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Company Policy: It's all About Purpose
Bob Ryan, About Purpose, Inc. ©2005
Recently, I’ve gotten a number of questions about setting company policy: “How do we set sales compensation?” “What financial information should we share with employees?” “Can we require traveling employees to share a room?” “What kind of a discipline policy should we have?”
I’ve come up with a standard answer – regardless of the question. It’s all about purpose. Policy should always be preceded by a careful discussion of what you are trying to accomplish. There is no right or wrong policy (except in those cases where policy is dictated by law). Rather, leadership should step back and ask themselves very specific questions about the purpose of any proposed rules.
Take the examples above, although this works with any policy question.
Sales Compensation Policy – What’s your purpose? Are you trying to reward prospecting for new sales? Do you expect the salesperson to service existing customers? To up-sell existing customers? Will the salesperson be responsible for bids or other paperwork? Do you want to focus on “A” sales which may have a longer, and more complicated cycle? Design your sales compensation policies around what you want the outcome to be. Yes, you have to be aware of what others in your market are doing for sales people, but be sure you are accomplishing your purpose first.
Sharing Financial Information – Open management styles are very popular and can be very powerful tools in motivating and developing good employees. But is it right for you? What financial knowledge will help what employees? What specific behaviors are you trying to empower and what (if any) financial disclosure will incent those behaviors? Is financial knowledge the right tool for the job (and do the employees understand and know how to use it)?
Travel Policies – I trust you have already gone through the purpose exercise to determine whether the travel itself is beneficial. Now ask yourself about specific outcomes. Expense reimbursement or per diems? Which accomplishes your purpose? Is it important for your accounting and billing to capture every expense? Are you trying to send a message to your employees about trust and responsibility? What will be accomplished by having employees share a room? There’s the obvious direct benefit of saving cash, but are there unintended consequences?
Discipline Policy – I recommend all companies have a policy around discipline. Once again, though, it’s all about purpose. Do you intend to assure all employees of your responsibility in taking action? Do you intend to warn the occasional misfit that there will be consequences? Certainly, you do not intend to tie company hands from taking decisive, appropriate measures when needed. (This last is why most consultants advise against “progressive discipline” policies that require a successive set of actions to be taken for repeated offenses.) State the purpose and tie the policy to the purpose.
These are only a few examples, but I hope you get the point. It’s all about purpose. Unless you take the time to clearly articulate the purpose for any policy and craft the wording so that it accomplishes the purpose, you will make bad policy.