When to set policy

What is too much vs not enough policy?

My first management position was with a government agency, and I learned how setting too much policy stifles creativity, innovation, building of sound judgment and morale. It can sap the energy out of an organization.

At the other extreme is Nordstrom, whose early success was built on two policies. Number one, “do whatever it takes to please the customer” and, number two, “when in doubt, consult policy number one”. Obviously it worked for them, and their approach transformed the retail industry, which had to alter its policies to emulate the Nordstrom commitment to customer. This minimalist approach worked because Nordstrom coupled it with aggressive incentives for all their salesman and supervision practice that weeded out the faint of heart. Likely this model would be tough to execute for most organizations.

So, what’s the middle road? What is sound policy? Policy should be a set of general principles that guide the planning and programming of managers in the organization. As you go lower in the organization, policy becomes more specific until it becomes orders for specific action. For example, a general policy for a clinic might be “services to patients shall be maintained throughout all posted office hours”. Within a department then, policy or orders might require that lunches be staggered in a certain fashion such that the flow of patients through the clinic not be disrupted during lunch hours.

There are no “one size fits all” answers to when to set policy, but there are some principles you can apply. Consider using policy in the following instances:

• When the cost of a mistake is high.
• When how you want something handled is outside of common sense and must be prescribed.
• When there is a record of somewhat consistent poor results across a number of departments or employees, i.e. not an isolated section or employee having difficulty.

What policy provides

Good policy provides a framework within which the organization has freedom to innovate and experiment. Think of it as a picture frame. There is freedom in the actual picture created – the colors, textures, etc. – but it needs to fit within the frame provided. Employees tend to feel more freedom when sound policy is implemented and followed consistently. They know the boundaries from within which they can safely offer their own unique thinking and approach.

Next blog? When not to set policy!

I would love to hear your thoughts. Send me an e-mail with your comments.