, a special recognition by ASQ for his work on the 64^th annual ASQ World Conference on Quality and Improvement, and another award for outstanding representation of St. Louis Section 1304 at the ASQ 2010 conference.  In 2006 he received the Extra Measure Award for above and beyond contribution to the St. Louis section.

The Vezeau Award has been given out 27 times since 1971.  Past recipients include: John Hinchin (1971),  Harry Hehner (1973), Floyd Smith (1974), Joseph Movshin (1975), Arnold Braun (1976), C. Joseph Lonsdorf (1977), Eugene Lawrence (1978), Philip Brumbaugh Ph.D. (1979), Leonard Canovi and John Jawarosk i(1983), Dale Hampson (1984), Robert Deufel Ph.D. (1991), Puran Luthra (1992), Andrew Taylor (1993), Dr. Satish Nayak (1994), Charles Mercer (1995), Steven Rigdon (1996), Ashok Agrawal (1997), James Derner (1998), Donal Denk (1999), Dale Besterfield Ph.D. (2000), Michael Schneider (2001), James Duarte (2002), Randy Baker (2003), William Meyer (2006), and Rob Herhold (2009).

About Chris Anderson

Mr. Anderson is a Senior Member of ASQ, and holds many ASQ certifications: Certified Quality Auditor (CQA), Certified Manager of Quality /Operational Excellence (CMQ/OE), Certified Quality Process Analyst (CQPA) and Certified Quality Improvement Analyst (CQIA). He is a past chair of ASQ St. Louis, Section 1304, has served as ASQ Region 13 Deputy Regional Director and on the Lean Division Leadership, Membership and Training Committees.  He is currently a member of the Six Sigma, Lean, and Quality Management Divisions of ASQ as well as ASQ St. Louis section 1304 leadership team.

About Bizmanualz, Inc.

Bizmanualz (www.Bizmanualz.com) is speeding the evolution of SaaS-delivered document control software.  The company’s Onpolicy Procedures Management Software (www.onpolicy.com/) is designed for ISO 9001 document compliance and encompasses a full library of policies, procedures and forms for many business departments.  This SAS 70 Level II certified solution simplifies document control and allows clients to focus on their core business. More than 20,000 companies rely on Bizmanualz solutions and services to comply with document control requirements.  Bizmanualz is located in Saint Louis, MO. and is an ISO 9001:2008 certified company.

About ASQ

ASQ is a global community of people dedicated to quality who share the ideas and tools that make our world work better. With millions of individual and organizational members of the community in 150 countries, ASQ has the reputation and reach to bring together the diverse quality champions who are transforming the world’s corporations, organizations and communities to meet tomorrow’s critical challenges. ASQ is headquartered in Milwaukee, Wis., with national service centers in China, India and Mexico. Learn more about ASQ’s members, mission, technologies and training at www.asq.org. The ASQ St. Louis, Section 1304, is one of the oldest and largest ASQ sections in the Unites States.

Contacts:

Bizmanualz, Inc.: Dan Davidson, 314-863-5079,  dan@Bizmanualz.com
ASQ: Lynda Nicely, 800-248-1946 x7587,  lnicely@asq.org

One reason for this might be that your procedures are too long. If you have 35-page-long procedures — especially if that’s all text — it’s probably not fair to expect your employees to understand, let alone use, them. At that length, there’s the very real risk that your procedures are unclear, overly complicated, and just plain boring.

Another reason procedures may not be up to date is that they’re not followed.  If your people were using the procedures as written and taught, they’d be more likely to notice when things are out of date or out of sync with other company practices. Revisions are a healthy indicator of ongoing use and revisions help to create effective procedures.

Why Don’t My Employees Follow Procedures?

Perhaps your people can’t find your procedures, or possibly they’re unaware that you have a procedure for this or that activity. Maybe because it’s not right in front of them¹, they’re assuming you don’t have a formal procedure. Nonexistent or uncontrolled procedures imply that your quality management system is out of control.

There’s also the possibility that your procedures are too simple; that is, they’re too broad and general to suit a specific situation. If your procedures aren’t directly to the point and don’t offer information specific to the process your employees are working on, they won’t be used.

Poorly written procedures are as bad as generic procedures.  If your procedures are incorrect or confusing, your employees will not use them, either.

