CHARACTERISTICS OF BUSINESS POLICY | Cheat Sheet Marketing Business-to-business (B2B)

CHARACTERISTIC OF BUSINESS POLICY

INTRODUCTION In this unit, we shall continue with the discussion on

overview of business policy. This discussion will centre on the

nature and characteristics of policy, reasons for formulating

policies, and formulation of policy. The policy thrust of an

organisation solely depends on the type of business offered –

whether it is for production or services; the intensity of needs of

operation and quality of human resources to be employed. It provides

guidance to achieving objectives and goals of organizations. 2.0

OBJECTIVES At the end of this unit, you should be able to: explain

the characteristics of policy; list and discuss the sources of a

policy; State the features that make a good policy. 3.0 MAIN CONTENT

Most organisations produce statements and explanations on what they

are trying to achieve in particular areas. Policies are subdivided

and stated in terms of procedures i.e. series of related steps or

tasks expressed in a chronological order, and rules i.e. prescribed

course of actions that explicitly state what are to be done under a

given sets of circumstances. Many organisations provide parameters

within which decisions must be made. Some of these will be written by

specialists in different operational areas, like employment matters

which may focus on hiring and firing, sales and marketing departments

may provide guidelines of pricing and credit facilities; purchasing

department policies may prohibit gifts from suppliers. Some policies

focus on materials/stock and others on capital and equipments. Some

describe objectives and others means. In general, policies may be

classified in relation to personnel, capital, objectives, means and

specific organisational areas. This is an arbitrary but convenient

way to classify policies. It should be noted that these categories

are not mutually exclusive but frequently overlap.

Characteristics of Policy Sound policies usually contain a

combination of the following characteristics: (1) Destiny (2) Top

Management Approval and Commitment (3) Intellectual Input (4)

Consistency and Long-term in Nature (5) Acceptability (6)

Communicated to Staff (7) Genuine Intention and Application (8)

Balanced Interpretation (9) Alignment with Objective • Destiny – A

common characteristic of policy is that it denotes future action and

intent. It usually describes a goal or destiny which is there to be

achieved. In addition, it implies a conviction in a set of beliefs

which is considered “right” for the people in the organisation. The

manner a policy is expressed and the detailed procedures which stem

from it all point in the same direction and do not allow individual

actions to follow a different direction. If the actual procedures and

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CHARACTERISTIC OF BUSINESS POLICY

INTRODUCTION In this unit, we shall continue with the discussion on overview of business policy. This discussion will centre on the nature and characteristics of policy, reasons for formulating policies, and formulation of policy. The policy thrust of an organisation solely depends on the type of business offered – whether it is for production or services; the intensity of needs of operation and quality of human resources to be employed. It provides guidance to achieving objectives and goals of organizations. 2. OBJECTIVES At the end of this unit, you should be able to: explain the characteristics of policy; list and discuss the sources of a policy; State the features that make a good policy. 3.0 MAIN CONTENT Most organisations produce statements and explanations on what they are trying to achieve in particular areas. Policies are subdivided and stated in terms of procedures i.e. series of related steps or tasks expressed in a chronological order, and rules i.e. prescribed course of actions that explicitly state what are to be done under a given sets of circumstances. Many organisations provide parameters within which decisions must be made. Some of these will be written by specialists in different operational areas, like employment matters which may focus on hiring and firing, sales and marketing departments may provide guidelines of pricing and credit facilities; purchasing department policies may prohibit gifts from suppliers. Some policies focus on materials/stock and others on capital and equipments. Some describe objectives and others means. In general, policies may be classified in relation to personnel, capital, objectives, means and specific organisational areas. This is an arbitrary but convenient way to classify policies. It should be noted that these categories are not mutually exclusive but frequently overlap. Characteristics of Policy Sound policies usually contain a combination of the following characteristics: (1) Destiny (2) Top Management Approval and Commitment (3) Intellectual Input (4) Consistency and Long-term in Nature (5) Acceptability (6) Communicated to Staff (7) Genuine Intention and Application (8) Balanced Interpretation (9) Alignment with Objective • Destiny – A common characteristic of policy is that it denotes future action and intent. It usually describes a goal or destiny which is there to be achieved. In addition, it implies a conviction in a set of beliefs which is considered “right” for the people in the organisation. The manner a policy is expressed and the detailed procedures which stem from it all point in the same direction and do not allow individual actions to follow a different direction. If the actual procedures and

