Procedure Capture

A business can price the owner's seats correctly and still find that hiring into them fails. The new general manager is capable and paid the market rate, and within a month every decision of consequence is back on the owner's desk. The manager does not know how the work is really done, what the exceptions are, or which judgment calls the owner makes without noticing. The owner, wanting things done properly, answers every question, and the business ends up paying the salary and the owner.

Procedure Capture is the driver that prevents this. It turns each owner seat into a job a market-rate hire could do, and that is what makes the benchmarked salary the right deduction in the pro forma. Each core function gets a written procedure. The judgment calls the owner still makes go on a short escalation list, each with a threshold. And before the owner steps away, the person who will own each procedure runs it once while the owner watches and says nothing.

A procedure for each function, written by someone else

Every function on the organization chart gets a written procedure stating what starts it, the steps, the systems used, the seat responsible, the known exceptions and the date it is next reviewed. It is stored where the team does its work.

The owner does not write it. Someone else shadows the owner through one full cycle of the function and writes down what the owner actually does. An owner describing their own work leaves out the parts that make it hard: the check they always run, the customer they always call first, the number they glance at before signing. Those are habits, so the owner no longer sees them. Someone watching does.

Every procedure follows one template, and a procedure missing a field does not count as written.

A function with a written procedure carries on when the person doing it changes, and a buyer who will not run the business needs every function to carry on when the owner leaves. That is the buyer's discount for durability, and the procedures are what remove it.

The decisions the owner still makes

The second piece is an escalation list: every decision that reached the owner over a four-week log, with the threshold, in dollars or in risk, that sent it there, and the seat it will move to.

The decision log runs alongside the owner's time log from Role Costing. For each decision it records who brought it, what it was, what it was worth and what the owner decided. From the log each class of decision gets a threshold. Below it, the seat decides. Above it, the owner does, until the seat has decided correctly for a set number of cases and the threshold rises.

Some decisions belong with the owner, and the list names them, so the owner's judgment is bounded and kept where it is needed. A buyer looking at an owner who makes forty decisions a week cannot tell how dependent the business is on that person, and assumes the worst. A buyer looking at a short list of named decisions, each with a threshold and a seat it will move to, can see how much dependence is left, size it and price it. The discount for certainty shrinks to whatever that list contains.

Functions that are mostly judgment

Some functions resist being written down. Processing an order is easy to capture, because the steps are the same every time. Pricing a complex job, closing a difficult sale or deciding whom to hire looks impossible to capture, because the owner's answer depends on the case.

It helps to separate the parts. Most judgment-heavy work sits on a layer of routine: where the data comes from, which costs are always included, the margin the business aims for, the questions always put to a candidate, the standard terms. That layer can be written down, and writing it down is most of the value, because a new person cannot guess it. What is left is judgment proper, and the escalation list handles it. Jobs above a certain size are priced by the owner until the estimator has priced enough of them correctly. Discounts beyond a stated level need approval. A senior hire gets a second interview with the owner.

The seat can then do the routine part of a judgment-heavy job alone from its first week and take on the judgment in stages as its record earns it. A buyer sees a function partway through a handover with a visible path to the end, and can price that. A function only the owner understands is a risk the buyer cannot price.

A dry run with the owner silent

Before the owner's planned absence on the next span, the seat responsible runs every procedure end to end with the owner watching and saying nothing, and the gaps found are written back into the procedure.

One function a week gets a dry run. The seat works from the document, the owner watches without stepping in, and the writer records each point where the document was not enough: a missing step, an exception nobody foresaw, a decision nobody knew was theirs. The procedure is revised the same week, each gap becoming a step, an exception or a line on the escalation list, before the next run.

Everything depends on the owner staying quiet. An owner who corrects the seat mid-run has rescued the run and hidden the flaw in the procedure, because the correction is exactly the knowledge the document failed to capture. What is asked of the owner is uncomfortable and deliberate: watch the work go slightly wrong, and write down why.

What it does to value

Procedure Capture ranks near the top of this bridge's work on value, and it gets there cheaply. It acts on one of the two largest risks a buyer at this anchor prices, that the owner's successor fails in the first year. The framework values the driver as the fall in that probability, measured by the decisions brought to the owner falling toward zero, multiplied by the gap between what the business is worth if the successor succeeds and what it is worth if they fail. The cost is a writer's time and some of the owner's patience.

It also has a price effect, which the framework keeps in a separate column. A buyer who doubts the business can run without its owner holds back part of the higher price a fund would pay until the business has shown it can, and procedures, an escalation list and finished dry runs are part of the showing.

What has to be in place first

Procedures are written per seat, so the driver needs the functional organization chart from Role Costing; without it there is no list of functions to capture. It needs a writer who is not the owner and has time set aside, whether an operations lead, an assistant or the lead's own team, because an owner describing the work to nobody produces nothing usable. And it needs one place the team already uses for documents. A procedure kept anywhere else goes unread, and the seat does the job from memory as before.

Knowing that it works

Progress shows first in the share of functions on the chart with a procedure written to the template. The decisions brought to the owner each week should fall as the thresholds take effect, and the dry runs completed without the owner stepping in, as a share of the procedures written, show whether the documents work.

A procedure picked at random and run by the seat from the document, with the owner writing down what they wanted to say instead of saying it, measures what the document still leaves out. On the escalation list, the owner strikes every decision they are willing to delegate today and writes a threshold beside each one that remains. Both tell the owner how much of the business still runs through them, and turn each remaining piece into something they have chosen to keep.

Why it slips, and what holds it

A manager leaves and the procedure goes with them, because nobody maintained the document and the manager had improved on it in ways nobody wrote down. Or the owner drifts back into the seat, taking back a decision here and there until the escalation list no longer describes the business.

Each procedure carries a review date owned by its seat, so the next person in the seat inherits a current document and does not depend on the owner's memory. The escalation list is reviewed every quarter, and its thresholds can only move up, so a decision that has moved to a seat comes back to the owner only if someone chooses that in a review and records why.