Sometimes, procedures are not designed for ease of use. Either they’re hard to navigate in themselves, or their formats are inconsistent. Formats that are inconsistent across departments and work areas are a frequent source of confusion.

It helps to think about who procedures are written for when designing your procedures. Procedures are primarily designed to be training aids: Frequent, experienced users don’t need procedures often, if at all. They should periodically review procedures to be sure they’re current but on a day-by-day basis, they’re not your target.

Occasional users need reminding, but it’s novice users who need procedures the most. They’ll need the guidance of a procedure until the process has become ingrained.

How to Make Your Procedures Work for You

To understand how to make your procedures work for your employees, you need to pay careful attention to the following:

1. Develop a system that keeps your procedures current using intranets, social media constructs (blogs, wikis, etc.), document management systems, software, or new knowledge management systems.
2. Keep your procedures concise, clear, and to the point — no tangents or extraneous material.
3. Use pictures, graphics, and examples to illustrate objectives.
4. Make your procedures available where they’re needed most.
5. Develop a system with easy access (see point #1, above), make them searchable online, or make them part of the job (see #4).
6. Revision control is required for ISO and must be part of the job (see #1 & 4).
7. Eliminate generic procedures entirely.
8. Keep procedures updated and useful (also see #1 & 4).
9. Create and maintain a common, easy-to-navigate format for your documents.
10. Instill the discipline to follow procedures in your organization by making the process “owners” part of the procedure development.

Now that you know the secret to writing effective (i.e., useful) policies and procedures, what are you waiting for?

NOTES

¹ISO 9001, for one, requires that you have documents available at the point of use.

“Steve has demonstrated proficiency and comprehension of quality management principles and practices,” said Bizmanualz President Chris Anderson. “He is one of only two at Bizmanualz who have this certification. I’m sure this will help Steve, both as a Product Manager and ISO 9001 Quality Manager.  Of course, this provides our customers additional value, too.”

An ASQ-Certified Manager of Quality and Organizational Excellence leads and champions organizational process improvement initiatives. A CMQOE facilitates and leads teams, establishes and monitors customer/supplier relations, supports strategic planning and deployment, and helps develop measurement systems to assess, maintain, and improve an organization’s quality management system, or QMS.

Steve Flick, Bizmanualz Product Director

“ASQ certification provides formal recognition to professionals who have demonstrated an understanding of and a commitment to quality techniques and practices in their jobs and careers”, explains David Spong, current ASQ President. “This is a great accomplishment and, although not a formal registration or licensure, it represents a high level of peer recognition.”

Since 1968, when the first ASQ certification examination was given, more than 160,000 individuals have taken the path to reaching their goal of becoming ASQ-certified in their field or profession, including many who’ve attained more than one designation.

Steve has been with Bizmanualz since 2005 as its Product Director.  He is also responsible for maintaining the company’s quality management system (QMS).  He is a senior member of ASQ and holds the rank of ASQ Certified Quality Auditor (CQA), as well as the CMQOE.  In addition, Steve is a member of the Audit and Education Divisions of ASQ and is a member of ASQ-St. Louis, section 1304.

Document Compliance Management since 1995

About Bizmanualz

Bizmanualz is speeding-up the evolution of SaaS-delivered document compliance applications.  The company’s policy management software is designed for ISO 9000 document compliance and encompasses a full library of over 2,000 policies, procedures and forms for various business departments.  This SAS 70 Level II certified solution “simplifies document compliance” and allows clients to focus on their core business functions. More than 20,000 companies rely on Bizmanualz solutions and services to comply with document management requirements.  Bizmanualz is located in Saint Louis, MO. and is an ISO 9000 certified company.

About ASQ

ASQ is a global community of people dedicated to quality who share the ideas and tools that make our world work better. With millions of individual and organizational members of the community in 150 countries, ASQ has the reputation and reach to bring together the diverse quality champions who are transforming the world’s corporations, organizations and communities to meet tomorrow’s critical challenges. ASQ is headquartered in Milwaukee, Wis., with national service centers in China, India and Mexico. Learn more about ASQ’s members, mission, technologies and training at www.asq.org.

