Policies: A policy is a general guideline for decision making. It sets up the boundaries around the decisions. Policies deal with “how to do” the work. These provide a framework within which decisions are to be made by the management. According to George R. Terry: “Policy is a verbal , written or implied overall guide, setting up boundaries that supply the general limits and direction in which managerial action will take place”. Eg. Personnel policy, recruitment policy, price policy, advertisement policy. Say, the personnel policy of a company is to recruit through the employment exchanges.
Objectives and policies both guide thinking and action. Objectives are the end-points of planning while policies channelise decisions to these end points.
Procedures: Policies are carried out by more detailed guidelines called “procedures”. A procedure is a detailed set of instructions for performing a sequence of actions involved in doing a certain piece of work.
Difference between policies and procedures:
1. Policies are general guidelines to both thinking and action for people at higher level. Procedures are general guides to action for people at lower level. 2. Policies fulfil objectives. Procedures show the way of implementing policies. 3. Policies are generally broad and allow some discretion. Procedures are specific and lay down the sequence of definite acts.
Methods: A method is a prescribed way in which one specific step of the procedure has to be performed. For performing a particular step, there could be multiple methods. The organisation must select a method which is efficient and effective.
Rules: Rules are detailed and recorded instructions that a specific action must or must not be performed in a given situation. Eg.1. In case of a fire-alarm, all the employees have to vacate the building immediately. Eg.2. The personal computer needs to be switched off before the employees leave the office premises.
Single Use Plans:
Programmes: Programmes are precise plans or definite steps in a proper sequence which need to be taken to discharge a given task. Eg. A bank can have a programme of opening 5 new branches.
The essential ingredients of a programme are “ time phasing” and “budgeting”. This means that specific dates should be laid down for the completion of each successive phase of the programme. In addition , a provision should be made in the budget for financing the Programme.
According to the Institute of Costs and Works Accountants , London, a budget is “a financial and/or quantitative statement prepared prior to a definite period of time of the policy to be pursued during that period, for the purpose of obtaining a given objective”. Hence they are:
- Future statements
- Result oriented
- In numerical terms.
Eg. Sales budget, production budget, cash budget etc.
Since the budgets are expressed in numerical terms, they help in measuring performance and taking controlling action.
Steps in Planning Process:
1. Establishing Verifiable Goals or Set of Goals to be achieved: The first important step in the planning process is to set up the objectives or goals of the organisation. The type of goals depends on the philosophy of the organisation, values of its management and potential ability of the organisation.
2. Establishing Planning Premises
The second step is to establish a planning premise ie. Certain assumptions about the future on the basis of which the plan will be formulated. Planning premise provide certain pertinent facts such as population trends, the general economic conditions, production costs and prices, probable competitive behaviour etc.
The planning premises can be
• Internal and external
• Tangible and intangible
• Controllable and uncontrollable
Premises may exist inside the company or outside. Internal premises include sales forecast, capital investment on...