If you run a business, you make the rules. Tape a note to your bathroom mirror, or print it out in big letters and hang it on a string from the ceiling in your office—whatever you do, burn these words into your brain; embody them with your actions:
You make the rules.
You don’t make the law—that’s up to state and federal representatives and regulators—but you decide how your organization abides by the law. You determine how your employees are allowed to perform their jobs, how they ought to handle a crisis, and what they should be saying to your customers. You lay the bedrock for your company’s actions, and your organization’s culture is a reflection of your vision and leadership.
Remember this the next time another big corporate fiasco like what happened with United last month goes down. The airline’s violent removal of a passenger shocked onlookers around the world, leaving many wondering what would lead a company to deliberately mistreat its customers. But for the employees involved in the incident, it wasn’t a choice—they were following the rules.
In the Harvard Business Review, author and Fast Company founder Bill Taylor examines the kind of leadership mindset that thwarts employees’ capacity for critical thinking and compels them to obey “tomes of rule books” and “giant manuals” above all else. During the United incident, he argues, “employees at every level did what they were supposed to do—they followed the rules—yet the result was a total failure.”
To adequately respond to events as they unfold, organizations need to balance written rules with employees’ real time situational analyses. It’s a philosophy exemplified by Nordstrom’s one-page employee handbook, which reads, in its entirety: “Rule #1: Use best judgment in all situations. There will be no additional rules.”
Right now, writes Taylor, there are too many Uniteds and not enough Nordstroms:
Truth be told, life inside most giant organizations is much closer to the rules-obsessed culture of the big airline than the common-sense freedoms of a high-end retailer. Have you ever tried to explain your special family circumstances to a health insurance provider? Or hoped for satisfaction during a painfully robotic conversation with a cellphone company or internet service provider? Or asked for a common-sense exception to established policies and procedures from a financial services conglomerate?
Good luck with that! As leaders, we’ve become so obsessed with efficiency, productivity, and consistency that we’ve designed cultures that can’t handle the exceptions to the rules that real life invariably demands. And yet it’s how we handle these exceptions, for good or for ill, that increasingly defines how we’re perceived by our customers, especially in a world where social media captures and amplifies everyone’s behavior.
You can read the full article, “Trust Your Employees, Not Your Rule Book,” at hbr.org.
Compliance professionals know that not every company can operate like Nordstrom. In heavily regulated industries such as consumer finance and automotive sales, there are proscribed right and wrong ways to operate a business, and deviations from the norm typically fall into the “wrong” category. Lenders who offer “common-sense exceptions” risk a penalty or legal action from the Consumer Financial Protection Bureau.
Still, Taylor’s article serves as an important reminder that somewhere between 9 and 5 times out 10, leaders do make the rules. Just as it’s crucial for employees to act in the best interests of customers, leaders need to accept their role in providing employees with the freedom to act justly, fairly, and humanely. In this sense, businesses and regulators like the CFPB are pursuing the same objective. As a leader, do you know what tone you’re setting at the top—and at the beginning?