Contact:

Bizmanualz – Dan Davison, 314-863-5079,  dan@bizmanualz.com

ASQ – Linda Nicely, 800-248-1946 x7587,  lnicely@asq.org

Procedures describe a process, while a work instruction describes how to perform the conversion itself.  Process descriptions include details about the inputs, what conversion takes place (of inputs into outputs), the outputs, and the feedback necessary to ensure consistent results. The PDCA process approach (Plan, Do, Check, Act) is used to capture the relevant information.

Questions that need to be answered in a procedure include:

• Where do the inputs come from (suppliers)?
• Where do the outputs go (customers)?
• Who performs what action when (responsibilities)?
• How do you know when you have done it right (effectiveness criteria)?
• What feedback should be captured (metrics)?
• How do we communicate results (charts, graphs and reports)?
• What laws (regulations) or standards apply (e.g., ISO 9001, 8th EU Directive, IFRS, Sarbanes-Oxley)?

We can look at documentation as a pyramid comprised of four levels (or types of documents):

Policies Procedures Pyramid

Level 1 – Policies and Objectives
Level 2 – Procedures
Level 3 – Work Instructions
Level 4 – Forms and other Documents

Level 1 and Level 2 represent your policies and procedures.  What is the difference between policies and procedures? Your policies are at the top of the pyramid, like a beacon from a lighthouse.  They direct the procedure in the proper direction and provide a foundation for the procedure’s description of the process being documented.

1. Policies

A policy is used as a course of action to guide and influence decisions.  In an ISO 9001 system this may be found in the “Quality Manual“. The purpose of this level of documentation is to state concisely the policies and objectives of the company, organization, or division.  Policies are similar in some ways to mission statements.

2. Procedures

Your procedures are the second level of documentation, which should be more detailed and describe who does what and when (in sequence or order).  Activities for a department or function might be listed along with the functional titles or positions responsible for the procedure. These procedures can be text based but many use a process map to communicate the information.

3. Work Instructions

A work instruction describes how to accomplish a specific job.  Visual aids, various forms of job aids, or specific assembly instructions are examples of work instructions.  Work instructions are specific.

4. Forms and other Documents

The last level of documentation includes forms used to create records, checklists, surveys, or other documents used in the creation of a product or service.  Records are a critical output of any procedure or work instruction.  They form the basis of your process communications, audit material, and process improvement initiatives.

So, What Is the Difference between a Procedure and a Work Instruction?

• Procedures describe the process: who does what, when they do it, and under what criteria.
• Work Instructions describe how to accomplish the process conversion of inputs into outputs.

Learning how to write policies and procedures is easy once you understand the four levels of documentation and the difference between policies, procedures, and work instructions. Sample policies and procedures from Bizmanualz make it even easier!

It is interesting to note that, in many cases, the internal control system at many companies consists of volumes of instruction-like procedures that document activities. If a company is taking the time and effort to develop a procedure-based financial control system, it’s worth the additional effort it takes to:

• Understand major financial processes;
• Establish key finance polices and goals (including performance goals and accurate financial statements);
• Determine which processes introduce the greatest amount of risk and which are material to our financial goals;
• Prioritize development of the internal control system according to materiality, risk, and other important criteria;
• Incorporate best practices; and
• Foster an environment in which continual improvement is the status quo.

Is there a better indicator of an effective system of controls than clear goals and key performance metrics that are consistently measured and regularly improving? And are you taking advantage of the financial control system to improve process results and your financial performance?

Easily Editable Procedure Templates for Internal Control


CFO Accounting Procedures Series

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Accounting Procedures Manual

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Financial Procedures Manual

Improving Processes in the Production Area and the Office

Discussions of process improvement and quality commonly reference the production area, or shop floor. Is it any less important for your other key office processes (for example, accounting and finance) to function effectively and efficiently? If you’re a service provider rather than a manufacturer, are quality and process improvement less material? (Of course not.)

How well does your company manage financial aspects like working capital, debt and investments, and leasing? These are as vital to a company’s success as efficient product design and production, yet few attempt to understand and improve finance processes to the same degree as, say, the product development process.

In fact, a lack of focus on finance is common, especially among privately-owned SMBs. Research shows that a majority of SMBs do not create capital plans, do not actively manage working capital, nor do they conduct analysis of financial statements.

