The Rule Illusion

Organizations should beware of a “rules bias”: a tendency to give in to risk aversion by establishing ever more rules.

Koen Smets
Mar 16, 2017 · 5 min read

Any situation in which people coexist benefits from common agreements. We like to know what is acceptable and what is not; what is obligatory and what is not. We also sometimes need help to settle ambiguous matters — it’s good to have a rule telling you what side of the road you’re supposed to drive on, for example. People in general like a sense of completeness. So much so that a whole field of psychology (Gestalt) sprung up around the concept.

Yet rules inevitably imply a trade-off. Every single one takes away a bit of freedom. But provided a rule is well designed, the trade-off will produce net benefits. Unfortunately, rules in organizations do not always meet this condition.

This is a growing concern as organizations — like society in general — tend to become more risk averse. Introducing ever more rules looks like a simple and effective way to lower risk. To quote Jason Averbook from the HR Tech Fest 2016:

Limiting people’s freedom does indeed mean they have less opportunity to do the wrong things or to do them in the wrong way (at least, that is what you hope!) But it also restricts their ability to do things that are worthwhile: experimenting, using their judgement, being creative. How can people learn from experience if their options are curtailed by a forest of rules?

Just like in the real world, stricter rules in an organization are rarely effective in stopping the most egregious transgressions. People intent on acting foolishly, irresponsibly or fraudulently will not be stopped by rules any more than drivers who speed through a village at 50mph will change their behaviour if the actual speed limit is reduced from 30mph to 20mph.

You could safeguard against rules that hinder people doing the right thing while failing to solve the presumed problem by ensuring the rule-makers themselves are subject to the rules they make. At least they would then experience first-hand the benefits and the costs involved.

Ineffectiveness rules

In practice, those who make the rules are often insulated from the true consequences. The lack of a good feedback mechanism to adjust the rules would be bad enough if the rules were based on evidence and logic. But it’s often even worse, because rules often originate from received (but dubious) wisdom, unproven ‘common sense’, or reactions to one-off events. Rules that are based on beliefs rather than evidence, and never tested, are unlikely to produce net benefits. Yet such rules are precisely the ones the makers feel most protective of. Attempts to budge them meet with the backfire effect. That’s how we end up with sledgehammers to crack a nut.

Sledgehammer meets nut (via Stevepb/pixabay)

And it’s not just the behaviour of the rule-makers that is the problem. There is often not much transparency around the purpose of rules, and how the trade-offs were made. So the people for whom the rules are intended will only see the downsides to them, and not the (intended) upsides. The result is predictable: human ingenuity trumps rules. People will always find ways to beat the system and circumvent rules they see as unhelpful and counterproductive. And so the sledgehammer often fails to crack even the nut.

Many rules were originally intended to be guidelines to help shape behaviour, but instead over time get codified into rigid laws. Often most people in the organization no longer know why the rules were even implemented. And yet depressingly, “Rule Nazis …. They cling to the rules like Leonardo DiCaprio clung to that door in Titanic — as if their lives depend on it. And they make sure everyone else does too, even when the rule doesn’t make sense or stands in the way of productivity,” as Heidi Grant says.

The psychology of rules goes further, though. They are pointless without enforcement, but how do you go about this? Are the rules applied fairly? Are the punishments for infractions distributed equally? If not, you can easily see how it can harm morale. Generally the onus for enforcement falls to the direct manager. But how much orientation, training and reinforcement have they had on fair justice? A recent post on the Science For Work blog sets out how important this sense of justice at work really is. Poorly enforced rules can easily undo all the other efforts.

Despite all these concerns, in some organizations there is a pernicious tendency to take back control through more rules. The example that was chosen in a recent article about effective emailing is rather typical of this trend:

Compare this with the culture at Timpson, a nationwide UK chain of shoe repair, key cutting and engraving shops. CEO John Timpson, in a CIPD report on High Performance Work Practices: “If a kid comes into the shop and only has £10 from his saving tin to do an engraving for his granny, our shop staff can take a decision to accept the business even though we would have charged a lot more under the normal circumstances.” Timpson staff are trusted to use their judgement to decide what is right. Small wonder the company doesn’t need paid advertising and can rely on word-of-mouth.

Rules mostly creep in one by one. As their number grows, they contribute to a culture of conformity, rather than one of intelligent judgment and empowered employees who do what is right.

Maybe such hard compliance is exactly what you want. But it’s worth making really sure, because the control it gives you can be illusory. If your organization relies on bright people responding intelligently to the complex interactions with your customers or service users, or with their colleagues, then you had better think twice before you implement yet another rule. Otherwise you might find yourself having to appoint someone to change dumb company rules.

Don’t let rules rule your organization.

(This story was co-written with Paul Thoresen)

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New Organizational Insights

Eclectic wisdom from Organizational Psychology and Behavioural Economics for a better workplace.

Thanks to Paul Thoresen

Koen Smets

Written by

Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

New Organizational Insights

Eclectic wisdom from Organizational Psychology and Behavioural Economics for a better workplace.

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