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Rules to Better Business Management - 6 Rules

  1. Cross-approvals - Do you know how to scale approvals?

    In small companies, a single key stakeholder often approves everything, ensuring alignment with the organizational vision and strategy. However, as the company grows, this can lead to bottlenecks. One approach that addresses this is to create an employee responsibility, which lists the people responsible for a specific approval. This list ensures a clearly communicated system for cross-authorization.

    Video: Cross-approvals - Do you know how to scale approvals? (4 min)

    Benefits of scaling approvals

    ✅ Significant time savings for the person causing the bottlenecks (aka the "original approver")

    ✅ Fewer bottlenecks for those seeking approval

    ✅ Consistent and high-quality approvals

    Developing the system

    There are 5 steps to developing the new system of approvals:

    1. Identify - Find tasks causing "approval hell" aka bottlenecks
    2. Assign - Appoint trusted subject matter experts to be responsible
    3. Classify - Determine the importance of the task
    4. Implement - Document and induct the new approvers
    5. Monitor - Keep track of each employee's responsibilities

    1. Process - Identify tasks causing "approval hell"

    Before being able to fix "approval hell", problem tasks need to be identified.

    Look for tasks which frequently take a long time to be approved.

    For example, there might be delays in approval for induction completion because the person assigned to approve it is often busy.

    2. Assign - Appoint trusted subject matter experts to be responsible

    Start building out a list of people who are experts on that subject. Those people will become the ones responsible for approvals.

    Once the list is compiled, assign each person a priority. That determines the order to contact people.

    Tip: Set the "original approver" as the lowest priority to minimize their involvement.

    3. Classify - Determine the importance of the task

    Some tasks are more valuable than others, meaning the quality check required will differ. For example, a task to fix spelling mistakes doesn't matter as much as deleting invoices. Therefore, you would assign more approvers to the task of deleting invoices.

    Figuring out the correct number of approvals can be difficult. Generally, the idea is to reduce the amount of approvals as much as possible without sacrificing quality or risk.

    Here are some guidelines:

    Number of Approvals: 0

    The gold standard is to look for a way to remove approvals entirely. This gold standard can usually be achieved for common sense fixes using tools like Grammarly and ChatGPT. For example, you may decide that any spelling mistake fix can be applied to the company induction system as long as Grammarly has verified it.

    In these cases, it becomes a rubber stamp and a 3rd party tool acts as the approver.

    Number of Approvals: 1

    Tasks that require 1 approval are usually well-documented, routine processes. In that case, the standard acts as the second approver since it is assumed that it has been followed.

    A routine leave request is an example of a task that might require 1 approval.

    Number of Approvals: 2

    2 approvals are for tasks that fall into one of the following categories:

    • They do not follow a well-documented process
    • They frequently have variations from the process
    • They are of high importance

    In these cases, a 2nd approval is valuable because:

    ✅ It establishes confidence in the process

    ✅ A second perspective results in fewer mistakes slipping through

    ✅ A single approver may make a rushed or wrong decision

    ✅ The approvers hold each other accountable

    A purchase for $500-$5,000 is an example of a task that might require 2 approvals because it is relatively expensive.

    Number of Approvals: 3+ or stick with the "original approver"

    When approval is critical to the business, it is worth considering if it should be approved by a "council" of people or by the "original approver". These are tasks where a mistake could be catastrophic for the business. For example, opening a new office might require 3 approvals because it is costly and risky.

    4. Implement - Document and induct the new approvers

    The final step is to record all the established decisions and induct the new approvers.

    1. Induct each person by having them shadow the "original approver" for at least 3 approval processes, ensuring they understand the goal
    2. Document the new approvers in a central repository, naming it {{ APPROVAL }} Masters
    3. Create a template in the Teams Approvals app to ensure a standard process is followed
    4. Update the standard so that instead of contacting the "original approver", individuals use the Teams approval template and contact the new approvers in order until they get the required number of approvals as determined when classifying the importance of the task

    TeamsApprovalsTemplate
    Figure: The Teams Approvals app is a good way to add structure and data capture to the system.

    5. Monitor - Keep track of each employee's responsibilities

    One problem with this system is responsibility creep! When someone is a trusted individual within the company, they can end up with too many responsibilities, causing new bottlenecks.

    To prevent this issue, create reports tracking the number of approvals people do. That way, if someone has too many, you can reallocate some of them.

    ApprovalsReport
    Figure: A report tracking how many approvals people do is valuable for figuring out where to distribute the workload

    Keeping Approvers Aligned

    Sometimes, approvers may run into a controversial approval or need clarification about how to handle an approval. When that happens, they should call in the "original approver" to help resolve the problem.