Do you know if you’re making money on the cash you borrow? How about the assets you deploy, like accounts receivable, inventory, or cash? What about asset acquisitions you make? These are hard questions but they’re the kinds of questions you should be asking before you raise debt or equity capital.

What really represents the bigger threat to the success of your business:

• One of your Receivables staff borrowing 5-10 euros from petty cash when they’re short of cash and they want to go out to lunch on Friday? Or…
• Not having well-thought-out and consistent methods for managing high level finances that — if your financial situation suddenly and significantly worsened — could result in millions’ worth of losses?

The answer should be obvious.

A Financial Control System that Focuses on Improvement and Success

We’re not implying that businesses ought to ignore cash drawer controls. What we are suggesting is that focusing on low risk/low payoff components while neglecting key aspects doesn’t indicate a system of controls that appropriately addresses risk or that has its priorities in order.

Focusing on the mundane or trivial will do little to improve your overall financial performance! Internal control systems should be designed for continual improvement in key aspects of your operations, such as:

• Regularly reviewing and improving the overall capital structure;
• Using a capital plan to minimize the cost of capital while strengthening your debt/equity position;
• Managing working capital so excessive inventories and receivables do not sap your financial resources;
• Ensuring proper calculations and scenarios are explored while making debt & investment or leasing decisions; and
• Maximizing returns while minimizing costs for cash and merchant accounts.

A system of well-defined processes is not only about control or compliance: it is also about consistently striving to do a little better. Control systems that are designed only to achieve compliance are doing the bare minimum, which means they represent missed opportunities — opportunities to gain and keep a competitive edge, for instance.

That ought to be enough reason for any size and type of company to think about using the process approach to ensure continual improvement and an effective system of internal controls.

To help you build an effective system of internal controls for success, consider the Bizmanualz Finance Policies, Procedures, and Forms manual. Download a sample and see for yourself what companies like yours have saved in planning and development alone!

The dynamics of employee recruiting and retention are getting more and more complex.  The 21st century has introduced an array of new HR-related issues, such as:

• Family/medical leave;
• Telecommuting;
• Flexible work schedules;
• Global cultural workplaces; and
• A workforce that may not have the skills to meet forecasted hiring requirements for future job openings.

As baby boomers leave the workplace, the number of available workers to fill the projected demand is not expected to keep up.  How does a company’s Human Resources department plan for such a contingency?  Senior management must recognize that circumstances like these could prevent the company from accomplishing its goals.  The answer is to ensure that Human Resource Management is a key ingredient in strategic planning and the future success of the business.

Employee Recruitment and Hiring

The employee hiring process is generally initiated once you’ve identified a need to bring on one or more additional employees to fulfill certain requirements of your business plan. It officially starts when you fill out a new employee requisition, including required experience, skills, and qualifications, and ends with the candidate selection and offer, followed by orientation and reporting to work.

After the employee requisition, your staff prepares an appropriate advertisement to solicit qualified candidates.  The advertisement should make your requirements clear (e.g., all applicants must complete an application form) and should include such information as:

• Job title;
• Job qualifications;
• A description of duties; and
• Salary or pay rate.

The application form cannot ask the applicant to divulge any information that could be used to unfairly discriminate (questions of race, religion, etc.).  All language in the advertisement should be specifically job-related.  A “final date for accepting applications” may be indicated to ensure the company meets its own requirements, as well as to limit the number of applicants, so long as that date is conspicuous.

The advertisement may be posted in state employment offices, as well as in newspapers, radio, television, trade journals, announcements on yours and other websites. Some companies’ recruitment processes include job fairs and/or using a recruiting service. A statement that you are an “Equal Opportunity Employer” is required of job postings in the USA, the EU, and other areas of the world.

Depending on your location(s), you may have to comply with regulations pertaining to recruiting, selection, and hiring of employees.  Examples of laws affecting hiring include the:

• Age Discrimination in Employment Act (USA);
• Americans with Disabilities Act (ADA, USA);
• Various Civil Rights Acts (USA);
• Racial Equality Directive (EU); and
• Employment Framework Directive (EU).

