The keynote at our recent Self-Management Symposium was delivered in the form of an interview of Professor Isaac Getz of ESCP Europe Business School and Brian Carney of the Wall Street Journal, co-authors of the book Freedom, Inc. One of the things they discuss in their book is "managing to the 3%". They discussed it in the interview and, as I listened to them speak, it occurred to me that this may well be one of the most dangerous risks to organizations everywhere.
Let me try to outline the concept:
Getz and Carney discuss, in their book, a particular manufacturing firm. The owner happens to be walking through the factory one day and sees a worker standing at the supply closet, holding a pair of worn gloves. The owner stops and asks the employee if there's something he can help with. The employee responds that he's waiting for the supply clerk to come to the supply closet so that he can turn in his worn out gloves and receive a new pair. The owner nods and says that's fine, and moves on. But he can't shake the feeling that something's not right. So he tracks down the factory accountant and asks him how much it costs the company for a pair of gloves. I don't recall the exact cost, but it was a few dollars. He then asks how much it costs the company for that particular employee to sit for 15 minutes and wait for a new pair of gloves (the employee worked on a line that was running at reduced capacity while he sat and waited for new gloves). Again, I don't recall the exact amount, but it was around $100 per 15 minutes. After mulling this over for a few minutes, the owner of the company called everyone together and abolished the "new glove" process. He indicated that gloves would be freely available to anyone who needed them.
You see, he realized something very important: their policy, intended to keep dishonest employees from stealing gloves (or, at the minimum, taking gloves more frequently than they really needed to) was actually costing the company money. He calculated that for every time an employee had to go sit and wait 15 minutes for the clerk to open the supply room, receive the old gloves and approve and sign out a new pair, the company was losing the equivalent in lost productivity to 20 pairs of gloves! Their policy, designed to ensure the company didn't lose money, was actually costing the company more money than if they'd just set the gloves out for people to take when they needed them!
Now, I may have some of the details a little off (I can't recall the exact numbers), but you get the general point. The thing is, though, this tendency to enact these "policies" in order to ensure our organizations don't "lose" money, quite often end up costing us more in the long-run. And the irony is (according to Getz and Carney) that, really, only about 3% of the general population is going to take advantage of the system anyways. So, basically, we enact a rule in order to keep the 3% in line, and in doing so, crush the productivity of the other 97% who are actually working hard, trying to accomplish something productive.
And, before you disregard this, know that I see this "3%" mentality quite often--even in our affiliate companies (organizations that are supposed to be amongst the most self-managed in the world). The truth is, we grow up in a world that is designed to thwart that lowest common denominator--that 3%. So many of our government's stifling regulations are designed to ensure that small minority of the population doesn't get away with doing something wrong. Problem is, those regulations are, many times, exactly that: stifling--not just to the 3%, but to everyone.
Don't get me wrong: every society must have some general codes of conduct. But, as our organizations age, and as we become more "professional", we think that success depends on us having a whole volume of "does" and "don'ts". Self-Management, though, is designed to be a principle-based organizational model (not one governed by a bunch of complex rules). The two fundamental principles are you don't use force and you do what you say you're going to do. Think about it: doesn't that cover just about everything? You don't use force--not to get someone to do something you want them to do, NOR to get something that you want (that's called stealing). And you do what you say you'll do. Isn't that kinda the recipe for a productive society?
And here's the beauty of an organization like a business: you have a choice as to who is a part of the organization. If someone refuses to adhere to those basic principles, then they just don't get to be a part of your organization any more. Let's go back to our initial example with the gloves. The owner in the story realized that he was losing quite a bit of money every time someone had to come go through the "new glove" process. So instead he decided that anyone who needed gloves could simply grab a pair of gloves as needed. The unstated (perhaps) rule, though, was that you can't steal gloves. This change in process freed up the 97% who were honest and hard-working to accomplish even more. If also, of course, freed up the 3% (who were inclined to steal) to take gloves home (and perhaps sell them on the black market; who knows). The thing is, even if those 3% stole a lot of gloves, the additional productivity by the 97% more than made up for the losses. Further, someone is bound to find out about the 3% at some point; some guy walking buy might see another worker stuffing a handful of gloves in his pocket. And he, then, realizing that this shady glove-thief is not abiding by the first principle (you don't steal), can simply go through whatever process exists to disassociate with the thief.
So, I ask you this: what kind of organization do you want to be a part of? One that has books of rules and regulations, processes for ensuring the 3% can't take too many pairs of gloves? Or one that acknowledges that 97% of the people within the organization aren't going to steal gloves, and are simply being tied down by the opprossive regulations, and works to eliminate the 3% instead?
That's a real question. Comment below; I'm interested in your thoughts.
