POLICIES

POLICIES


Policies are guide to thinking and action of subordinates for the successful achievement of business objectives. Policies provide the framework within which a person has freedom to act.

Purpose of Policies:

1. To ensure that there will be no deviation from the planned course of action.

2. To ensure consistence in course of action.

3. To provide a guide for future planning.

4. To leave scope for interpretation.

Classification/Steps of Policy
POLICIES

On the Bases of Sources On the Bases of Functions On the bases of Level
· Originated Policies · Production Policies · Basic Policies
· Appealed Policies · Financial Policies · General Policies
· External Policies · Credit Policies · Departmental Policies
· Personnel Policies

On the bases of Sources

1. Originated Policies: These policies are formulated by Top Management. Such policies direct subordinates that, how to act in different situations. These are also called as basic policies.

2. Appealed Policies: When a subordinate is in dilemma whether he has sufficient authority to handle the particular situation, he may seek the verdict of a superior.

On the bases of functions (Functional Policies)

Functional policies refer to the policies, which are prepared for various functional areas of management. Production policy, Financial Policy, Credit Policy, Personnel policy etc are some of the examples of this segment.

On the bases of Level

In this type, the policies are made for the particular level, to handle the situations at their own level.

Basic Policies and General Policies are made and used by the Top Management. Whereas, Departmental Policies to be used by the group-leaders, foreman etc.