Standard Operating Procedures: Accommodating People and Their Practice

Multinational companies, in Samina M. Saifuddin, Ph.D. their effort to increase global Assistant Professor presence, continually look for opportunities to grow. Yet, due Morgan State University to differences between home and host countries, Multinational Companies (MNCs) often need to choose whether to implement standard operating procedures (SOPs) across all countries or to adapt the practices to the local context. SOP is a process document that details how a particular task should be completed by company standards, industry regulations, legal framework, or global regulations. SOPs are widely accepted methods that bring uniformity to important business functions that can be replicated at scale to standardize performance. SOPs can be used to improve task efficiency at every functional area in organizations such as human resources, manufacturing, quality assurance, and accounting, as well as it can be used as a governance mechanism for a firm’s compliance with its standards for requirements. With inputs from the Project Management Body of Knowledge Guide (PMBOK), SOPs are organizational process assets (OPAs) that can influence the plan quality management process. SOPs provide guidance and direction on how quality will be managed and verified throughout the project (PMI, 2017). There are several reasons for a company to use SOPs. Fazzi (2007) listed a few important reasons as: • Ensuring consistent, repeatable processes; • Facilitating training by giving trainees a point of reference; • Reducing safety risks and other hazards by specifying how to avoid and prevent them; • Providing a basis for evaluation and improvement of processes; and, • Complying with regulations and quality standards. For these reasons, many organizations establish and maintain SOPs as a quality management tool to ensure precision in the quality of product or end-result as well as a governance mechanism for compliance (Manghani, 2011). Recent evidence suggests that the consistent use of SOPs ensures performance efficiency (Scaduto, 2019). For example, Dean Scaduto, a Forbes Councils member -- who operates a distributed company with a remote global workforce -- credits SOPs as an input for his business growth. He further adds that the consistent use of SOPs helped him to create a virtual culture for a distributed workforce (Scaduto, 2019). The business advantages of SOPs are well documented, but implementing SOPs could pose significant challenges in projects spanning multiple countries. More specifically, there could be differences due to several macro-enterprise environmental factors, including law, culture, society, taxation, nationalism, technology, literacy, and level of education (Vrontis, Thrassou, &

“Many organizations establish and maintain SOPs as a quality management tool to ensure precision in the quality of product or end-result as well as a governance mechanism for compliance.”

Lamprionou, 2009). In a real-world scenario, two teams working on the same project in two different countries for an MNC attend a business exhibition held at a location. During conversations, it became clear that the project teams in Country A and Country B operated under different working conditions. Both teams’ tasks and responsibilities were the same however, project manager and project team members in Country B were operating under more favorable policies. They enjoyed more privileges in terms of benefits and perks compared to the project team in Country A. This new information was demotivating for the Country A’s project team, especially knowing that their region/market contributed the highest percentage toward the overall business growth. The obvious solution should be that there is a clear set of policies to use that is consistently applied across the board. While this has considerable appeal, there can be conflicts due to differences in labor standards across national boundaries. One technique MNCs can take to address differences in the international landscape is to apply Donaldson’s Ethical Algorithm (Donaldson, 1989). Wicks, Freeman, Werhane, & Martin (2010), in their review of Donaldson’s Ethical Algorithm, outlined the two conflicts that may result from not implementing SOPs - Type 1 (economic) and Type 2 (cultural). Type 1 conflict arises when there is a difference in business practice between the home country and host country due to economic conditions in the host country, such as lower wages and lower environmental standards. Type 2 conflict arises when there is a difference in business

practice between the home country and host country due to cultural conditions in the host country such that it violates international rights or business practice prohibited in the home country. Donaldson argues that the adaptation of business practices in the host country is acceptable when it is morally and legally allowed in the home country. That is, multinational companies can tailor the business practice in the host country only when it is permissible in the home country under similar economic conditions and abides by international rights. PMBOK opined that incorporating the organization’s quality policies or SOPs into a project can increase the probability of meeting the quality objectives (PMI, 2017). However, the onus lies on the efficient project manager who is expected to have the capability of understanding their business environment – both political and cultural— to execute projects in the host or home country successfully. Another technique MNCs can take to mitigate differences in standards is to self-regulate their conduct in areas such as environmental policies, working

“Multinational companies can tailor the business practice in the host country only when it is permissible in the home country under similar economic conditions and abides by international rights.”

conditions, and quality control (Christmann, 2004; Christmann & Taylor, 2006). Self-regulation refers to a firm’s adoption of policies or performance standards that exceed the requirements of governmental regulations. By self-regulating work policies, the MNC can give the appearance that they are operating under similar work standards across their country subsidiaries. In today’s world, where national boundaries are no longer restrictive, companies can attract and retain the best resource in their project management teams by subscribing to higher standards through self-regulation. However, MNC’s standardization of processes through self-regulation can be in response to stakeholders’ pressure. Thus, the use of such self-regulation is subject to debate. In summary, there are two techniques MNCs can take in deciding whether to implement SOPs in project management teams across all countries or to adapt to local contexts - Donaldson’s Ethical Algorithm and self-regulation. Donaldson’s Ethical Algorithm is a better technique in dealing with international differences in work practices as it operates within the scope of what is morally and legally acceptable, which is in keeping with the PMI code of conduct (PMI, 2017).

References: Christmann, P. (2004). Multinational Companies and the Natural Environment: Determinants of Global Environmental Policy. Academy of Management Journal, 47(5), 747-760. Christmann, P., & Taylor, G. (2006). Firm Self-regulation Through Interna- tional Certifiable Standards: Determinants of Symbolic Versus Substantive Implementation. Journal of International Business Studies, 37(6), 863-878. Donaldson, T. (1989). The Ethics of International Business. New York: Oxford University Press. Fazzi, C. (2007, February 14). Quality Management: SOPs Relay Knowl- edge. Quality Magazine. Retrieved from https://www.qualitymag.com/ articles/84868-quality-management-sops-relay-knowledge Hagan, M.O (2020). Brainstorming and Image Ideas of Miriam Hagan, MSc Project Management at Morgan State University, March 2020. Manghani, K. (2011). Quality Assurance: Importance of Systems and Stan- dard Operating Procedures. Perspectives in Clinical Research, 2(1), 34-37. Project Management Institute (PMI). (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide). 6th ed. Newtown Square, PA: Project Management Institute, Inc. Scaduto, D. (2019, November 7). The Lowdown on Standard Operating Procedures. Forbes. Retrieved from https://www.forbes.com/sites/forbes- businesscouncil/2019/11/07/the-lowdown-on-standard-operating-proce- dures/#3f5a86a16b86 Vrontis, D., Thrassou, A., & Lamprianou, I. (2009). International Marketing Adaptation Versus Standardisation of Multinational Companies. Interna- tional Marketing Review. 26(4/5), 477-500. Wicks, A. C., Freeman, R. E., & Werhane, P. H. Martin, K.E. (2010). Busi- ness Ethics: A Managerial Approach. Upper Saddle River, NJ: Prentice.