I wrote this post years ago on another blog. I'd thought I'd dig it up and stick it here. A common phrase I've been using this last year is, "Its the difference between King George and George Washington."
I'm not going to go into a history discussion or a psychological profile of either of these guys... the difference when it comes to business is a written constitution. A set of rules of engagement that everyone has access to. Whereas under a king, the rule of law is the King's mood and subject to change at any time. Click below to read the difference.
[EXPAND Click to Read, "The King's Mood"]
The King's Mood
Under a King's rule, his subjects have no idea what they could be jailed for that day. They have to wake up every morning in an environment of constant uncertainty. It creates an environment of fear; people running around avoiding punishment rather than working hard to produce or improve. Subjects have no way of knowing a clear path to bettering their situation. They must guess on what path to take to succeed. One day they may do a thing and get rewarded, on a different day the same action could lead to punishment... its all contingent on the mood of the
Managing a Business by "The King's Mood"
An employee needs to know his boundaries. He needs to know what the company policies are. Working in an office with no clear path to advance in pay or position gives uncertainty. Saying things to your employees like, "We'll take care of you when
we finally catch that pie in the sky the company starts to do better," or "Don't worry, just put in your time and everything will work out," doesn't cut it.
These are vague and don't offer any security or any clear path of progression. How is one to act if there is no consistent guidelines? If someone goes to there boss and asks, "How much do we charge our customers for Widget A?" and her boss tells her, "um... $15... yeah, 15 sounds good." Then later is scolded for selling a second Widget A for $15 because her boss changed his mind without letting anyone know. The manager has now created his own nightmare. Now this employee will no longer think on her own. She will ask her boss EVERY time this question comes up. She will tell her coworkers to do the same. There is no consistency in the office. Most people in this office would eventually get frustrated enough to leave in search for a more stable working environment. Now, I'm not saying that bosses shouldn't be able to change prices or change policy... I'm saying that there should be a KNOWN procedure to do so. I'll get to this in the "Written Constitution" section.
Another issue with the manager's-mood-is-law is that the manager can never be wrong. That may sound good to you, but trust me, its very bad. Think of the best basketball players in the game. The most skilled basketball players in the world have instincts with the game that most people aren't even aware of and most players only dream of... and yet they all still have a coach. They all still have referees with a whistle and a rule book. Micheal Jordan could be put on the bench by his coach or Kareem could be given a technical foul by a ref. Even the greatest have accountability to someone and to a set of rules. A man who is not accountable to anything or anyone will begin to degrade. No one is that good. [/EXPAND]
[EXPAND Click to read, "A Written Constitution"]
A Written Constitution
Now George Washington worked under a written constitution. He could be wrong. People could read and know the laws and know when and if he broke them. The citizens of the country knew with a certainty, no matter how the president felt that morning, what the laws where. This didn't mean that the law couldn't be changed, but there was a system and steps to change the law. It had to be thought out, decided on, and then written down. Every citizen has the opportunity to know when and how the law changes. The citizens knowing that the laws are fair and stable, now can know the rules of the engagement and can see paths to success. They can know the systems and how they change.
Managing a Business by "A Written Constitution"
A business needs a price sheet and a procedures manual. A business with more than one person needs to foster an environment of stability within the office to allow for movement in the marketplace. When employees aren't worried about what mood their boss is in, then they are more likely to be able to focus on innovating and progressing in their job. If they know that there is consistency, then they can have confidence in their choices, thus freeing up their boss from being the bottle neck of the information flow.
If they know what skills or quotas to meet to progress then they will look at their occupation as a career rather than a job. This doesn't mean that the company is stagnant. I suggested to one business owner to have a procedures manual and if he wanted to change his mind and shred all the copies and print new manuals, so be it. It would be better than the Law-Of-Mood that was prevailing. There would be a procedure in place, when the boss shreds the copies and hands out new ones, then the rules have changed. Everyone would know the rules had changed. If the boss broke the rules, he could still be held accountable by his own manual. Stability, consistency and logic breed an office full of innovation, confidence and progress.
There are two reasons that a small company stays small. The first is that the management chooses to stay small as the most profitable option. The second is the company that tries to grow but is stopped by an owner who keeps trying to be the machine and not the machine operator. He bottlenecks all decision making at his desk with employees lining up outside his door. He handles all the "important" clients himself, but without enough time to do so. He changes his mind constantly with his mood and perpetuates the problem of people waiting in line outside his office. Eventually he burns out his good employees and is left with the people who can't leave for other work. He has a small company and longs for a big one. A price sheet and a procedures manual with a little delegation would be a great start. [/EXPAND]