Heera Training & Management Consultants

eNewsletter Dec 2008

Dear Everyone,
Hi! And how are you all? This newsletter is being sent a little earlier as I am going on a long deserved holiday with the whole family. I shall be away for the next few days and I am really looking forward to it.
A very interesting thing happened to me the other day during a training session for a leading insurance company. I inquired as to why there is so much of bureaucracy involved when making a legitimate insurance claim, especially in relation to paper work. The majority of my participants answered that the bureaucracy was necessary to prevent ‘cheating’. I then inquired those in the claims department as to the number of cheating cases they encountered annually and the surprising answer was ‘only one or two’.  My next question was “why do you ‘punish’ the 98% of customers who make honest, legitimate claims to go through a laborious process, because of abuse by 1 or 2 people. The reply I got was, “it is the system’ and we have to adhere to it”. 

Don’t Punish the Majority because of the Actions of the Minority.

The above is a sad but real phenomenon in most organizations. We make rules because of the minority and these rules hinder and impede the majority.  In so doing, we create bureaucracy which stifles the efficiency of employees, which in turn creates systems that make customers go through long arduous processes in order to do business with us. In his book, ‘Good to Great’, Michael Collins refers to this as the ‘the bureaucratic death spiral’. He writes that “most companies build their bureaucratic rules to manage the small percentage of people who do wrong in an organization, which in turn drives away the right people from the organization, which then increases the percentage of wrong people in the organization”.
Another good example of this phenomenon is when someone makes a false claim in an organization. What usually happens is that the rules on claims are then tightened which immediately creates bureaucracy, which makes the life of the majority who are honest more difficult. It also creates extra work for the Finance department as there will have to be increased monitoring of all paperwork in relation to claims. I would like to make it clear that I am in no way encouraging a situation where ‘abuse’ is being encouraged by having lax rules and regulations. What I am advocating is having minimal control measures so that employees and customers alike can work and be served in an environment where efficiency and effectiveness is not being impeded by the ‘system’. I believe that irrespective of what the system is, there will always be a minority who will try to abuse it and hence I would encourage organizations to work under the philosophy that it is better to lose the money or service involved from 2 people abusing the system, rather than making life difficult for the rest. I assure you, this will most certainly bring in more dividends and goodwill in the long run. I however concede that where safety and security is concerned, then the rules must rightly be very stringent. 
It is a sad irony that most organizations in trying to become more ‘efficient’ actually create systems that make it more inefficient. Bureaucracy not only impedes the efficiency and effectiveness of the organization, but at the same time de-motivates customers and employees alike, who will then leave or take their business elsewhere. In the current volatile and competitive business environment, organizations can ill afford losing customers and talented employees!
Thank you for taking the time to read this. I do hope all of you will have a great month ahead. Take care!