SOPs vs. Tribal Knowledge: Why Growing Firms Can't Scale Without Documented Processes
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At some point in growing your firm, you reach that uncomfortable moment. Revenue is on an upward trajectory, but somehow things feel like they are harder than they were last year. New hires are on repeat with the same questions, a single person’s vacation grinds their department to a halt, and a client asks how something works and the answer is “Let me check and get back to you.”
If that sounds familiar, it’s not a hiring or talent problem you’re facing, but a documentation problem. It’s more commonly referred to as tribal knowledge, and fortunately, it’s one of the more fixable challenges your business will face, it just requires being honest about where you stand, and getting an outside perspective that doesn’t come bundled with institutional myopia (aka having already drunk the Kool Aid).
The easiest way to break down Tribal Knowledge is any knowledge that lives in a team member’s head, rather than documented somewhere that can be easily found and learned. It’s the “just ask Sharon” answer to half the questions in your onboarding process. Academically, it’s defined as a kind of institutional memory that relies on a particular person’s memory and accessibility, which means it only survives through training, mentoring, and the availability of a particular person. This makes that institutional knowledge highly fragile in the face of turnover, illness or departure.
But you don’t want your foundation to be sand, you want it to be strong enough to withstand sustainable growth. And it’s not like the people with that Tribal Knowledge are the problem, rather they are providing a false sense of security because their necessary memory is being taken for granted. Your entire operation, the bigger it gets under this framework, becomes more and more volatile. If you don’t archive that knowledge and make it easily accessible while that person is showing up for work and continuously reliable, eventually you will find yourself with a knowledge gap that could set you back years, if not collapse your company entirely.
When your team is small, Tribal Knowledge is just part of the team’s culture. Everyone knows who knows the things they don’t, or at least everyone knows someone who knows the right person. But growth erodes that cultural awareness, to the point nobody knows who knows, or even who to ask to get pointed in the right direction. That small team of 5 people can answer questions in real time, with no disruption, and informal patchwork sharing fills in the gaps. That team of 50, on the other hand, requires multiple checks to find the right person, and that team of 200 won’t even know the names of half the company, let alone who knows what.
Combine this with soloed operations, and you have a complete breakdown. And so you hit a wall just as your company is taking off. Top leadership moonlights as firefighters, new managers can’t get consistent results because “consistent results” aren’t actually written down anywhere, formulaically, and when the top brass decide to bring in outside capital, sell the business, or step back from day-to-day operations, the first question in that audit is “what happens if your key people leave?” And hopefully, they haven’t already at that point…
It’s kind of like that moment you realize you need HR, and worse case it’s when something bad happens that needs it. You end up playing catch up, and it’s basically counterproductive at that stage. Documentation is no different. Treating it like a “we’ll get to it when we get to it” means never. But the cost of not documenting goes up exponentially as time passes and teams grow.
Turnover is the easiest way to understand this failure. When you replace that mid-level employee, you pay out the equivalent of six to nine months of their salary once you account for recruiting, onboarding, and ramp-up time. The cost isn’t even in the search so much as it’s the length of time to catch up and do things the right way when they are left piecing together the role of their predecessor through trial and error.
An even more insidious byproduct of this issue is the inconsistency of output. When the SOPs aren’t documented, quality varies wildly depending on who is doing the work. Now you’re faced with erratic customer experience, shoddy compliance exposure, and the confidence gauge in upper management, when their day-to-day consists of non-stop issues and complaints from stakeholders inside and outside of the business. If you’ve ever been in a leadership role and felt like you couldn’t go on vacation for fear of the whole department collapsing, congratulations, you have experienced the cost of Tribal Knowledge firsthand.
A well-constructed Standard Operating Procedure isn’t some dusty tome in the basement that never gets cracked open. In fact, that’s how you know it isn’t done right. The best SOPs are living, practical, and efficient recipes for the optimal execution of a task or operation. Step-by-step, consistent, and completely disconnected from the person doing the work or their particular work ethic. The best SOPs share a few traits:
They are grounded in reality, not theory. You build the instructions in real-time when being performed by the most capable and consistent members of your team. That includes any shortcuts and judgement calls.
They are built by the team, not handed down from up on high. The people closest to the process are your SME (subject matter experts). These people know where the friction points lie, so when they build them out, you are more likely to get buy-in because it feels real, not performative. Not to mention people are more likely to follow the procedure they helped create.
They are a living document. If you write your SOP once and never revisit it, it gets dated fast. It needs to evolve, especially as team structures change, grow, and take on new roles. Build in a review cycle.
They go beyond the “how” and into the “why.” Operational steps are important, but compliance requirements, customer-facing standards, and judgement calls are what define a truly great SOP.
It’s not like you need to do it all today. And that will just fail anyway. Start with the processes that act as the support beams and get into the habit of reviewing and building out SOPs as part of your work week or month. Think about each member of the team, what you rely on them for day-to-day, and what you would lose if they left. Institutional knowledge often lies heaviest on the earliest hires. Focus on client onboarding processes, core service delivery, and anything that broaches compliance. Then anything a new hire has to learn by “watching someone.”
Involve your whole team in being mindful of the work they are doing, encourage them to document their own processes (this is especially useful because asking one or two employees will freak them out, thinking you are getting ready to replace them). And once you have SOPs completed, stress test them and build in an anonymous comment system to ensure they meet the needs of all members on the team. SOPs have to be a part of your process, whether it be writing, reviewing, testing or improving on them.
An outside consultant can really help with this, as they are not worried about interpersonal relationships, stepping on toes from a potential knowledge gatekeeper, or missing the forest for the trees. That objective assessment also avoids hard feelings within the company culture, as it was an outsider that came in and shook things up, but then they left and everyone went through an experience together that brought them closer. It’s a special kind of team building, and one that leaves you with an insurance policy and a real foundation for next-level growth within your organization.
Tribal Knowledge isn’t a flaw in your team, and gatekeepers usually do so because it makes them feel important while ensuring their job security in their mind. But left unattended, critical knowledge will one day walk out the door, and the ensuing chaos will cascade down until your company culture will reflect paranoia and fear. A little advance planning, a culture of writing down best practices (even consider rewarding the best ones!), and you have the ingredients for a great team with a ton of confidence. You’ll have a business that performs at a high level, no matter if your superstar employees are in the room or not.