- is a predetermined course of action which is established to provide a guide toward accepted business strategies and objectives. Policies identify the key activities and provide a general strategy to decision-makers on how to handle issues as they arise. This is accomplished by providing the reader with limits and a choice of alternatives that can be used to "guide" their decision making process as they attempt to overcome problems.
Characteristics of a Policy
1.Are general in nature
2.Identify company rules
3.Explain why they exist
4.Tells when the rule applies
5. Describes who it covers
6.Shows how the rule is enforcement
7.Describes the consequences
8.Are normally described using simple sentences & paragraphs
Features of Business Policy
-Policy should be specific/definite. If it is uncertain, then the implementation will become difficult.
-Policy must be unambiguous. It should avoid use of jargons and connotations. There should be no misunderstandings in following the policy.
-Policy must be uniform enough so that it can be efficiently followed by the subordinates.
-Policy should be appropriate to the present organizational goal.
-A policy should be simple and easily understood by all in the organization.
-In order to have a wide scope, a policy must be comprehensive.
-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.
-Policy should be stable else it will lead to indecisiveness and uncertainty in minds of those who look into it for guidance. Content
-outlining why the organization is issuing the policy, and what its desired effect or outcome of the policy should be.
2.Applicability and scope statement
-describing who the policy affects and which actions are impacted by the policy. The applicability and scope may expressly exclude certain people, organizations, or actions from the policy requirements. Applicability and scope is used to focus the policy on only the desired targets, and avoid unintended consequences where possible.
-which indicates when the policy comes into force. Retroactive policies are rare, but can be found.
-indicating which parties and organizations are responsible for carrying out individual policy statements. Many policies may require the establishment of some ongoing function or action. For example, a purchasing policy might specify that a purchasing office be created to process purchase requests, and that this office would be responsible for ongoing actions. Responsibilities often include identification of any relevant oversight and/or governance structures.
-indicating the specific regulations, requirements, or modifications to organizational behavior that the policy is creating. Policy statements are extremely diverse depending on the organization and intent, and may take almost any form.
Some policies may contain additional sections, including:
-indicating any reasons, history, and intent that led to the creation of the policy, which may be listed as motivating factors. This information is often quite valuable when policies must be evaluated or used in ambiguous situations, just as the intent of a law can be useful to a court when deciding a case that involves that law.
-providing clear and unambiguous definitions for terms and concepts found in the policy document.
Responsibilities of the Chief Executive
1.To work closely with the board of directors elaborating the major policies of the firm. 2.To work closely with the board of directors and his top managers defining the objectives...