All businesses should have a core set of principles, and policies should follow after that. It’s easy to conflate the two, and it can be dangerous if you do.
I recently heard Adam Grant share the story of Robert Reffkin of Compass, and how this kind of overlap between principles and policies caused some problems there. Compass is a real estate brokerage, and Reffkin wanted to set it apart by not paying commission to his staff and just paying a flat salary. Some time down the road, Reffkin had to change the policy and lost a lot of employees because of it.
As Grant put it, Reffkin’s principle was to value his agents more highly than others and do it in a fair way, which was noble, but people only heard about the “no commission” policy and were upset when Reffkin “changed his principles”.
Treating clients right
After hearing it explained that way, I realized that this is something I flirt pretty close to the edge with and need to be careful of doing. At GreenMellen, one of our core values is to always do the right thing for our clients, even if it comes at a cost to us. That’s the principle.
The policies around that are things like not making our clients sign monthly contracts and not putting our link in the footer of client sites. I think it’s important to make that distinction between principles and policies, because those policies could potentially change over time.
For example, as we’re getting into Growth-Driven Design with our agency, having clients sign an annual contract might be required to help us make that situation work (where we lose money for the first few months, so we need the guaranteed revenue in later months to catch back up). For now we’re still structuring things in a way where a contract isn’t required, and I expect we’ll keep it that way, but I want to keep our options open. Even if we need to start requiring long-term contracts for some deals (the new policy), we can still always work inside of that to do what’s best for our clients (the existing principle).
Grant unpacked this a lot further in a recent interview with Guy Raz on the How I Built This podcast, which I strongly encourage you to listen to here.