“HR Policies:
Rigid Rules? General Guidelines? Noble Aspirations?”
By Robert J. Greene, PhD, SPHR, GPHR
HR has the responsibility of developing policies that ensure their programs are
administered consistently and that they result in fair treatment. But policies must be enacted, not
just written and bound into a policy manual. And very often the policies are subject to
questioning by managers, particularly when they believe they keep them from managing
effectively.
It is common for HR to experience parades of managers approaching the staff to plead
their case for varying from established policies and practices. Their argument for a variance is
often that it is necessary in order to get someone or keep someone they believe is critical to their
function. They claim that other companies are paying more for specific critical skills and are
making deals with individuals that include other rewards. They also complain that other
managers have made deals that their employees are aware of and that they should be allowed to
do the same thing. As the appeals mount up it appears every employee is critical and that they
are all poised to leave for any of a hundred reasons, such as the need for more money, a need to
work at home, a need to have a flexible work week, a need for better technology, a need for more
staff, etc. And every outside candidate for employment seems to demand some deviation from
some of the established policies and practices.
Even though this sounds like an unpleasant situation it could be worse. Managers could
be making the deals they deem appropriate without informing HR or senior management that the
policies and practices are being applied in a way that is very different from what was intended.
They could also be circumventing policies by using contractors rather than hiring employees and
cutting deals on compensation, work schedule and work assignment deals that are expedient in
the short run and that get their department’s work done.
No organization can totally avoid idiosyncratic deals that vary from established policy
and administrative guidelines. The press of business makes some flexibility in applying policies
necessary. But bad deals can result in inconsistencies that create inequities and even legal
exposure. Inconsistencies between deals can result from: 1) poor decision-making, 2) a lack of
consistency between managers or 3) a lack of consistency by the same managers over time in the
way policies are applied. To avoid or remedy this type of damage the organization must take the
initiative to make the best of an imperfect situation.
Why Managers Make Deals
There are numerous reasons for managers to vary from established policy. The pressure
applied by employees who feel they have both a legitimate need and a right to accommodation is
typically the most common reason given by managers. The things that cause employees to
provide this pressure are the receipt of “better” offers from the outside, the discovery that they
are paid inequitably relative to peers, finding “data” on the internet that shows them to be
underpaid and experiencing pressures in their private lives that necessitate accommodation in
their work life. Initiating a request for varying from company policy may also be a way of
testing how much the manager values the employee.
Managers also make deals that violate established policy due to a poor understanding of
what the policies are or an inadequate appreciation of the consequences of making such a deal.
The fixes for a poor understanding are making policies explicit and communicating them
broadly. Although policy manuals are generally not the most scintillating reading it is a good
investment to ensure managers and employees are fully informed about them. Too few new
manager/employee orientations focus on what the policies are, why they are what they are and
what the consequences of not adhering to policy are for managers, employees and the
organization. Many HR policies are mandated by law, although managers and employees may
not be aware of that. Overtime pay provisions in the Fair Labor Standards Act are often violated
by managers because they do “what makes sense” (e.g., get the work done this week and give
some compensatory time off next week), rather than what the law prescribes. It is incumbent on
the organization to explain that laws need not be convenient or make sense. They only have to
be followed.
Yet another reason for “manager transgression” is that a manager is firmly convinced a
policy is wrong or that it has not been consistently adhered to. For example, they may be
convinced that pay ranges or budgets for pay increases are not competitive. As a result, they are
not going to feel bound to stay within the constraints contained in formal policies. Although the
managers may accept that in general the policies can guide decisions, if they are being pressured
to make an accommodation that might save a valued employee the policies are likely to be
trumped by the benefits associated with the expedient action.
Deals Related To What?
Hiring: Deals commonly are made during the recruitment of outside candidates. People
new to the organization are likely to have different employment conditions in their current
employer (pay, work schedule, responsibilities and the like). A manager desperate to hire a
candidate is likely to view their “must have” conditions as being reasonable – after all, the
person already has adjusted his or her life style to the current situation. But that same manager
may have ruled out the same accommodations for existing employees, establishing a precedent.
An example would be the candidate’s condition that certain days or hours not be worked, due to
a personal situation. If an existing employee has already somehow managed to work at these
times the manager may view the same request from her or him as being a preference, rather than
a requirement. This sets the stage for a deviation from policy or practice approved for someone
who had not yet contributed to the organization but denied to an existing employee. Such a
scenario seems to beg a complaint or legal action.
Retention: Deals are also commonly made to attract or to retain critical skill employees in
short supply or to keep and satisfy top performers. Making deals for top performers has a long
history, both because the strong bargaining position of those who are contributing the most give
them power and because the company may wish to motivate others to perform as well. Larger
salary increases, larger incentive awards, plum assignments and other rewards are commonly
viewed as a legitimate way to treat highly valued employees. Some of these deals are consistent
with established policy and practices. Others may be made quietly by managers because they are
not officially sanctioned by policies or practices.
