The 3 Hidden Costs of a Compliance Culture

by Libby Wagner on October 21, 2011


Commitment Versus Compliance

Sometimes, as leaders, when we take a look at the kind of discipline and commitment it takes to build and sustain a “Profit Culture,” we just think it’s a lot of work, a lot of effort, and it seems like it will require Herculean effort to pull it off.

Where are the good ‘ole days when bosses were bosses and everyone else was a pipsqueak?

Though fear is a motivator, it’s not the kind that will influence performance in the way we want for the long term.

Though we don’t want “no stress,” because people then become apathetic and disengaged, we don’t want “extreme stress” either because that causes people to freeze and take cover.

We do want the tension created, the eustress, to generate enough challenge that people will take pride in their work, feel compelled to push themselves in productive ways, but not push them over the edge.

Yet, often we choose short-term compliance over long-term commitment. Why?

Why We Often Chose Compliance, Despite Its Flaws

People follow for one of two reasons— either they have to or they want to be followers.

Establishing one predominant leadership practice over another means that we may get a Compliance Culture, when people are following because they have to, or, hopefully, we get a Commitment Culture, when they follow because they want to.

What Commitment Looks Like

How would you know if you had a Commitment Culture? Here are some indicators:

  • Low turnover
  • High levels of innovation and creativity
  • Resilience and sustainability in tough times
  • Good levels of stress, i.e. eustress
  • Promotion from within the ranks

With all of the possible, good consequences of a Commitment Culture, why would any leader choose a Compliance Culture instead?

Beware the Hidden Costs of Compliance Culture

In my experience, organizations and teams choose a Compliance Culture by default—they don’t really want one, they just want things to happen quickly, with little fuss, so they can move on to the next thing. This is unfortunate because a Compliance Culture contains the following hidden costs:

Hidden Cost #1: It’s inefficient—it takes more time to lead this way.
This often feels counter-intuitive to many leaders, but a quick order or directive actually becomes inefficient over time as a leadership and influencing practice. This is because a Compliance Culture is a culture of waiters . . . not carrying trays of Bellinis for brunch, sadly, but rather people who are waiting around for us to tell them what to do.

Hidden Cost #2: You stifle creativity, innovation and autonomy.
In addition to creating a culture of waiters who don’t create their own initiatives or act of their own volition, one of the worst things that a Compliance Culture can do is stifle creativity, innovation, and autonomy. Since many of the most successful companies and business leaders posit the assertion “innovate or die,” this is crucial in today’s marketplace.

Hidden Cost #3: Lack of Loyalty
It may seem strange to imagine that the overuse of position power, or a compliance culture, could impact employee loyalty, but it does. And without loyalty, you’re at greater risk for high levels of employee turnover— which can be very costly. Even if you think you can afford this, if you’re trying to transform your firm into a Profit Culture, you can’t ignore the impact this can have on the bottom line. No to mention the hit you’ll take in terms of morale.

In summary, a Commitment Culture is what you want today, it’s the option that will pay positive dividends. On the flip side, a Compliance Culture comes with serious hidden costs. Avoid this more traditional option so your business can move full-speed ahead.

Image courtesy of opensourceway via Foter.com.

Libby Wagner, Libby Wagner & Associates, is one of only a handful of published poets regularly welcomed into the boardroom. Author of the new book The Influencing Option: The Art of Building a Profit Culture in Business (Global Professional Publishing), she has been labeled The Influencing Coach™ by her clients. Her expertise in leadership, strategy, management, and executive team development helps organizations create environments where clarity and increased trust lead to unrivaled results, shaping such Fortune 500 cultures as Boeing, Nike, Philips and Costco. Find out more at http://www.libbywagner.com/

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