The economy is said to be improving. Though they’ve had their ups and downs, the Dow, NASDAQ, and other market indexes are up from a year ago. The housing market may have also hit bottom.

One indicator that doesn’t bode well, however, is the unemployment rate. Firms still aren’t hiring. They’re getting by with what — or whom — they have. What does this mean for the currently employed? It means we’re expected to be more efficient…more productive. “We’ve go to do more with less!”, we so often hear it. This is frustrating for both sides. Employees are trying their hardest, in virtually all cases. And, employers want to keep growing.

As a manager or owner, simply telling your employees “we have to be more efficient” won’t motivate them. Saying, like wishing, doesn’t make it so. You have to be a mentor and coach to get the most out of your employees — all of them.

You say you “don’t have time for that”? Well, do you have time for inadequate performance? Do you have time to replace and train a replacement? Time to acclimate them to the “company way”? Time to recoup the investment you’ve already made or the experience? The wisdom?

How do your employees stack up to expectations? Are they performing at a satisfactory level? If not, could that be due to:

• Poor training?
• Inadequate equipment?
• Time pressure?
• Lack of priorities and/or organization?
• Poor communication?
• Lack of motivation?

Home in on the reason(s) for employees’ underperformance to determine if better coaching will address them.

What, When, and Why — Does the employee know what to do, when to do it, and why? If not, you need to tell (maybe even show) them.

What Is and What Should Be — What is the standard of performance and how does the employee measure up to it? Does the employee know what the standard is? You have to let them know clearly what’s reasonably expected of them.

Communicate — Does the employee know his/her performance isn’t meeting the standard? You need to let them know.

Train — Does the employee have the skills needed to do the tasks required of them? If not, you need to invest time in training to get higher performance in return.

Realistic Expectations — That standard of performance: is it reasonable? What’s it based on? Is your standard current? Stretch goals are fine…as long as they’re fact-based.

The Butterfly Effect — What impact does substandard performance have on the rest of the organization? The employee may need to be reminded of his/her place in the firm, their relationship — direct and indirect — to everyone else, and how inadequate performance affects other people and processes. The organization is, after all, only as strong as its weakest links.

Ample Resources — Does the employee have enough (time, money, materials, etc.) to get the job done? You have to see that they do.

Performance Hurdles — Is something beyond the employee’s control affecting his/her performance? Is there something you, the employer or manager, can do to help?

Positive Feedback — Is the employee getting the occasional, well-placed “attaboy”/”attagirl” for a job that exceeded expectations? Or, are they being “rewarded” by having more responsibilities heaped upon them? “You did this so well, we’re going to give you more” can be as damaging as “You stink!”

Motivation — Is the employee’s heart in the job? If not, more training, better equipment, and more resources (like time) aren’t going to solve the problem of poor performance.

Now, let’s say you’ve analyzed the situation and have come to the conclusion that coaching will help turn the employee’s performance around. Here’s how you might go about it:

1. HOLD THE COACHING SESSION IN PRIVATE

Nobody but the two of you need be involved.  Be warm and courteous. Remain calm and keep a positive attitude.

2. CLEARLY STATE UP FRONT THE REASON FOR THE SESSION

Don’t be blunt, though. Say “I’d like to discuss (XYZ)”, rather than “I need to talk to you about your recent performance problems.” You want to engage them, not talk at them.

3. SHOW YOUR CONCERN FOR THE PERFORMANCE ISSUE

Example: “It looks like we’re not following up with customers as quickly or as thoroughly as we should. We used to get back to 80% of our customers within 10 days of their purchase. Now it’s more like 10%.” Focus on the problem, not the person.

4. DESCRIBE THE WAYS IN WHICH THE PERFORMANCE ISSUE AFFECTS OTHERS (INCLUDING YOU)

Example: “When we don’t follow up with customers in a timely manner, they probably feel like we don’t care about anything but their money.” Emphasize “we” and “the team”. Putting the focus entirely on them only deepens the sense of isolation they already feel.

5. ACKNOWLEDGE THE EMPLOYEE’S SIDE OF THE ISSUE…AND LISTEN

Regardless of whether the employee apologizes, rationalizes, promises to do better, etc., hear them out. They may have a valid explanation (like that they’re overworked — you might do more with less but you can’t do more with nothing).

