Freedom within a Framework

I’ve been giving some thought as to what structure strikes the best balance between giving everyone the autonomy they need to make good decisions while at the same time shielding the legal department as a whole from the mistakes they may make.

One approach that works well is called “freedom within a framework”. The basic idea is that you empower everyone in your department to operate autonomously - but within well-defined boundaries, beyond which there is no authority to “go it alone”.

The boundaries are: governance, culture, strategy and materiality.

Let’s consider each boundary in turn.

Governance: This one is easy. Everyone is subject to corporate governance, including company and department policies, guidelines and other norms. No one is allowed to act outside of these in carrying out his/her work. Enough said.

Culture: Culture consists of the shared principles and practices that influence how people feel, think, and behave within your department. In effect, these are the core values and beliefs that members of the team share and that drive your visible traits and behaviors. The culture boundary requires that everyone act consistently with the core values and beliefs.

If you allow people to consistently operate outside of the accepted cultural norms, two very negative things will happen. First, your culture will atrophy. If people are allowed to regularly transgress the cultural norms, that behavior will destroy your work environment, resulting in a flight of talent and/or poor performance.

Second and perhaps most importantly, bad decision-making will emerge. A well-established culture will ensure that everyone is aware of and has decision-making authority over actions that might impact the department’s integrity, even where there may be no specific policy or rule that mandates escalation. These things will get raised because it is the right thing to do from the culture perspective, not (merely) because some policy mandates it. You allow cultural norms to be violated at your peril.

Two final points should be noted about the culture boundary. First, putting it in place requires that you clearly articulate and reinforce your culture. You must identify cultural norms and publicize them.

Second, while there may be differences between the legal team’s sub-culture and the company's broader culture, the two must be consistent. It is essential that your legal team’s culture be aligned with the broader culture. As Abraham Lincoln famously said, “a house divided against itself cannot stand.”

 Strategy: The third boundary is your strategy. It is critical that you have a strategic framework, consisting of a vision, mission and priorities that allow you to determine where you are heading and how you will get there. That framework is your core tool for prioritizing your department’s workflow and establishing your priorities. If people disregard the strategic framework and prioritize work and tasks as each sees fit, without reference to any bigger picture, they will spend precious time and energy on matters that may not be core priorities.

In addition, you will find that without any discipline around where you are trying to take your team, you will head toward nowhere or perhaps toward a completely different destination from the one you intended to aim for. In a world of scarce resources, this is not something you can allow.

Materiality: Finally, you need to instill materiality boundaries for people at different levels to ensure that you strike that right balance between giving people the freedom to take reasonable risks and allowing them so much latitude that their decisions risk blowing up the company.

The parameters you have in place may vary by seniority. For example, you might give more senior people the freedom to settle certain types of litigation matters without specific authorization, up to a fairly significant amount. By contrast, relatively junior members of your team may only be permitted to independently settle certain matters for a relatively small amount without senior approval.

In determining what materiality levels you want to set, you will in any case want to ensure you as the leader are made aware of certain sensitive matters, irrespective of formal parameters. For example, you should be made aware of any decisions taken in respect of sensitive ethical violations, disputes involving product liability or quality, etc. To a certain extent, you will need to rely on culture to drive this rather than formal materiality thresholds, but both play a role. In the words of poet Anthony Liccione, “everyone needs a house to live in, but a supportive family is what builds a home.”

By putting “freedom within a framework” in place, you will give your team flexibility, freedom and autonomy to drive decisions at appropriate levels, but in a manner that is consistent with your department’s strategic priorities and the risk thresholds that your company can tolerate.