Interviewing Applicants

Once you’ve identified qualified candidates, you should invite them in for an interview.  The interview is an opportunity to:

• Meet the applicant;
• Exchange information;
• Ask additional, or more in-depth, qualifying questions;
• Allow the individual to ask their own qualifying questions (about the company, the job opening, etc.)

The interview is for assessing the applicant — and vice versa — and discussing both parties’ needs in detail.

The interviewer must be careful not to ask questions that are considered confidential, discriminatory, illegal, or not job-related. Certain questions (about citizenship status, age, national origin, children, transportation, height, weight, disabilities, marital status, religion, military service, or housing) are off-limits, according to various privacy and rights laws. A sample (i.e., not an all-inclusive) list of questions one may “ask”/“not ask” an interviewee is included in the Bizmanualz^TM Human Resources Policies, Procedures, and Forms manual. In any case, open-ended questions are the best, in that they allow the applicant to provide answers voluntarily.

An interviewer needs good interpersonal skills and should always keep thorough recorded (written) notes of the interview.  A thorough interview record not only helps the applicant screening process — it can help defend the company if someone who’s not hired decides to take action against the firm on the basis of discrimination.

Title VII of the Civil Rights Act of 1964 and other local and state laws prohibit the interviewer from asking questions that could be used to discriminate against an applicant on the basis of race, gender, or other issues. Make sure applicants know if there are additional applicants to interview and that a hiring decision will be made by an approximate date.

Background Checks

Background checks should be performed on applicants who’ve succeeded at the interview phase of the hiring process. By the end of the interview, the applicant should be asked to read and sign a form authorizing your organization to conduct a background check, including a criminal check and a check of past employers.  This form should include a statement (“waiver”) that both you and the prior employer are released from financial liability from any suit that may arise from obtaining or releasing background data as long as the data provided are accurate.

Remember — if you hire an employee without performing an adequate background check and he/she later endangers other employees or customers, you may be held criminally or civilly liable.  Look for gaps in employment, verify addresses, confirm qualifications and education, talk to past employers, and verify professional references. Once again, keep careful, thorough documentation of all background checks.

A credit check — which has become more popular in recent years, regardless of the type of job offered — cannot be performed unless the applicant has approved it in writing, thereby releasing you from liability.  A credit check should be performed only if an applicant’s financial condition is relevant to the job (e.g., bank teller, loan officer).

If employment is denied due to the results of a credit check, the applicant must be notified in writing of the company decision and must be given the name and address of the credit reporting organization that provided the decisive information. Many states have specific “employment credit check” regulations; check with your state’s labor department or division of employment security for more information.

Federal and state anti-discrimination laws place legal limits on a company’s ability to obtain arrest and/or conviction records.  A criminal background check should only include convictions. Furthermore, only a record of conviction can be the basis for rejection, and then only if business necessity requires it (for example, a bank may reasonably refuse to hire someone convicted of embezzlement for a teller or teller supervisor position).

Again, many state laws are more restrictive than their federal counterparts; this should always be considered when a criminal check is required.  Some states require an employer to conduct criminal record checks of applicants for jobs that involve working with minors (e.g., day care, teaching, coaching) or in health care; always check with your state for guidance on criminal record checks.

Discriminatory Restrictions (Federal & State)

Companies that have fifteen or more employees are subject to federal anti-discrimination practices covering recruiting, application and hiring processes.  States have more laws that are restrictive and generally affect even the smallest companies as to anti-discrimination.  A company cannot discriminate in hiring based on sex, race, color, national origin, citizenship, disability (physical or mental), religious affiliation, military service, pregnancy, personal bankruptcy, refusal to take a polygraph test, or age.

Selection (New Hire Employee)

The successful applicant should be processed into the organization in an orderly manner beginning with a company orientation, a review of the company policies concerning employee’s, a tour of the job site, a safety brief concerning the job, introductions to associated supervisory personnel and co-workers, and processing into the payroll system.

GENERAL EMPLOYMENT ISSUES

The new hire is sometimes asked to sign an “at-will” employment statement, which means there is no contract binding either party to the other (unionized employees being an obvious exception). In other words, the employer or the employee may terminate the work relationship at any time without cause.

You may hire applicants who are not U.S. citizens.  However, once a non-citizen is offered a job he/she must have an “Alien Registration Receipt Card” (USCIS Form I-551, commonly known as a “green card”) or an appropriate “work visa”, which shows that the individual has the right to work within the United States.

