Rules to Liberate vs Rules to Choke

by Krishna on July 29, 2012

Angela Baldonero at Return Path has a post about her work at human resource management. Some of her points are very good. She writes about not tolerating brilliant people who cannot work in a team. Their company (apparently) does not simply pay lip service to their stated value of total transparency, but acts on it even when not doing so could have been easier. They cultivate an executive team that discusses everything in the open and there are no back channels for communication.

However, when she discusses about policies and rules, she is not completely right:

Policies and rules are created to guard against people doing stupid things to control time and resources. The reality is, with clear direction 99% of our people make great decisions every day. The couple of misses we’ve had have been quickly resolved after a clarifying conversation. Instead of locking things down, we set them free. We’ve said no to creating a policy for every situation we might encounter. Instead, we have unlimited vacation and sick time. We have a common sense expense reimbursement philosophy (“spend the money as if it was your own”).

Of course, there are some rules that are meant to prevent people from doing stupid things. But that is not necessarily true for all rules and it is also not the case that the only rules that apply are the ones in the company’s employee manual. Think about the phrase “clear direction” in that paragraph. What does that mean? Does that mean someone (like a manager) tells people what to do and they follow them? Or is it the company culture that provides a guideline for the acceptable range of behavior? In either case, you have a de facto rule. What does a “clarifying conversation” mean? Does it not mean that you broke some unwritten rule and someone is giving you a hard time about it?

Take for instance, the “unlimited vacation”. What does that actually mean? Does it mean, someone can take a vacation for 3 months? Can an employee take a month off and then take another month’s vacation in the next quarter? I would bet that people at Return Path have rarely, if ever, done that. And the reasons are clear. Such behavior would not be tolerated because it interferes with the business and the employee (who doesn’t conform) has shown themselves not to be a team player. We are then effectively looking at maybe 2–4 weeks once a year as the de facto vacation. Not that much different from your average company.

So what is the problem? The issue is that without the written down rule, you confuse people instead of clarifying. You also make decision-making difficult for them. For example, if say 2 weeks is the norm, what happens if you want to take 3 weeks? Will that create a bad impression about you? Do you have to do something different to earn it? What if you don’t have enough time left to put extra effort? Also think of a manager who was asked by someone how long they can be and replied, “2 weeks would be ideal”. Then along comes someone in the same project and says they need 3 weeks for whatever reason. Do you accept or not?

In the case of expense reimbursement, I am more sympathetic. You would need several pages of an HR manual to cover all the different situations possible. But even here, you can establish high-level guidelines or reimbursement limits ($x for taking a customer to lunch, for instance) and then come up with an approval mechanism. This is important because when people are not sure about what they can expect, they are more cautious. Reimbursements are typically meant for acquiring or retaining business, and you don’t want people to be penny wise and pound foolish, just because they were not sure whether they should have spent a few extra dollars to please a customer.

Good rules allow everyone to know the limits of what is acceptable in the organization. They make it easy for employees to make quick decisions.Trust-worthy employees are afraid of creating the wrong impression of impropriety or dishonesty. In the absence of rules, their caution can cause you business. This might not be so evident on the surface. A policy that unwittingly makes employees spend less and take fewer vacation days may seem good. But there is a business reason why you give people time off and why you want people to spend money on behalf of the company. And not doing enough can hurt you.


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