Policy

A policy is a general statement that guides thinking or channels energies in a particular direction. It provides a basis for interpreting strategy, which is usually stated in broad terms. Policies are guides to managerial action and decision-making during the implementation of strategy.

For example, a company may have a recruitment policy or a pricing policy. Within the boundaries set by these policies, specific objectives are set and decisions are made. When an established policy exists, it becomes easier to resolve problems or issues. In essence, a policy is the general response to a particular problem or situation.

Policies exist at all levels and in all departments of an organisation. They range from major company policies to minor policies. Major company policies are meant for everyone to know — customers, clients, competitors, and the public. Minor policies, on the other hand, are applicable only to insiders (employees) and contain minute details vital to the organisation’s functioning.

However, there must be some basis for deciding what information to share with outsiders. Policies define the broad parameters within which a manager may function. The manager can use his or her discretion to interpret and apply a policy.

Under a Purchase Policy, decisions would be about manufacturing or buying. Should the company make or buy its requirements of packages, transport services, printing of stationery, water and power supply, and other items? How should vendors be selected for procuring supplies? How many suppliers should the company purchase from? What is the criteria for choosing suppliers? All these queries are addressed by the Purchase Policy.

Key points to remember:

• Policies are general statements, not specific instructions.
• They guide thinking and channelise energies in a particular direction. …