wording do not imply belief in a course of action, then it is probably a wrongly formulated policy. • Top Management Approval and Commitment – In practice, making contributions and recommendations on policy issues may be the function at the lower levels of management in the organisation, but it is the hallmark of policy that it is approved and endorsed by the top management. This may be Board of Directors and Managing Director or the responsibility may be delegated to a top executive committee. Directors and top managers are primarily responsible for policy making and setting long-term objectives. Once the series of policies are approved at the top, there is every possibility that all segments of the organisation will move to the same direction toward the set objectives. • Intellectual Input – Policy requires a high level of intellectual and intelligent inputs because policies are concerned about the future activities deemed to be just and right for the organisation. Policies must be able to withstand pressures, opposition and challenges from all parts of the organisation and its environment which may see and treat the policies differently. Without a high degree of thorough analysis and deep thought of reasoning during formation, a policy may be less effective and may even fail to provide the framework for enduring decision making. • Consistency and Long-term in Nature – Usually, policy makers have thought through all aspects of a particular policy culminating into consistent and enduring policy thereby making frequent amendments difficult. Constant changes in the course of action and direction of an organisation will surely bring about confusion, resenting and even generally derail all thingsthat sound policies are trying to achieve. Practically, almost all policies are long-term in nature, although for practical purposes; long-term policies are sub-divided into short-term. It is worthy of note that there could be circumstances in which refinement and revision might be required; in essence, they are intended to create a continuum against which day-to-day standards and decisions can be made. • Acceptability – The degree of acceptance of organisation policy to everyone is marked by the persistence and understanding of employees who want to know why the policy is made or changed. Genuine reasons must be forthcoming and management needs to provide supervisors with sufficient information to satisfy queries regarding a policy. There is danger in withholding information which often leads to gossip and speculation in an organisation as this can be disorganizing, cause increased friction between management and employees, upset and strain relationships through general suspicion and mistrust. • Communicated to Staff – As soon as policies are formulated and ratified, they should be communicated to members of the organisation. Everybody must be aware about the mission and objectives of the organisation; hence,

promulgated so completely and comprehensively as to leave little room for definition or interpretation. (2) Appealed Source – In practice, in most cases, policies stem from appeal through the hierarchical level of management authority. If occasion for decision arises for executives who do not know whether they have sufficient authority or how such matters should be handled, they appeal to their supervisors for the necessary support and action. As appeals are taken upward and decisions are made on them, a kind of rules and procedures are established. Precedent, therefore, develops and becomes guides for future managerial action and serves as reference point. (3) Implied Source – Useful policies are developed from the actions which employees see about them and believe to constitute them. Employees will readily understand what real policy is if they work for a company that operate policies that produce high quality goals, or sound labour policy, for instance, though the real policy is implied. (4) Externally-imposed Source – To a large extent, policies are externally-imposed by such agencies as the government, trade unions, professional associations and others like trade association. This might come in form of direct regulation or one of the many conditions of accepting government aid or contract; it could also be to maintain industrial peace. Besides, local and state governments, professional associations, social and charitable organisations do influence the policies of organisations. What Makes a Good Policy Wikipedia (2012) states that company policies are most effective as official written documents. While policies often differ in form depending on company size, industry, and length of time in business, policy documents generally contain certain standard components including: • Purpose Statement, outlining why the organization is issuing the policy, and what the desired effect or outcome of the policy is. • Specifications, including statements indicating the specific regulations, requirements, and organizational behavior that the policy is creating. • Implementation section, indicating which parties is responsible for carrying out individual policy statements and how policy adherence will be ensured.

Effective Date, which indicates when the policy is considered in force (an executive signature or endorsement can be useful to legitimize the policy). • Applicability and Scope Statement, describing whom the policy affects and which actions are impacted by the policy. • Background, indicating any reasons, history, and intent that led to the creation of the policy, which may be listed as motivating factors. • Definitions, providing clear definitions for terms and concepts found in the policy document. 4.0 CONCLUSION You will note from the discussion in this unit that policies are subdivided and stated in terms of procedures. For instance, it

contains series of related steps or tasks expressed in a chronological order, and rules.

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CHARACTERISTIC OF BUSINESS POLICY