Remember: there are always at least two sides to every story.

6. GET THE EMPLOYEE’S INPUT ON HOW TO IMPROVE THEIR PERFORMANCE

Ask, “What can be done to improve our follow-through with customers?” There may be some beautiful gems hidden among their thought nuggets – help them find those gems. After all, they’re on the front line every day, so they’ll have insights you won’t.

7. DISCUSS POSSIBLE SOLUTIONS

Work with the employee to develop a number of potential solutions to the performance issue. Make use of the employee’s ideas and offer guidance, but don’t take over the project. You’re a coach, not a critic.

8. AGREE ON A SOLUTION AND ACTIONS TO TAKE

Identify what you both think is the best solution. Agree on how to arrive at the solution and on reasonable deadlines. Be clear of your intent – that you want status updates so you can help them, not because you get any joy out of “riding” them.

Be sure to put the action plan in writing and make sure you both have a copy.

9. CHECK ON THE EMPLOYEE’S PROGRESS AND CONTINUE TO GET THEIR FEEDBACK

Give them additional guidance and reinforcement. Don’t hover around them constantly. Just make sure that they’re not stuck on something. If they have ideas on how to improve the process or the result, listen and evaluate. If they have a good idea, let them run with it.

10. GIVE POSITIVE FEEDBACK FOR POSITIVE RESULTS

Every time the employee meets a deadline or hands in a “deliverable”, give them a sincere “Good job!” Don’t say, “That’s more like it”, or “You should’ve been doing this all along.”

Remember — even star employees who are strongly self-motivated (and there are probably more of them out there than you think) can use a sincere pat on the back…or a handshake…or a shout-out. So, you can imagine how an employee who’s been struggling will benefit from quality feedback.

You’ve been there. You know how good it feels when someone takes you under their wings. Give back what you got.

Now it’s time for your feedback. Tell me what you think.

* * * * * * *

References

Toastmasters International Advanced Communication and Leadership Program, “Interpersonal Communication” — Project #4, “The Coach”.

]]> http://www.bizmanualz.com/information/2010/06/28/ten-keys-to-improving-employee-performance.html/feed 3 http://www.bizmanualz.com/information/2009/08/03/what-is-a-process-map.html http://www.bizmanualz.com/information/2009/08/03/what-is-a-process-map.html#comments Mon, 03 Aug 2009 17:18:29 +0000 Chris Anderson http://www.bizmanualz.com/information/?p=891 You have probably heard of the term “Process Map” or a process flow chart (the terms process map and process flow chart are used interchangeably) to describe a process. But what exactly is a process map anyway? Are there different types of process maps? Are all process maps created equal? We’ll try to answer some of these questions by taking a look at seven different types of process maps and how they are used to describe a process. After all, the foundation of all businesses is a common set of core processes.

In summary, a process is a structured set of activities that transform inputs into outputs. We believe processes should be measurable with clear performance indicators. Processes are strategic assets of an organization that if managed well deliver a competitive advantage. And processes assist us in defining responsibilities, internal controls, and work standards for compliance, consistency, and performance.

Process Flows or Activities

A “process map” visually describes the flow of activities of a process. A process flow can be defined as the sequence and interactions of related process steps, activities or tasks that make up an individual process, from beginning to end. A process map is read from left to right or from top to bottom. We prefer to minimize “backflow” or arrows that go from right to left or bottom to top because it can greatly confuse the reader (more on this later).

It helps if a process map identifies a Supplier providing Inputs to a Process, which produces Outputs for a Customer. We call this basic format a SIPOC (Supplier, Input, Process, Output, Customer) diagram (Figure 1). There are many variations of this SIPOC theme but it does provide a useful framework for understanding the critical elements, sources, and outputs of a process.

Standard symbols are used within a process map to describe key process elements. These symbols come from the Unified Modeling Language or UML, which is an international standard for drawing process maps. There are many symbols that can be used. Figure 2 provides some common UML symbols.

Better Understanding of a Process

Process maps are used to develop a better understanding of a process, to generate ideas for process improvement or stimulate discussion, build stronger communication, and — of course — to document a process. Often times a process map will highlight problems and identify bottlenecks, duplication, delays, or gaps. Process maps can help to clarify process boundaries, process ownership, process responsibilities, and effectiveness measures or process metrics. Process maps can be very effective at increasing process understanding during training.

