5 Important Functions of Business Policies
The important functions of business policy are:
1. Objectives of the company are defined and classified.
2. The planning function is done systematically.
3. Business policy clearly states the amount of authority that the subordinates have. It also specifies the limits of the authority of the subordinates. Thus it tightens the authority on one hand and provides initiatives to the subordinates.
4. Subordinates can use the policy directives intelligently and carefully. It also helps the managerial personnel to perform the functions of control and coordination successfully.
5. Policy acts as the main foundation for evaluation and determining the quality of action and decisions taken by executives
Advantages of Business Policies
Policies flow from planning and are extremely useful connections between goals and action. The.policies are useful day-to-day guides. As a guide for making decisions, policies provide the following advantages:
1. They tend to serve as precedents and thus reduce the repetitive rethinking of all the factors in individual decisions; they save time.
2. Clear policies helps each manager to understand the range within which he can make decision and thus feels less uncertain as to whether he can give answers to subordinates without ‘getting into trouble.’
3. Because they specify routes towards selected goals, policies helps in evaluating performance.
4. Policies are ‘control guides of delegated decision-making‘.
5. Good administration and implementation of policies naturally improves the working environment with good labor-management relations.
6. Policies help the firm to clarify its objectives, guide planning for future operations, aid subordinates in reaching operating decisions, facilitate overall coordination and control and act as yardsticks for evaluating the quality of executive decision-making and action.
It is through policies that the organization’s objectives are achieved, better use of resources is ensured, social responsibility is fulfilled in an increasing manner, personal satisfaction is obtained by the employees and the management is enabled to take useful decisions.
Since policies emanate from good plans and since the actual performance of duties and activities depend upon some means of directing future actions, planning and policies are closely related in the management of an organization.