A policy is a broad statement that guides managerial actions, thinking, and decisions.

A policy describes how a manager should attempt to handle routine management task.

Policies define the broad guidelines and parameter on which manager action and decisions are made.

Generally, policies that affect the whole organization are usually made by top level management while departmental policies (or policies that affect specific departments in the organization) are made by middle to lower level management.

Top level management usually makes policies that affect the entire organization, whereas middle to lower level management makes departmental policies (or policies that affect specific departments within the organisation).

Policies are generally created to provide solutions to recurring problems. 

Examples of policies are "no sending of personal emails during work hour". "customers must fully paid for goods before ownership is transfered to them".

Features of policy

1. Policy serves as standing plans for dealing with recurring situations.

2. It establishes the parameters within which management decisions must be made.

3. Policies are periodically reviewed.

4. Policy serve as broad guidelines for present and future decisions.

5. Although top management makes most policies, lower-level management can make policies within their respective limits of authority.


Characteristics of sound policy 

1.  A sound policy must be precise, concise and straightforward: A good policy must be stated in clear, easy-to-understand terms to avoid misinterpretation.

A good policy should also be specific, stating the circumstances under which certain methods and procedures should be followed.

2. A good policy should be flexible but relatively stable: A good policy should be adaptable to fundamental changes in the organization's goal and planning premise.

Flexibility also means that managers should have the freedom to use their ideas within the limits of the policy

That is, it should give managers the chance to apply some form of judgement as required by different situations.

While being flexible, a policy is stable if it is to effectively serve as a guide to action.

Stability indicates that no modifications to the policy should be made unless the planning premises and variables change. 

The stability of a policy assures people that there will not be a drastic, unexpected and overnight change in the policy.

The stability of the policy assures individuals that it will not alter unexpectedly, or within a short period.

3. It should be in writing: If possible, a good policy must be in writing.

Written policies are usually specific and easy to understand.

A written policy helps to avoid situations where one organizational member claims he is unaware of the existence of a policy.

With a written policy, there is no ambiguity whatsoever on the intents of top management and the organization's objectives.

A written policy ensures that every action and decision taken by the organization is based on documented facts rather than guesswork and instinct.

4. A policy should be based on objectives: A sound policy should be based on objectives and contribute to the achievement of the organization's objectives.

5. It should represent the desired image of the organisation: Policies are useful indicators of a company's conduct, ideology, and what it stands for.

Hence, a sound policy should truly reflect its intentions, objectives and philosophy. 

6. Policy must be communicated: A policy will be useless if it is not understood by all parties involved.

And, for organisational members to understand the policy, it must be adequate to them.

This ensures that the objectives for setting the policy are understood by all members of the organisation and also enhances their commitment to follow the laid down policies.

7. Sound policy should conform to the norm of the society: No policy can stand the test of time if it violates the prevailing societal norms

Hence, every policy should and must conform to the norms of society.

8. A sound policy should coordinate the activities of the organisation:  A policy should ensure that the organization's activities are consistent.

Even though different work groups and divisions will have different, functional policies, they must be linked with the common theme of the organisational goals. 

To put it another way, the sub-policies should not clash or contradict one another. They should instead agree.

9. Policy should be reviewed continuously:  A sound should be examined and revised regularly in light of changes in the organization's social, political, and economic environment.

Policy review should also take into account the existing resources available, as no policy can survive without adequate resources.

A policy review is required to ensure that the organization continues to comply with societal requirements.

A policy review also guarantees that the organization's policies are still relevant to current business trends.

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