What’s the difference: policy, process, procedure, standard?

As any organization grows, there’s a point where the you can no longer manage finances on a spreadsheet, no longer manage priorities on a whiteboard, and no longer manage the team by looking around the room. Usually this starts by compiling a list of principles that the team agrees to uphold while they do stuff (like at Amazon or Google). Then, the team gets big enough that there are enough smart people who can find enough grey area within the principles, that rules need to be written down. Also, “go ask Steve how to do that” doesn’t scale. Steve can’t do his own work when he gets interrupted 50 times a day to explain something, and the other 49 people aren’t getting anything done while waiting for Steve.

At this point the organization needs to formalize its Business Process Management (BPM) and governance structure. Joy!

Transitions from informal to formal systems are hard (image: xkcd.com)

Most people resist structure of any kind when the administrative burden (the squeeze) is greater than the perceived benefit (the juice):

  • sales guy: “Ugh! Expense report? Why can’t you just give me a company credit card?”
  • product marketer: “Ugh! Creative services request? Why can’t you just give me edit permission on the company website?”
  • my kids: “Ugh! Chore chart? Why can’t you just give me cookies?”

As you get started deploying (or overhauling) the BPM system in your organization, remember to keep the system as lightweight as possible while still achieving the intended benefits. All the principles of Leading Change, such as “there is no such thing as over-communication,” still apply. Now let’s get to the definitions.

There are four essential components to a BPM system:

  1. Policy: a collection of related principles and guidelines that explain “why” an organization does stuff a certain way. Policies sit in the background and define the rules that should not be broken when following the processes and procedures built on top.
  2. Process: a sequence of actions and decisions that describe “what” happens to achieve an outcome. Processes can fit within or across organizational boundaries (functions, geographies, business units, etc.) and define the work that humans or IT systems perform.
  3. Procedure: instructions describing “how” to complete a certain step in a process. Highly detailed procedures are often called work instructions.
  4. Standard: a “definition of done” that sets the level of quality for work defined in a procedure or process. Standards can also set boundaries around the time our resources consumed when completing work.

Notice how this structure mirrors the why, what, how structure seen elsewhere, like in sales, and explained in Sinek’s classic book (check out the TED talk video, too). These components are modular, meaning that your team can make revisions to one part in response to new business goals or requirements, without necessarily changing another part. Remember, however, to check the implications of a change before implementing it, for example if a change to a standard would push the required level of quality outside the capabilities of the existing process.

Here’s an example most people have experienced:

In a restaurant kitchen, the goals are clearly defined: make consistently delicious food that customers will enjoy every time they visit. There are a number of policies in place that establish guidelines and rules to govern work in the kitchen. For example: everyone will wash their hands thoroughly after using the bathroom, raw food will be stored in certain containers at a certain temperature, cutting boards for fish won’t be used for fruit, etc. Next, there are processes in place to achieve specific outcomes. For example the process to receive an order from the dining room and deliver the ordered dishes to the pass. For each step in that process, there are procedures that the kitchen staff to execute the work, for example the method to cook spaghetti carbonara. Lastly, the steps in the process to deliver the food that was ordered must conform to standards. These standards include the taste of the sauce, the temperature of the dish when it hits the pass, even the type of plate it’s served on.

If the restaurant is a local, family run place, maybe none of this information is every written down. Cambridge, MA legend Clover Food Lab has posted its employee training documentation publicly since opening, which includes policies, processes, procedures, and standards. Ferran Adria posted a sythesis of elBulli cuisine: great example of a policy document in the context of avant garde cuisine. Watch his team’s system of creativity and service excellence unfold in the movie el Bulli: Cooking in Progress.

With a better understanding of the difference between policy, process, procedure, and standard, you can help your organization achieve it’s goals with just enough structure, not more.


Four ways to prevent employee incentives from destroying value

With the new year comes a new set of business goals and likely a new set of personal performance objectives for your team. If you work in sales, you probably have a new boss, too. With the best of intentions, most organizations I’ve encountered set the incentive structure in a way that leaves company profit on the table and erodes personal initiative. Before your team adopts Homer Simpson’s work ethic, use my 4 tips below to adjust your incentives

Any team will consist of high-, average-, and low-performing individuals. The modern incentive toolkit has two main features: traditional “carrot and stick” incentives that keep everyone accountable, and others tapping into intrinsic motivators that spur your top performers even higher. Daniel Pink describes these as autonomy, mastery, and purpose. And don’t depend on money alone as a reward. While Alfie Kohn takes an extreme view that pay for performance flatly doesn’t work, Michael Sturman’s research shows it is more about careful choice of how and how much you pay (hint: more than the competition).

  1. Create tiered goals to prevent “checking out” – For the core operational tasks in your organization, publish goals well in advance. Set rewards proportional to the minimum acceptable, target, and stretch levels. The metrics you choose for individuals should map clearly to overall business goals.
  2. The best rewards are unexpected yet consistent – Daniel Pink describes this as using “now that” rewards instead of “if, then” rewards. By providing recognition and non-monetary rewards (e.g., free lunch or a nice company fleece) to the people who embody the culture you wish to develop in the team, you will incite more of the same. When those rewards come as a pleasant surprise (but are completely unsurprising in hindsight), you are rewarding your best people for what they “would do anyway.”
  3. Small rewards for everyone, big for the best – Another variant on #1 above is to set a target for the group as a whole and also reward the top performers with a larger prize. This technique works particularly well when you have built a team with what organizational psychologists like David Hekman call high organizational identification and low professional identification. More simply, their sense of “I am Google” is stronger than “I’m an engineer.”
  4. Choose personal improvement areas from a list of company priorities – Lastly, ratchet up the sense of ownership for outcomes by providing choice. For example, provide your team members with the 5 key metrics for the business, and let them choose which 3 they will improve by 10% over last year.

It should be obvious that how you manage to targets matters (look for more on this topic in leadertainment). But carefully setting performance targets can avoid destroying both profit and motivation in your team.