As already observed, policies are basically formulated by the two management or the general management for guiding, directing and facilitating the thinking and acting process of the various functional executives, to ensure the best contribution towards the corporate objectives and goals. Policy can either is formal or informal, which can be applied, implied or imposed.
It originates from the top management for the express purpose of guiding themselves and their subordinates to make use of their operational tools as effectively as possible. It also enables to set objectives for the whole organization in general and for the various functional areas in particular.
It is the corporate policy that creates a sense of mission and purpose in the executive value judgment, and in their managerial operations, because a direct and purposeful preparation to face the challenges, opportunities and threats of the day-to-day business activities, is provided by the business policy from time to time.
According to Edmund, the associates’ business policy is concerned with the top management function of:
- Shaping high-level, long-range corporate objectives and strategic that will be matched, to both company capacities and to external realities in a world marked by rapid technological, economical, social and political change.
- Casting up an effective well-matched set of general policies for the pursuit of that strategy.
- Guiding the organization in accordance with that strategy.
The mission of the top management is influenced by the policy at various levels and phases. They are:
- Perception of industry and economic trends that affect the prospects of the economy.
- Clearly understanding the needs, opportunities, threats, strengths, weakness and problems.
- Selecting the best opportunity or opportunities from an array of them, this can cope with the capacity of the company.
- Formulating of a strategy taking into account the opportunity and availability of resources.
- Development of operating plans for the pursuit of the chosen strategy and policies.
- Creation of organizational relationships, organizational climate, and an atmosphere for the proper implementation of policy.
- Evaluating the performance and the progress, and
- Periodic re-evaluation of positions in the light of developments within the organization and its environment.
To sum up it can observe that the overall performance of the company depends on the pragmatic policies, and the top management is mainly responsible for the policy formulation.
Business policies cover such a wide variety of subjects and are so broad-based that every possible matter that affects the interests of any one in the organization, the community and the government are included in them.
In fact, business policies cover all the functional areas of business- production, marketing, personnel and finance. These functional areas are generally covered by the term as “major policies” and “minor policies”.
Parameters of Policy:
There are certain parameters for business policy, they are:
- Policy should be identifiable and clear, either in words or in practice.
- Objectives of the policy should be fully identified and well defined.
- Policy should not be conflicting with other functional and divisional policies of the company.
- The policy should be capable enough to fully exploit the opportunities.
- Policy should be characterized by fairness and honesty with organizational philosophy, objectives, goals and strategy.
- Policy should be appropriate to the desired level of contribution to society.
- Policy should be acceptable to all concerned; i.e., it should be appropriate to the personal values and aspirations of the key managers.
- Policy should constitute a clear stimulus to organizational effort and commitment.
- Policy should always be realistic.
Features of Business Policy
An effective business policy must have following features-
- Specific: Policy should be specific/definite. If it is uncertain, then the implementation will become difficult.
- Clear: Policy must be unambiguous. It should avoid use of jargons and connotations. There should be no misunderstandings in following the policy.
- Reliable/Uniform: Policy must be uniform enough so that it can be efficiently followed by the subordinates.
- Appropriate: Policy should be appropriate to the present organizational goal.
- Simple: A policy should be simple and easily understood by all in the organization.
- Inclusive/Comprehensive: In order to have a wide scope, a policy must be comprehensive.
- Flexible: Policy should be flexible in operation/application. This does not imply that a policy should be altered always, but it should be wide in scope so as to ensure that the line managers use them in repetitive/routine scenarios.
- Stable: Policy should be stable else it will lead to indecisiveness and uncertainty in minds of those who look into it for guidance.
Difference between Policy and Strategy
The term “policy” should not be considered as synonymous to the term “strategy”. The difference between policy and strategy can be summarized as follows-
- Policy is a blueprint of the organizational activities which are repetitive/routine in nature. While strategy is concerned with those organizational decisions which have not been dealt/faced before in same form.
- Policy formulation is responsibility of top level management. While strategy formulation is basically done by middle level management.
- Policy deals with routine/daily activities essential for effective and efficient running of an organization. While strategy deals with strategic decisions.
- Policy is concerned with both thought and actions. While strategy is concerned mostly with action.
- A policy is what is, or what is not done. While a strategy is the methodology used to achieve a target as prescribed by a policy.
Importance of Business Policy Plans
Business policies are important and affect everything from legal liabilities to employee satisfaction and a positive public image. Policies make sure everyone is on the same page when it comes to expectations of certain things. A business might have policies pertinent to different aspects of the company. There may be safety policies, human resources hiring policies and anti-discrimination policies. There may also be policies that pertain to employees’ dress code, lunch schedules, time off and holidays. Other policies are relevant to the customer experience including greeting customers, phone call management and product delivery specifics.
All of these policies create a positive work environment. Employees who feel safe at work from injury or discrimination are happier and more productive. This is an important aspect of productivity that every business owner must consider. When employees have specific directives on dress code, scheduling and requesting time off, it levels the field and shields employees from favoritism. It sets the tone of the office dynamic and the foundation for teamwork. Simply organizing schedules requires working as a team, or at least considering others on the team.
