A Motivational Thought

Most people have a negative opinion of business procedures. They think of them as a boring anachronism that only people with green eyeshades or pocket protectors worry about. Worse, they may have experienced procedures being wielded as an obstructionist device, as in: “You can’t do that. It is against procedure.” Such reactions are reflective of bureaucracy, which is the failure of procedures. See, for example, the American Heritage Dictionary definition:

bureaucracy An administrative system in which the need or inclination to follow rigid or complex procedures impedes effective action.

Procedures should promote action rather than impede it. They should be motivational, representing a “can do” document detailing how employees can accomplish what needs to be done. The procedures must comprise a living document that is actively updated to reflect emerging business needs and opportunities.

A client of mine was recently encouraged to implement formal procedures by an outside authority. They asked me to review a draft of what they had written. Here is a snippet. Read it and see what you think:

… If any employee believes that another employee / agent / consultant / contract worker or even a business unit of the firm is in violation of the procedures or acts in a manner that might damage the firm’s reputation, such information must be brought to the attention of the employee’s management, or, in the alternative, to the attention of one or more of the following:

• The head of the employee’s department or business unit.
• Any person designated in these procedures as a person responsible for the compliance in the specified area involved.
• Executive vice president or chairman directly.

Violation of the law or the procedures, including negligence in supervision, will lead to one or more of the following:

• Disciplinary action against the employee(s)
• Termination of employment
• Legal action
• Remedial action to stop the violation and prevent further violations
• Tightening of controls to enhance the firm’s goals of preventing and detecting violations

Imagine a junior level employee at this firm who has stumbled across information suggesting that a trader is committing fraud. She reads the above procedure, looking for guidance. It is so vague and general that it actually says nothing beyond what is obvious—that adverse behavior should be reported, and that it will be dealt with in some manner. The tone of the procedure is so threatening and authoritarian, I think any junior employee contemplating blowing a whistle on fraud would translate the procedure into English as:

If any employee believes that another employee / agent / consultant / contract worker or even a business unit of the firm is in violation of the procedures or acts in a manner that might damage the firm’s reputation, she better keep her mouth shut.

There are plenty of ways this particular procedure could be rewritten to be more motivational. One is to offer some assurance to the employee that, if she blows the whistle, the firm will actually investigate her concerns and take appropriate action. Accordingly, the procedure should detail how the firm will handle reports of wrongdoing. It should impose specific obligations on specific managers, especially the manager the whistleblower first reports her concerns to. That person should be required to inform certain other people. One of those people should be required to formally make a decision to investigate or not investigate, and there should be a paper trail documenting that process. If there is an investigation, there should be a requirement for a formal report—more paper trail.

The procedure should give the potential whistleblower some sense of security. If you suspect from experience—or from news accounts—that there is more career risk in blowing a whistle than in looking the other way, how do you thing a prospective whistleblower will feel? The procedure should alleviate this. It might detail specific protections for whistleblowers. In some cases, it may be feasible to keep the whistleblower’s identity secret or even hide the fact that there was a whistleblower. Also, procedures might require that the head of human resources be informed of any whistleblower and impose specific obligations on him to monitor the employee’s subsequent treatment for signs of retribution. If an employee is aware of such safeguards, she will be more likely to blow the whistle when the need arises.

One concern a potential whistleblower might have is the question of what forms of adverse behavior should or should not be reported—where do we draw the line between a backstabbing tattletale and a heroic whistleblower? The above draft procedure is so vague on this as to be useless. It could give guidance and examples. It could even encourage unsure employees to confide in a colleague and get his or her advice before deciding what to do. It could go on to detail exactly whom to make the report to and the manner in which to make the report. It might advise the employee to accompany oral communication of her concerns with a letter. The procedure might even include a sample letter.

Before you reject the thought of including a sample letter in your procedures, stop and consider that your opinions about how procedures should be written have most likely been shaped by reading poorly written, bureaucratic procedures—the kind of procedures you don’t want to write. So often, procedures read like some sort of legal disclaimer. Write them as you would a best-selling cookbook. They should not tell people what they can and can’t do. They should tell people how to do things. Often, people don’t act, not because they don’t want to, but because they don’t know how. Procedures should tell them how. Give step-by-step instructions. Make your procedures an instruction manual.

Imagine a new back office employee who asks her boss how to settle a futures position. If her boss directs her to the procedures, and these answer all her questions with step-by-step instructions, the procedures will become a valuable tool that employee turns to in the future. There will be no question as to whether or not employees ever read the procedures. They will be reading them whenever they want to do anything that is unfamiliar or new.

This requires that procedures be continually updated. Things never stand still. Business plans evolve. Markets change. Unanticipated opportunities arise. People want to do things not covered by the procedures. Here the answer isn’t to throw the procedures out and have employees do what they please. Instead, have detailed procedures for requesting, researching and implementing changes to procedures. If employees know that they can get procedures changed quickly and effectively when the need arises, they will be more likely to adhere to existing procedures, and pursue changes to procedures when necessary. In this manner, the procedures will truly become a living document—always relevant and up-to-date.

Of course, someone has got to orchestrate all this. I will give you a hint as to who that might be. Read my posting of October 19, 2006.