Career Guide


Why good companies create bad rules

Not everyone sees the intention behind rules and policies

I'm staring at my expense check and I notice that it’s short by about US$4 – must have totalled up the wrong amount when I submitted my expense report.

I pull up the report with a month’s worth of mileage, meals, hotel rooms and office supplies. I add up all the rows, and my math seems correct.

This was the first time I had ever submitted a report and gotten a check back. I sold my business just a month before and I was now a vice president and partner in the new acquiring company. Maybe I filled out the form wrongly, or don’t understand how the expense stuff works.

I shoot an email off to our chief financial officer (CFO), letting him know that the check he sent me didn’t match my submission; I didn’t care about the US$4 but wanted to make sure I hadn’t made an error somewhere.

The email I got back from the CFO; the man who was one of my fellow partners and the man who had just cut me a check for over a million dollars to buy my company said:

“I deducted US$4.34 because we don’t allow employees to buy Post-it notes.”

What? What the heck could be wrong with Post-it notes? I emailed back:

“Why?”

And he answered:

“Wasteful expense. Cheaper to tear regular paper into little squares.”

I can still remember how I felt even though this occurred over 15 years ago. Let’s just say, I surely didn’t feel vice-presidential or like a co-owner of the company. I mean, I didn’t even have the authority to choose office supplies.

And I wasn’t the only one surprised by the expense reimbursement rules. Another executive, whose company had also recently been acquired, found his expense check short by US$6 because he had ordered a beer along with his dinner, while he was traveling for business. He learned, after the fact, that the company policy was not to reimburse for alchol.

What I had stumbled into would quickly become known as the “Post-it note debate.” It wasn’t about little self-sticking pieces of paper, of course. And it wasn’t about beer. It was about rules.

While the partnership would eventually review, and rewrite our internal policies very quickly, the senior leadership was divided into two camps. We, of course, thought they were “those out-of-touch micromanagers in HQ” and they thought of us as “those wasteful spendthrifts who don’t care about the bottom line.”

All of us can rattle off countless “dumb rules” we’ve encountered in the workplace. But nobody creates rules that are dumb on purpose. Whoever created the rule must certainly believe they are doing so for the benefit of the organisation.


Where do all the rules come from?

Assuming the best of intentions, rules are implemented to maintain quality, high performance, standards and to mitigate risk.

For example, let’s say you decide to start your own company. You are employee No. 1, and there are no others, so you need no rules. You, of course, know right from wrong and trust your own decisions.

It’s a year later. Your company is growing and you now have 10 employees who report to you. You still don’t need rules, because whatever your personal whims may be, you are still able to personally hire, train, coach and manage all the company employees.

I can remember when I had 10 team members and no official “rules”, but everyone knew that I wanted the office phone answered by the third ring, casual dress was fine (unless clients were in the office then we wore suits), and we couldn’t start our marathon games of Doom II until after 3pm.

Your company keeps growing and you now have 110 employees; 10 still report to you, but each of your direct reports is now a manager of 10 more people.


Kevin Kruse is a New York Times bestselling author, keynote speaker, and leadership expert. He is the founder of The Kruse Group. To engage with him, e-mail us at editor@leaderonomics.com

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