Process maps are not limited to a single department or function. For example, the ISO 9000 Quality Management Systems standard requires some type of process map of the organization’s quality processes. Mapping should be the first step in designing a process or in documenting a procedure. Why? Because, to improve a process you must understand it and most of us understand a graphical picture better than a written procedure.

Process maps come in many different forms but they all tend to use a SIPOC format and a standard UML for symbols. The most common process map types include: High-Level Process Map, Process Flow Chart, Document Map, Cross Functional or Swim Lanes Process Map, Value Stream Map, Work Flow Diagram, and a Rendered Process Map. Over the next several weeks, we will take a closer look at each of these maps and see how they are used within an organization.

Read Part I (Types of Process Maps)….

Now look at quality in light of behavior change.  What do you design and develop that causes behavior changes.  Certainly that would include teaching methods, but also the curriculum, course length, how the day is structured, homework, grading, extracurricular activities, grade levels, meals served, etc.

Consider a factory that makes a product.  The factory worker uses work instructions, methods, and tools to create the product.  The system the worker uses consists of these very same work instructions, methods, and tools.  Problems or defects with the product produced, as a result of these work instructions, methods, and tools, require changes to the system.  The product is not the work instructions, methods, or tools.  Seems obvious but, how would this work in education?

Let’s take a look at the teacher in a school.  The teacher uses work instructions, methods, and tools to create the product we call learning, just like a factory worker.  If the product produced (learning) has problems or defects (i.e. learning is not occurring as expected) then the teacher must change their work instructions, methods, or tools in order to decrease the defect rate and increase the quality of the product.  Teaching is to a school as working is to a factory.

There was a European study done in 1997 regarding the Application of ISO 9000 Standards to Education and Training.  Although it references the old ISO 9000:1994 standard instead of the current ISO 9001:2008 standard, it is still a worthy interpretation of ISO 9000 for education.

People Don’t Create Defects. Systems Do.

People use the system (made up of work instructions, methods, and tools) to create products.  Neither teaching nor working is the product.  They represent the system used to create the product.  The consumers consist of the students, parents, and society whom all consume or benefit from the learning.

The effectiveness of any system is a function of product flow.  Variations and defects obstruct the product flow causing rework, delays, and unsatisfied customers.  The work instructions, methods, and tools need to be aligned to deliver maximum learning at a maximal product flow (progression through the grade levels).  Effectiveness occurs when the two are aligned to produce the highest composite result.

Education Quality Basics

Purchasing – Think about art supplies, books, equipment, meals, sporting goods, or furniture.  If there are purchasing specifications that are important to learning than those items need to be controlled.  Do you have an obligation to provide safe and healthy meals?  What about sufficient supplies, equipment or furniture for learning?

Production & Service Provisions – Think about the work instructions or teaching procedures to ensure some type of consistency or uniformity.  How are these controlled, revised, distributed, and validated (how do you know they worked?).  Can you trace or track learning (or the lack there of) to a specific teaching method or event?

Customer Property – Think about what kids bring to school: coats, notebooks, books, supplies, etc.  Do you have an obligation to care for their property, provide lockers, or control access?  What do you do if an item is damaged or misplaced?

Control of Non-Conforming Product – A non conformance can be in the teaching methods, student behavior or performance, or purchased items needed for learning.  What do you do with broken furniture, equipment, or lockers?  What is your process for removing it from the learning process so that it does not hinder other students from learning?

Corrective Action – What is the process for monitoring, reviewing, and adjusting the learning system as a result of complaints, comments, or audit findings?  Each incident should be tracked, investigated and resolved.  A good complaint handling process is the best ways to instill a culture of continuous improvement in your organization.

Preventive Action – Do you review your methods and make changes BEFORE you receive complaints?  If you get a complaint your action is corrective, if you fix it before you get a complaint than its preventive.  So what are you doing to prevent complaints?

A class is like a manufacturing cell in a factory.  The batch size is the number of students.  But one class does not make a graduate.  A student must pass through numerous classes or manufacturing cells in order to come out an educated student.  How your students progress through the cells in your facility determines the learning effectiveness of your quality system.

