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Business Insights from Andrea Hill

The larger a business grows, the more difficult it is to manage communication among all of its constituents. Some policies are unavoidable, but it is desirable for an environment to operate on sound principles rather than rules and policies to the greatest extent possible.

The Administrative Answer to Wisdom at Work

14 February 2008

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In Theory of Constraints, Eli Goldratt teaches that business policies are frequently behind business dysfunction. In fact, he names policy constraints as the primary culprit behind business bottlenecks. Though my last company was not particularly policy heavy, this teaching still held true, as a few times each year we would discover some policy getting in the way of exceptional service or smart decision-making.

Now that my transition from corporate executive to consultant is complete, vigilance against policy constraints is one my the primary activities. It is amazing, and sometimes disheartening, to discover how awry an originally well-intentioned policy can go.  

The larger a business grows, the more difficult it is to manage communication among all of its constituents. Managers are the primary instigators of policies. Managers need policies because they can not be all places at all times. They fear two things – they fear subordinates simpling makes a decision (and possibly making the wrong one), and they fear the opposite problem of nobody being willing to do anything until the manager comes back. When I first arrived at my last company, an entire department wore t-shirts that said "We'll all know when (insert name here) is back." That's pretty broken!

But even in more functional environments, well-meaning managers create policies that are intended to guide behavior. In some cases, the policy is intended to hold people accountable, such as policies that require all shift changes be approved by a manager. I don't believe policies keep anyone accountable, because accountability is something an individual chooses regardless of external pressure. You can't make someone accountable. You can point a finger at them, or you can ask them to take responsibility, but accountability is an individually chosen perspective. Southwest Airlines – with their 33,000 employees – allows their employees to switch shifts with a co-worker without managerial approval. Consider how much time managers save by not having to sign off on (or even discuss) all those shift changes! Their ability to ditch the policy is based on hiring accountable people in the first place - proving that the inverse of enforced accountability is more cost and time effective.

Policies may serve the purpose of creating a situation where the rules are clear and therefore the consequences of not following the rules are also clear, but they can also create a situation that is rife with politics, negative creativity, and games. The Civil Rights Act of 1964 introduced remedies against Quid Pro Quo sexual harassment and Hostile Work Environment sexual harassment – both policies that were needed and welcomed by working women (and men) across the country. But those "policies" have been distorted repeatedly, leading to overly-stringent corporate sexual harassment policies that terrify men and effectively neuter the workforce (if you want to read a great book on this topic, read Heterophobia: Sexual Harassment and the Future of Feminism by Daphne Patai – it's excellent). These corporate policy reactions are due to abuses of the policies, overweening HR departments, and faint-hearted corporate law departments. The end result? Dysfunction.

Some policies are unavoidable. Federal labor law policies are an example of that. But just because something is a federal law doesn't make it a desirable policy. Look at all the money and lives wasted on enforcing an absolutely unenforceable drug policy - nobody is accountable, though we tax payers continue to pay the accountants. If policy constraints are costing us at the corporate level, what are they doing to us at the level of national government?

It is desirable for an environment to operate on sound principles rather than rules and policies to the greatest extent possible. I don't think that all policy can be removed - that's utopian. But I do think that much of what we try to govern with rules is situational and the rules have to be shoehorned to fit the situation. Sound principles will serve diverse situations much more effectively than rigid policies, and the system can continuously adapt itself accordingly. In the meantime, all of this policy dysfunction is part of what's keeping me in a job.

(c) 2008. Andrea M. Hill