Business Concept 5: Humans Vs. Systems

No, I'm not referring to Terminator here... I'm talking about the relationship between humans and systems in a business. Consider this scenario:

The accounts department gets confused by the many pricing structures of a company. There are:

• limited-time price promotions
• free gift with purchase
• quantity discounts

If you asked the accounts department to bill a customer based on his previous invoice, how can you make sure it is not billed based on a promotional price? When a mistake is made who do you blame - The person or the system? There is a difference and it is important for a business owner to understand the difference. The lazy, easy and common way is to give the accounts clerk a good scolding and hope that the mistake doesn't repeat itself. But what happens if the clerk is on leave and another person has to take over the job and makes that mistake?

The alternative to a good scolding, provide intensive training, multi-level checking, etc is to try to improve the system so that we close the loophole to prevent another repeat incident. How about creating a special code for all non standard items? This can be a form of a promotion invoice tag or promotion product code, so when the account clerk is about to price an item, promotional items are clearly marked. This will lead to less confusion, therefore less mistakes in the future.

Do you improve man to compensate for a weak system, or do you improve the system to compensate for the unpredictable man? I believe that humans are too variable and unpredictable to be depended on. Humans are emotional beings and performance can be affected by many outside influences. I also believe than systems should be set up to be run by people rather than people running the system. In order for a business owner to go on a long holiday and not worry about things going wrong while he is away, he will need to set up a foolproof business system. Remember: a self running business is the difference between a self-employed and a business owner as defined in the earlier article, "How to Make Money". If the business system is not foolproof to be run by employees, the owner can never take himself out of the business and his income will be proportionate to the time he puts in the business.