The rapidly increasing pressure and scrutiny to comply with ever changing regulations such as VAT, GDPR, anti-money laundering (AML), financial auditors and other regulators continue to put organisations under pressure to keep operations ticking smoothly while at the same time being profitable.
Documentation of Policy and Procedures (P&P) are the foundation to ensuring such policies are followed to minimise errors and failures. This is even more crucial in the UAE region due to the transient nature of the workforce and the continuing change in regulation. Many people stay in jobs for a few years and leave, taking their knowledge and experience with them. This exposes many companies to a higher risk of process error and failure and is compounded by the fact that UAE being an emerging nation which frequently introduces new regulation, effecting all industries as it continues to competes with developed nations.
This paper discusses the five steps to best practice when documenting P&P.
The primary motivation for organisations to document P&P is usually for business continuity and regulatory compliance but discussed below are a few more reasons why organisations would benefit from this exercise:
Reduction in negative findings in audits which leads to fines for non-compliance: Fines and business disruptions resulting from unacceptable audit findings and observations can be devastating. Often non-compliance found during an internal or external audit can be tracked to inconsistencies in P&P documentation; confusing business communications that fail to convey important messages or bury key points; or mistakes made because employees misunderstood the documentation.
Efficient help desk: Most help desk requests could be eliminated if employees were able to easily find and understand previously published policies, procedures, and documentation.
Reducing missed deadlines: Employees who are under pressure to meet deadlines do not have time to waste looking for hard to find information. Whether they are reviewing, updating, and documenting compliance information, or conducting employee performance reviews, employees need an accessible and reliable source of information to find out what they need to do, how they need to do it, and when the work needs to be completed. Providing them with clear, effective P&P can save time and help ensure that deadlines are met.
Reducing incorrectly completed, routed or documented forms. Whether it is an expense report, benefits submission, supplies request, holiday request or any of the other form required for company authorisation, if an employee does not know how to fill out a form, where to submit it, and when to expect a response, the process gets bogged down and it can take days or weeks to process a simple form. This results in inefficiencies and lost productivity which could have been solved if effective P&P were in place.
Prevention of regulatory investigation: Documentation of processes and procedures are one of the fundamental methods an organisation can demonstration to regulatory authorities that critical policies and procedures are adhered to. This will save the organsiation time, reputation and ensure business continuity.
Reducing employee mistakes: Most companies point the finger at employees when errors are made repeatedly, however in the case where P&P that are poorly written, hard to find, incorrect, or out-of-date the blame falls on the organisation and/or management. Ensuring that adequate processes and procedures are in place ensures that all employees have guidelines to follow when undertaking business processes.
Enhanced Client/Customer reputation: An organisation which aspires to achieve standard accreditations such as ISO9001, ISO14001 etc. would need to ensure that documentation of their P&P as a minimum. Moreover, when tendering new business to clients, many companies would have strict procurement pre-qualification processes which would require the documentation of P&P.
Good P&P are the ones which have clarity and consistency of style; are easy to follow and maintain, will promote efficiency and ensure legality. During documentation, it is important that they possess the following qualities:
Relevant: They address the actual needs of the entity for which they are created, rather than being abstract statements of theory.
Cogent: The policy has to make obvious sense and easy to understand. This is not the place for hidden agendas.
Co-ordinated: Every policy, and component of a policy, must be compatible to the other policies of the organisation. Policy conflict is a very common cause of organisations losing direction and control.
Balanced: Policies which read like vision statements, full of high minded goals but weak on grounded reality, will seldom be implemented successfully and adhered to.
Lucid: Written in a way that the target audience will understand, and free of grammatical and other errors of style that might arise from the language skills of individual policy authors.
Ethical: Ethics can, and should, be explained and exemplified in corporate policies and statements. It is then up to management to ensure that all stakeholders, not just employees, are aware of these policies, understand them, and understand the consequences of failure to follow them.
Authority: P&P must have the sign-off from senior management to provide it with relevancy and authority.
A review of processes and procedures will contribute immediate benefits in internal control as well as efficiency. The following five steps are the best practices when documenting them:
Step 1: Understand the requirements of the audience. Before this exercise begins, one needs to determine who needs to do what, and what they need to know in order to do it. The next step would be to assess the existing documentation (if any) to see if the right level of detail is provided for different audiences? Can users of the document find and access the information they need where and when they need it? Do they find the documentation to be easy to understand and use? Consideration also needs to be taken for third parties such as auditors and regulators and for more technical processes, documentation needs to include the assumed technical knowledge of the audience.
Step 2: Ensure that information is categorised: Information is easiest to find and understand when it is categorised based on the purpose of the information for the audience. Typical categorisations would include procedure, process, principal, type, concept and structure. Once categorisation has taken place, it would need to be labeled simply and clearly. Labels can help the reader quickly find information and also provide insight as to the content of the information. If different types of information are mixed together in the documentation, the chances are that employees find it difficult to use and understand.
Step 3: Ensure that information is selected and sequenced from the audience’s perspective. The next step would then be to ensure that the information the reader needs is presented in the order in which it should be accessed and used. New concepts should be readily available for novice readers, but easily skipped by experts who are already familiar with them. Cautions and warnings should be provided before a procedure is presented – not placed as a note at the end or buried in the text where the reader may not see them until it is too late.
Step 4: Make sure the document is consistent: Confusion can arise from poorly defined terms, acronyms, abbreviations and formats. Documentation of P&P should be presentable and not overly creative. A “form” should not later be called a “document.” Once an acronym is defined, it should be used consistently. If a certain type of information is typically presented in a tabular format, graphs should not later be introduced simply to add variety. Consistency aids comprehension and understanding and makes it easier for readers to understand where to find and how to interpret complex information.
Step 5: Determine if the information is accessible: The best information is not useful if it cannot be easily found or accessed when it is needed. Ensuring clear titles and labels, tables of contents and indices, access aids, references, hyperlinks, key words, search technologies, and well constructed content hierarchies are all essential for optimizing information access.
Step 6: Seek reusable information modules. Content which is created in small and modular units can be re-used across multiple departments and sites without losing the integrity of the information. For example, key concepts surrounding the necessity for AML compliance can be used in training, customer service, security and IT. The consistency of information and its presentation serve as a reinforcement that helps compliance and reduces corporate risk.
Once an organisation establishes its P&P, those P&P must be documented and consistently applied to ensure a reduction of errors, compliance failure and reduction in productivity. Documentation of policies for some organisations may be a yearly or on an on-going process depending on the complexity of the tasks. This process would ultimately require working with several internal department such as accounting, compliance, legal but ultimately would need the authority from senior management to ensure relevancy. An external advisor or consultant invariably will bring the fresh perspective, as well as the wider experience, that is necessary to create or update corporate P&P effectively, without bias and unhindered by adherence to outdated practices that inevitably take hold within any mature organisation.
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This article is an extract from the Xero website and is written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of its contents.