Retirement: With the aging of the Baby Boomer cohort in today’s U.S. workforce the
major challenge is to effectively utilize employees who are near the end of their careers and who
are making decisions about whether to retire, when to retire and how. Employers are also facing
potential skill shortages and are considering approaches to utilizing late career employees and
retirees in new ways, in order to fill the gaps. Workforce planning efforts have led many
employers to realize current late career employees may have to be retained. However, this
strategy brings into question many of the existing policies and practices. The traditional concept
of “today you are an employee… tomorrow you are a retiree” is changing as Baby Boomers
increasingly want to remain active. By building flexibility into policies regulating work
schedules and work assignments it may be possible to create staffing plans that work better for
both the organization and the late career employees.
Making “Good” Deals
Exhibit 1 illustrates the considerations that manager should include in their decisions
about making deals. If deals are evaluated using an appropriate decision-making structure it will
improve the quality and consistency of the deals that are made. The existence of a gestalt that
can be used to frame decisions about individual deals can be a giant step towards improving
consistency and making deals more acceptable to all parties at interest. Managers often
unconsciously consider most or all of these factors but by making them aware of all the potential
consequences and by educating them about what to consider the organization improves its
chances of minimizing bad deals.
All factors impacting a decision should be considered prior to making the decision. If an
employee is about to leave for substantially more money the organization should consider the
probable impact of matching the pay offer on the employee, on co-workers and on the
organization. But counter offers may violate a long-standing commitment to maintain equity
among employees and cause morale problems with co-workers. Even worse, the action may
precipitate feelings of inequity on the part of managers in other functions who now feel their
people are not as valued. Much of the potential damage can be controlled by aggressive
communication of the details of the situation, accompanied by an explanation of why the action
makes sense from a business perspective. However, the willingness to make an exception sends
a message about which skills are critical to the organization and there will inevitably be some
resentment on the part of those who do not fall in the “critical skills” category.
It is short-sighted not to explain to employees how the organization must compete for
talent in the marketplace and what it needs to do to be competitive. It should be understood that
those having skills that are central to the core competencies of the organization and critical to its
performance will enjoy a privileged status, and their attraction and retention will be given the
highest priority. Explaining the realities of the business and the strategy may not make everyone
happy but it will minimize the feeling that the decision is being made based on personal likes or
in an arbitrary fashion.
If an employee is viewed as a star by co-workers and if they feel their lives would be
worse without that employee they may support actions to prevent the departure, even though
these actions are outside policy and not available to them personally. And if the organization can
make the decision in a manner that is consistent with the guiding principles that govern how it
makes such decisions the outcome may be positive. Using the framework provided in Exhibit 1
can help to ensure all relevant factors are considered.
Other conditions of employment may be varied for individuals through idiosyncratic
deals. Hours of work, location of work and flexibility in time off to deal with other personal
responsibilities are topics of considerable discussion today in organizations with diverse
workforces. The X and Y generations are following the Baby Boomers in the U.S. workforce
and bring different priorities and expectations to the workplace. Since they lack faith in any sort
of employment security they are more inclined to be mobile, with employment decisions based
on the employer value proposition that fits their needs currently. Consistent adherence to formal
guidelines is even more difficult when dealing with situations such as the illness of a child or an
aged parent, principally due to the subjectivity involved in making a determination if an
accommodation is warranted. But as with the pay decisions discussed earlier the existence of a
decision structure and the communication of why decisions are made can help to limit
perceptions of unfairness or favoritism. If laws mandate minimum levels of accommodation the
floor level is easy to establish. But how far the organization is willing to go beyond that
mandated level is not. Some organizations have allowed employees to contribute their accrued
time off to pools that are made available to employees who have special needs. If this practice is
accepted by employees then fair and consistent administration is all that is needed to produce an
acceptable result. And an organization can provide unpaid leaves to people with needs that are
unquestionably legitimate without setting bad precedents.
Deals In Different Contexts
Use Of Part-Time/Seasonal Workers and Contractors: Charles Handy introduced a
staffing model he called the “Shamrock Organization.”1 There are three categories of employee
in this model: 1) full-time core employees, 2) part-time/temporary employees and 3) contractors.
This approach has become widespread due to the necessity of matching staffing to continuously
varying workloads and available resources. Having different categories of people working with
each other raises several issues related to the terms and conditions accorded each category. Fulltime core employees may feel their security is threatened by the use of contractors and parttimers/temps. Seeing others working under different arrangements makes the tenuous nature of
their employment clear, since they may be replaced by these workers or may forced to become
one of them. If contractors are seen to be better paid, allowed to work more flexible schedules
and assigned the “glamour” work an employee’s satisfaction with their own conditions of
employment are apt to diminish. Very few hiring managers factor in the potential impact on core
employee satisfaction and productivity when developing a strategy for using flexible workers
and this is a major oversight. Although economics or work demands may mandate this approach
it is prudent to understand all the implications.
