The Purpose of Policies and Procedures

Policy is an ordered set of rules to guide specific actions and reach rational results. A policy is usually an official statement of purpose and is typically implemented as a formal process or manual. Such a policy may be a contractual commitment or a commitment taken in good faith. Usually, policies are formally adopted by an appointing authority within an organization as part of an organizational strategic planning process.

Policies, as well as procedures, can be adopted in various forms. For example, some organizations adopt policies and procedures by writing them down in legibly written procedures. Still other organizations develop policies and procedures orally as part of an ongoing discussion. Still yet, other professionals prefer a mix of the above two approaches. Still, regardless of the form taken, a policy or a procedure must be developed in order to specify the intention behind it and provide the means for carrying out that intention.

Policies developed and formalized policies are part of a company culture. A firm that adopts policies and procedures will need to monitor and account for those policies and procedures on a regular basis. It will be important to distinguish between “policy” and “procurement.” A policy, as we have seen, is an official statement of purpose and is formally adopted as part of an overall strategic plan; whereas procurement is less formal, and is more flexible, in that it occurs when a company makes a purchase rather than when a formal contract is signed.

Policy and procedure are not independent concepts. They are intertwined, and the meaning of one policy or another is influenced by the existence of other policies or procedures. Thus, it is not surprising that “key” concepts like commitment, consistency, accountability, and value are intertwined with “value creation” processes. Key concepts such as these will be necessary if a company wishes to successfully implement and manage its policies and procedures.

A key goal of most companies is their ability to meet their targets and objectives. When a company establishes a formal policy-managed process, it can align that company’s actions with its stated goals and objectives. The existence of a policy helps to ensure that a company takes the right actions in response to external pressures and to respond to external challenges. This is why, when a company implements a policy, it must commit itself to the achievement of the policy.

The importance of a firm’s rules and procedures are obvious. A company cannot successfully move ahead unless it establishes and adheres to a code of conduct. These rules-and any policies they decide to establish-must not be arbitrary but must be grounded in a firm’s core values. Moreover, these rules-and any policies they establish-should provide a clear path for a company’s executives and employees to take when faced with a set of circumstances. Once a company has determined the purpose of policies and procedures, it is far more likely that a company will be successful in its efforts to improve its performance and meet its objectives.

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