Policies are general guidelines that direct decision-making and encourage initiative within organizational units. They clarify management's values and intentions, facilitate delegation of authority, and promote uniform coordination. Well-formulated policies are key to planning success and provide guidance to managers. Policies differ from procedures, which guide specific actions, and strategies, which are single-use plans to address environmental threats. The policy formulation process involves identifying needs, defining problems, collecting information, developing alternatives, evaluating options, testing policies, and incorporating them into manuals. Factors like goals, resources, and external conditions influence policy development.

1. POLICY
MAKING

2. “Policy is a means of encouraging discretion
and initiative but with in units.”
- Harold Koontz -

3. 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.

4. 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.

5.  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.

6. Policy Content
a) Purpose statement
b) Applicability and scope statement
c) Effective data
d) Responsibilities section

7. 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.

8. 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.

9. Difference between Policies and Procedures
Policies Procedures
i. Policies are guiding i. Procedures are guide to
principles, that set a action
direction
ii. Top management ii. Procedures are
determines the policies formulated at the lower
iii. Policies form the basis managerial level
for determining the iii. Procedures follows the
procedures policies
iv. Policies are relatively iv. Procedures are
flexible deterministic

10. Example for Policy and Procedure
(A common Road Map for reaching a particular
destination)
Procedure: Basic Speed law
You 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, snowing
Policies: Road signs
Take Left, Take Right, Diversion ahead, End of the Road

11. Difference between Policies and Strategies
Policies Strategies
a. Policies are standing plans. a. Strategies are single use
b. Policies are formulated to plans
deal with specific b. Strategies are formulated to
problems. meet environmental threats
c. Concerned with the c. Strategies are concerned
organization as whole or with organization as a
particular whole
d. Policy is a contingent d. Strategy is a rule for taking
decision. decisions.

12. Types of policies
1. Originated policies
2. Appealed policies
3. Implied policies
4. Externally imposed policies

13. Steps for Policy formulating process
1. Identification of the need for policy
2. Defining the problems and issues that the proposed
policy is required to cover
3. Collection of relevant information which may serve
as bases for formulation of policy and formulation
of preliminary views of management

14. 5.Formulating of alternative policy proposals
6. Evaluating of alternative policy proposals through
discussion of the proposals at all relevant
7. Making choice from among alternatives polices
through a process of progressive elimination
8. Testing the policy in action and removing “bugs” if
any
9. Incorporation of policy in the policy manual

15. 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

16. Thank you