Executives often express to me their desire for the company’s employees to think strategically and to act strategically. Always in the same conversation, they also talk about how disappointed they are that this seldom happens. Most employees will not take the initiative and will not take the risk to do what they think works best for the strategy. Rather, employees prefer to follow the rules, do what they know has always been done and play it safe.
As we dive deeper into the topic, the executives have plenty of stories that exemplify their concern. An insurance company executive who described an interaction he had when walking around and talking with employees (Remember managing by walking around!).
He saw a photo of a two story house, with a flat roof that has two lawn chairs perched by the edge of the roof. When asked if that was her house, she replied, “no.” It is my shining example of how our clients take risks that we have to pay for later, when someone tumbles off the roof. She had met with the house owner to discuss a minor claim and had seen this major liability. She cited how expensive that would be for the company and how she had warned the customer not to go on the roof. The executive asked if she thought that the warning would be effective. She said, “No way.”
The executive then asked what would work. She said, “Oh that is simple, they need to put a railing around the edge of the roof.” “But they cannot afford it and it will never happen.” The executive suggested that maybe the homeowners would put up a railing if they were incented by a discount in their policy. The employee said, “Yes of course that would work but we are not allowed to do it.” He asked why not and the employee responded that she could not because it was against the company policy. He explained to her that the company was in the business of preventing losses not just paying for them. Her response was “Yes I know but it is not the job of the claims department.”
A critical strategic value – avoiding a loss – was negated by misaligned department policy. The employee clearly understood business and the two sides of the insurance ― claims and prevention. Her department was focused on the claims side and she was not “allowed” to help the company on the prevention side. She knew how to prevent the potential loss (and physical trauma to a policy holder) but felt powerless to stop it because she had to follow policy. The executive thanked her for her story and moved on with his visit.
The moral of this story is clear. Even if an employee understands the mission of the company and can recognize an opportunity to further the mission, she is often stopped by policies and processes that are misaligned with the company’s strategy. Not fulfilling the company’s mission is often not a lack of understanding.