Are Rules Wrecking Your Organization?

Organizational leaders like to imagine themselves building consensus and inspiring others to achieve great things. Even when this self-image is accurate, it often obscures another critical part of leadership: creating and enforcing rules that shape behavior.

Leaders at different levels write and enforce policies with very different scopes. A team leader may set rules for how work is coordinated and how people communicate. A division leader may define policies governing budgets or operational priorities. CEOs may help establish company-wide rules about compensation or remote work.

Across all levels, leaders use rules as essential tools to define what is permitted, expected and discouraged. Yet despite their importance, organizational leaders are rarely trained to design, communicate and enforce rules effectively.

Rules are often treated as band-aids for undesirable behavior. But rules and policies do more than correct problems — they reflect an organization’s values and signal how those values should be lived day to day.

Organizations rely on a wide range of policies, from data protection and security protocols to dress codes and meeting norms. Some are formal and written; others are informal and unwritten.

Even when rules are not explicitly stated, employees notice patterns and infer expectations that guide future behavior. No one needs to spell out whether a manager welcomes dissent in meetings — employees observe what happens when someone disagrees and draw their own conclusions.

Centuries of moral philosophy and legal scholarship point to several compelling benefits of rules.

First, clear rules provide quick guidance for decision-making by defining what is allowed and what is not.

Second, rules standardize behavior across individuals, teams and geographies, enabling coordination and alignment.

Third, effective rules can prevent harmful outcomes, such as discrimination or abuse.

Fourth, well-designed policies create precedents that support consistency; when a controversial proposal arises, employees can look to existing policies to determine whether and how it fits the organization’s priorities.

Finally, rules can serve as an impersonal way to correct behavior, reducing the need for repeated or uncomfortable interpersonal confrontations. If culture is defined by the worst behavior leaders tolerate, then rules are one essential mechanism for building and sustaining organizational excellence.

Despite these advantages, rules also have well-documented weaknesses. Policies can conflict with one another, creating confusion — for example, when leaders promote flexible work while enforcing rigid meeting schedules.

Rules can also stifle innovation when they are used as conversation stoppers rather than as guardrails. How many promising ideas have been dismissed with “we don’t do that here?” Stakeholders may interpret policies differently or comply with the letter while violating the spirit, as when employees use mouse jigglers to appear active while working from home.

Rules can become outdated or unfair when the conditions under which they were created no longer apply, such as dress codes that require women to wear high heels. Finally, when leaders fail to clarify how rules are enforced or how exceptions are handled, ad hoc decisions emerge, fostering perceptions of favoritism and eroding trust.

These strengths and weaknesses underscore a central point: rules shape how people think and decide, not just how they behave. When used unreflectively, rules shut down judgment. When people disagree with a rule, they may ignore it. When used thoughtfully, rules communicate what an organization values and guide how employees pursue shared goals.

Because rules are always more abstract than the situations to which they apply, putting values into practice requires judgment and critical thinking. By explicitly designing and communicating how rules are created, enforced, and revised, leaders can increase the likelihood that employees follow not only the letter of the rule but also its spirit.

Consider a manager trying to rein in rising travel expenses. She introduces a policy requiring employees to book the cheapest available flight from the nearest airport. On the surface, the rule seems efficient.

Yet such a policy may backfire if the cheapest flight includes multiple layovers, driving up hotel and meal costs. If the manager enforces the rule blindly, she may increase expenses rather than reduce them.

Alternatively, if she explains the underlying goal — controlling total travel costs — and clarifies when exceptions are appropriate, employees are more likely to make sound decisions and even propose creative solutions.

Policies That Promote Thinking

The following questions can help leaders design and implement rules that encourage thoughtful judgment rather than blind compliance.

1. What specific problem are we trying to solve? Clarity is essential. There may be multiple ways to achieve your goal, and policies are not always the best tool. Understanding how much others care about the goal matters as well. Mandating office returns without engaging employee concerns may achieve attendance at the cost of morale and collaboration. If you cannot articulate your goal honestly, others are unlikely to support the policy.

2. What benefits do we expect if the policy works? Define the behaviors you want to change and how you will measure them. Without clear metrics, you cannot evaluate or improve the policy. Clear measures also make it easier to communicate impact.

3. How will the policy be enforced? Anticipate how people might comply superficially or work around the rule. Define consequences for noncompliance. If you are unwilling to enforce the policy in clear cases, it is not a policy — it is a request.

4. What exactly is the policy, and when does it apply? Simplicity and precision matter. Avoid vague terms and consider alternative interpretations. Write policies to minimize ambiguity.

5. Who has the authority to revise the policy, and how often will it be reviewed? Policies should evolve as conditions change. Define how updates will be made in light of new information or experience.

6. Who can grant exceptions, and based on what criteria? The authority to revise a policy often differs from the authority to grant exceptions. Clarifying this distinction reduces perceptions of unfairness and inconsistency.

Leaders cannot run organizations without rules. Rules are fundamental to collective action. By approaching policies as tools for shaping judgment rather than enforcing unreflective compliance, leaders can reduce unintended consequences and foster more thoughtful decision-making. When rules are treated not as top-down commands but as ongoing conversations about shared values, they become a powerful foundation for responsible leadership.

Professor Bobby Parmar is the author of “Radical Doubt: Turning Uncertainy Into Surefire Success,” published in 2025.