Have you ever experienced a situation at work where someone has made a bad decision and the company decides that a new policy is the solution? What if companies could focus on teaching their employees to be better thinkers rather than providing more rules, regulations, guidelines and procedures? Often these new policies result in a costly domino effect when implemented because the organization doesn’t work through the details and the potential impact to all of the key stakeholders.
A woman works at a company that has decided to save money by implementing a new travel policy. The assumption here is that the employees were not making good decisions about their travel and the unnecessary expenses and costly hotels was expensive to the company.
Her company decided that in order to save money on expenses that they would implement strict travel guidelines. One change to the travel policy was that the lowest priced airfare must be booked. Additional approvals were required for any exceptions.
From a logical standpoint, these rules appear to make sense and would save the company money. But is this true? What are the other ramifications of this type of change?
The employee, a sales representative, needs to fly to meet with a customer. The cheapest flight includes a layover in Chicago during the winter. Assuming that the flight is on time, the sales representative will have a 4-hour layover in Chicago. The next cheapest flight also has a connection but it costs $25 more. The employee wants to take the flight that will be shorter but it is out of policy due to the higher airfare. She needs to call the travel agent to purchase the tickets because the online portal will not allow for the booking outside of the stated guidelines. At this point the employee learns that she must receive approval from management before this flight can be arranged. Assuming she has to travel on this date and these are her options she can:
1. Reach out to management to obtain approval for the additional $25 fee then call the travel agent to book the more direct flights. Hidden costs: time of the sales rep to call the travel agent and manager, time of the manager to review and approve the change, risk of losing the seat if this process takes too long.
2. She could choose to go with the travel policy as stated. She would save $25 but she looses 4 hours of productivity due to the layover. There will be additional fees for a meal due to the extra time as well as additional risk of further delay due to weather.
An actual cost could be determined by factoring in the time of the sales representative, manager and travel agent. But I am curious about how often the cost of this time is overlooked? Do we disregard the extra time that the sales rep is stuck in an airport and dismiss the opportunity costs of not having her meeting with clients during that time? Or the manager, who has many business decisions to make but is focused on approving a $25 charge instead?
I think this is a prime example of where teaching employees how to make good decisions can eliminate the need for such strict policies. A formal policy with little room for judgment could be altered to empower the employee to make the decision that is best for everyone involved. The end result would most likely impact the bottom line as well as have a positive impact on employee morale.
What do you think? Have you seen this happen in your world?
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