When it comes to policies on operations and the customer experience, this is imperative to consistent operations and being able to troubleshoot potential problems. If the policy is to follow up after a product is delivered, and that doesn’t happen, managers can target that segment of the process to higher returns.
Establishing a Corporate Culture
When policies are clearly laid out in a written plan, expectations are set. This starts to establish a corporate culture of what to do, what not to do and how to act. Employees who are given expectations in a clearly outlined format, are better able to perform those duties and tend to veer less often from the “script” than employees who are employed in businesses that do not have clearly written policies.
Of course, policies mean nothing if management is not going to implement the policies. Some policies, such as safety and discrimination, have legal ramifications, and directly affect productivity and customer satisfaction. If a manager isn’t going to require that employees adhere to the policy of a six-month review after purchase, then the company might lose business and the manager will find it harder to start the enforcement policy.
For example, Google has a corporate culture that is very employee-driven, meaning that parents can adjust schedules around child-care hours; dog owners can bring Fido to work, and employees are allowed to spend part of their time on personal projects they’d like to develop, not only on what project was assigned. This is a lot of flexibility that’s outlined with very clear parameters by the company, so that employees know where the boundaries are. As a result, Google is a place where people like to work, and this policy has resulted in Google becoming a global leader in technology.
Employee Business Policy Training
Business leaders must train employees on business policy. Every employee should receive an employee handbook outlining all policies in one central document. Updates should be disseminated in writing as amendments to the handbook. Should the handbook become outdated, it should be revised so the newly implemented changes are integrated into the employee handbook.
Employers should also keep the handbook accessible via the cloud or online portals so employees are able to access it if there is a question. Additionally, by having it online, there is no excuse for any employee to say they didn’t know.
But this isn’t enough. Employers should hold training sessions to review key policies. Many businesses are holding inclusivity training, helping employees better understand what type of language or actions could be perceived as harassment or discrimination. Don’t assume employees know right from wrong. Train them to understand it. This helps keep the business and the employee out of legal trouble.
The same is true when it comes to operations. If you need employees to follow a specific script on the phone, the review it with them and role play. This holds true for personal interactions as well. Don’t just review sales processes. Take the time to review potential customer service issues so that employees are better trained to address potential problems during the day. The more an employee can deal with customer problems, the less is redirected up the chain of command to leadership. That frees up business leaders to focus on growth and development strategies.
Violations of Business Policy
It is important to be consistent with any business policy. Even something as simple as “every off-site worker will have the shirt tucked in” requires management. As already discussed, you can’t pick and choose when to implement a policy. This creates confusion and animosity among employees who don’t know what version of the boss will be coming in on any given day.
If a business policy is implemented and consistently managed, then you need to hold employees accountable for violations. There should be a process or protocol for management to follow that is appropriate for the action. This helps you document what is going on with employees and determine if anyone employee needs to be released.
For example, if the policy is for all men to wear a tie and for all women to wear pantyhose, the process for violation might be a verbal warning followed by a write-up in the employee’s file. Repeat violations would result in a further disciplinary action such as probation or even suspension. On the other hand, if the policy is that a hard hat must be worn on site at all times, a violation becomes a safety issue and requires immediate action, including being written up and removed from the site.
Policies revolving around legalities such as harassment and discrimination should require involving legal experts, law enforcement if necessary and performing an investigation to determine the truth. Individuals may be separated and job duties may be adjusted pending the investigation but firing rarely is appropriate prior to an investigation’s conclusion.
Importance of Your Business Policy
The policies and methods of implementation you choose as a business leader to adopt will directly affect how your employees perform. Some business leaders don’t want to have everything in a rigid format while others like to implement specific processes at every stage of the company operational process. This is a business owner’s decision.
Keep in mind that some policies and procedures are designed to prevent legal issues while others are designed to build a company image, experience and culture. A business leader should be aware of how policies are affecting his team. If a dress code is becoming a problem for the majority of employees, a new policy such as a casual Friday policy could change the office dynamic in a positive direction. If no cell phone policy exists but employees are spending hours on personal calls, texts and social media then a new policy with training should be implemented and managed to improve productivity. Managers should regularly evaluate company policies and their effectiveness to the business’ success.
Building Business Policies
Establishing policies generally starts with a business owner or his initial leadership team writing an employee handbook and business plan with mission and vision. The team must consider what are standard policies regulated by federal and state regulations. Some regulated policies include privacy policies, anti-discrimination rules, overtime and holiday pay and even healthcare programs.
Most businesses will find these regulated rules are similar among many companies though some companies decided to go beyond the required policies. Then there are the operations and cultural policies. These include the image that leaders want the company to have and the internal corporate culture they are working to establish. Everything from dress code to smoking at work might be defined by a business policy.
Once the main policies are created, business leaders must keep a pulse on how employees and customers respond to the policies. If a policy is having a negative impact on the overall productivity of the company, feedback must be sought and adjustments considered. Every business leader must have this as his own policy for success. Businesses are fluid entities that are always changing. Being too rigid can result in negative performance and negative results. Troubleshooting production problems sometimes start with troubleshooting business policies.