In 2014 Deloitte’s research by Deloitte Australia showed that red tape was costing Australia’s productivity $250 billion each year – and the rules imposed by the private sector are double that associated with government regulation! Overly complex compliance is costly and counter productive (I saw an executive role description that was 100 pages long), and according to the research, an average leader spends, 8.9 hours/week complying with organisation rules.
Rules and regulations are necessary for a civil society, but the habit of believing yet another rule will fix a problem erodes trust and wise decisions.
More significant is that companies that put more emphasis on compliance than culture have a worse track record in terms of compliance.
Compliant cultures are disengaged cultures. They are dominated by unthinking custom and practice. People are passive. “Just tell me what to do”, is a phrase I hear a lot. Unfortunately there is never going to be the definitive rulebook as situations and context shift and change.
A speaking up culture is one in which:
- Trust is ‘given’ as well as earned. Nordstrom, a retail giant in the US has an employee handbook that consists of one sentence, “use good judgement in all situations”. This very simple statement gives the message of a culture in which workers are trusted, and perhaps contributes to a better-than-average morale and retention.
- A moral compass and values are the foundation of all systems, processes and policies, and present day to day.
- People are encouraged to “conform – but just enough” (Goffee and Jones, HBR 2005). This means that rules and regulations can be questioned and robustly discussed because contexts shift and time changes. What was right for last year may not be right this year.
- Group think is always challenged. As Benjamin Franklin said, ‘If everyone is thinking alike, then no body is thinking’. Groupthink is one of the greatest enemy of ethical cultures. Compliance breeds cognitive sluggishness. In healthy risk cultures constructive argumentation is the norm.
- Speaking-up is also the norm. Research shows that 85% of employees say speaking up about ethical issues is what they fear the most -– harder than naming problems. Furthermore, wilful blindness means that nobody is listening. In healthy risk cultures people speak up and are listened to. Issues are followed through and communicated back.
- People are encouraged to experiment with safe-to-fail projects if they are grounded in well thought out values and principles that sit within broad guidelines.
- The vital human capacity of using good judgement to make wise decisions is encouraged and taught at all levels of the organisation.