When circumstances change rapidly due to upheaval and uncertainty from events such as the COVID-19 pandemic, social unrest driven by income inequality, or severe weather caused by climate change, business leaders should design rules to change along with them. So reports a new MIT Sloan Management Review article released today.
These events signal a much more dynamic environment for businesses. Yet, many of today's organizational practices and processes were created for comparatively predictable and stable circumstances, and are ill-suited for current and future unpredictable and volatile times.
The article, titled "Turbulent Times Demand Dynamic Rules," reports that for organizations to prosper and function effectively in the new, more dynamic normal, they must change how they design, implement, and monitor their policies and procedures.
"Now is the time for business leaders to embrace the notion that rules should change, especially in response to employee feedback about rules that disrupt work," says David R. Hannah, report coauthor and associate professor of management and organization studies at the Beedie School of Business at Simon Fraser University. "When rule-makers and people that have to follow rules collaborate and experiment, purposeful and effective policies are created."
The article is based on observations of how businesses have coped with the challenges posed by the COVID-19 pandemic and on the authors' previous research on rule compliance among employees in high-technology organizations, effective organizational communication and employee involvement during times of change, and increasing employee autonomy enabled by mobile and social technologies.
Dynamic rules begin with the right mindset.
The prerequisite for organizations to move from an organizational culture that favors traditional rules to one that embraces dynamic rules is a shift in mindset. There are two critical differences between the mindsets needed for traditional and dynamic rules: who is involved in making and changing them, and what is taken into account when determining their success.
In the dynamic rules mindset, upper management are collaborative facilitators, working together with employees to create and modify work requirements. They have a genuine intent to understand the full impact of policies, including their potential detrimental consequences. In contrast, a traditional mindset focuses on control, where managers tell employees what to do, monitor employees to make sure they obey the rules, and impose sanctions on people who fail to follow them.
Three strategies for creating dynamic rules:
- Increase employee involvement in rule-making. Transparency and communication are essential for workers to join managers in a collaborative effort. When leaders enable employees to share their thoughts about rules without fear of penalty, recognize the relevance of employees' expertise, and explain the reason a rule exists, a virtuous cycle is created where employees and managers create better policies and achieve a higher level of employee commitment.
- Embrace rapid rule experimentation. Organizations often need to move quickly when implementing new rules in a dynamic environment. It's better to develop a rule that is "good enough" and roll it out quickly, than spend months creating the "perfect" rule.
- Enact rule audits. It's best to conduct a rule audit, an evaluation of an organization's existing policies, in response to, or in anticipation of, a major organizational transition or environmental shift. Get started by identifying rules that are the most disruptive for employees and the organization, scrutinize each one's purpose, and assess whether existing rules need to be updated to fit the organization's current environment.
"A dynamic rules mindset has benefits beyond helping to create a more functional set of rules," says Hannah. "Relationships between managers and employees may improve; leaders may arrive at an improved understanding of how work is actually carried out; and employees may be more likely to buy into and adhere to rules, experience less disruptiveness from them, and feel more appreciated."
Read the MIT Sloan Management Review article, "Turbulent Times Demand Dynamic Rules," for practical and actionable recommendations that companies can take to shift from traditional to dynamic rules. Building this flexibility into an organization's structure, processes, and practices is essential to prepare for unpredictable future changes.
About the Authors
David R. Hannah is an award-winning researcher and teacher, and presently an associate professor of management and organization studies at the Beedie School of Business at Simon Fraser University. His research and teaching focus on how individuals at work can cope effectively with the challenges and dilemmas of organizational life, and how they can help others to do so.
Christopher D. Zatzick is an associate professor of management and organization studies at the Beedie School of Business at Simon Fraser University, where he studies a variety of organizational issues including downsizing and layoffs, high-performance work systems, organizational change, and diversity.
Dr. Jan Kietzmann is an associate professor of innovation and information systems at the Gustavson School of Business at the University of Victoria. His research interests combine organizational and social perspectives related to new and emerging technologies. His current research projects include such phenomena as social media, artificial intelligence, crowdsourcing, user-generated content, gamification, and sharing economies.
About MIT Sloan Management Review (MIT SMR)
At MIT Sloan Management Review (MIT SMR), we explore how leadership and management are transforming in a disruptive world. We help thoughtful leaders capture the exciting opportunities — and face down the challenges — created as technological, societal, and environmental forces reshape how organizations operate, compete, and create value.
