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Do Your Employment Policies and Procedures Fit Your Company?

In my HR work, I get asked a lot of questions about policies and procedures. These days, there are so many that an organization can (and often should) have, but how many and which ones? To answer that, you’ve got to take a step back and think about your organization’s structure, and how these policies and procedures might fit with it.

Organizations can be loosely divided into two categories based on their structure: mechanistic and organic. A mechanistic organization is usually larger, has more centralized decision making (most decisions are made by a few people at the top), and has pretty narrowly defined jobs. Mechanistic organizations are often bureaucratic, and having a large number of policies and procedures makes sense for the company to run smoothly. I see the benefits of having a large number of detailed policies in my job as a professor. Imagine the unfairness and chaos we’d have if there weren’t rules around course drop dates or procedures for a grade appeal for such a large student body.

On the other hand, organic organizations tend to be smaller, have decisions made by people at the lower levels of the firm, and have more broadly defined jobs. Smaller, flexible companies can quickly meet customer needs, and a large number of policies and procedures might constrain employees who want to more nimbly respond to their environment. My work many years ago in a startup gave me first-hand experience in an organic organization. We had almost no formal policies, and this helped employees engage in more creative work and benefit from the flexibility of their work environment. It was only as we grew to over 50 employees and ran into some issues with inconsistent employee behavior, that we established policies around things like break times and dress code.

So, take a look at your company, and it should be pretty easy to see where it falls on the mechanistic-organic continuum. Then, determine if you think the number and types of policies and procedures fit with that structure. A mechanistic structure is going to need more formalization, and an organic one may benefit from fewer policies and procedures.

What are some signs that you may have too many policies and procedures? First, the culture of the company may seem punitive, with so many rules that employees worry more about tiptoeing around them than actually providing value to the firm. When managers play “gotcha” and seem to be looking for rule-breakers more than contributors, this is a poor use of policies. Second, if employees seem to have abandoned common sense and rely only on the employee handbook or policy manual to guide their thinking—particularly if they won’t make a decision without organizational instruction--they may be too rule-bound. Third, if engagement and empowerment seem to be noticeably slipping, it may be a case where strict policies and procedures have robbed employees of the value they bring to the company. Your company won’t thrive if employees simply follow the letter of the law and do only what is spelled out in the employee handbook. Finally, good policies and procedures should save managers time; if navigating overly detailed guidelines costs more time than it saves, it may be worth finding a few policies to eliminate.

But it’s important to recognize that a lack of needed policies and procedures may be just as challenging to employees and the firm. When do we know that it’s time to formalize a few things? First, if the culture of the company seems too lax and employees aren’t contributing because of it (i.e., as with excessive tardiness), then it may be time to tighten up expectations with a policy. Second, if there are best practices in jobs, but employees don’t know them because a procedure isn’t documented, this can cause errors, poor customer service, and frustration among employees. Having detailed steps for important work tasks helps everyone work more efficiently and effectively. Third, without policies and procedures, managers risk making decisions that are too subjective and can be seen as unfair (or worse, are illegal). Unfair treatment leads to a host of negative outcomes, and without some guidance, managers may not know better. Finally, just as having too many policies and procedures can cost managers time, too few can also waste their time. If a manager is making one-off decisions repeatedly about the same issues and is spending time figuring out what to do when, instead, a well-written policy would offer a fair and timely decision, it’s time to bulk up the employee handbook.

How you can you best leverage your employment policies and procedures? Could your employee handbook use an overhaul? Or is it time for your small business to start a handbook? If so, get in touch!

See my my next blog post where I share 50 employment policies you might need.


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