People tell us how hard it is to keep their procedures up-to-date.  Information gets stale fast and it is difficult keeping procedures current and relevant without becoming outdated.  One reason for this is that the procedures are too long in the first place.  If you have a 35-page procedure then, yes, it is difficult to keep all 35 pages up-to-date.  Especially, if the procedure is unclear, overly complicated or just too difficult to understand in the first place.

Another reason procedures are not current is because they are not followed.  If your people were using the procedures then they would get updated with the latest information.  An unused procedure is one that is not updated either.  Revisions are an indicator of usage and revisions help to create effective procedures.

Why don’t people follow procedures?

Perhaps your people can’t find your procedures.  Maybe they don’t even know you have a procedure.  And when they go to look for one, if they can’t find it on the server, where it is supposed to be, they figure you don’t have one.  That means your configuration management is suspect.  An uncontrolled procedure implies your system is out of control.

I have also seen procedures that were too simple or generic.  If your procedures are not offering helpful information then your employees will not have a reason to use them.  Poorly written procedures are just as bad as a procedure that is too generic.  If your procedures are incorrect or wrong, of course people will not use them.

Sometimes procedures are just poorly designed, without a good format to navigate around.  An inconsistent format that changes with every department can confuse your readers.  It helps to think about who procedures are written for when designing your procedures.  Procedures are training aids.  So, frequent users don’t really need the procedure at all.  Occasional users need a reminder of what needs to get done and novice users need a lot of description.  Perhaps more than you can or will want to put into a procedure.  In this case novices should use the work instruction.

So what are the Top Ten Reasons Why Policies and Procedures Don’t Work?

1. Procedures are out of date.
2. Procedures are too long and wordy.
3. Procedures are unclear, complicated or difficult to understand.
4. Procedures are not used or followed.
5. Procedures are hard to find or locate.
6. Procedures are uncontrolled or out of control.
7. Procedures are too generic, general or simplistic.
8. Procedures are incorrect, wrong or poorly written.
9. Procedures are poorly designed or hard to navigate.
10. Procedures are inconsistent using different formats.

How to make your procedures work for you

I couldn’t leave you with just the problem.  To understand how to make your procedures work you need to fix each of the problems.

1. Develop a system that keeps your procedures current using intranets, social media constructs (blogs, wikis, SharePoint), software, or procedures management software designed for this purpose.
2. Keep your procedures short and succinct so it is easier to update them.
3. Use pictures, graphics, and examples to illuminate what you expect.
4. Incorporate your procedures into the job at the point of use.
5. Develop a system with easy access (see 1 above), make them searchable online, or make them part of the job (see 4 above).
6. Revision control is required for ISO and must be part of the job (see 1 & 4 above).
7. Eliminate generic procedures entirely and save paper.
8. Keep procedures updated and useful and they won’t be wrong (see 1 & 4 above).
9. Create a common format as part of your document control.
10. Discipline the organization to follow your procedures.  If they are part of the job then they are more likely to be followed (see 4 above).

Now you know the secrets to writing effective policies and procedures and ensuring that they are used.

Static versus Dynamic Systems

When I was studying engineering in college we had to take many different classes in control.  The simplest ones to talk about are the mechanical versions of static systems and dynamic systems.  Static systems are those that don’t change over time like a bridge or a flag pole.  You had to figure the forces on these systems and calculate the stress, tension, torque, etc.  I found statics pretty straightforward.

Next came dynamic systems, which are static systems that can (as a result of other forces) change over time like a suspension bridge that sways in the wind.  Things got tricky, fast.  We had to use fancy calculus like differential equations to solve the problem.  Why (you might ask)?

The thing about static systems is that you have no feedback.  So the static equation is drawn with the forces in balance and feedback set to zero.  With no feedback the problem is easy or relatively easy using basic calculus.  In contrast, dynamic systems have feedback.  The wind pushes on the bridge and the bridge pushes back (basic physics: a force is met with an equal but opposite force).  This “pushing back” starts the feedback, but feedback can also produce feedback loops, which means the bridge begins to oscillate as it rocks back and forth in the wind.

