NO RED TAPE

This company trusts its employees so much it has a “no limits” expense policy

Obsession
The Office
Obsession
The Office

Autonomy is arguably the most valuable company perk—especially for millennials, who tend to prioritize freedom to pursue purposeful work over the size of a paycheck.

Basecamp, creator of a project management tool by the same name, is ahead of the curve on this trend, providing its 52 employees with a vast number of freedoms—such as where and how they work. They also trust their employees with how to spend company money.

Basecamp’s “no red tape expense account” provides each US employee with an American Express credit card in their name to spend on travel, office supplies, and software. There is no pre-approval needed and there are no limits. The only requirement is spending “within reason,” says Basecamp co-founder Jason Fried. Employees file receipts after the fact and “if some line items look off we dig in and see what’s up,” Fried said. Since most employees are remote and don’t require much in terms of travel, yearly per-employee expenses typically add up to less than one thousand dollars.

Fried is known for his outspoken views on the workplace, which he synthesized into a popular TED talk (“Why work doesn’t happen at work“) and co-authored book, ReWork. The gist is that while technology has freed us in many ways, it’s also led to over-communication and co-dependency in the workplace, which stifles innovation and productivity. He’s not big on company policies and experiments with self organization. Employees typically report to each other instead of to managers. So far this has worked for Basecamp, largely because of one key ingredient: hiring the right people.

Netflix, which has a simple expense policy asking employees to act as if the company’s money were their own, has echoed the similar sentiments. In its now-legendary company manual, “Netflix Culture: Freedom & Responsibility,” the media and entertainment company espouses a culture of trust and freedom. It only hires A-players, pays them well, and expects them to do the right thing (with the simple directive, “Act in Netflix’s best interests”).

While many American workplaces have taken on a role akin to that of a parent (which encourages employees to act more like children), Netflix makes a point of hiring “fully formed adults.” It estimates that statistically close to 97% of A-players will do the right thing. Basecamp takes a similar approach, dealing with outliers on a case-by-case basis. (Fried says he’s had only instance of an employee spending beyond what was “reasonable.” He addressed it and the employee still works for the company.) Both companies have discovered that an “ask forgiveness, not permission” culture begets higher employee engagement.

Harvard Business School professor Francesca Gino came to the same conclusion in her 2016 report “Let your workers rebel.” She discovered that only 10% of 1,000 employees interviewed across a variety of industries said that their workplaces regularly encourage non-conformity, an essential ingredient to innovation. “Leaders have been overly-focused on designing efficient processes and getting employees to follow them,” Gino wrote, advising that leaders should instead encourage “constructive nonconformity: behavior that deviates from organizational norms, others’ actions, or common expectations, to the benefit of the organization.”

Instead of providing lavish perks that convey distrust, employers may be better off hiring top talent and de-regulating policies that encourage conformity.

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