Organizations do not operate solely through formal regulations and organizational charts. Who receives information first, whose opinions are accepted, and who is assigned important work are often determined by rules that are never written down. To build a fair and capable organization, leaders must redesign the hidden systems that allocate opportunities before attempting to change employees’ attitudes.

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Every organization has formal rules. There are standards for recruitment and procedures for promotion, divisions of responsibility and decision-making systems, as well as regulations governing evaluation and compensation. Judging by an organizational chart alone, it seems clear who reports to whom and which department is responsible for what. In practice, however, the way work actually gets done often differs significantly from what is written in official documents.

At some meetings, everyone appears to have an equal opportunity to speak, but certain people’s opinions carry greater weight. An organization may announce an open application process for the leadership of an important project, even though the likely candidates have already been informally identified. The qualifications for a new position may be publicly available, but employees are not told whom they should approach first, which experiences they should emphasize, or when they should express their interest in the role.

These customs, which shape people’s behavior and choices outside formal regulations, can be described as “unwritten rules.” Typical examples include advice such as, “You need to align your views with key stakeholders before the meeting,” “Producing results is not enough; you must actively communicate them,” and “If you want a new opportunity, do not wait for your manager to offer it.” To employees who are familiar with organizational life, such advice may sound like common sense. To others, it is closer to a secret they have no way of discovering.

In February 2026, Wharton professor Judd Kessler drew attention to the hidden markets and unwritten rules operating within organizations. In ordinary markets with clearly stated prices, people purchase goods and services with money. However, valuable organizational resources?such as desirable projects, promotion opportunities, meetings with senior leaders, and access to training programs?are not allocated by price alone. Who receives a limited opportunity is determined by a complex combination of rules involving applications, recommendations, reputation, relationships, and timing.

The problem is that only some people know these rules. Employees who work strictly according to formal policies and those who understand how the organization actually operates do not begin from the same starting line. Even when their abilities and performance are equal, people who understand the unwritten rules are likely to secure more opportunities. This is why the actual distribution of opportunities can remain unfair even when an organization appears to have fair systems on the surface.

Within an organization, information is not merely knowledge. It is a kind of admission ticket to opportunity. Employees who learn early that a new business initiative is being prepared can develop relevant capabilities in advance. Those who know that a position will soon become vacant can express their interest at the right time. Employees who understand what senior management values can organize and present the same results in ways that are more likely to receive recognition.

Official information is generally delivered to everyone at the same time. Positions are posted on internal bulletin boards, policy changes are announced by email, and business priorities are shared at scheduled meetings. More valuable information, however, often begins circulating before the official announcement. The outlines of an opportunity may first emerge through hallway conversations, brief discussions after meetings, lunches with managers, or messages exchanged among particular employees.

People close to these information networks can respond to organizational changes one step ahead of everyone else. By contrast, remote workers, new employees, temporary workers, and employees unable to attend informal gatherings because of childcare or other caregiving responsibilities may receive important information late or never encounter it at all. Life circumstances unrelated to an employee’s capabilities can therefore create disparities in access to opportunity.

Information gaps widen over time. A person who receives a small piece of information early may join an important project, meet new people through that project, and gain access to more valuable information. Someone excluded from the first opportunity does not accumulate the necessary experience and may then be judged insufficiently prepared for the next one. What initially appears to be a minor difference in access to information can grow into a career-long disparity.

Managers often say, “If they were interested, they should have approached me first.” But that expectation is not fair if employees were never told what opportunities existed, whom they should approach, or how prepared they needed to be before expressing interest. Initiative is an important capability, but whether people are given equal access to the information needed to act proactively is a separate question.

The outcome remains unequal even when the people with information did not intentionally exclude anyone. Inequality does not always originate in malicious intent. People naturally speak first with those they know, ask familiar colleagues for opinions, and assign new work to employees they already trust. As these ordinary choices are repeated, opportunities become concentrated among particular groups. Unwritten rules are reinforced through precisely these kinds of everyday decisions.

Organizations often claim that they provide opportunities according to ability and performance. In reality, however, factors other than ability exert considerable influence when opportunities are allocated. Decisions are affected by who displays confidence, who speaks frequently with managers, who is fluent in the organization’s preferred language, and who presents their achievements persuasively.

