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Based on my of experience, the best way to encourage creativity is by reducing stress to my subordinates, giving them more free and flexible time to encourage growth. Because I believe that happy employees generate happy thoughts, happy thoughts produce focus and relax mind which in return can generate productivity and besides my company is output base policy. I value my designers more than my anything else and I always tell our clients that we have our own rules to follow if they not ok with it then they can look for another design firm and we can also look for another clients :). And personally i witness the output of such kind of regulations and company policies, we produce awesome designs and made our clients happy.
"You don't go to a fast food chain and order a full course fine dining" - RLD