Less Rules, More Principles

I find that every construction company creates rules for their people to follow, and I think that is a smart thing to do. However, I’ve noticed that some companies have way more rules than others, and by and large, it seems to have unintended negative effects. 

One negative effect I notice is that people get frustrated when rules change, which sometimes leads to resent towards management. I think one of the reasons why is because when organizations are partial to using rules, they realize it’s hard to set a rule for every situation. So, they make a rule, but then quickly modify it when an exception to the rule comes up. 

One example of this situation was inside of one of the Contractors we work with. I’d prefer not to mention too many specifics and I will alter the details to protect their identity, but you can assume the company in the following example is a profitable trade contractor with between $35M - $60M in revenue.

One day, they noticed their PMs weren’t doing site walks. So, they implemented a rule that a PM should go on a site walk every week. Sent out an official email and everything. For a few weeks, the PMs tried to meet the rule, but many were finding it was a difficult task given their workload. 

We hear this a lot, and it can often indicate a need for more planning and time management skills for the PM, but regardless, it leads to them gossiping about why the rule doesn’t work. Then, they push back against the rule to management. Management has good intentions but feels frustrated that the PMs aren’t skilled enough to handle the new rule. However, with those good intentions in mind, after just a few weeks, they modified the rule to say project managers need to go to their jobs at least once a month, instead of once a week. While this quelled the project managers concerns, the Superintendents felt frustrated that their PMs have a rule, that in their mind, was not strict enough (ah—the classic distrust between office and field!). Which of course led to more gossiping, and even some brewing conflicts amongst everyone involved. 

Now, multiply this rule-setting across an entire organization, and you can see how you can end up with frustrated people, who in some cases, decide they’d rather leave than deal with another rule change. Which sucks! 

Before resolving this problem, we must first recognize that both things can be true: 

• Management can have good intentions about rule-setting.. 

AND 

• Employees can misunderstand their intentions, resent them for it, and undermine the rules unintentionally. 

It doesn’t make either side bad, but it is a common enough problem that we should address it. If this is you, no judgement. Just work on getting better. I think a good way to get better is to focus less on rules, and more on principles. Here’s what I mean: 

Principles 

Sometimes, principles take the form of core values in a company. If you have core values, this is a good place to start for building a principle-based culture instead of a rule-setting culture. If you don’t have core values, I would recommend starting there as you begin your principle-based journey. 

The reason principles seem to work better than rules is because they leave room for flexibility and lead to debate rather than corrective conversations. See, principles are things like “honor the field and support them always” vs. “go to your jobs once a week”. 

When you say, “go to your jobs once a week”, you are really saying: 

• “We don’t trust you to hit your jobs enough.” 

• “We’re frustrated with our project management staff.” 

• “We think something is messed up about the way our PMs are performing.” 
  

At least, some people will perceive it to be that way. It may be uncomfortable to hear, but I truly believe that in a lot of cases it is true. Consider this approach vs. a principle to “honor the field and support them always.” 

With that principle in mind, the PM staff—in a conversation led by their superior—should discuss the proper way to honor the field on their projects. Should we stop by  the jobs more often? Could our communication be clearer? What do we need to do to successfully honor the field? 

Now, you have a collaborative environment where ideas flow. With ideas come healthy disagreements—until everyone can accurately define what it means for the project management staff to honor the field. Maybe that’s site visits, maybe that’s more phone calls—it doesn’t matter. The point is you don’t need to set a rule for it. Your people are perfectly capable of setting their own rules. Plus, and this is really the key, when your employees create the rules for how to follow the principles for themselves, they are much more bought-into the plan. It feels good to co-build with your team. 

Then, your role—assuming you are an Executive or Owner, although this could also apply to every single employee in the company—is to monitor whether the actions we’re taking actually satisfy the principle. If they’re not, you must have a frank discussion with the team to create an improvement plan. You can do this in a healthy way, but you must still enforce the principle and ensure the team is getting the desired results. I find it is a much more fun way to do it though. 

Building your ideal employee 

There are so many other examples we could come up with as to why a principles-based culture seems to succeed over a rule-setting culture. One more that comes to mind that I think will deepen our collective understanding of how to beat this issue is some companies use their principles to deliberately build their ideal employee. 

When people follow rules, they fall in line. But with a principles-based culture, there is an opportunity for all employees to adopt a similar moral code that corresponds to being a highly successful employee at the company. With lots of people in your organization feeling that way, they are much more likely to feel empowered to grow the business for the sake of their fellow teammates. Over time, the team will evolve into a group that is so much more powerful than the sum of each individual. Groups can create great change. Individuals can too, but it is much rarer and takes more time. The point is groups move more quickly and efficiently than a bunch of solo players. 

Principles-Based Culture 

I’ve seen a principles-based culture work in a few construction companies, but not many. Not because it doesn’t work, but because I don’t think there are many construction companies doing it yet. I am increasingly convinced that it is a leading indicator for high profitability and employee satisfaction. 

If that’s not enough reason to give it a try, then I don’t know what is. If you want help bringing this type of culture to your business, we’d be happy to see if we would be a good fit for working together. 

Spark Notes:

• A principles-based culture fosters flexibility and collaboration, allowing employees to create their own rules and feel more invested in the company's success.

• Unlike rigid rules, principles encourage healthy debate and a shared understanding, leading to more meaningful and effective actions within the team.

• Companies that build their ideal employees around core principles rather than rules empower their teams to work together, creating a more powerful and cohesive group.

• I've observed that a principles-based culture can be a leading indicator of both high profitability and employee satisfaction in construction companies.