You see the wind is not a constant force, its velocity changes over time.  So this is a complex situation that becomes difficult to solve.  If we fail to produce the right answer, the bridge could fall apart in the wind (it has happened).  Positive feedback loops amplify the signal and can cause such destruction (i.e. a vicious cycle) whereas negative feedback loops reduce the signal and result in… control.

So when you design your procedures, are you designing in positive feedback loops that amplify your output and lead to the destruction of your process or are you designing in negative feedback loops that result in the control you are looking for?

Static versus Dynamic Control

Funny, we have to take into account the dynamic nature of a bridge before we built it but do you take into account the dynamics of a business process when you capture it in your knowledge management system?

Business policies and procedures are not static.  They involve people that provide feedback; they involve customers, suppliers, and management that all provide feedback. So how do you integrate this natural feedback into your procedure?  Start by planning for it.  Plan for both positive and negative feedback but most importantly harvest the negative feedback.

Planning for feedback means data, scoreboards, process reviews, process audits, management reviews, customer and supplier surveys, discussions, interviews, comments, and most of all collaboration.  We need to design collaboration into business procedures to allow for the natural feedback process to occur.  Just like building a bridge requires us to understand the forces at work BEFORE we build the bridge, so it is with building business policies and procedures.

Compliance and Control

Can you really have compliance without control?  You can check the box that a business procedures exists but a procedure requirement is not about existence it is about deployment and usage.  There is a reason for every requirement.  The standards we talk about (ISO 9000, Sarbanes Oxley, GMPs) are all about reducing risks or reducing risks using negative feedback right?  The next time you have to write business procedures think about how you can introduce negative feedback to obtain the control that the standards are really asking for.

St. Louis, MO (April 24, 2009) - Bizmanualz, Inc., a business strategy consulting and quality publishing company based in Clayton, Missouri, today announced the successful certification to ISO 9001:2008 for the design, development, realization, and delivery of its policy and procedure publications, training courses, and consulting services.  The certification demonstrates the Bizmanualz commitment to continually improve its ability to assist business owners achieve the growth they envision. 

“We developed a Lean visual management approach to implementing our Quality Management System (QMS) to dispel the notion that an ISO system requires a lot of paperwork,” explained Chris Anderson, Bizmanualz, Inc., Managing Director. “Now we can show clients the benefits of a working ISO-compliant quality system using Lean visual techniques to streamline the operations, focus employees on the objectives, and reduce wasted efforts.”

Bizmanualz ISO 9001:2008 Registration

Bizmanualz received its ISO 9001:2008 certification on April 10,2009, from Platinum Registration.  Auditor Colin Gray noted particular areas of excellence, including Bizmanualz customer feedback, corrective action, and internal communication methods, which involve morning staff meetings around the company’s “scoreboard” — a bulletin board listing the company’s main processes, projects, action items, and metrics.  Mr. Gray also praised the Bizmanualz Internal Audit process, saying in his report that the company’s internal audits are “thorough, effective, and meaningful.”

Kaizens/Corrective Actions are posted on the Bizmanualz "Kaizen Wall"

With the new lean implementation, Dan Davison, Vice President of Sales and Marketing has noticed a difference, saying, “clients are seeing tighter project definition, project management, status reports, and budget forecasts by job for the coming weeks. Tracking tasks posted on the wall increase our communication’s effectiveness.”

ISO 9001:2008 is an internationally recognized QMS standard, which ISO Secretary General Rob Steele said has “an estimated one million users worldwide.”  Certification is obtained through independent registrars that audit every aspect of a company’s QMS.  Lean is a quality system approach that seeks improvement through the elimination of waste, a focus on the customer, and systems of visual management.

Bizmanualz has been at the forefront of deploying business best practices since 1995, delivering Policies and Procedures publications, Lean ISO Quality Management Systems, and strategic marketing implementation services to help business owners achieve growth and expansion.

Bizmanualz Policies and Procedures publications are available through Amazon.com, calling Bizmanualz at 800-466-9953 (outside the USA, 314-863-5079), faxing your request to 314-863-6571, e-mailing sales@Bizmanualz.com, or by logging onto store.bizmanualz.com.  Bizmanualz® is a registered trademark of Bizmanualz, Inc.

