The Fallacy of "Best Practices"
Creating a higher performing organization is not like ordering a Chinese banquet – pick two items from Column A, one from B, plus desert and drink.
One of the most overlooked and unmentioned principles is that a chosen best practice does not work in isolation. To be effective it must also be part of a coherent system – and aligned with other aspects of the organization and the unique culture, context and strategy of the company.
Think of Netflix and all the attention to its HR practices.* Two of the more discussed policies include allowing employees “unlimited time off” and “firing good performing people” if/when a potentially better option seems available. These practices fit a fast growth, tech company with generous stock options and compensation practices; and where everyone who signs up knows the deal. Try to implement these selectively in another company or industry and the results would likely be quite different.
Compensation programs seem to be one of the areas that get the most “best practice” attention. Another example is Expeditors International, a leading performer in the global logistics industry. They have a well-documented program (from the very founding of their company) of paying their district managers a relatively low base salary plus a generous profit-sharing formula. This has created highly motivated and loyal managers. But the success of this practice has to be seen as part of the overall vision, values, strategy, structure of Expeditors – where Expeditors takes a consistently long-term view, carefully picks its markets, and invests heavily in technology and training. Isolating success to any one practice would be a poor bet.
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Thinking about best practices is great for expanding your thinking about organization levers to pull. But remember the true power comes from organizational alignment. Make sure all the elements fit together and whole will be greater than the sum of the parts.
*The presentation on Netflix’s culture, philosophy and practices have been viewed over 20 million times. And written up in Harvard Business Review.
Note: In searching the phrase “fallacy of best practices” I found an article by Don Pepper on LinkedIn. He makes a different and equally valid point – “survivor bias.” Beware that two organizations could have done the same thing, with one surviving and the other failing. To quote Don, “Studying best practices in order to decide what your business should do is a decision-making method that suffers from what experts would call "survivorship bias." Only successes are in your data set, rather than successes and failures, so your data set is not objective.”