Do Process and Procedure Make A Difference?

Process, procedures, policies, rules – these are just a couple of things employees often get exposed to or asked to adhere to or apply in daily employee life. Are they making businesses more efficient, or life more enjoyable, or goals more attainable? I explain why that dreaded process is hugely beneficial for organising one’s private life.

Anybody who works in a major enterprise will know what a corporate policy is. It might be a policy related to business conduct (don’t bribe your potential clients) or a travel policy (always seek the cheapest flight; best hang on to the wings). Policies introduce some rules and internal regulation. This helps to streamline the business, keep a lid on costs, avoid unnecessary guessing and inquiries by employees about ‘what is generally accepted’. Thus, policies and rules provide the internal, company-specific laws to organise corporate life. So we are fine with that.

A procedure, as says, is “a manner of proceeding; a way of performing or effecting something; a series of steps taken to accomplish an end; a particular course of action intended to achieve a result; a way of acting or progressing in a course of action, esp. an established method.” It also says that process is a synonym for it. “A process is a set or series of actions directed to some end or a natural series of changes; whereas a procedure is a series of actions conducted in a certain manner, an established way of doing something”. Confusing? Yes.

Simplified one could argue: A procedure is a series of actions together worthy to be called a procedure because of the manner how the actions are affected, whereas a process is a series of actions directed to some end or a series of changes. Some fine differences in there.

Companies are rife with procedures and processes. For example, an oil refinery will use a process, a series of changes and actions to turn crude oil into diesel or gasoline. A software company will use a software development process which includes a series of actions, turning client requirements into a complete software design and code, eventually tested against the requirements. Finally, doctors in a hospital surgery may apply an operating procedure which is unique due to new methods used.

I conclude that processes streamline efforts to achieve a certain goal or outcome. A well-established process increases efficiency, as it lays out a template of actions to go through to produce a desired outcome. Once a process has been proven to work, people can rely on it. A process helps to organise work, to align and inform participants, to direct effort towards maximum progress, to cut out waste (then it’s a lean process) and to shorten lead times and ramp-up times (in the sense that it avoids the need to rediscover over and over again the best way of doing things). When a type of activity is not undertaken for some time, a documented process allows to get started with a similar activity and to be on the right track in very short time.

On top of that, a procedure may play an important role within a process. Whilst a process may be judged as lean and efficient, it may benefit from some procedure which is applied during the process, when that procedure further increases effectiveness and efficiency simply because of the smart methods, methodologies, tools and intellectual property which are used. Again, benefits in an enterprise context are obvious as long as processes and procedures help to attain corporate goals at low cost.

Is there any good use of processes and procedures in private life?
My conclusion is that there is. Unfortunately, many people are getting tired from corporate bureaucracy, complicated processes, and sometimes procedures perceived as useless or not empowering. Once people return home, from the office, school or college, they take a rest, dust off the office stuff and slip into their private leisurely mode of enjoying the rest of the day. Well, quite likely they have deserved a rest on the sofa, a time out in front of the TV, a game on the console, a chat with a neighbour etc. unless they are true city slackers and have wasted their time during office hours.

One may say that people’s private life is often rather free of process and procedure. However, that may be to their own disadvantage. I base this on the strong assumption that process and procedure actually accelerate achieving goals and enormously save time if well designed. So people should ask themselves during private time (non-office hours): Are they applying any well-considered processes and procedures? What would change if that did so?

Example 1: I recently discovered how a student approached learning a foreign language. He clearly struggled in making any decent progress. Soon it was clear to me that he didn’t apply any sensible processes. First, his approach wasn’t goal-oriented. His approach to learning French was more tinkering with it. Second, even if he had a goal to pass a language exam, his approach lacked proper planning. What to achieve by when? Third, even if he had documented some planning steps (e.g. learn irregular verbs by end of the month, revisit vocabulary every week), his way of learning French didn’t include any process that would knit in elements of optimal learning, memorizing, feedback channels and the like.

Example 2: Young people approaching life without a diary. In one case (I offered a brand-new diary as a present nicely wrapped up in xmas paper), the good youngster didn’t know what to do with a diary: it didn’t offer any TV program schedule, nor was it on-line, nor did it speak to him. It just sat there on the desk, elegant black cover, with an empty white page for every day of 2012. I explained the purpose of a diary. After a couple of weeks, the youngster cheerfully showed me the planned actions he had written into his diary with the ones delivered ticked off in green colour. A sense of achievement, purpose and movement in a desired direction was his new experience.

Example 3: Private investors. This is a highly interesting topic. Who remembers to have bought some shares or stocks for their private portfolio? Who has ever experimented with other financial instruments, like options, futures, spread bets, contracts for differences etc.? How many private investors have made great fortunes through their investment or trading activities? I don’t know, however I assume not that many. A key reason will be that they tend to neglect process and procedure. In private do-it-yourself investment management, an investment management process is absolutely key though it may sound highly complex and sophisticated. Here are a few reasons for this:

  • Investors can easily fall victim to behavioural biases, which lead them to do the wrong thing. For instance, they may be overconfident, follow a hot tip, cut short on own study or research, be too emotional, sell losers too late and winners to early. A process would be designed to give the investor more self-control.
  • Private investors, like anybody else, are human beings prone to bad habits. Do-it-yourself investment management requires application of good process, uninterrupted from any bad habits that would like to creep in here and there. A process would be designed to focus the attention of people on the market at the right time during the week or month and with sufficient frequency.

I even claim that the success of private investment management as well as trading depends to a very large extent on how smart a process is applied and adhered to with great discipline. Obviously, individuals then need to decide whether they are able to buy into their own process, commit themselves to ‘best execution’ and give it a try or whether they are cut out of other wood, less able to rigorously succumb to self-imposed processes and procedures e.g. due to lack of time, lack of enthusiasm and joy, or simply lack of understanding. Not everybody ticks the same way and no need to.

Though people may sometimes produce a cynical smile when asked about the usefulness of corporate processes and procedures, the design of custom-made processes and procedures for one’s own life could be extremely useful and personally rewarding. The more custom-made, self-invented, self-created or personally adjusted those are, the better, as the processes and procedures then don’t appear to be imposed by someone else. Rather they will be perceived as one’s personal competitive edge.