Policy is a carefully planned method to guide human activities and achieve reasonable results. A policy is an agreement of purpose and is typically implemented as a structured procedure or rule. Usually policies are adopted by a governing body within an organisation. A large number of business and organisations have a policy that ensures that the work procedures, ethics, policies and practices of the organisation conform to accepted standards of conduct.
Most often these rules and procedures are adopted as part of an overall corporate policy. A policy can be general, covering all areas of activity in the organisation. Or a policy can be more specific, covering some aspects of activity within a specific area of the organisation. The broad aspect of the policy is the basis for which the different procedures concerning these different aspects of the organisation are implemented.
When drafting a policy, a principle or fundamental rule is usually included. This principle states what the organisation wants to achieve. Principles may include values, shared values, or a set of principles designed to shape the organisation and its activities in some particular way. These values or principles are often specified in terms of general principles, practical applications, time-to-market and/or cost-effectiveness.
A procedure is a description of how things should be done. Policies often detail the procedure by which particular parts of the organisation must comply with the policy. Procedures are usually specified in terms of the application of the policy and its effect on the different parts of the organisation. Some policies are not specific about the procedures they apply to, such as those that deal with general HR management or those that cover strategic planning. Other policies are very detailed and detail procedures in particular fields. Such procedures are usually detailed, with examples, of how each part of the organisation will deal with the application of the policy.
Policies can also include ethical or social principles. These principles generally indicate what members of the organisation are expected to do and how they may deal with customers. An example of a social policy might be an equal opportunity at work for all employees regardless of race, gender, age, or religion. An ethical principle might be that the actions of the organisation, its officers and staff, have a special responsibility towards the achievement of certain goals. There are many potential areas of application for a social or ethical principle, such as issues of prejudice and discrimination.
In order to be formally registered, a policy must be accepted as being valid and binding by the directors of the company. This is normally done via a written agreement between the directors and the policyholder(s). Policies are not legally enforceable, but they are legally binding, thereby providing a powerful tool for future management. Policy is an important tool in building an effective management structure, and should be considered carefully before implementation.