POLICY AND PLANNING
Policy and Planning are complementary to each other.
Policy formulation is an important aspect of the planning. The smooth working of an organization requires the formulation of the policies. A well thought exercise is essential to formulate the sound and effective policy. The following is the procedure to formulate the policies:
DEFINING POLICY AREA
Management has to identify the areas of the policy. In other words, the areas have to be found out for which the policies are to be made or formulated. Even the existing policy may be changed in this manner. A management could have a clear cut idea only after selecting the area of policy formulation.
Organizational objectives play a vital role in the formulation of the policy. Objectives are the foundation for policy formulation. Objectives give clear cut directions to formulate the policy. The reason is that the policy is formulated to achieve the objectives.
ANALYSIS OF BUSINESS ENVIRONMENT
A policy reflects the circumstances under which the policy is formulated. A policy is formulated according to the situation. But the policy should be designed by taking into consideration the expected changes in the legal, political, social, economic, demographic, technological business environment.
Corporate analysis refers to the internal analysis of the organization. The SWOT analysis should be conducted for the same. SWOT:
This type of analysis gives a clear picture of the functioning of the organization and is of utmost help in policy formulation.
COLLECTION OF INFORMATION
The next step in the formulation of policy is the collection of information. An intelligent person may be appointed to collect the information in case of small organization. In case of bug organizations or multinational organization, a committee may be formed and assigned the duty of collecting the information. Information can be collected not only from within the organization but also from outside the organization.
ANALYSIS OF THE INFORMATION
Collected information must be analyzed to assess the value of the information. Proper attention should be paid to the attitudes, aspirations and customs of the employees and the philosophy of the top management people should also be considered. Widespread consultation and discussions ate held with experts for analyzing the information.
IDENTIFICATION OF ALTERNATIVES
On the basis of collected information, different alternative policies are developed to achieve the objectives of the organization. Here the alternative policies are formed with the help of active participation of the employees. Active participation of the employees helps the easy implementation of the policy.
APPRAISAL OF THE POLICIES
Appraisal of the policies is very important. Feasibility, financial implication, pros and cons of each policy are taken into consideration while appraising a policy. Value of a policy could be correctly assessed only through the process of appraisal of policies.
SELECTION OF A POLICY
Management can select anyone of the policies among the appraised policies which is most suitable for a particular situation. The appraisal process of policies facilitates the management to select or formulate the best policy.
APPROVAL OF THE POLICY
The policy draft should be sent to the top management at the right time for its approval. The top management has to approve the policy only after considering whether a policy represents the objectives of the organization or not.
COMMUNICATION THE POLICY
The approved policy should be communicated to the concerned persons. Policy manual has to be prepared or meetings have to be conducted for communicating the policy. Besides, an educational programmer may be conducted to educate the employees as how to apply the new policy.