“Policy is a means of encouraging discretionand initiative but with in units.” - Harold Koontz -
Significance of Policies Policies are general statements or understandings which guide or channel thinking and action in decision- making. They are predetermined decision rules applicable for a range of managerial decisions and actions. Policies can be understood as political, management, financial, and administrative mechanisms arranged to reach explicit goals.
Importance of policy They are standing plans formulated to guide and direct the future course of activity. They clarify and crystallize the real values and intention of top management. The facilitate delegation of authority among the various managerial levels. The facilitate Uniformity of action and coordination of effort.
They minimize the destruction of decision-making process. They communicate to outsiders the general attitudes and approaches of the organization They provide guidance, a sense of direction and understanding to managers in their action. They minimize the possibility of brining managers personal prejudices in decision.
Forms of policies Policies may be in written form or may take the form of implied, unwritten practices, precedents, principles, and conventions. It is generally believed that written policies tend to minimize the scope for confusion and misinterpretation and tend to promote unified thinking for decision making and action purposes.
Distinction between plans and policies Plans and polices are different concepts but they are not distinctly different. Well formulated polices are key to success of any plan. The implementation of any plan requires policy guidelines. Organizations plans are based on established policies. Thus, planning and policy making go together as important functions of management.
Difference between Policies and Procedures Policies Proceduresi. Policies are guiding i. Procedures are guide to principles, that set a action directionii. Top management ii. Procedures are determines the policies formulated at the loweriii. Policies form the basis managerial level for determining the iii. Procedures follows the procedures policiesiv. Policies are relatively iv. Procedures are flexible deterministic
Example for Policy and Procedure(A common Road Map for reaching a particulardestination)Procedure: Basic Speed lawYou may never legally drive faster than the posted limit.Speed should depend on The no of and speed of other vehicles on road The surface condition of road: wet, dry, rough, wide, narrow, smooth Bicyclists or pedestrians walking on the road edge The climate: raining, fogging, windy, dusty, snowingPolicies: Road signsTake Left, Take Right, Diversion ahead, End of the Road
Difference between Policies and Strategies Policies Strategiesa. Policies are standing plans. a. Strategies are single useb. Policies are formulated to plans deal with specific b. Strategies are formulated to problems. meet environmental threatsc. Concerned with the c. Strategies are concerned organization as whole or with organization as a particular wholed. Policy is a contingent d. Strategy is a rule for taking decision. decisions.
Steps for Policy formulating process1. Identification of the need for policy2. Defining the problems and issues that the proposed policy is required to cover3. Collection of relevant information which may serve as bases for formulation of policy and formulation of preliminary views of management
5.Formulating of alternative policy proposals6. Evaluating of alternative policy proposals through discussion of the proposals at all relevant7. Making choice from among alternatives polices through a process of progressive elimination8. Testing the policy in action and removing “bugs” if any9. Incorporation of policy in the policy manual
Factors influencing formulating policy 1)Internal factors Organizational goals and strategies Organizational resources Organizational structures 2)External factors o Social-political factors o Product market factors o Resource market factors