    Approvers may also have differing views about how to handle an approval. Disputes between 2 approvers can be solved as follows:

    1. The 2 approvers should have a call to get aligned about how to solve the problem
    2. If they still cannot agree, they should call in a 3rd approver to mediate
    3. If they still cannot agree, then the original approver should act as arbiter

    InductionMastersBadExample
    Figure: Bad example - Adam approves the completion of everyone's induction

    InductionMastersGoodExample
    Figure: Good example - There are 8 Induction Masters responsible for approving everyone's induction

    Communicating the streamlined approvals process

    This process should ideally be implemented across all business bottlenecks. However, identifying the most problematic approvals can be challenging.

    To solve this, communicate the new approval process company-wide, encouraging employees to suggest areas for implementation. This crowdsourcing approach should yield valuable feedback on where to apply the streamlined approval process.

  2. Do you know the pros and cons of different management structures?

    Many organizations start out with a flat management structure, valuing its simplicity and direct communication lines. However, as they grow, the lack of hierarchy and defined responsibilities in a flat structure can lead to confusion and inefficiency. This transition often prompts a critical re-evaluation of management structures, seeking alternatives that can balance flexibility with the clarity needed to scale successfully.

    Flat Management Structure

    Pros

    ✅ Simplicity - Fewer management levels, often leading to quicker decision-making.

    ✅ Collaboration - Makes it easy for everyone to raise their voice and feel heard.

    ✅ Agility - Allows for quick responses to changes and opportunities.

    Cons

    ❌ Ambiguity and Role Confusion - Lack of specific guidelines and a clear hierarchy may lead to confusion over roles and responsibilities.

    ❌ Growth Challenges - May not scale well, as the head of the company can become a bottleneck.

    ❌ Difficulty in Accountability - Without clear reporting lines, holding individuals accountable for specific tasks or outcomes may become challenging.

    ❌ Imbalanced Distribution - Can result in uneven distribution of workload, decision-making power, or recognition among team members.

    Hierarchical Management Structure

    Pros

    ✅ Clarity - Well-defined lines of authority and responsibility.

    ✅ Vision and Control - Ensures all work aligns with company goals through centralized oversight.

    ✅ Stability - Established and proven by many organizations.

    Cons

    ❌ Inflexible - May lack flexibility and responsiveness to changing needs.

    ❌ Potential Disconnection - Higher-levels may become disconnected from ground-level realities.

    ❌ Lack of Influence - Lower-level employees may feel voiceless, lacking the ability to contribute or have a say in decision-making processes.

    Cross-Approval System

    Pros

    ✅ Reduces Bottlenecks - Distributes responsibility, preventing delays.

    ✅ Efficiency - Streamlines the approval process, saving time.

    ✅ Scalability - Adaptable to different organizational sizes and complexities.

    ✅ Collaboration - Enhances trust and teamwork through clear guidelines.

    Cons

    ❌ Implementation Complexity - Requires careful planning and monitoring to avoid responsibility creep or misalignment.

    ❌ Monitoring Required - Regular reviews and adjustments are necessary to maintain effectiveness.

    ❌ Potential Overhead - If not well-designed, it may add unnecessary complexity.

    Conclusion

    Each management structure, offers unique benefits and challenges. The choice of structure should align with the organization's goals, culture, and operational needs. Understanding the pros and cons of each can guide decision-makers in selecting or combining structures that best support efficiency, collaboration, and adaptability within their organization.

  3. Do you empower employees closest to an issue to make decisions?

    Sometimes a senior leader intervenes in an issue that could be handled by someone else who is well-informed and close to the problem. This intervention is not a good idea because it diverts focus from high importance strategic priorities that senior leaders should be involved in. Instead it is better for the senior leader to ask the person closest to the issue to fix the problem, that way they feel empowered and the senior leader can focus on strategy.

    The problems

    When senior leaders are involved in every level of decisions, it causes several problems including:

    ❌ Setting the wrong tone for how senior leadership is spending their time.

    ❌ Conveying a "command and control" model of management, disempowering others.

    ❌ Inefficient use of company resources.

    The solution

    When a senior leader notices an issue they think could be handled by someone else, they should do the following:

    1. Determine if there is an existing person responsible for fixing this issue.
    2. If there is, ask the person responsible to resolve the issue.
    3. If there isn't, check that their senior is happy to hand it over and ask the new person to to resolve the issue instead.

    This delegation leads to benefits such as:

    ✅ Trains the employee to fix the problem and take responsibility for it in the future

    ✅ Employee empowerment because all employees have important decision making capability

    ✅ Increased efficiency because senior leaders are focused on issues which need their attention more

    ✅ Reduced bottlenecks in the future because senior leaders are not the only ones making decisions

    You can formalize this process using the Cross-approval system which helps clarify who is responsible.

