In an ideal world, all of your employees would have their processes documented to a precise level so that if they were unable to come to work, another employee could easily pick up the slack.

Think about your most crucial employees. If you received a call one morning that a key employee whom the company relied on extensively was unable to come to work for an extended period of time, what would your reaction be?   Would you say, “That’s OK, take care of yourself, we’ve got it under control” or would you stress that the company would be significantly impacted?

Here are a few questions to ask yourself when considering the risks of operating in an environment without updated, documented processes:

In the above situation, assuming a critical employee (or employees) is absent for an extended period of time without updated process documentation:

  1. What would the business interruption risk be to the company, its clients, and other stakeholders?
  2. What would be the financial and reputational risk to the company?
  3. Would crucial commitments to customers be adversely impacted?
  4. How much financial resources and time would be needed to learn and complete tasks?

The proactive solution is to create “click-by-click Instructions.”   A client once informed me that their controller gave a 3-week notice of resignation.  Luckily, the client realized that they needed to document everything he did before he left.   When I finished documenting the month-end close process, we had 23 pages of instructions so detailed that my 11 year-old daughter could easily close their books.  We noted what folders contained each document needed, what cells needed updating in an Excel workbook, and what buttons to press when running reports.  A temporary controller successfully closed the books for several months, and the permanent controller, hired a few months later, also had a seamless transition.

Here are your steps:

  1. Have employee #1 create their own instructions.
  2. Demonstrate those instructions to employee #2.
  3. Employee #2 provides feedback on areas that require clarification.
  4. Employee #1 updates the documentation.
  5. Employee #2 performs the task unassisted (if there are any issues, return to step #3).

It also helps to have an outside consultant review the steps to see if there is any missing information such as not enough detail about how something is reviewed, the triggering events before a process begins, internal controls that need to be included to avoid issues and risks, etc.  The goal is to make the steps so crystal clear and obvious, that an 11 year-old could do it.  Maybe that is extreme, but instructions should be precise enough to stand on their own.

Taking the time to be prepared and create process documentation will pay dividends during periods of employee transition and create a less stressful work environment.  It is obviously better to be proactive and create instructions before they are ever needed.

Marcum is here to help with documenting processes, reviewing previously documented processes, and can even offer suggestions about internal controls and ways to improve efficiency.  Please reach out to Chrissy Walters, Marcum Risk Advisory director, at chrissy.walters@marcumllp.com with any questions.