How to write company policies

Imagine a world where companies had no employees, but instead utilized only ideal programmable robots. If you wanted these robots to, say, interact with each other in an optimal way, you would write formal policies – also known as code. That code would have to outline every single possible situation the robots might find themselves in, and for each situation, explain what the robots should do. Writing these policies would be a pain – as any real programmer can tell you, you’ll almost certainly forget to think about a few edge cases – but if you succeeded, your team would operate in exactly the way you wanted them to.

Back in the real world, our employees aren’t robots; they are humans. Among the key differences between these two kinds of entities, humans have a much more limited (and fallible) memory; they take much longer to look up the right policy to apply in a given situation; and most folks have a creative drive which causes them to be (rightfully!) unhappy when all their freedom is stripped away and they are asked to just follow orders. Each of these so-called ‘limitations’ of humans informs important lessons about how you should write behavioral policies in the real world. Let’s take them one at a time.

Memory Limitations

Human beings have limited memories. That means that, if you want them to be aware of all of your formal policies, then those policies have to be concise. In particular, you are limited by your employee’s ability to realize “there is a policy which applies to this situation, and I know where to find it.” This is hard because communication is hard. If you write policies which apply to “political disputes”, what exactly does and doesn’t qualify as a political dispute? If your answer is “I’ll write a detailed explanation going into the minutiae until there can be no doubt”, then congratulations, that’s the only policy your employees are ever going to have the time or energy to bother understanding (and even that’s a stretch.)

What this means is that your policies have to have really simply, conceptually straightforward triggers. Policies for ‘if you ever want to spend money’ or ‘how to book travel details when attending a business event’ are good examples of this. It’s easy for an employee to realize they are in the relevant situation, and it’s easy for them to remember that there’s a policy somewhere which they can look up and apply. In contrast, having separate policies for, say ‘software expenses’ and ‘service fees’ make no sense. Where does, say, QuickBooks fit in – is it software, or a service? The answer is that it doesn’t actually matter – divide up your policies across lines that nobody could ever get confused about.

Lookup Speed

Even if your team recognizes that there’s a policy that applies to a given situation, it takes us time and energy to dig that policy up, re-digest the specifics, and determine what it suggests for the situation you’re working through. In other words, requiring the use of a policy adds friction to any interaction or decision. As a consequence, you should only write policies when the friction they add would be negligible to the total amount of time and effort that would normally be spent making the decision; or when the cost of a mistake is so very high as to justify the extra effort.

Continuing to think about budgets, do you really need a policy about expenses that cost less than a dollar? Realistically, since most employees actually have other work to do, they might make no more than one or two such purchases a day – totaling a few hundred dollars by the end of the year. If they needed to consult a complicated policy – or worse yet, get formal approval – each time, then that might cost them, say, 2 minutes of attention each time they make the purchase. 2 minutes * 260 (workdays in a year) is a full day of work (plus a little extra) that you just wasted of this employee’s. Is that really worth a few hundred dollars?

(That said, this does trade off with the complexity point made above – a dollar amount is nice and easy, but trying to add too many special exceptions will make your policy too hard to remember in the first place.)

Freedom and Creativity

Finally, real humans want freedom and creativity to execute their actions in their own way; and oftentimes, they know better than you do how to complete their jobs most successfully! This leads me to perhaps the most important philosophy around creating culture policies – treat them as a last resort. Culture inherently allows for lots of soft-touch social engineering – nudges, norms, and other techniques which influence without commanding. But once you put down a formal policy, you are inherently restricting your team’s ability to innovate. Sometimes this is necessary – if the cost of failure is too high, or if there are important ways in which you want to enforce conformity within your team (say, with respect to hiring practices to limit unconscious bias.) But whenever you are considering a new culture policy, you should always be asking yourself first, what’s the best I can do with good old fashioned cultural influence? If the answer is “people are generally cost-aware but we probably lose a few hundred dollars compared to having a more rigid policy”, is it really worth adding extra complexity and restrictions to your team for that amount of gain?

This last point might seem obvious, but in practice it’s often forgotten. I constantly see executives who notice that a behavior isn’t what they’d imagine as ideal, where their first reaction is to try to determine whether or not they should explicitly forbid that behavior (or explictly require a different one). I admit that this was my own instinct earlier in my career, and still something I catch myself doing sometimes. But that black-and-white nature – forbid or allow – is the purview of policy. It assumes that there’s a right answer to use 100% of the time. The correct thing they should be asking themselves is “how far off do I think the their behavior overall is from my own ideal behavior, regardless of what specific outcome it led to this time?” If they truly believe this individual is approaching things in a totally backwards way – say, they appear to be actively trying to make another employee cry – then it might be time for rigid action like a policy (or just firing the offending employee.) But most of the time, you’ll discover that this employee was thinking about things in a way where they’d act like you 90% of the time, and this was a corner case. In these situations, you need to remember that the most you can possibly win with a policy is that last 10%, and wonder whether softer approaches – whether through setting new social norms, applying pressure through a company-wide culture statement, or just having an honest 1:1 where you share your perspective – could get you most of that benefit at a much lower cost.

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