Policies or guidelines. Which work better?

The more policies you have in place, the less effective your organization. This is all about the difference between compliance, contribution and commitment. If you tell someone what to do and utilize constraining polices, the best you can hope for is compliance. Directional guidelines give people the freedom to contribute. Going one step further, commitment to a cause requires a shared mindset.

Warehouse managers and worker talking in a large warehouse

Some definitions:

Policy: Mandatory, definite course or method of action that all must follow.

Guideline: Preferred course or method of action that all generally should follow.

Mindset: Way of thinking about relationships, behaviors and impact.

For example:

Policy: Respond to all customer inquiries within 24 hours.

Guideline: Try to get back to all customers within 24 hours.

Mindset: Think customers first and pull in the people you need to answer customer inquiries right the first time.

While all three make sense, expect people constrained by the 24-hour policy to comply with the 24-hour rule without regard to the quality of the response or the impact on the customers.

Those working with a 24-hour guideline will try to respond within 24 hours, but will relax that constraint as required to provide a higher quality response with a better impact.

Those with a customer-first mindset will have a bias to using these customer interactions as excuses to move the organization forward in line with its purpose.

Big difference.


Sales Call Standards

In the last century Lever Brothers’ retail sales department had a policy that sales people had to be in their first store by 8:00 in the morning and could not leave their last store until 5:00 in the afternoon. In between, they were supposed to call on nine stores. Further, sales people were supposed to sit in their cars after each sales call and complete all the paperwork around that call including the paperwork for the order and write up for the daily retail sales and merchandising report (DRSMR).

I was an area sales manager in the New York metro area with five retail representatives reporting to me. While the policy seemed to make sense in general, I decided it was counter-productive in our particular situation. Sales people leaving their last store at 5:00 would be driving home in the heart of rush hour.

So, we ran an experiment. I asked people to be in their first store by 8:00 and to call on at least nine stores. But, instead of doing paper work after every call, they saved in until the end of the day, leaving their last store in time to drive home before rush hour and then doing their paper work at home.

It worked. They used the time they saved by avoiding rush hour to make one extra sales call per day and get home earlier. Morale improved. Sales improved. What’s not to like? (Other than my violating a policy.)


Helpful Policies

Some organizations get this right.

Nordstrom’s famously reduces all its policies to one rule: “Use best judgment in all situations.”

Stu Leonard’s in Connecticut has two rules:

Rule No. 1: “The Customer is always right.”

Rule No. 2: “If the Customer is ever wrong, reread Rule 1.”



Of course there are times when you need strict compliance to rules and regulations to minimize risks. You generally don’t want people thinking too far out of the box when it comes to standardized, routine management of nuclear power plants, hospital operating rooms or industries highly regulated by the SEC and watched by the press.

In most cases you do want your employees to think, to try new things, to help the organization improve on a continuous basis. In those cases:

Start by communicating the mindset you want your people to have as they approach problems and opportunities.

Have a strong bias to deploying guidelines over policies.

  • Use guidelinesto… wait for it… guide peoples’ direction, leaving open room for initiative.
  • Use policies only when you must constrain peoples’ actions because potential mistakes come with extinction-level risk.


(This articles first appeared in Forbes Magazine)


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