Are rules and red tape really necessary? Some companies have rules for everything from holidays to bathroom breaks. Does your company have a policy for when it's appropriate to create a rule? Most companies don't, instead they create one whenever an issue comes up that affects operations. This is an ad-hoc approach based on the fear that things can and will go wrong.

Too many rules and you end up spending all your time enforcing them. This creates a lot of work. Some people argue that rules add structure. A certain amount of structure creates freedom because guidelines liberate people and make them more productive. However, most companies place too much emphasis on structure and not enough on their people.

The Pitfalls of Rules

1) Applying the same rules to everyone can cause resentment. Different people have special circumstances. If these are ignored, people feel ignored;
2) too many rules create an atmosphere of prohibition. Employees learn not to rely on their own judgment. Instead of thinking on their feet and taking risks, they use the rules as their fall back position;
3) if it's not in the rulebook, they may not do it;
4) relying on stale rules deprives employees of their creativity;
5) rules create more rules, which create a lot of administration and, in the long run, are very costly;
6) usually rules spill over onto customers. Soon, if someone wants to buy from your company they must first study and abide by the rules. They could just go somewhere else;
7) too many rules communicate a lack of trust in employees;
8) rules create an attitude. Employees mimic this attitude and it affects how they deal with suppliers and customers. For example, the company has strict policy about payment terms. So employees continually bang customers over the head with payment terms. They are just doing their job;
9) rules affect the atmosphere employees work in and customers buy from. Everyone has had the experience of walking into a store to be greeted with signs like, "Do not touch!" or "You break it you pay". Imagine being invited into someone's' home and seeing signs like these. Would you be eager to come back?
10) managers become parole officers enforcing rules. They get so caught up in who did what wrong, they forget to lead and end up babysitting.

How Rules are Set

How are rules set? Usually an employee does something undesirable, so management creates a policy and punishes everyone. Actually rules are set this way in every facet of the company. Consider this example: a few customer cheques bounce, so the company sets a policy of accepting no personal cheques. It's hard to estimate how much lost business is directly related to this new policy.

Rules are also set strategically. A company has a certain objective so they create rules to make sure it happens. Instead, why not empower employees to achieve goals, versus punishing them with more rules?

Power Comes from People

Effective managers know power comes from people. The manager's role is not to have power over people by enforcing rules, but to support and coordinate employees' efforts. This may be a complete attitude shift for some managers who are used to being in charge.

In most companies, the manager is also expected to be the leader. They can most effectively lead by empowering employees to use their own judgment and skills to benefit the company. Can you trust people to do their job without all the rules and controls? Yes. Most people do the right thing when left their own judgment. If you tell employees what to do, they will automatically do it your way without calling on their own creativity and judgment. After awhile this creates a stale work environment. Instead of being alive with creative ideas flowing, people dutifully do their jobs.

Stop Relying on Rules

How to stop relying on rules? Empower employees to solve problems on their own, making them a part of the solution. Get them asking, "What is the best way to handle this?" Then, provide them with the resources and support to do it. For example, lets say it was taking employees too long to go through their email every day. Instead of creating a policy that limits the time spent picking up email, ask employees, "How can we use our email system more effectively?" Let them come up with the solution. Being a part of the solution makes employees more accountable, creating much less paperwork and formality.

Final Words

Decide how and when you will set rules. Instead of setting them ad hoc whenever it seems necessary, decide in advance when and where it is appropriate. For example, rules are often necessary for routine things where, otherwise, everyone would do it differently every time, causing chaos. If something comes up that you think requires rules to be developed, ask, "How many people does this directly affect? Will this rule help us deal with future situations or is it just creating more paperwork? Is this something that we can empower employees to deal with themselves and use their own judgment? How can I involve all people who are affected by this policy?"

Be careful where you set rules, they may come back and haunt you.