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Policy creates order in business chaos

WHILE the growth in many companies (especially SME’s) necessitates that a more systematic approach to management is required, it is well to recognise that the policies and procedures that usually accompany efforts to create order should remain “company servants” of management and staff and not their masters.

The danger is summed up very well by Theodore Levitt, an American writer on management, in the quotation below.

“Increasingly, administration replaces commonsense, formalism supersedes dexterity, org-anisational routines be-come more tortuous and staff dominates the line. Methods rivet the attention as much as results. Entropy threatens energy.”

Having recognised the possible dangers, policy can be considered as the general written plan of action adopted by an enterprise to guide all the activities involved in its operation.

These policies should be directly related to the goals established for the enterprise.

An enterprise can often function quite well, and many do, without written policy but this does not mean that no policy exists.

In the absence of written policy, things still get done and the way they are done is developed over time in an unofficial/informal manner, often at the discretion of the management team.

Decisions are made, precedents are established and people accept these precedents as the “policy” for future similar situations demanding decision making.

Nonetheless, enterprises and man-agers, by nature, tend towards a desire to create order and routine in their activities so the systematic develop-ment and writing of policy usually replaces this ad hoc method of policy formulation.

It is very important, however, to only establish written policies if they are to be acted upon.

The very worst thing that can happen from an enterprise and staff point of view is for policy to be written but not followed - the “ when all is said and done more is said than done “ syndrome. What is preached must be practised or the preaching is seen as a cynical exercise at best. People need to “walk the talk” in the words of management writer Alistair Mant.

Policy should be viewed as a guide to action and this means that it can be applied in a flexible manner. However, every policy carries the spirit of the intention behind its formulation and it is this spirit that must not be changed.

It must be recognised that a policy and its implementation are inextricably connected and that what is said will be done is done and seen to be done - or simply, “do as you say”.

Thus the keys to writing policy should be centred around the following points.

l Do we need a policy for this function, element, activity, area? Is it neces-sary for the efficiency and effective-ness of the company? If it is not, then do not have one.

l If a policy statement is developed, is it intended to be used? This may seem a redundant question but, as discussed above, much policy often turns out to be pure wind and is viewed as such by staff.

l The policy statement itself should be carefully worded so that it clearly reflects the spirit of its intention and leaves little room for different perceptions by different readers. This is no easy task.

It is in the nature of policy statements that they tend to inspire terminology that is sometimes vague and meaning-less. Policy writers have to be aware of this and try to make such statements clear, factual and action-oriented.

l Any policy statement should receive the scrutiny of a number of people who will be affected by it. In this way the implications of the policy can be more clearly identified and changes made if necessary so that its positive impact can be increased and its negative impact reduced. (It should be remembered that - “policy can never satisfy all the people all the time”).

l The policies that are developed should be communicated widely throughout the company so that all staff are aware of the company’s intentions in regard to their implementation.

l Policy should be relatively stable over time but, when circumstances change substantially, the policy should be changed and not left in place because of historical reasons or a desire to retain the status quo.

To conclude with a question I will answer.

When is a policy not a policy? When it is stated or written but not followed.

n Professor Roger Smith, Graduate School of Management. rsmith@ecel.uwa.edu.au

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