    Scenario - Missing spare office keys

    Imagine that the spare office keys have gone missing and it is unclear who has them.

    If the CEO notices this issue, there are 2 ways to handle it:

    ❌ Bad Example - The CEO sends a company wide email

    It's not a good idea for the CEO to send an email to everyone about this issue.

    The outcome of this approach is that:

    • It desensitives people to the CEOs emails because they are uninmportant
    • A poor impression is given for how the CEO spends their time
    • The people who are responsible for looking after the spare office keys feel disempowered

    ✅ Good Example - The CEO notifies the person who should be responsible for the spare office keys

    A better scenario is for the CEO to email the person who should be responsible for the spare office keys and ask them to send an email to the company instead. The CEO should also communicate that they want that employee to handle this task in the future.

    Conclusion

    Empowering those closest to an issue to make decisions fosters efficiency and strategic focus within the business. By delegating tasks to those best suited to handle them, senior leaders can concentrate on high-priority matters, enhancing overall productivity and employee satisfaction.

  4. Do you process approvals in a timely manner?

    Don’t leave people hanging – ensure you review your email, SugarLearning, Timepro, or Intranet accounts for items from staff and colleagues to review and approve each day

    require approval

    Figure: Make sure you review and take action on any approvals daily so that they don't back up

  5. Do you have KPIs for your Annual Employee Reviews?

    When a company is small, Annual Employee Reviews start as a fairly informal process. The head of the company might take employees for a walk, or generally have a chat about different topics.

    As the company grows and more people join, 2 problems start to occur:

    1. Reviews start to get longer as scope increases
    2. Other managers need to start leading reviews but aren't clear on the processes

    For these reasons, it's important for all the review managers to get aligned about what topics and performance indicators need to be covered, and to ensure scope is limited.

    Key Performance Indicators (KPIs) are a tool for standardizing how performance is measured at a company and ensuring employees are aware of what they need to focus on. However, everybody brings much more to their companies than just statistics; KPIs are just a conversation starter.

    KPIs also lead to efficient, focused Annual Employee Reviews.

    Video: Annual Reviews | Adam Cogan & Ulysses Maclaren | SSW Rules (8 min)

    How KPIs should be used

    KPIs are a tool for evaluating employee performance during an Annual Employee Review.

    Each KPI would have a weight denoting how important it is, and a score denoting how well the employee has done.

    The result is a final score and % showing the performance of the employee.

    BobNorthwindKpis
    Figure: Good example - An example of the final output of KPIs

    Qualitative vs Quantitative KPIs

    While many organizations opt for quantitative KPIs, it's difficult to build a system that factors in all the nuance of performance.

    Qualitative KPIs provide more room to make a subjective judgment.

    Metrics to measure

    There's lots of metrics that can be measured, and the right ones are going to depend on what is important to the organization.

    For example, SSW is a consulting company and has particular metrics for a consultant (see SSW template for Annual Review KPIs.
    Tina is a product company and there would be different metrics for an engineer.

  6. Do you record a monthly stakeholder video?

    Keping stakeholders up to date is crucial for the success of any project. Developer teams use Scrum meetings which work very well. For internal admin teams - Scrum might not work as well (e.g. Sales, Accounting). Often admin teams get sidetracked, and so Scrum isn't a perfect tracker of tasks or performance.

    So, to keep stakeholders well informed, these teams should record a monthly stakeholder video. This ensures that stakeholders are aware of the project’s progress, any challenges faced, and the plans for the upcoming month. It also provides a personal touch - stakeholders get to hear from the team directly.

    Steps

    The video should be recorded by the Product Owner (or other head of the team)

    1. Open your analytics in browser tabs (this might be PowerBI for Sales, Google Ads and social media for Marketing, etc.)
    2. Note the important points you will talk about
    3. Record the video, clicking through the tabs and talking through the important metrics Tip: Use ZoomIt for easy recording and on screen notation
    4. Upload the video to YouTube (public if there is no sensitive information - unlisted if there is)
    5. Email your stakeholders with the video link

    Benefits

    • Transparency: Regular updates promote transparency and problems get resolved before they balloon
    • Engagement: Videos are more engaging than written reports
    • Accessibility: Stakeholders can watch the video at their convenience, making it easier for them to stay informed without scheduling conflicts.

    Tips

    • Plan your content - have tabs open in a browser and cycle through them
    • Be concise - just give the most important points
    • Use visuals - trends are the most important - have analytics graphs that show changes over time
    • Highlight successes and challenges - include the best and worst news/statistic for that month
    • Make videos public - Users can follow product updates and the videos can be good marketing
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