Finding Root Causes: Phase Four – Corrective Action Phase

The Corrective Action Phase is either about process re-design to address common cause variation, or it is about root-cause analysis to address special cause process variation.  Deming pointed out that about 85% of process defects are the result of common cause variation, so it is important to understand this concept.
All processes have variable output (not completely consistent).  The question to ask is, “Is the variation we experience common variation?”  In statistical terms we call this random variation.  (If it is not random then the variation has a special cause.)  This expected variation is really the capability envelope or capability range of the process.  If you are unsatisfied with the capability of a process, then the only solution is to make the process more capable through a process re-design.  The original design or documentation was done in Phase Two.  Phase Three, which we call Process Stability, is basically the check step for Phase Two, where you ensure the process’s capability and take action to improve it as necessary.

A Cycle of Continuous Improvement

In Phase Four of the process maturity scale we are tweaking the process design in a cycle of continuous improvements.  There are several methods you can use to accomplish this process improvement.  Quality Function Deployment (QFD) is a design tool that can be used to understand and rank the customer’s needs, wants, and desires, which make up the basis of your value proposition.
Six Sigma uses a host of quality tools to manage the whole corrective phase.  DMAIC (Define, Measure, Analyze, Improve, and Control) is the acronym for the Six Sigma process of corrective action.  But corrective action is internally focused on how we correct common or special causes of variation.  If we continue down this path we will eventually realize a diminishing return on our efforts, as we focus on smaller and smaller problems.
Once we start reaching diminishing returns (i.e. the investment of time and money needed to correct the problem outweighs the benefits gained) through correcting problems, the goal should be to move past the Corrective Action Phase.  We need to start thinking more externally and about what could go wrong, but hasn’t yet.  We are ready to employ tools used in the Preventive Action Phase:  Benchmarking, Failure Modes Effects Analysis (FMEA), Design For Six-Sigma (DFSS), or Poka-Yoke.

Phase Five – Preventive Action Phase

The Preventive Action Phase is all about preventing defects and errors before they occur.  We need a really good system for customer feedback, benchmarking, and external data collection.  In addition, our employees need to be flexible, be willing to try something new, and be unafraid of mistakes or critical comments.

The organization as a whole should be spending more time on preventing defects than correcting them.  Management, however, has to be careful not to harvest the profits from all of our good work using job cuts (known as the Iron Law of Layoffs).  “When product quality is bad use quality engineers, when product quality is good lay off the quality engineers.”  If we lay off the quality engineers, then who is going to focus on problems that have not occurred yet?  After all, isn’t that why there are fewer defects?  Once you lay off the quality engineers then the defects will start coming back, and you have started a vicious cycle.
We may start to use Hoshin Kanri for strategy implementation and we may start new market development.  As we venture into uncharted waters, we are actually reentering Phase One again with new processes and methods.  Now we are back to the Reaction Phase.  The cycle is complete.

Implementing Effective Management Systems

Now we have discussed all five phases of management system maturity.  It starts out as reactive, moves into documentation, and then stability before we can really have corrective and preventive actions.  Yet, many companies try to implement it all at once and get overwhelmed, or they get stuck somewhere in the first two phases.  Few organizations are able to implement a truly effective management system of well-defined policies, procedures and processes.
Have you figured out which phase your organization is in?  If you are like many, you might think your organization is a composite of all of the phases.  This could mean that you are trying to do a little bit of everything.  Or maybe some of your processes are farther along than others.  Either way, it is a good idea to align the organization to the same goals and try to get all of your processes to the same maturity level.
Remember, you are only as strong as your weakest link.  It will be more important to have all of your core processes complete Phase Two, where all processes are documented and you began to keep important process records, than to have a collection of processes at different phases.  Your weakest process could hold the others back.
But that shouldn’t stop you from implementing your strategy now that you know how it’s done.  Step through the phases one at a time.  Do your best to get out of the reactive phase as soon as possible. If you need help, give us at Bizmanualz a call.  We can start with a simple Gap Analysis that will identify what where you are in your process maturity and clarify what your next step should be.  With a little help from a company like Bizmanualz, you could achieve the effectiveness you are looking for in your management system.

