Cut the Paperwork

Tom Peters

Store manager, loading-dock supervisor, and division general manager share the same lament. Too much paperwork gets in the way of getting on with the job or serving the customer better. Surprisingly, the usual paper inundation is not as inevitable as most people suspect.

McDonald’s Corp. does $10 billion in business each year (including its franchisees’ sales). Yet the company’s high-volume agreements with its suppliers generally are sealed with handshakes; rarely are they put to paper.

One Mars, Inc., subsidiary’s labor contract was due for renewal recently. A management negotiator set an objective about which most of his peers were highly skeptical—to replace the current inch-thick document with five pages or less, focusing on a few simple principles. He was successful, and as a result of his efforts, grievances have been cut to a trickle. There are no nit-picking details left for either side to debate.

Rene McPherson was chairman of the $3.7 billion (sales) Dana Corporation during the company’s remarkable turnaround in the 1970s. He believed that cutting bureaucracy was the key to increased productivity, by freeing up both management and non-management. He reduced layers on the organization chart from over a dozen to just five, and slashed central staff by 80 percent. He also threw out all 22 inches of policy manuals and replaced them with a one-page statement of corporate philosophy.

Excessive regulation is successfully challenged even in the Army. Walter Ulmer, a three-star general who created the Army’s premier combat-ready group, reduced the command’s policy manuals from several feet to fewer than two inches.

Willard Korn heads Frito-Lay, Inc., the successful $3 billion PepsiCo snack food subsidiary. There are no files in Korn’s office. He collects vital statistics on factory and sales district productivity, and boils it all down to just two small index cards. Each line of the corporate policy and procedure manuals doubtless makes sense. Yet as the statements are relentlessly elaborated, their sheer bulk becomes the prime source of organizational paralysis.

Lawyers will state that McDonald’s is at some risk with its handshake agreements. And management and union administrators will shudder at Mars’ truncated labor agreement. But systems, procedures, policies, agreements, and contracts tend to take on a life of their own. Doing the job with quality and advancing the supplier-buyer or union-management relationship are then relegated to secondary status. Interpreting an agreement and policing its finest subpoints become the consuming passion of a phalanx of staff administrators.

Unfortunately, advice is easy to offer but difficult to execute. One colleague who runs 25 successful Burger King franchises vowed that he would cut his store managers’ policy manuals by two-thirds each year. So far, he’s completed two rounds. Since each line of the manual is rational, going through it to weed out the “stupid stuff” is of little help. Thus, arbitrary quantitative reduction targets, religiously adhered to, are the only sound formulas to achieve simplicity.

A manager designed an engaging ritual to involve all his people in cutting irritating rules and regulations: “I bought a bright red mailbox and placed it in the division hallway. I commissioned a cartoon around the theme, ‘Send back the Mickey Mouse.'” He acts on the suggestions within a week, and awards a porcelain Mickey Mouse statue each month to the person who identifies the biggest nuisance.

Hewlett-Packard Co., now $6 billion strong, keeps written procedures to a bare minimum. Instead, HP people formally collect stories about how the best workers—at every task, minor or major—do their job. The collected wisdom, called “best practices,” serves as a useful guideline, not a formal document to be slavishly adhered to.

My suggestions:

Announce your own “stamp out the demeaning regulations” operation. Involve everyone and make it fun.
Cut every procedure manual in half over the next 12 months. Then do the same thing again in the following year.
At the next opportunity, have your lawyers or contract departments experiment with handshake agreements or contracts of no more than two pages.
As a manager,”model” nonbureaucratic behavior. For instance, demand that any reports sent to you be reduced to five pages or less.
Starting today, do not send memos to anyone for any reason. Use the phone or personal contact. If this sounds unrealistic, consider Schlumberger, the $6 billion oil field services company that employs 75,000 and is rated the most profitable company in the world. Its former chairman, the late Jean Riboud, reportedly never wrote a memo.