Many small business owners know a policy manual is essential, but they feel overwhelmed and never create one. Or they make one but add so many details that users become confused and frustrated. Often it is because they have trouble understanding the differences between policies, procedures, and work instructions.
Policies are the backbone of your business. They are high-level documents reinforcing your mission and vision and ensuring you and your team act consistently. Policies state what you need to do and why. Generally, policies do not change very often. For example, my business policy is to send my clients their monthly retainer invoices on a specific day with payment due on a particular day. The policy states:
Retainer invoices are sent to clients no later than the 28th of the month, with payment due on the 5th of the following month.
That’s it – one simple sentence. You will notice, however, that I have some flexibility. I can send the invoices a few days early if the 28th will be a weekend, holiday, or February.
Policies explain what you do and why and procedures explain how to implement the policy. Procedures are broad yet straightforward instructions that don’t often change. In my business, the procedure states:
- On the first of the month, verify the invoicing date. If the 28th is a weekend or holiday, adjust the “Send Invoices” reminder to the business day immediately before the 28th.
- On Invoice Day:
- Send Canadian clients their invoices through [name of Canadian financial software]
- Send American clients their invoices through [name of American financial software].
In addition, there may be several procedures related to one policy. For instance, for my invoicing policy, I have procedures explaining how to add new clients and remove past clients from the system. The procedures refer to forms I need to complete and where I can find the forms. I also include troubleshooting information such as what to do if an email address bounces the invoice and where to look for troubleshooting tips for the financial software.
Work instructions explain in detail how to execute the procedure. We often refer to them as SOPs (standard operating procedures). Because work instructions contain a lot of detail, including photos and screenshots, we tend to update them more often. There may also be multiple work instructions for each procedure. For instance, I have two different work instructions, one for invoicing Canadian clients and the other for American clients.
The best part about work instructions is I can easily use them to train someone else to do the job exactly as I do it. However, if I hire a bookkeeper, they may have software different from mine. In that case, I would give them my policy and procedures, and they would create their own work instructions.
To summarize, the differences between policies, procedures, and work instructions are in the amount of detail. You don’t have to write down the minutia of every task to start building your policy manual. Start with high-level ideas, then work down to the details. And if you need some help or advice with policies, feel free to reach out.