Back in 1999, I was the Controller for Buffalo Brake Beam, a $13 million in annual sales small business with 40 employees was a worldwide manufacturer of brake beams for train car manufacturers. The expectation from the CEO, was I handle all of the accounting, financial, outside audit, banking and internal costing functions with my staff of two; a full time bookkeeper and a part time intern.

The expectations to handle a considerable amount of accounting functions with a very small staff are not unusual in the average small business setting, however in order to fulfill those expectations, each member of the accounting staff ends up wearing lots of hats and each member ends up playing important role in the day to day activity. When a staff member calls in sick for even one day, there a very good chance that at least part of the accounting system slows down or stop altogether (for example at Buffalo Brake Beam, when my bookkeeper would call in sick, no one would be available to enter the deposits received that day).

It becomes even more problematic when an employee quits. Most small businesses fail to create procedures of the major tasks being performed throughout the company so when a person leaves, so does all of the knowledge, making it far more difficult to fill the gap the employee leaves behind.

This very situation happened to me at Buffalo Brake Beam and when it did, I wasn’t prepared for it. All of the work the employee left behind became my responsibility. I ended up having to learn all of the tasks that the bookkeeper was responsible for, find, interview and hire a replacement and then train the new hire. This took three months and added about 15 extra hours to the 55 hours I was already working. My wife wasn’t happy considering I had 3 year old and a newborn at home.

It only took one time to make that mistake in order for me to implement corrective action. I initiated a program that would create procedures for all of the major day to day tasks that ran the accounting department - everything from entering invoices and daily receipts to closing the monthly financial reports. The most important part of the program was to successfully write the steps of the procedures so clearly that a person with no experience or background in accounting would be able to accomplish them.

With the assistance of my team, we listed all of the major daily, weekly, monthly and annual tasks that we performed and using the loss of a member of the team as the basis for choosing, we highlighted all of tasks we felt needed written procedures.

We prioritized our lists and I instructed everyone to begin writing procedures for the top task listed and when complete, save the Word documents to a shared company file. When I finished writing my first one, I wanted to put it to the test to see if anyone (even a person without any accounting experience) could perform the procedure.

That’s how the Al Jaenecke test was born. Al Jaenecke was a salesperson at Buffalo Brake Beam. He was extremely good at sales and had absolutely no experience in accounting. He was a perfect candidate to test my procedures.

I went over to Al’s office, explained what I was trying to accomplish and asked him if he would come to my office to see if he could follow the step by step procedure I just created for entering invoices. He was more than happy to help.

I had him sit in front of my computer at my desk and handed him the procedure and an invoice and said, “this procedure has all of the steps to enter this invoice. When you get to a point that you can’t go any further please tell me.” He took the invoice and the procedure and began reading the first step, he looked at the computer and then he looked at me. He said, “I have no idea how to get into the accounting software.” We stopped there. I thanked him and I pulled up my Word document and added all the steps to get into the accounting software to the procedure.

Once I completed that, I asked Al to come back to repeat the process of performing the procedure until I finally wrote it clearly enough for him to perform it from start to finish. Once we had that, we knew we had a procedure that wouldn’t fail.

The steps to creating procedures that never fail are as follows:

List all of the important daily, weekly, monthly and annual tasks each of your employees perform;
Isolate the tasks considered so important that if an employee left, there would be immediate need for another person to take it over;
Prioritize the importance of the tasks selected;
Chose the highest prioritized task in step 3 and Write the procedure from start to finish;
Find your Al Jaenecke - a person who isn’t from your department who will have no idea how to complete your task without a procedure to follow;
Ask that person to follow the procedure and instruct that person to stop when it’s not clear on how to complete the next step;
Update the procedure to make more clear the step that your Al Jaenecke failed to complete
Repeat steps 6 & 7 until your Al Jaenecke performs the procedure from start to finish.

Face it, when you have any leadership role in a small business, it’s inevitable, you will have to deal with the loss a key employee. Once you and your team get into the habit of creating procedures for all of the major operations and tasks it will give the whole team a greater level of cross training and the confidence that all of the ex-employees tasks will be completed timely while you search for their replacement. So get started today.

I hope you have a great day!