Also in the USA…within three (3) days of employment, every new hire must fill out a “Form I-9” and supply identification and proof-of-eligibility documents listed on the I-9. This is required of all firms, in accordance with the Immigration Reform and Control Act (IRCA). Note that I-9 forms must be kept separate from personnel files.

Minors (those under 18 years old) may be hired, except where certain work hazards (e.g., working with explosives, in a sawmill) are a normal part of the environment, where minors are prohibited in accordance with the U.S. Fair Labor Standards Act.

Minors that are 14 or 15 years old may work only during certain hours after school (e.g., not after 10 p.m.), not more than three hours a day, and no more than 18 hours a week; check your state and local labor statutes for specifics.

Employee Relations / Retention

The most important elements in employee relations are:

• Ensuring that employees are paid a fair wage for their efforts, combined with a benefits package that compares favorably with standards for businesses similar to yours;
• Respect is important to employees — they need to know their efforts are appreciated;
• Respect for their management team; and
• Having a sense that they will be individually and collectively treated in a fair, lawful manner.

The company can communicate employee appreciation through performance appraisals, or performance reviews.  Employees want the opportunity to hear how they are doing in comparison to what you expect from them and how they might compare to other workers in similar functions.  Developing individual and group performance standards is an essential ingredient in employee relations and retention.

Performance standards should be clear, concise, consistent, and in writing.  Effective performance appraisals are objective, assesses employee potential, identify opportunities for improvement, allow for compensation review, and can be used to identify training needs.  They can be a powerful motivator for the employee, if used correctly.

The employer needs to decide on how they will administer base pay and incentive or bonus programs, as well as when pay and performance will be reviewed with the employee.  Most compensation packages (in small to mid-size companies) include Salary + Incentives + Benefits.  A reasonable and common relationship is Salary (65%) + Incentive (5-8%) + Benefits (27-30%).

The compensation function falls under wage and salary administration.  This includes establishing pay rates and grades, establishing job classifications for pay, compliance with state & federal minimum wage laws and annual reviews of your company’s position with regard to pay and benefits as compared with national and local businesses similar in nature.  Market salary surveys can be purchased and will provide valuable comparative information on a local, regional, national, and line-of-business basis.

Another key employee relations ingredient is deciding which benefits to provide.  Legally required benefits include:

• Social Security;
• Medicare;
• Unemployment insurance;
• Workers’ Compensation (insurance for work-related injury);
• Federal and/or state leave laws (e.g., FMLA); and
• Continuation of group health insurance coverage after termination (e.g., COBRA).

Insurance programs are normally offered to employees (and are sometimes mandated by law).  Most plans for employee insurance benefits include medical, hospitalization, vision, dental and life insurance.  The company, the employee, or a shared form of contribution by both the employee and company may pay for the insurance program.

Other benefits may be included, though they are not required by law, as additional incentives. (Generally, if such benefits are offered to one employee, they must be made available to all employees, in accordance with anti-discrimination law.) These benefits include:

• Retirement and pension benefit plans (e.g., 401K);
• Employee stock ownership plans (ESOP);
• Defined benefit plans (a monthly pension payment upon retirement); and
• Defined contribution plans (money periodically deposited by the company into an employee’s individual retirement account).

Other benefits include payment for time not worked (e.g., vacation, sick leave, long-term disability (LTD), holidays, bereavement). It is important to note that employers are not required to give any Federal or state holiday as a day off, with or without pay. However, all employers are required to excuse employees for military leave and jury duty (and in some states, time off to vote); review your state laws for exceptions.

Companies with generous benefit plans might also include legal insurance, tuition reimbursement, payment toward credit counseling or psychological counseling, and reimbursement for parking and transportation.

Benefits are very important to the employee.  Your benefits program sends a direct message to your employee community — it tells them how much you value them.  It tells them if you think of them as assets or liabilities.

All of these issues are covered in the Human Resources Policies, Procedures, and Forms manual from Bizmanualz. It provides a great start for any growing company.  It’s well researched, covers the core human resource management issues, provides guidance and sample forms, and even includes a sample Employee Handbook.  Check it out and let me know what you think.