In learning about our own business processes, we have identified a five level process maturity model to describe the phases in which an effective management system comes to life.  If you are on a path of continual improvement, you may find it useful to consider the concept of process maturity. In this series of three articles we will explain our approach regarding process maturity and how it serves as an aid in gaining continual improvement.  This week, we cover level one, the Reactive Phase.

Realizing the Need for Process Improvement:  Phase One – The Reactive Phase

Is your quality management system in a constant state of repair?  Each day brings new surprises: situations arise, errors are discovered, customers complain.  Did that supplier deliver the wrong parts again?

The Reactive Phase is, well, reactive.  There is no system for using information for improvement.  The staff deals with problems as they are realized according to priority and resources. Issues are addressed one by one by individual staff members who are doing their best to get things done.  Each customer complaint, shipping error, or other problem starts a reaction.  Every day seems different even though the same type of problem might arise again and again.

In Phase One of the process maturity model, processes are not well-defined and have little meaningful documentation or effectiveness criteria.  Tribal knowledge rules, while training programs are weak.  Employee experience is gained primarily through OJT — On the Job Training.

Using the Maturity Model to Kick Start Your Process Improvement

To move past Phase One you must start to document your processes, start to write procedures, think about more effective training, and develop process maps.  We believe one effective way of building an effective management system is by employing the requirements set forth in the ISO 9001 Quality Management System Standard.

Building an ISO 9001-based quality management system provides the framework to move out of the reactive phase because all of these steps are part of building an ISO management system.  The ISO 9001 standard spells out the requirements of a Quality Management System but leaves it to organizations to use the methods they want to use to meet those requirements.

You may recognize your organization in Phase One, the process maturity level of many organizations.  Few organizations are able to advance much farther up in management system maturity.

Next week we will look at another common phase, the Documentation Phase, and the most desired state, Phase Three, the Stability Phase.  We’ll close the month with a look at Phase Four (Corrective Action) and Phase Five (Preventive Action), the most difficult phase to reach and, therefore, the rarest of them all.

The Typical Accounting Manual

When exploring accounting manuals on-line you can see the table of contents and perhaps samples from accounting manuals available for purchase, and you can also see actual accounting manuals developed by public entities like universities and state/local governments. No matter where you find a sample accounting manual, they seem to have a lot in common.

Almost all of these accounting manuals are a set of accounting procedures that provide rules and guidance for various accounting functions and operations like petty cash. They typically employ what we could call the “Thou Shalt” approach. Sometimes they provide particular information like cost center account codes. At times these accounting procedures do an adequate job of describing the accounting process, and other times they read more like a list of accounting rules.

In almost every case, the accounting procedures have a ballistic approach, meaning that the accounting procedures may list the accounting steps to be carried out in the process, but rarely are any criteria established that would indicate whether the process is being carried out effectively and fulfilling organizational goals.

A Managerial Accounting Approach

Does an accounting manual that just consists of a set of accounting policies meet your needs as the accounting manager? What information do you need to establish and convey in your accounting department? If one reason you need an accounting manual is Sarbanes-Oxley compliance, then it is hard to see how a set of ballistic accounting procedures provides the internal control required by SOX Section 404. Plus, it is particularly difficult to see how a set of ballistic procedures can help management assess the effectiveness of the internal control system as required by SOX Section 302.

A different approach would be to include additional materials besides accounting procedures in the accounting manual. As an accounting manager you may want the level of consistency that “Thou Shalt” style accounting procedures provide, but that doesn’t need to be the entire content of the accounting manual.

Selecting an Accounting Manual Approach

In a recent article we talked about using risk management to create internal control systems. An accounting manual is one place you could begin to assess accounting risks by defining core accounting processes and the interaction between processes (i.e. inputs and outputs). With core processes identified, risk assessment can be applied by addressing what could go wrong, along with the likelihood and materiality of these risks.

Another approach to creating an accounting manual is to follow an ISO 9001 approach. While often associated with manufacturing and production, ISO 9001 is really an approach to creating effective management systems that can be universally applied. Using an ISO process approach, the accounting manual would include information on organization structure (your org chart), designated responsibilities of management and staff members, as well as identifying core accounting processes and their interaction. Also, following the ISO example, accounting procedures would employ the PLAN-DO-CHECK-ACT approach to processes (as opposed to the ballistic process approach of simply writing down the rules).