Global Organizations: The issues associated with making decisions about individual
deals become dramatically more complex when the workforce represents multiple national/ethnic
cultures. Whether cultural diversity is caused by people from different backgrounds working in
the same country or due to a workforce dispersed across national borders the effect is the same.
Different deals for different people or different situations is a concept accepted far more readily
in some cultures than in others. The U.S. culture is strongly “universalistic” in nature, which
mandates one set of rules for everyone.2 Other more “particularistic” cultures (much of Asia,
Latin America, Latin Europe and the Middle East) believe the particulars of the situation should
dictate the need for variation. Who is involved can have a major impact on whether a deal is
appropriate in these cultures. These significant differences in beliefs about what is fair and
appropriate can cause a good deal of stress to the global organization. Americans often label
hiring preferences extended to relatives or acquaintances as nepotism (not a good thing) while a
Latin may think it the best approach. The underlying rationale is that scrutiny of the new hire by
their family and social network will promote honesty and diligence. Pay levels and perceptions
of performance may also be at least partially a function of who someone is in “ascriptive”
cultures such as France, while in the U.S. the “achievement” culture mandates that rewards and
career progress be based on what the person contributes, no matter who they are or where they
went to school.
Public/Not-For Profit Sector Organizations: Rigidity in pay structures and pay
administration policies are still prevalent in the U.S. public sector. Federal employee GS rules
prescribe increases based mostly on time in grade and also that someone hired or promoted into a
new job be paid at a specific step within the schedule. Sometimes this inflexibility limits the
ability to hire and/or retain highly skilled and mobile professionals who can negotiate a
compensation package that is consistent with their market value and that reflects their
performance. The rigidity can force a manager to attempt to attract or retain a valued individual
by artificially upgrading the person to a level they cannot justify, thereby creating inequities with
other employees. These end runs around the system are very difficult to control and to defend.
It can be argued that there are benefits to tying pay level to longevity and by adhering to the rigid
1
2
Age Of Unreason, C. Handy, Harvard University Press, 1989.
Managing People Across Cultures, Trompenaars, & Prud’homme, Capstone, 2004.
system managers may in fact avoid feelings of inequity on the part of other employees. But few
managers will follow established HR policies and practices if they believe it will result in the
loss of people who are critical to the performance of their unit (and to their own performance
rating).
Start-Ups: Organizations in their early life often do individual deals rather than
formalizing policies. Often this is a requirement in an environment when the organization has
“one of everything”… one Finance person, one Design Engineer, etc. Since everyone’s
knowledge base and contribution is unique it is difficult to focus on consistency. However, since
each deal sets a precedent, the realities of managing a larger organization in the future may force
management to attempt to bring order out of chaos. Often the gunslinger culture that people
signed up for persists and resists standardization, viewing it as stifling bureaucracy, no matter
what the requirements of the business mandate. Therefore, the dilemma of consistency vs.
flexibility should be taken seriously by management in the early years, to ensure the balance
between the two can be effectively and appropriately maintained to fit the realities faced in the
future.
Conclusion
The continuous and dramatic changes occurring in the talent markets today place intense
pressure on organizations to be flexible in how they administer their HR programs. The types of
employer value propositions that sell to those with critical skills and who are mobile across
organizations must include some flexibility and individualization. Yet every idiosyncratic deal
that is made can create inequities relative to other employees, precedents for further variation
from established policies and procedures and even exposure to legal liability.
The existence of a well-defined and broadly communicated decision-making structure
can minimize the negative impacts of deals and in fact can improve the quality of the deals that
must be made. The structure must prescribe consideration of how the deal will impact all parties
at interest, including the individual, the organization and other employees. Guiding principles
that are established formally and made public can provide a gestalt that managers can use to
frame their decisions when they find it necessary to deviate from policies and practices.
Employees are capable of understanding that market factors and business necessity can create the
need for variation. Those who need flexibility in their own situation will appreciate the
organization’s willingness to attempt to make accommodations, while at the same time adhering
to the values and principles that apply to all.
Evaluating Idiosyncratic Deals
Culture more person- or
task-based? What are
Norms about consistency?
What is the policy?
How clear is it?
How much does
deal vary?
First request?
Candidate or
Employee?
Nature?
Legitimacy?
HR
Policies
Culture/
Values
Deal
History
Deal
Visibility
Employee
History
Employee
Needs
What would be
the impact of
losing person?
MAKE
THE
DEAL?
Nature
Of Deal
Co-Worker
Reaction
Employee
Criticality
How common in
other organizations?
How tight is market?
What has been done
in similar situations?
Competitive
Environment
Impact On
Performance
FIGURE 1
Who will know
about the deal?
Controversial?
Need or
preference?
Raise legal issues?
Impact on co-workers?
“Better” than theirs?
How do they vote?
Can employee be as
productive and effective
under the new deal?