Policy Manuals

Policy Manuals

Here are a couple of thoughts regarding policy manuals in general

All policy manuals are  really just  documents copied from somewhere else.  The copies bring with them all of the biases and problems of the previous company.

Let me explain.

A policy manual for the most part is a book of “thou shall nots” directed towards employees.  Nothing is ever put into a policy manual unless someone did something management did not like. Also policy manuals never shrink – they only grow.  Every time another action is taken by an employee to upset management a new paragraph of “thou shall not” is added.

Also, it is the custom of the middle manager who gets handed the task of drafting a policy manual to think that page count is more important than effectiveness; that quantity outweighs quality.  They are not wrong to try and produce as much information as possible, as upper level managers often view their subordinates efforts by page numbers and not necessarily the content within them.  In time they evolve into straight jackets of behavior controls.

In looking at companies through the due diligence lens of pre-acquisition research I will always gravitate to the collection of policy manuals.  I do read them, I often find copy and paste errors – tell tale trials of theft from another company, and I also count the nu numbers of pages.  As a rule I find the more pages in a manuals the poorer the company is managed.  The more pages of manuals the more likely management, in my hypothesis, is not leading by example but rather dictation and managing by exception (aka fixing unplanned screw ups).  Paragraphs are added each time management has an upset – and upsets occur either as a thwarted intention or an unfulfilled expectation.  Both upsets are the result of the failure of good two way communication.

It is also instructive that policies are a kind of ‘make wrong’ exercise – a way that management  makes employees wrong – as a means of control within an organization.  Management shows a policy breach and makes the employee wrong – and thus it is the fault of the employee. It is the tool of weak management to resort to policy breaches to discipline employees.  Strong management needs few policies, weak management needs many policies.

It is instructive to look at the manual and the company and look for perverse incentives; such as incentives that may  partly  work against the company’s best interest. Many examples of these can be found in all companies.

An example: “Drivers will at all times adhere to posted speed limits.”  Yet the same drivers are offered bonuses on how many deliveries they can make in a given time period.  This is an example of incentivizing the employees to take actions that are antagonistic to the policies.

Lastly, one of the exercises I try to engage my clients in is to look at each of the policies on a manual and find out where management, if it had done better, could have avoided the desire to include another paragraph of “thou shall not” and to see how they could better the acquisition’s value.

The best policy manual ever would include the following slogan,  “So in everything, do unto others as you would have them do unto you.”  It is simple, ancient, kind of catchy too – but does require rational thinking and an empathetic attitude.

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