A Different Approach to Accounting Manuals

The Bizmanualz Accounting Policies, Procedures & Forms takes a hybrid approach that combines elements of risk management along with elements of an ISO style quality management system. The Accounting Manual section is completely separate from the included accounting procedures. The Accounting Manual includes information such as the following:

• Detailed descriptions of scope and purpose
• Typical accounting organization structures
• Establishes core accounting processes and the interaction of sub-processes (that constitute the core processes)
• A list of accounting policies
• The accounting resources required

Listing all accounting policies in one place (as well as in applicable accounting procedures) allows accounting managers, controllers and department leaders to recognize where policies align and where there are inconsistencies and conflicts between policies that require resolution.

The procedure sections in Bizmanualz Accounting Policies, Procedures & Forms are divided into the core accounting cycles (processes):

• General and Administrative cycle
• Cash cycle
• Inventory and Asset cycle
• Revenue cycle
• Purchasing cycle

Each section includes 5-10 procedures documenting in detail the sub-processes that constitute these core accounting cycles.

A set of ballistic accounting procedures may not meet your long term organizational needs for an accounting manual. There are alternatives to the ballistic approach but before you decide what goes into your accounting manual, decide why you need an accounting manual in the first place. Then deciding what goes in your accounting manual becomes much easier. Let us know your thoughts and comments about what you need or would like to see in your accounting manual.

To learn more about Bizmanualz Accounting Procedures go to http://www.bizmanualz.com/accounting/ and check out the Accounting Policies and Procedures Manual or sign up for the Bizmanualz Newsletter and download a free sample accounting procedure right now.

Determining Needed Documents

What are some of these potentially needed documents? Here is a table that lists documents you may want to consider making part of your QMS. (Referring to the ISO 9001 Standard might make some of the descriptions more clear.) Frequently particular documents may not be required by the ISO 9001 Standard, however, creating a document may be the easiest way to comply with the intent of the standard.

What a list! It doesn’t seem very “lean,” does it?

Lean Means Value – Not Small

Some of the listed documents are required, so there is no choice. The goal it to keep the required document simple, thus ensuring that it provides value. (As I attempted to convey in the two previous articles in this series.)

For the documents listed as “Strongly Implied” in the table above, there may not be an actual document requirement in ISO 9001:2000, but it may be the easiest way to meet the requirements in the standard, as opposed to verbal explanations. In addition, the items listed as “Strongly Implied” there is also value in having a document that is actually useful for the organization. An example would be the Approved Supplier List.

For the documents categorized as “Implied” or “Optional,” an organization needs to focus on the rationale for these items to see the value. For example, ISO 9001 clause 5.5.1 states, “Top Management shall ensure that responsibilities and authorities and defined and communicated within the organization.” An Organizational Chart goes a long way to effectively communicate the responsibilities and authorities. Try substituting a few paragraphs of text for an Organizational Chart and one can see the value of a simple graphic. In some organizations, this is all that is needed to meet the 5.5.1 “shall” statement.

Overall, if an organization maintained all or most of these documents in a simple value-added format, then their Registrar Compliance Audits will go much smoother. As anyone who has been through the audit process knows, anything that will help the auditor facilitate a swift completion of the audit is a big plus.

Creating Your Lean System

I hope this series will assist those who with a Quality Management System, whether it is to comply with ISO 9001, AS 9100, TS 16949, or other standards. The time savings in using a Lean approach to QMS documentation can be dramatic, as well as the value of saving paper. The greatest value, however, lies in having a document that is actually used and aids the organization by providing value, rather than a wasted document that never really used and only exists to be brought out at audit time.

For those who are just starting their journey to ISO registration to a Quality Standard, I hope that I have at least put a few holes in the “documentation nightmare” myth. As you go through your journey, first examine if the document is required. If it is, then ensure that when complete it is adding value to your organization. If the document is not required, but desired, absolutely ensure there is value and not added bureaucracy to your QMS.

A simple matrix listing required documents and non-required documents, and the value non-required documents add may help you decide which documents are needed to meet the needs of your organization and QMS.

Best of luck to all of you changing your paradigm and instituting a Lean ISO 9001 Quality Management System