Someone who clearly explains their contribution during meetings may receive a higher evaluation than a person who quietly produces results. An employee who uses language familiar to senior executives may appear more persuasive than someone who offers a more accurate solution. A person who expresses interest early and secures recommendations from others may emerge as a candidate before another employee who possesses stronger capabilities for the role.

Not all these differences can be dismissed as unfair. Communication, relationship building, and self-presentation are also necessary organizational capabilities. The problem arises when an organization does not clearly disclose what it is evaluating and instead judges those capabilities through methods understood by only a small number of people. If the organization claims to evaluate job performance but actually rewards informal networks and self-promotion, a contradiction emerges between the official standards and the real ones.

People who understand the unwritten rules quickly identify gaps in the evaluation system. They know when to communicate their achievements, at which meetings they need to speak, and whom they should approach for assistance. Employees who are new to the organization or lack access to established networks may assume that producing strong results is enough. Even when the two groups possess similar abilities, their careers are likely to progress at different speeds.

Under this structure, people who received opportunities in the past gain an advantage in securing future opportunities. Employees assigned to major projects accumulate important experience, become known to senior management, and acquire the qualifications required for their next role. Those who have not yet received such opportunities are excluded again because they lack experience. A circular argument develops: Employees need opportunities to gain experience, but the organization refuses to provide opportunities until they already possess that experience.

Organizations can easily misinterpret this process as evidence of individual differences in ability. Current performance, however, reflects the opportunities people received in the past. If leaders compare only present results without examining the historical distribution of opportunities, they will repeatedly select people who were already in advantageous positions.

The greatest problem with implicit rules is that they quietly reproduce inequality. Removing discriminatory language from formal policies does not guarantee that opportunities will be distributed fairly. Discrimination can remain embedded in customs and relationships rather than explicit regulations.

For example, if important decisions are made not during formal meetings but in informal conversations before or after them, the people who can naturally participate in those conversations gain an advantage. If relationships are formed through late-night dinners or weekend gatherings, employees with caregiving responsibilities are placed at a disadvantage. If more work and information are given to people frequently encountered in the office, remote workers may struggle to maintain their visibility.

Members of the organizational majority may not even recognize these patterns as rules. They assume that everyone knows the practices they learned and used naturally. Advice received from senior colleagues, information obtained by chance at a gathering, and behavioral methods learned through relationships with managers are interpreted as personal intuition or ability. Those without access to the same information are then judged as people who “do not understand the organization,” “lack initiative,” or “do not demonstrate leadership.”

Leadership potential is also affected by unwritten rules. When an organization associates leadership with a particular speaking style, personality, or way of working, it overlooks different types of talent. A person who speaks loudly and offers opinions immediately may appear to be a capable leader, but someone who listens carefully and makes decisions after thoughtful consideration may also become an excellent leader. If only people who behave like existing leaders are judged to have high potential, the composition of the organization’s leadership will remain largely unchanged.

This inequality is not merely an ethical concern. It also damages organizational performance. When opportunities circulate within a limited network, new perspectives and capabilities remain unused. Employees begin to believe that relationships matter more than results and lose the motivation to apply for challenging assignments. When the belief spreads that hard work will not lead to opportunity, engagement and trust weaken.

The departure of capable employees is particularly difficult to interpret accurately. Employees may officially cite personal reasons or better compensation when they resign, but repeated experiences of exclusion may lie behind their decision. The organization may regard the resignation as one individual’s choice, even though it may actually be a warning from a malfunctioning opportunity-allocation system.

To correct unwritten rules, organizations must first make them visible. Leaders should not conclude that their organizations are fair based solely on their own experiences. A procedure that feels natural to a manager may operate as an opaque barrier to other employees.

The first step is to identify the valuable opportunities available within the organization. Leaders should specifically examine career-shaping opportunities such as major projects, meetings with clients, training programs, overseas assignments, presentations to senior management, mentoring, and inclusion in promotion candidate pools. They should then investigate who received these opportunities during recent years and how those individuals were selected.

