How good systems and policy can optimize company profit

Some of you may be confused what systems I refers to.  What is systems and policy and what benefits of good systems and policy to your company?  Without systems and policy, CEO and business owners might experience:

  • Chaos
  • Not able to scale up the business
  • Frustration and work overtime
  • Inefficiency in managing his business

Businesses which run with no systems creates a lot of inefficiency and difficult to scale.  The CEO or business owners spend a lot of time to manage the business, make decision and judgement calls.

So how can you manage your business easily and increase your profits massively?  By establishing systems and policy.

What is Systems and Policy I am referring to?

I do not refer to computer systems or application.  A System is a way of working, organizing, or doing something which follows a fixed plan or set of rules grouped together that work toward a common goal.  Part of a system can be establishment of Standard Operating Procedure (SOP).

A policy is a set of ideas or plans that is used as a basis for making decisions in business.  Policies provide the framework within which the decision-makers are expected to operate while making decisions relating to the organization. Policies are a guide to the thinking and action of subordinates for the purpose of achieving the objectives of the business successfully.

Having a good systems and policy will help you managing your business and increase your company profits massively.  So what are the benefits of good systems and policy?

How good systems and policy can optimize company profits?

I list the 5 benefits of good systems and policy to your company which can help optimize company profits. Only with systems and policy CEO and business owners can scale up the business and increase profits massively.

5 Benefits of good systems and policy to your company:

Benefit #1: Scalable – can grow and expand the business

Each task is structured so that the person in charge knows exactly the process and what should be done.  New hires can easily learn and understand the process. 

In most cases, SOP (Standard Operating Procedure) is established to document the business process in structured manner.  However, the systems need to be designed and blue print needs to be mapped out prior to making SOP.  Any changes to the company procedure can only have massive impact if it’s structured.

Having a system allows you to scale up your business so that your business can grow and expand.  With a system, CEO and business owners can duplicate processes easily and can duplicate business in any number of locations easily. 

Benefit #2: Business is organized

Business is organized as everyone knows the process. With good systems, business can increase efficiency and reduce cost as duplication can be minimized and eliminated.  As systems are implemented throughout the company, it is done and executed by every employee.

Benefit #3: Easier to manage and operate

With systems, CEO and business owners spend less time managing the business as the business can run itself.  Each employee knows the policy and the systems used.  Employees can also make decision, work based on the systems established so that less time in managing them.

Business is easier to manage and operate as the process has been standardized.  CEOs and Business owners can spend more time with family and friends and less time worrying about running the business or working overtime.

Benefit #4: Consistent product and service quality every time

Consistent product and service quality every time from consistent application of systems established.  New hires can also easily be trained and follow the systems.  Customers are happy because they have quality products and services every time.  This will lead to increased revenue and growth of the company.

Benefit #5: Increase profits massively

Changes in the systems will result in increasing profits massively.  Of course, the changes must improve the current systems from ad hoc and manual into structured systems.

Case Study

In one of the companies I worked for, when I joined the company the systems and policy for training was not structured and clear.  Operation could have its own training, with no supervision or approval from HR.  The operation trainer could set a schedule, determined the venue, determined the topic, determined the participants and asked for payment without proper documentation. That person made all arrangement: acted as trainer, arranged for venue, requested for payment and he only submitted payment receipt for request of payment. The training could be a sham as all work and arrangement is done by one person and there was no proof that it was being held, only payment receipt was submitted.  Internal control was very weak.

I changed the systems and policy that all training must be organized and approved by HR, the venue must be negotiated and approved by Procurement department  after discussing with HR, the trainer must be approved by HR, when the training is held all attendees must sign an attendance list and a photo of the session must be accompanied when the final bill is submitted. 

This systems and policy help the company save from unnecessary training, choose competent trainer and training is held more selectively. Most importantly that the training is actually held, not a sham, cost effectively.  This systems and policy reduced the company training cost substantially.

Summary

Good systems and policy is a friend to CEOs and Business Owners as a tool to increase profits massively.  Only changes to systems and policy can have massive impact.  Item by item cost saving or cost reduction can not significantly make a difference.

5 benefits of good systems and policy to your company:

  1. Scalable – can grow and expand the business from structured process
  2. Business is organized resulting in increase in efficiency and reduction in cost
  3. Easier to manage and operate resulting in CEO and business owners spend less time managing the business
  4. Consistent product and service quality every time making customers happy and increase revenue.
  5. Increase profits massively

As the systems is well designed considering internal control and efficiency, only systems can increase your company profits massively as it is done structurally throughout the company. 

Good systems and policy is key to your business success.  It’s one tool CEOs and Business Owners can increase his/her company profits massively.  Please review the way your company doing business and to find where improvement can be made by establishing good systems and policy.

Wish you success,

Ronawati Wongso

CEO & Founder

Rantai Breakthrough Consulting

Profit Optimization | Turnaround

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Systems and Policy FAQ

What is Systems and Policy?

A System is a way of working, organizing, or doing something which follows a fixed plan or set of rules grouped together that work toward a common goal.  Part of a system can be establishment of Standard Operating Procedure (SOP).

A policy is a set of ideas or plans that is used as a basis for making decisions in business.  Policies provide the framework within which the decision-makers are expected to operate while making decisions relating to the organization. Policies are a guide to the thinking and action of subordinates for the purpose of achieving the objectives of the business successfully.

How good systems and policy can optimize business profits

Benefit #1: Scalable – can grow and expand the business
Benefit #2: Business is organized
Benefit #3: Easier to manage and operate
Benefit #4: Consistent product and service quality every time
Benefit #5: Increase profits massively