Everyday, companies around the country fall into a trap. Instead of setting policies and procedures that reflect a high level of trust in their employees, they settle for something less. Policies and procedures are built around the minority of employees who cannot be trusted, instead of being built around the majority of employees who can. This is the phenomenon of the lowest common denominator.

All companies at some point fall prey to the lowest common denominator trap: A handful of employees dress inappropriately, so a strict dress code is put in place. One employee takes advantage of a liberal paid time off policy, so the policy is made more restrictive. One incident of a soda being spilled on a computer keyboard, and now all food and beverages are banned from all workstations. One person sends an inappropriate e-mail to a group of customers, and now no one is allowed to send e-mails to customers without approval from the communications department or the CEO first.

Companies fall into the trap of the lowest common denominator because it is the easy way out. Making policies more strict and procedures less flexible makes the people in charge feel better because something concrete has been done and they’ve freed themselves from any potential blame in future incidents. This is a good thing when you are talking about something like preventing another Enron. Most of the time though, the issues are not on the scale of Enron, and the impact of catering to the lowest common denominator has a significantly more negative effect than if nothing were done at all.

Why is the lowest common denominator trap bad for companies? Because it kills everything vital to keeping a company alive: employee engagement, empowerment, creativity, innovation, motivation and happiness.

If employees know that a failure is likely to lead to reprimand and a more restrictive policy, then they will not take any risks. If an employee knows that being creative comes with a high likelihood of losing all opportunities to be creative in the future, then innovation will not even be attempted. If a company forces its best employees to follow policies and procedures geared toward its worst employees, the great employees will either come down to the level of policy that has been created or simply leave.

Companies who avoid the lowest common denominator trap end up on lists of the best companies to work for and are some of the most successful companies in the world. Google actively encourages its engineers to spend 20 percent of their time experimenting with company-related projects that intrigue them, even if they are outside of their normal scope of work. Gmail, Google News, and a number of other innovations at Google were born out of that “20 percent time”.

Zappos.com, another company on Fortune’s “100 Best Companies to Work For 2009” list, empowers their customer service representatives by allowing them to manage calls from customers without scripts or maximum call times. The representatives can also make decisions without running it by their supervisors first about upgrading customers to overnight shipping, matching a competitors’ price, or even sending flowers to a customer who just lost a loved one. The amazing level of employee empowerment at Zappos.com does make a difference. With Zappos.com recently reaching $1 billion in annual sales (and having seen it for myself recently at Zappos.com headquarters in Las Vegas), it is clear how trusting employees creates a more engaged, happy, and effective workforce.

At my own organization, the level of trust we have in our employees dramatically increased a year ago when we empowered them to have control of their time in a Results-Only Work Environment. Giving employees the opportunity to work wherever they want, whenever they want, as long as the work gets done, was a leap of faith. People outside of our organization were skeptical and assumed our trust would be taken advantage of. Not only have our employees proven the skeptics wrong, but they have become more engaged, productive, innovative and happy as a result.

The next time you find yourself teetering on the edge, ready to fall into the lowest common denominator trap, stop. Instead of lowering the bar, raise it. Treat employees as trustworthy, hardworking, intelligent human beings and they will more often then not live up to your expectations. Those who don’t are probably not the type of people you want working at your company anyway.

Jessica H. Lawrence is the CEO of Girl Scouts of San Gorgonio Council, a non-profit serving 15,000 girls and 5,000 adult volunteers in Riverside and San Bernardino counties. She can be reached at jlawrence@gssgc.org.