If your company is experiencing high levels of attrition, it’s tempting to dismiss the issue as the result of natural causes like retirement, emigration, and family responsibilities. However, research by the IBM Smarter Workforce Institute cites job dissatisfaction as the cause of 40% of employee exits. The result of an exit is a loss of 42% of the individual’s skills (skills colleagues are unable to replace, or a new person will have to learn from scratch), and a replacement cost of 50%-150% of the person’s salary, depending on seniority.
While a company has limited control over employees’ personal circumstances, it does have considerable power to determine an individual’s experience while on the job. Your company culture can be considerably improved by moving away from a rule-based to a principle-based approach, ensuring that employees are more satisfied, and less likely to leave.
What’s the difference between rule- and principle-based management?
Many companies subscribe to a rule-based approach which sets out rigid directives for employees to follow. For example: ‘Employees are expected to be at work at 7am. They are permitted a one hour lunch break, and may only leave work at 5pm’. This approach is mainly concerned with controlling an employee’s time and movement. The employee’s productivity is assumed to flow from this tight control. The emphasis is not so much on what the employee has achieved during this time, as on whether they have adhered to the exact terms of the ‘rules’.
This is in contrast to a principle-based approach, which sets out the company’s objectives, and leaves the exact details of its achievement to the individual. For example: ‘Each employee will be given a work plan for the week. The employee is free to work where and when s/he wishes, as long as the work is completed at the agreed time’. Such an approach gives the individual the autonomy to work under conditions that suit him/her. Success is measured by outcome (completion of project), rather than adherence to process (being at work at certain times).
Advocates of the rule-based approach cite the certainty and clarity of having exact parameters in place. This, they argue, leaves no room for misunderstanding. However, the danger of this approach is the increasingly long, complex, and unwieldy rules this results in, as the lawmaker consistently tries to plug gaps and loopholes.
Additionally, a rule-based approach is by its nature a one-size-fits-all exercise that is meant to be applied without exception. It leaves very little space for consideration of individual circumstance.
On the other hand, the principle-based approach can achieve a more nuanced form of regulation. Instead of a one-size-doesn’t-suit-anyone system, you can move towards a mutual-respect-and-understanding approach.
Why can a principle-based system bring down your attrition rate?
Job satisfaction is as much about the work someone is doing, as the conditions they’re expected to work in. A principle-based approach could help your company create the kind of positive, respectful, and mutually beneficial environment that makes staff happy to stay. It lets you set overarching objectives that allow your employees to be productive, without exerting draconian control over them.
In a 2016 survey conducted by Flexjob, over 84% of employees cited work/life balance as critically important. You can help create this balance by concentrating on a certain outcome, instead of the process of getting to it. For example, after an employee is given their weekly work plan, you could let them get on with it, without undue restrictions from you. Set up support structures, like feedback mechanisms from supervisors and team brainstorm sessions, but on the whole, allow the employee the freedom to work when and where they want. Remote working tools make this a fast, effective, and economical process.
Similarly, you can counter job stagnation (another major cause of employees leaving) by encouraging creativity and innovation. Instead of focussing on a defined goal, for example, winning a particular client, you could encourage input from the team on how to solve your cash flow problem. Perhaps they would prefer pitching for another client instead, or curbing wastage by changing suppliers. Instead of dictating to your employees, let them in on the problem-solving process. This encourages transparency, trust, co-operation, and shared responsibility.
With a principle-based approach, you allow your employees more autonomy in their day-to-day work, helping to combat much of the dissatisfaction that causes people to leave. At the same time, you encourage them to achieve outcomes that lead to a sense of productivity.
Practical examples of a principle-based approach
While a rule-based system may circulate a company memo restricting the amount of paper or ink each department is allowed, a principle-based approach would simply ask employees to ‘consider the environment before printing’.
Similarly, while it may be tempting to dismiss the mother leaving early to attend a sick child as neurotic, you may be more sympathetic if you knew the child had an autoimmune condition. The person arriving late may be taking public transport and have travelled 2 hours to be here every day. The overachiever who consistently impresses you may be on the verge of a nervous breakdown. Every person has a story. And instead of treating this as an inconvenient evil to be put up with, you should actively embrace opportunities to uncover these stories. Because by understanding each person’s circumstances, you can formulate principles that are satisfactory for the company, and its staff.
Instead of promulgating rules that seek to control a person’s time and movement, you can formulate a principle that allows work to be done in a way conducive to individual circumstance. For example, you could allow the mother with the sickly child to work from home. This allows her to get work done, while being on hand for her family. The person who arrives late at work might not deserve the ‘slacker’ label, if you measure his output rather than his arrival time. The overachiever might not be the best person to put on your next project. They may perform extraordinarily well (as usual), but then need to check into a wellness retreat for a month afterwards. This means you’re sacrificing their health, and your company’s long-term success for the sake of one project.
In all of the above examples, the overall objective of work is achieved. The difference is in giving the employee freedom to do so on their own terms. That is the goal of a principle-based management system.
When examining the way you manage employees, recognise that rigid rules may be hampering your organisation by diminishing job satisfaction, rather than creating good structures. Allow your employees more leeway in how they get the job done, and trust them to do it. You may be surprised at the results.