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An easy way to improve productivity

In my experience the two biggest barriers to productivity improvement are red tape/regulations and bureaucratic business systems.


My argument is that it’s our response to red tape/regulations that actually causes the bureaucratic business systems and I want to outline a way where red tape/regulations can be addressed without a bureaucratic-systems response.


The evidence over the past 20 years’ and across multiple industry groups says this approach works.


Take for example a corporate credit card policy. Good governance dictates the need for a policy outlining the appropriate use of the credit card.


The traditional approach is to write a policy, procedure and control system to address the small percentage of credit card users who will break the rules, people I call “the 2%-ers”. And herein lies the problem. The 2%-ers will always break the rules and all pedantic, detailed rules do is actually get in the way of the rest of the credit card users who never break the rules.


Further when the problems caused by the 2%-ers happen, traditionally the organisation’s response is to introduce more policy and procedures that tighten financial control, increase reporting requirements, and further restrict access to and use of corporate credit cards.

We call this The 2% Effect and it actually causes three major problems.

1. It does not solve the problems caused by the 2%-er

2. The 2%-ers continue to break the rules and cause more problems

3. It makes it much harder for the good people to get on with their job.

Collectively this approach can be proved to significantly reduce productivity; in some cases by up to 20% or more.


If you want to overcome these well-known problems associated with The 2% Effect and still keep good governance, try the following:

1. Accept the 2%-ers will always exist.

2. Develop all youy policies around your code of conduct and values rather than very specific do’s and don’ts.

3. Create a separate policy setting to manage the 2%-ers when they do something wrong.


Base this policy on identifying and solving the management problem caused by the 2%-ers behaviour with a clear goal of “turn around or terminate”.


Why does this work and increase productivity? Because

1. It recognises the vast majority of people work exceptionally well with simple rules.

2. The 2%-ers are successfully managed quickly and efficiently when they break the rules.

3. The process of identifying and solving the management problem with a clear goal of “turn around or terminate” is consistently deemed “reasonable management taken in a reasonable way”. I.e. we have had public support from Fair Work Commissioners for this approach and have never lost in court.

4. With the 2%-ers managed, the good people positively embrace initiatives to further increase productivity.


There is an easy way to increase productivity; all you have to do is give it a go.

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