Effectiveness of Rules and Regulations in Achieving an Organization’s Mission

How crucial are rules and regulations in a firm? Necessary rules decree ethical and legal behavior (a code of ethics); we need those. But, why so many rules? Do they allow entities’ to achieve their visions and missions? Or, do they impede firms?

Distrust is the main issue. Leaders don’t trust their workers. So, they set rules to curb their decision’s scope. Executives don’t realize trust builds confidence. And this boost leads to enhanced productivity, value creation, and morale.

The best person to lay the base for trust is a Chief People Officer. He or she would start by hiring the right people and putting them in their ideal jobs. This would be the start of stupid rules’ removal to spur workers’ creativity. After, value rises and clients and stakeholders win.

Managers should study Yves Morieux and Peter Tollman’s Six Simple Rules: How to Manage Complexity without Getting Complicated,1  which could benefit every organization:

Minimize Rules and Regulations: Six Simple Rules

  1. Understand what people do and why they do it: Watch and understand the context to learn if the firm needs what people do, and how you (the manager) might help them improve.
  2. Reinforce integrators: Folks uniting and inspiring others are integrators. Reinforce them. That’s how you cut the ranks. Less rules, people empowerment, and more cooperation will be a big perk. Fewer levels mean folks will rely on one another more. “It’s not what the rule decrees that matters, it is the effect the rule has on the actions and interactions of the people involved—how the rule affects the context.”
  3. Increase the total quantity of power: Power shows how a person can impact issues that matter to others. Frontline workers need the right to decide. They see clients; they know them and their likes and dislikes. So, end rules and disband hierarchy to build more power and unity. Reinforce integrators. Form clear, common goals, and let people closest to services’ delivery decide best delivery means.
  4. Increase reciprocity: Create conditions where one person’s success depends on another person’s success.
  5. Extend the shadow of the future: Link people’s actions to the endpoint, that future state, not only the next quarter. Get folks to understand the impact of their actions on others by “walking a mile in the other’s shoes.”
  6. Reward those who cooperate: Focus on how to deliver results and those who help to produce them. Reward helpfulness thus increasing organizational resilience. Managers should ask three things of their employees in one-on-one talks: (1) What will you do to improve performance? (2) What are the personal risks to you in setting this target? (3) How can I help you get the cooperation you need from others to mitigate the risk?

Dumb Rules And Regulations Stifle Creativity

The six simple rules focus on doing what’s right for the firm. Rule number one is clear, obvious, crucial, yet folks ignore it. We should want to use these rules. They promote cooperation, foster long-term behavior, and empower people to create value for the firm. Businesses win when they use these rules. Yves Morieux and Peter Tollman’s case studies show why and how the rules benefit employees and businesses.

Brazilian CEO Ricardo Semlar believes in people so much he abolished rules in his family owned business, empowered employees, and achieved a happier and more productive workforce.2 His experiment continues successfully today.3

Former chief talent officer at Netflix, Patty McCord tells us about the major transformation at Netflix:4

Over the years we learned that if we asked people to rely on logic and common sense instead of formal policies, most of the time we would get better results, and at a lower cost. …If you are careful to hire people who will put the company’s interests first, who understand and support the desire for a high-performance workplace, 97% of your employees will do the right thing. … Most companies spend endless time and money writing and enforcing HR policies to deal with problems the other 3% might cause. Instead, we tried really hard not to hire those people, and we let them go if it turned out we’d made a hiring mistake.

Zapposhas similar management ideas but encountered problems doing them. They are trying to fix them today. Self-management and  zero rules work with right people and culture. Still, each case is different. We must treat employees well and model value creation to them.

Conclusion

Let’s keep things simple. Hire people of character. Trust, train, and empowered them and let them use their talents to create value for stakeholders. As the late Steve jobs said: “That’s been one of my mantras — focus and simplicity. Simple can be harder than complex; you have to work hard to get your thinking clean to make it simple.”

(c) 2017 Michel A Bell

Footnotes:

1 Morieux, Yves, and Tollman, Peter, Six Simple Rules: How to Manage Complexity without Getting Complicated, Boston, MA: Harvard Business Review Press, 2014

2 Semler, Ricardo, Maverick: The Success Story behind the World’s Most Unusual Workplace, New York, NY: Warner Books, 1993

Semler, Ricardo, Speaker | TED.com, accessed June 12, 2017. https://www.ted.com/speakers/ricardo_semler

McCord, Patty, and Ram Charan, How Netflix Reinvented HR, Harvard Business Review, January-February 2014, accessed June 12, 2017, https://hbr.org/2014/01/how-netflix-reinvented-hr

Reingold, Jennifer, Fortune.com, How a Radical Shift Left Zappos Reeling, accessed June 12, 2017. http://fortune.com/zappos-tony-hsieh-holacracy/

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Michel A. Bell

Michel A. Bell is a former senior business executive, author of seven books — including his first children's book published in 2022 — speaker, and adjunct professor of business administration at Briercrest College and Seminary. Michel is a Fellow of the Chartered Certified Accountants (UK), holds a Masters of Science in management degree from Massachusetts Institute of Technology and a Doctor of Business Administration honoris causa from Briercrest College and Seminary. He is founder and president of Managing God's Money™ and Stewarding God's Resources.

2 thoughts to “Effectiveness of Rules and Regulations in Achieving an Organization’s Mission”

  1. An interesting discussion is definitely worth comment. I think that you ought to publish more about this subject, it might not be a taboo subject but usually people don’t talk about these topics. To the next! Cheers!!

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