Productivity is the key driver of our society’s wealth. Since 1950, our productivity has plummeted, while our rules have increased. Standards of living are doubled when productivity increases just three percent per year. When it increases by one percent per year, it takes three generations. Regrettably, the number of procedures, vertical layers, and approvals needed has increased by 350 percent in just the last 15 years, according to a study by the Boston Consulting Group. It also found that managers spend 40 percent of their time writing reports about those rules in the most complicated organizations. That is not productive. 

Rules at work often make it advantageous not to work cooperatively, and it severely impacts our productivity. Those rules frequently involve at least one of these three principles: clarity, measurement, or accountability. These are all based on good intentions. But, regrettably, these principles thwart our effort. In contrast, cooperation makes the whole greater than the sum of its parts.

Imagine a relay race. Even a team with the fastest runners on earth will fail if they can’t properly pass the baton. What rules based on clarity, accountability, or measurement would ensure success? Imagine a racer asking for a rule based on clarity. How long am I supposed to run, coach? To 95 meters? 92? The right answer can’t be found in math. They should stop running when the baton is in their teammate’s hand. Next, imagine a rule for who is accountable for passing the baton? A large race company would create a new position taking the baton from one runner to the next. We may not win the race, but we would have one person accountable. There is someone to blame if it all goes wrong! We will know who to blame, but we will not win the race. Then imagine a rule based on what gets measured. Being the fastest matters for racing. But the runner must divert energy from his legs to his lungs so he can yell loud and distinctively enough for his teammate to grab the baton. If the runner is measured based on speed alone, he will use his energy on speed alone. And down goes the baton, the race, and the legacy. 

Too many rules add obstacles at the expense of cooperation. We need to make it individually advantageous to be cooperative. Rules should focus on the how. Are your rules making it individually useful to cooperate?

Rules Create Weak Results

Company rules are created for good reasons. As companies scale, they create policies to reduce hiring mistakes, poor quality, and bad decisions. But some rules can harm the same company they were first meant to protect.

Every rule takes away the opportunity to make a choice

Employees need to think like owners. When you strip away opportunities for your employees to exercise their judgment, the more likely they will think of the business as your company, not their own company. When a job is managed by processes, workers will feel less ownership over their work. So their engagement plummets, and with that, results. 

There is a company where a first-year associate exceeded every metric, so he expected a very positive performance review. But during that annual review, his supervisor informed him that the highest grade he could give him was a “C,” despite his outstanding performance deserving of an “A” grade. In the second year, the associate tried again. But company policy only allowed for a “B,” because if he was given an “A” then someone else must be given an “F.” After that, the associate only gave the effort for a “C” grade. So the company is awash in mediocrity. 

Rules Target The Few At The Expense Of The Majority

Some company rules decrease trust and increase hassles for most employees to protect the business from, at most, a few offenders. 

There is a company that issued a technology system that rigidly banned the use of personal email and social media on work laptops. The business put software controls on each laptop. That resulted in the company owner’s admin password being required to access required websites and every update. It was a productivity failure. 

Rules Focus On Inputs Instead Of Outputs

Rules that apply to tasks instead of results will create a lot of busyness, but not many good outcomes. 

A real estate broker requires her agents to respond to her emails within an hour, respond to texts within two minutes, and answer every call. Although the broker is attempting to teach customer service, she is communicating distrust and creating division. 

These rules create ways to micromanage. They suffocate innovation. They disempower employees to protect them from tiny risks. The bottom line is that nobody likes to be micromanaged.

Fewer Rules Create Wiser Employees 

Nike held an experiment with two garment factories in Mexico. One plant enabled employees to decide their team organization, production goals, and division of work. In contrast, that other plant tightly imposed rules around the shop floor. The plant with fewer rules and more freedom was more productive. Employees with fewer rules have more ownership in their work. And with that commitment comes superb results. Employees were forced to become wise instead of mindlessly following instructions. They had ownership in the decision-making. 


When rules are set forth and enforced, employees begin to think their employer does not believe they can use their own judgment and reason. Team members become less motivated to do a job because they believe their boss expects them to make the wrong choice or decision when faced with an issue or a problem.

Employees will pause serving the customers’ needs if they fear breaking the rules. Customers will respond to the rigidity and recognize the unnecessary rules create inconvenient methods making the experience unpleasant.

Culture is healthiest when there is symmetry within rules and principles. Require rules when needed, but when judgment can be used, support the application of values. Compliant cultures are choked by rules. Dedicated cultures are developed with values.