Reviewing participation numbers alone is not sufficient. Leaders must examine who made the recommendations, how information was communicated, whether the opportunity was publicly announced, and whether the selection standards were disclosed in advance. Fairness must be secured not only in outcomes but also throughout the process.

The second step is to ask employees about their actual experiences. Abstract questions such as “Is our organization fair?” are less useful than specific questions such as, “When did you learn that a new project was beginning?”, “Do you know how the person responsible for the project was selected?”, and “Whom should you approach if you are interested in a particular role?” Specific questions reveal where unwritten rules are operating.

The third step is to formalize implicit standards wherever possible. Not every behavior needs to be turned into a regulation, but opportunities with a major influence on employees’ careers should be governed by transparent criteria and procedures. Organizations should publicly invite employees to participate in projects, disclose eligibility and evaluation criteria, and provide unsuccessful applicants with feedback that helps them prepare for the next opportunity.

The criteria for identifying “ready talent,” which often exist only in a manager’s mind, must also be translated into clear language. Evaluations such as “lacks leadership” or “is not ready yet” are too vague. Managers should explain what behaviors are required in particular situations, which capabilities are currently lacking, and what opportunities will be provided for the employee to demonstrate those capabilities.

The fourth step is to record and review the distribution of opportunities. Organizations carefully manage budgets and revenue, yet often fail to systematically track who receives developmental opportunities. Career-defining assignments and training are resources as valuable as compensation. Leaders need to determine whether limited opportunities are repeatedly concentrated among the same people.

The fifth step is to create channels through which employees can raise concerns. People who benefit from unwritten rules may find it difficult to recognize flaws in the current system. Employees who have been excluded must be able to describe their experiences safely. If employees who identify problems are dismissed as habitual complainers, the organization will cut itself off from valuable information.

It is unrealistic to eliminate every unwritten rule. Organizations operate through human relationships and judgment, and not every situation can be governed by a written policy. Informal conversations and relationships of trust also play positive roles by increasing organizational speed and flexibility.

The objective is not to eliminate informality but to prevent it from monopolizing access to opportunity. People should remain free to form relationships, but important information should also be redistributed through official channels. Managers may recommend individuals they consider suitable, but other employees must also be given an opportunity to apply. Even when circumstances require rapid decisions, organizations should later review the allocation process and determine whether they overlooked any capable employees.

The role of leadership must also change. If leaders in the past were selectors who recognized good people and gave them opportunities, leaders of the future must become designers who build structures that allow everyone to access opportunities. It is more important to make the decision-making process understandable to others than to simply believe that one’s own judgment is fair.

Managers should be cautious about considering only employees with whom they speak frequently. Before selecting a project leader, they should review a broad candidate pool and consider not only existing experience but also capabilities that have not yet been used. When an employee lacks experience, the manager should not stop at identifying the deficiency. The employee should be given smaller responsibilities through which the required experience can be developed.

Employees also need to change their behavior. Rather than using unwritten rules privately to secure a competitive advantage, experienced employees should share information with newer colleagues and explain transparently how they obtained particular opportunities. Organizational fairness cannot be completed through systems alone. It must be supported by everyday behavior that does not allow information to become privately controlled.

Transparency does not guarantee identical outcomes for everyone. It provides equal access to standards and opportunities and allows people to understand why outcomes differ. Not everyone can participate in every project or receive a promotion. At a minimum, however, everyone should be able to know which opportunities exist, what they need to prepare, and why they were not selected.

Unwritten rules are not merely a feature of organizational culture. They are part of the organization’s infrastructure. The routes through which information travels, the ways relationships are formed, and the procedures by which opportunities are distributed combine to shape employee behavior. If these structures remain unchanged while leaders continue to emphasize fairness and diversity, the distance between slogans and reality will only grow.

When an organization discovers, discloses, and redesigns its hidden rules, fairness moves from a declaration to an operating principle. More employees gain opportunities to demonstrate their capabilities, while the organization gains access to talent and ideas that previously remained outside established networks. Making invisible rules visible is both a way to distribute opportunity more fairly and a management strategy for expanding an organization’s potential.

Knowledge at Wharton, February 2026, Kessler, J. B., Your Organization’s Unwritten Rules and How to Fix Them