Policies and Procedures… the Path to Freedom!

Small businesses and especially new ventures typically employ individuals who are “jacks of all trades.” Very often even the Founder/CEO wears several hats and deals with each issue as they arise, developing a commonsense solution on the fly. Once any business reaches a certain scale, however, businesses invariably must support its growth by adding additional personnel. And no matter how good one does in the hiring process; it is impossible for any individual to make the exact same decisions in all situations as the business owner might want. In addition, often individuals come into an organization with their own experience on how a particular task or challenge may be handled better than the organization has ever done before. Sometimes, businesses may hire individuals fresh out of school with no inherent experience of their own who will need guidance on how to do what may otherwise be considered by experienced employee’s obvious tasks. Also, businesses often grow through repeating what has been profitable in the past and seek ways to do it more efficiently. It is for these reasons that any organization that has reached this point should develop a strong set of policies and procedures. These can be best understood as follows:

A policy is a formal, overarching guideline or principle that directs decision-making and actions within an organization. It is typically established by senior management or governing bodies and serves as a framework for ensuring consistent, strategic decision-making in alignment with the organization's goals, values, and legal or regulatory obligations.

• Purpose: Policies help to set expectations, promote consistency, and ensure that actions align with organizational goals, standards, and legal requirements.

• Scope: Policies are generally broad and high-level, covering wide-ranging areas such as workplace behavior, safety, compliance, or financial management.

• Characteristics:

  • Establishes the "what" and "why" of an issue.

  • Affects the entire organization or a specific department.

  • Often does not detail the step-by-step process but instead outlines principles or goals.

A procedure is a specific, detailed set of steps or actions that must be followed to implement a policy or accomplish a particular task or objective. It defines the "how" of achieving the goals set forth in a policy and provides a structured approach for ensuring tasks are completed consistently and correctly.

• Purpose: Procedures provide clarity and instructions on how to perform specific tasks or processes. They ensure that employees or stakeholders can carry out their roles efficiently and in accordance with established standards.

• Scope: Procedures are more granular than policies and are typically department-specific or task-specific.

• Characteristics:

  • Describes the step-by-step actions to be taken.

  • Focuses on the "how" and "who" aspects.

  • Can be modified or updated as processes improve, or as new technologies or regulations arise.

In developing policies and procedures, the management team should assess each part of their business to identify the most common and repetitive tasks, or tasks associated with significant business risk, and document the company’s preferred method of execution. This might be something as simple as how to get an invoice properly reviewed, approved and paid or as impactful as defining how large wire transactions are to be conducted as to ensure they are not susceptible to fraud.

Training on these policies should be a part of the onboarding process to ensure consistency of operational work. In addition, it should be made clear to employees that procedures should be treated as living, organic documents and as employees identify (or bring from prior experience) improved ways of conducting these activities, the documents should be updated with senior management approval. It is important that policies and procedures be written in laymen’s terms so that someone without industry knowledge would still be able to execute the process correctly. It is also important to prioritize those procedures which have the greatest potential impact on the business if not followed. Too many policies and procedures can become stifling to an organization, so it is also important to review policies and procedures from time to time to ensure they are still relevant to the business.

The general list of procedures included below is provided to act as an outline for any business operating in the real estate development and construction space.

• Design Construction Document Quality Control

• Design Permitting

• Design Process Start to Finish

• Design Prototype Management

• Design Request for Information Process

• Design Site Visit Reports

• Design Submittal Review Process

• Pre-Construction Project Startup

• Pre-Construction Construction Handoff

• Pre-Construction Estimating

• Pre-Construction New Market Pricing Analysis

• Pre-Construction Schedule Management

• Pre-Construction Value Engineering

• Construction Contract Execution

• Construction Project Startup

• Construction Accounts Payable

• Construction Accounts Receivable

• Construction Buyout

• Construction Cash Management / Retention Policy

• Construction Change Events and Change Orders

• Construction Monthly Budget Projections

• Construction Municipality Management

• Construction OAC Meetings

• Construction On Site Meetings and Reports

• Construction Personnel Change

• Construction Safety

• Construction Schedule Management

• Construction SDI and Bonding

• Construction Security and Fire Prevention

• Construction Special Inspections

• Construction Subcontracts and Purchase Orders

• Construction Submittals and Shop Drawings

• Construction Punch Out and Final Owner Acceptance Process

• Construction Utility Management

• Construction Warranty

• Quality Construction Inspections

• Quality Assurance / Control

When creating a policy or procedure document template, it is essential to structure it clearly and consistently to ensure that the document is both easily accessible and effective in guiding actions. Below are best practices for structuring these documents:

1. Title and Document Identification

• Policy/Procedure Title: A concise and descriptive title that reflects the content (e.g., "Employee Leave Request Policy" or "Safety Protocol for Construction Sites").

• Document ID/Number: For easy tracking, especially in organizations with multiple policies and procedures.

• Version/Date: Include version control (e.g., Version 1.0) and the date the document was created or last updated. This ensures that users are referring to the most current version.

• Approved By: Include which employee wrote and/or approved the document for future reference.

2. Purpose/Objective

• Policy: Clearly state the purpose of the policy or procedure and what it aims to achieve. For example, "This policy aims to ensure compliance with safety regulations and protect employees' health."

• Scope: Define who and what the policy applies to, e.g., "This policy applies to all full-time and part-time employees in the organization."

3. Definitions and Terms

• Include definitions for any terms or jargon that may not be universally understood. This is especially helpful in complex or technical documents to ensure clarity.

4. Roles and Responsibilities

• Identify who is responsible for enforcing the policy or following the procedure. This may include specific job titles or departments.

• For procedures, specify who needs to carry out each step.

5. Policy Statement (for Policies)

• Provide the main rules, regulations, or principles that make up the core of the policy. This is often a broad statement outlining the guidelines that need to be followed.

6. Procedures/Steps (for Procedures)

• Detail the step-by-step actions needed to carry out the procedure. Each step should be clear, concise, and in a logical order.

• Format: Consider using numbered lists or bullet points for ease of following.

7. Exceptions (if any)

• Clearly list any exceptions to the policy or procedure. Explain the circumstances under which exceptions may apply and how they should be handled.

8. Related Documents

• Include references to any related policies, procedures, or external guidelines that may support or be referenced by the policy/procedure.

9. Compliance and Monitoring

• Outline how adherence to the policy or procedure will be monitored and enforced. Specify any reporting or tracking mechanisms in place.

10. Review and Approval Process

• Specify the process for reviewing and updating the policy or procedure, including who is responsible for approvals. This is important to ensure the document remains current and relevant.

11. Contact Information (if applicable)

• Include contact information for individuals or departments that can provide clarification or assistance regarding the policy or procedure.

By using a clear and structured format, these documents will be easy to understand and implement, reducing ambiguity and helping ensure compliance.

But how can policies and procedures set my business free?

Think of all the time you might put in to mentoring a new employee on the proper way to do each function of the business. Now multiply that time by the number of employees you would need if your business was 10 times the size. How about 100 times the size? Training individuals individually on mundane tasks takes you and other leaders in the organization away from work that truly drives the business, time better spent on doing new and larger deals, raising capital, sourcing new investors, etc. Remember, the scarcest resource any business has is its employees time. A small investment up front can save thousands of hours down the line and help better ensure that potential risks that could severely damage the business are mitigated through following proper processes.