An article in Bloomberg Businessweek describes the makeup of French companies. "The country", it says "has 3.4 times as many companies with 49 employees as with 50". Why? Because the French labor code demands that companies with over 50 employees have "three worker councils, introduce profile sharing and submit restructuring plans to the councils if the company decides to fire workers for economic reasons".
Clearly, these rules were enacted to balance the need for small companies to have a relatively low legislative burden and the protection of workers. French entrepreneurs avoid the jump in legislative burden by starting new companies rather than expanding existing ones. Whether you're on the side of the legislators or the entrepreneurs, you can see that this wasn't what was intended.
That's why we encourage you not to have policies (see http://www.manager-tools.com/2010/01/how-stop-gossip). Policies cause people to work around them, or work up to the line, or to withhold goodwill because you are. They have unintended consequences. Whereas feedback about behavior which isn't productive moves you and your direct towards a more effective future.