Every business entity undergoes different stages of growth that can be broadly classified as Startup, Growth, Maturity & Renewal or Decline. In the startup phase, the focus is completely directed to find and obtain customers, develop a product or service and build a brand identity. And all departments/functions of the entity focus to support the same. As business sees a transition into the next phase i.e growth, it is essential to develop process documents. This is relevant to all functions of the business entity including Finance.
What is process document?
A Process document is a detailed description of all activities that are required to execute a process/task.
Why we require process document?
Process documents are one of the key drivers to process efficiency and cost reduction. It provides multi-fold benefits to an entity like:
- Organisations shift from people driven to process driven.
- It is a source of reference and becomes a guide to the employees. Thus avoids delay in delivery.
- Avoids process knowledge gap with exit of resources.
- Aids analysis of work process and check for of areas of improvement.
- Facilitates job rotation and job shadowing of employees.
- Process documents are integral part of Audits, ICOFR, and Corporate Governance.
- Enterprise risk management – process documents is key to device Business continuity plans.
- It is the fundamental requirement for outsourcing and automation of activities.
Policies vs Process
Policy document and process document are different. Policies are set of principles, rules, guidelines and procedures selected by the management of an organization. Policies are developed based on the organisation goals, statutory regulations. Policies are the governing framework basis which regulates the decisions and actions of the organisation. Whereas process is a set of activities performed to complete a function and achieve the end result. It’s a good governance practise keep policy and process as two separate documents.
Steps document a process?
The following are the sequential steps that one can follow to document a process:
- List the tasks for which process documents are to be prepared.
- Discuss with each team members involved/perform in the execution of the task.
- Process mapping – based on observation of the task and discussions with the team, map the activities being executed. The mapping should cover the complete details of inputs required, process and output generated. One can make use of software/tools available for process mapping.
- The draft process mapped to be discussed with the relevant stakeholders and the team members to reconfirm the mapping.
- On receipt of clearance from the stakeholders, process documents can be prepared.
Process improvements
The process of collating information and documenting task, many at times help us to see areas of improvement. Also identify tasks, currently being performed which might have lost its significance or can be better performed. These areas can be identified by:
- Discussion with stakeholders (both source and users)
- Collation of exception scenarios handled in the past
- Collation of escalations/complaints/feedback received
- Understand the future business prospects and Management expectation
The areas so identified can be taken up, discussed and resolved either before the preparation of process documents or can be taken up post process document preparation as version update.
Content of process document
Here is an inclusive list of topics that are recommended to be included in a process document which would make it very precise and durable:
- Name the document to identify the task and the version update
- Objective and description of the task to be performed
- Define the organisation policy for the task
- Process mapped to be presented sequentially
- Identify the process owner/(s)
- Identify the person responsible (i.e role responsible) of each activity
- Input Data source providers and the output users to be specified
- Technologies/systems being used
- Turnaround time (TAT)
- Attach checklist, sample templates, screenshots, policies, statutory regulations etc.
- Approval Authority
- Escalation Matrix
- Exception handling
- Authorized persons to approve any exceptions
- Process failure mitigation
- Custodian of the document
- Mechanism to monitor and update the document
- Document to be signed by the owner of the process and the relevant stake holders
Process Review Mechanism
The process once documented should be reviewed on a periodic basis by the Management. Any changes in the process due to various reasons technological, statutory requirement, organisation policy etc. should be updated on the occurrence of the event. The updated process to maintained as version update and should be approved by the relevant stakeholders.
Other matters:
- The management shall identify a person who shall be assigned with the task for the writing up the process documents. Many at times we over look process documentation due to lack of time being held back for operational activities.
- Prepare individual document for each process and avoid having single massive document.
- Organisations can formulate a Process Committee with members from cross functional teams. The committee can act as a custodian of the process documents, conduct reviews, update process according to changes, suggest areas of improvement, understand the future business requirements and implement changes etc.
- Involve the team at various stages. Many at times, the team becomes sceptical with the documentation process. Conduct meetings with the team, enable them to understand the significance of the documentation and ensure to get complete co-operation in entire process. Also present the final document to the team.
- Process documentation is certainly not a difficult task but is definitely a time consuming one.