How to reinvent HR policies for SMEs

How can HR re-imagine their approach to policy?

It’s hard to look at something you’ve done a certain way forever and re-think it.

But having too many policies for the sake of it can have a negative cultural impact on your SME.

Let's look at what can happen to a business when SMEs become overly policy-heavy. We’ll also look at examples from businesses who have implemented frameworks with less policies, to give you some food for thought. 

The impact of HR policing with policy

“Policies are a company’s message to its employees regarding how it values people.” Sue Bingham, ‘The High Price of Overly Prescriptive HR Policies,’ Harvard Business Review.

There can be serious cultural and business impacts of a policy-heavy culture. Not only does HR become bogged down with endless policy admin and updating clauses, employees won't feel trusted by hundreds of policies that cover their every move. This doesn't result in a successful working environment – and is actually harder work for everyone.

Lucy Adams, CEO & Founder of Disruptive HR, recently spoke at Breathe’s People First Conference & Partner Summit 2023 - 'HR in a disrupted world'. As part of reinventing HR, Lucy suggests replacing your '3782 employment policies with a funky welcome guide.' 

Thinking outside of the box, Lucy recommends abolishing probation periods for new employees. Her aim with this is to 'prevent loads of new hires worrying themselves sick for 3 months just to 'get' the one person who didn't work out.'

The same applies to performance ratings. Lucy's thinking behind scrapping these is 'so that no-one has to suffer the indignity of getting 'meets expectations' for another year.'

Lucy's ideas are designed to free businesses & HR teams from pointless policies, giving employees the trust and respect they deserve. 

“Creating an environment of mutual trust is much easier than trying to run an authoritarian regime free of rule-breakers. Giving leaders a comprehensive book of infractions and punishments isn’t helpful – it turns them into ‘bad cops’ where nuance would work better.” Sue Bingham, 'The High Price of Overly Prescriptive HR Policies,’ Harvard Business Review.

But it doesn’t have to be this way.

Lucy Adams’ 'EACH' model

Lucy Adams, CEO & Founder of Disruptive HR, presented a talk at Breathe’s People First Conference & Partner Summit 2023 - 'HR in a disrupted world'. 

The premise of HR that Lucy offered during her talk is the 'EACH' model – advocating that HR treat employees as adults, consumers and humans. We’ll cover some key takeaways for HR professionals.

In the ‘adult’ part of the model – Lucy talks about how HR has become overly parental and removes the space for employees to use their initiative and common sense.

Lucy says that she feels HR is often too parental, and that treating employees like children (by creating a policy for everything, infantilising people and not allowing them to use their common sense) doesn’t achieve anything constructive – and can actually have a negative impact on the culture of your SME.

When Lucy was HR Director at the BBC, she detailed an occasion where it started snowing. She was asked when she was going to write the 'snow email' – and she was incredulous. She couldn’t believe that the grown adult employees working for the BBC weren’t capable of looking out of the window and making an appropriate assessment about their travel plans. This is a perfect example of the over-parentification of modern HR.

Lucy advises against this, and instead that HR works best in the format of an adult-to-adult working relationship.

“Don’t have a load of rules and policies, but instead operate with a light-touch approach that is based on trust. Start from a position of trust, encourage managers to use their judgement – encourage freedom with responsibility.”

Lucy Adams - 'HR in a disrupted world', Breathe's People First Conference & Partner Summit 2023

When the organisation functions as the critical parent trying to protect itself from the worst-behaved employee, policies are created for every eventuality. Lucy reinforced that this doesn't create a truly productive working environment.

“This achieves a passive and compliant workforce, but this isn’t enough to help everyone survive and thrive. Treat people as grown-ups and don’t parent them. We need to have a greater ambition than achieving passivity and compliance.” ('HR in a disrupted world', People First Conference & Partner Summit 2023.)

Lucy advises that HR should treat employees as consumers. She argues that there’s not a one-size-fits-all approach to anything else (such as clothing, which offers different styles, colours, etc). So why do we use this approach in HR?

“In HR, we can help to understand people and support them to perform better by understanding them as individuals.”

Lucy reinforces the idea that HR treat employees as humans, rather than numbers. She advocates for trusting people's sense of what the right thing to do is, and trusting managers to exercise their good judgement.

Lucy also encourages disregarding the '9-box performance grid' style of performance review, that functions as a tick-box exercise and doesn’t regard employees as individuals.

“This sort of tick-box grid and plans with appraisal completion forms at 98% [still feels stuck in] 1980’s HR. It's compensating for poor managers when actually engagement hasn’t improved at all.”

Lucy Adams, 'HR in a disrupted world', People First Conference & Partner Summit 2023.

Essentially, Lucy's framework explains that creating policies to prevent misbehaviour from the small percentage of potential ‘bad apples’ within a business means that you’re excessively patronising everyone else in the organisation.

This results in increased HR admin, a HR team not reaching its full potential, and an infantilised workforce who feel less trusted by their organisation.

The HR impact of a ‘low-policy’ approach

Less policies can equate to increased employee autonomy, morale and motivation- which leads to increased productivity. Employees who are trusted and not micromanaged by policy will feel more confident in the work they do. The impact is hugely positive for both employees & businesses.

“Over the years we learned that if we asked people to rely on logic and common sense instead of on formal policies, most of the time we would get better results, and at lower cost. If you’re careful to hire people who will put the company’s interests first, who understand and support the desire for a high-performance workplace, 97% of your employees will do the right thing.

Most companies spend endless time and money writing and enforcing HR policies to deal with problems the other 3% might cause. Instead, we tried really hard to not hire those people, and we let them go if it turned out we’d made a hiring mistake.”

Patty McCord, Chief Talent Officer at Netflix (1998-2012), ‘How Netflix Reinvented HR’

Rather than creating formal policies, asking people to use their common sense often achieves better results. Netflix found this when Patty McCord (their previous Chief Talent Officer) implemented their method of “hiring, rewarding and tolerating only fully-formed adults”.

We look at some examples of a low-policy approach in action:

7 examples of low-touch HR policy approaches

• Netflix’s expense policy is 5 words – “act in Netflix’s best interests”. They found that getting rid of a traditional expense policy meant that costs were lowered, and responsibility shifted to managers rather than HR.

• Netflix also removed formal reviews, after realising that they were overly formal, ritualistic and didn’t achieve a lot. Instead, they encourage regular conversations between employees and managers about performance.

• Lucy Adams endorses a progressive approach to performance management. She describes that the company Atlassian simply asks employees once a week: 'what are you working on, how can I help and how are you feeling?'

• Swiss Re’s hybrid working approach – is simply 'own the way you work'. The company encourages staff to work where they’re most productive

• Hubspot have no formal policies, just 3 words for their employees and board members to live by – 'use good judgement'.

• Many businesses globally have adopted the ‘dress for your day’ policy, rather than stipulating a strict work dress code.

• Soundstripe offer simple, clear guidelines for their staff, such as ‘please don’t come into work throwing up, please take a vacation, often’.

The future of HR – less policies, more trust?

“HR’s role in the future should be coaching, facilitating, influencing rather than being a policy-pusher or the HR police.” (Lucy Adams, 'HR in a disrupted world', People First Conference & Partner Summit 2023.)

Although some HR policies might be necessary, chances are that you don’t need a library of HR policies. If you’re reviewing your policies, you might ask if they focus on the negative more than the positive, or whether they’re overly-prescriptive? Or perhaps they're written with those few potential ‘bad apples’ in mind, rather than most of your people?

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