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HUMAN RESOURCES

Forget Policy Manuals

A policy manual can hurt a company's entrepreneurial spirit and hinder fast growth, says the founder and CEO of PSS/World Medical. Here are some alternate ways to foster company policy.
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Fast Track
A sure way to transform efficient field generals into cover-your-butt middle managers is to toss a fat policy manual at them. Skip it--do a Blue Ribbon Tour instead

Maybe you've seen it happen. Maybe it's happening right now in your own company.

You start a business. It does well. So you open up a branch in a neighboring city. Soon you have a dozen branches, maybe more. Physician Sales & Service (PSS) started less than 15 years ago, and we now have facilities in 86 U.S. cities, plus a few more in Europe.

If you've done things right, you'll have a bunch of entrepreneurial types on the payroll hungering for a chance to run their own branch. The more branches you open, the more you can tap into all that entrepreneurial energy. It's a sure-fire path to fast-track growth.

Then you get the urge to write things down. You want to create rules, regulations, procedures. You decide you need a policy manual.

It's a natural enough instinct. You know why your business has succeeded, so you want all those far-flung branches to do things just the way you do. You want them to look and feel the same, and to deliver the same value to the customer. You know that Fed Ex doesn't allow local managers to paint their trucks green--or to decide that some packages don't absolutely, positively have to get there overnight.

But when you write everything down in a manual, people in the field read it. Worse, they base their decisions on it. The manual tells them how they're supposed to run their business. It spells out all the things they can't do. Before long, all those fast-moving, get-things-done field generals are turning into cover-your-butt, manual-reading middle managers (or they're out looking for a job at a real entrepreneurial company).

At PSS we have a different approach to written communication--and it doesn't involve a policy manual.

We don't write down much. We have a rule that people in the branches must read the first memo that arrives in their offices from the corporate office each month. After that they can wad up the memos and shoot 'em into the can.

When we do write things down, we steer clear of the policy-manual format. Our "Top 20"--a list of the company's core values--is written on a wallet-size card. When the lawyers told us we needed written nondiscrimination policies, we made up a poster with cartoon figures explaining those policies, and we put one in every branch.

And then there's the Blue Ribbon, which is how we make sure we're all reading off the same page.

We certainly want uniformity from one branch to another. PSS's reputation rests on delivering world-class service to its customers, and we have developed systems and methods to ensure that customers get that service. We have our business model, and we don't really want local-branch leaders experimenting with business models of their own.

But instead of a manual spelling out how a branch has to operate-- trucks must be washed no less than once a week; grade 3 employees are entitled to 12 vacation days a year--we created a 100-point checklist known as the Blue Ribbon book. Every branch gets a copy. Then the branches take part in a contest we call the Blue Ribbon Tour.

Here's how it works. Twice a year, either I or one of PSS's other leaders will show up at a branch's door. Unannounced. It might be 7:30 in the morning, 4 in the afternoon, or anytime in between. "Blue Ribbon time!" we'll say as we walk in.

The tour is an inspection. Book in hand, we'll walk around the facility, marking yes or no on every checkpoint:

  • Are the trucks clean?
  • Are there refreshments available for guests?
  • Is there a map showing every PSS location?
  • Are truck-maintenance logs properly maintained?
  • Is there a Wall of Fame celebrating employee accomplishments?
  • Is the phone answered in three rings or fewer?

With 100 questions, the inspection can take up to four hours. And since every question is pass or fail, each branch winds up with a score: so many points out of a possible 100.

At some companies, this kind of inspection would be a horrendous experience. At PSS, when people hear there's a Blue Ribbon on, they start whooping and hollering. They run around making sure the wastebaskets are empty and there's toilet paper in the bathroom.

Nobody is in trouble if the branch does poorly. You won't get fired, disciplined, or even reprimanded for a bad Blue Ribbon score. What you will win or lose is bragging rights--and money.

Every person in a winning branch pockets a nice chunk of change. Each employee in the branch scoring highest on the Blue Ribbon gets $3,000. The second-place branch gets $2,000 per person, the third-place branch gets $1,500, and so on, all the way down to the 10th-place branch, where employees get $500 apiece.

The losing branches--which is to say all the rest--have to pay for the other branches' prizes. They might have to pony up a couple thousand dollars from their operating profits. It isn't enough to do any serious damage to their bottom lines; it's just enough to make the leaders wince.

So this isn't some military-style inspection greeted by fear and trembling. It's a game. The branches are competitors. The people in our branches take pride in keeping their facility ready for a Blue Ribbon Tour at all times. They take enormous pride in winning--and, of course, in mentioning the fact that they won to their friends in other branches.

Sure, a company that's growing fast has to have consistency and uniformity. But you don't need a bunch of written rules, regulations, and procedures. You're better off figuring out fun, face-to-face ways of achieving the kind of consistency you need. The Blue Ribbon contest is a perfect example--and if you think it would work in your company, well, you're welcome to swipe the idea.

Patrick Kelly, founder and CEO of PSS/World Medical, is the author of Faster Company: Building the World's Nuttiest, Turn-on-a-Dime, Home-Grown, Billion Dollar Business, to be published this month by John Wiley & Sons.

Last updated: Apr 1, 1998




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