Just as all companies have management systems, ways of doing things, they also all have policies. However:
- These policies are seldom clearly defined. They are generally not communicated to, or understood by, the members of the company. They are often not aligned with the vision of the company. They do not always lead to clear objectives. In most cases Cases are not periodically reviewed to adapt them to changes both internally and in the national and international context.
Who has not heard the phrase: "The company must improve its profitability"; Is this a policy? No, not yet, a key element is missing: “commitment”.
"The company will continuously improve its profitability"
Now it is a policy, it contains the commitment to improve profitability, the word that defines the commitment is: “it will improve”.
It is possible to extend it:
"The company will continually improve its profitability to ensure its permanence in business and increase shareholder satisfaction."
Another example:
"We cannot continue losing customers due to quality problems."
The associated policy could be:
"The company will meet the requirements agreed with customers"
It doesn't seem that difficult. Indeed, defining policies is not difficult, the problem is to comply with them. But without them the company does not control its future. Without them the company is a ship adrift, the only thing it can do is try to avoid sinking, weathering every storm that occurs with a poorly coordinated crew that applies their best knowledge and understanding, with a great waste of resources and individual effort and with a predictable end: exhaustion and disaster.
Politics is the beacon, everyone on the ship looks at it and everyone on the ship now knows where they are going, they know where the port is. And when they arrive they will set out again, guided by another lighthouse and towards a new port.
There will always be storms, the officers will coordinate the efforts and knowledge of the crew, together they will decide how to get to the port and they will measure progress day by day, immediately correcting deviations and eliminating their causes.
Mission - Vision - Policy - Objective - Goal
These terms tend to cause confusion because there is no unified criterion on their meaning and use, but when defining, establishing and implementing company policies, the concepts associated with these terms are very useful.
The definition of the mission helps to clarify the positions and beliefs of the members of the company's management and to unify basic criteria. It is not strictly necessary to define it to arrive at the policies, especially in the case of a single director or owner, but it is always advisable to do so, especially to transmit to the staff the values that constitute the basis of the company's culture.
Vision is essential, the company's policies are built on it. Examples of vision are: if the company is medium, will it continue to be medium or does the management want to build a large company? If the company is a leader in your country, is it considering extending its leadership to the continent or the world?
The company may never be able to realize its vision, but it will always work towards it. If politics is the beacon, vision is the star.
The objectives define the quantitative and measurable achievements that will lead to compliance with the policy.
Regarding the goals, when the fulfillment of the objective implies the fulfillment of different stages or activities, simultaneous or not, it is possible to speak of “goals”. They must also be quantitative and measurable.
Thus, for example, if an objective for 2003 is "Increase sales by 5%", quarterly goals can be established that, accumulated, make up the 5% objective.
How to comply with the Company Policies?
While it may seem trivial, the first requirement is to define "enforceable" policies. To do this, when defining policies, it is necessary to identify and analyze the internal and external factors that affect compliance with them.
The internal analysis will include:
- The culture of the company The resources available Other weaknesses and strengths of the company
The external:
Environment variables, both national and international:
- EconomicSocialTechnologicalPolitical-legalCompetitionOther threats and opportunities
The need for this analysis becomes clear if we consider factors such as, for example, the exchange rate or tariff barriers. The incidence of these factors on the success of policies aimed at importing, exporting or import substitution is well known.
The rapidly changing environment in which the company operates requires constantly reviewing and updating policies.
The objectives indicate the concrete actions that must be carried out successfully to consider the policies fulfilled, then they must be quantitative and measurable. As in the case of policies, when defining them, it is necessary to consider whether and to what degree they are affected by internal and external factors.
When setting objectives, it is essential to define:
- Responsible for the fulfillment of the objective Compliance period Variable to be measured Method and frequency of measurement
In all cases, the management area of the company must, in addition to providing the necessary resources, ensure that the person responsible for fulfilling the objective has the required competencies and, if necessary, provide the appropriate training.
The term planning encompasses the activities of identification and analysis of internal and external factors, the decision making required to define the policy, objectives and actions, and the analysis of potential risks and opportunities emerging from the decisions made.
When the objectives and goals are not met, it is necessary to incorporate cause analysis activities to find the root cause of the non-compliance and, once determined, eliminate it.
It is convenient to bear in mind that some authors call "company strategy" the process that begins with the definition of the mission and ends with the fulfillment or not of the objectives.
However, there are no unified criteria on the use of the word "strategy", it has as many meanings as the authors who write about it.
Policies and Management Systems
The statistics issued by the ISO standard annually show a constant increase in the number of companies that certify Quality and Environmental Management Systems. On the other hand, in order to comply with current legislation, companies develop and implement Safety and Hygiene Systems and Administrative-Accounting Systems. These systems, as well as others that companies incorporate according to their needs, require specific commitments.
Therefore, when defining policies, it is convenient to consider the requirements of both current systems and those whose incorporation is planned in the near future.
Policies and Communication
Policies are useless if they are not communicated and understood by all members of the company.
Understood means that each employee is able to describe, in their own words, how their work contributes to compliance with company policies.
It is not an exaggeration to “paper” the company with the policies, the objectives will only be achieved if the personnel incorporate the policies into their thinking and reflect it in their attitudes.
Management must be fully aware of its role in this process, there is no chance of success if it does not “lead by example”.
Staff closely follow management's attitudes and only incorporate policies into their thinking and acting when they verify that management has already done so.
Management is the "guardian" of policies and it shows it day after day and always in each of its words, attitudes, actions and decisions.
It is not difficult to establish policies, the difficult thing is to comply with them.
Below is a short video-lesson given by Professor Alicia Silva, from UNAD, in which it is defined what is a business policy, what are the purposes of business policies and what are the requirements of a business policy
