Successful Companies Have Written Policy


Kenneth A Polcyn, Ph.D.

 Copyright 2001 Deva Industries, Inc., All Rights Reserved


The number of companies without written policy is amazing. The smaller tend to be the most guilty, but we've seen numerous larger PEOs/ASOs that haven't gotten around to it either. There are a lot of unwritten rules made up by staff to avoid crises and chaos, but normally they are incomplete, inconsistent or unnecessary because there is no overarching company policy to provide guidance. As a result internal operations run like an out of tuned automobile with a lot of sputtering and backfiring to the consternation of staff and clients/employees.




What the heck is policy anyway?  There are some slightly differing points of view and confusing definitions in the dictionary. I like to think of policy as usually having two parts: A rule for operation, along with procedures for execution; however, at times the rule by itself is sufficient. For example...No Smoking In This Building…is a policy unto itself, no procedures are required. But relative to…A Standard File Must Be Created For All New Employees…this is a rule requiring a procedure. Why? Because there needs to be steps which describe what must be done and how to do it, so new files are consistent in form, content, etc. for all new employees. Therefore, as a result, responsible individuals should know the rule and how to behave/perform accordingly to achieve the desired end.


Policy System


Establishing and operating within a policy structure is more than convening staff, writing rules, procedures, and passing out policy handbooks. For policy to work attention must be paid to all components comprising a policy system. What do I mean by a policy system? There are basically 11 interrelated components: 1) corporate policy, 2) sub-organizational policy, 3) format, 4) policy makers, 5 conflict resolution 6) compliance, 7) distribution and maintenance and, 8) exceptions. 


Corporate Policy - Developing policy begins at the top, the corporate leader(s), with input from corporate managers. It is this corporate policy upon which all company policy should be based. First, such policy should be derived from and be consistent with espoused core values, purpose and mission. Consequently, what you say is what the guiding principles of the business should be! Therefore, for example, if one of your core values is…Always Behave With Honesty and Integrity…corporate policy directing related behaviors should be created as such…There Shall Be No Misrepresentation of Information to Staff or Client/Employees… As the Figure 1 umbrella concept illustrates, corporate policy is the overarching standard for the company operations; subordinate department, team, division etc. policie are directed by, created and operate within! In other words, there must be what I label  "Hierarchical Congruence".


Subordinate Policy - Within the framework of corporate policy, typically each organizational element is responsible for creating policy for governing its day-to-day operations. This is easier said than done in PEO/ASO organizations where there are considerable dependencies. For example, Sales Department policy for the amount/specifics/timeliness of information to be collected will impact underwriting and thus the acceptance or rejection of prospects. Consequently, coordination, reviews and negotiation are usually a necessity; some of this is normally dictated by corporate policy. Nevertheless, managers must be charged with being knowledgeable about and understanding the intricacies of their operations, and thus creating workable policy, cooperating with other functional area managers and implementing the rules and procedures required for related smooth company operation.


Format - Creating policy on the back of an envelope or as e-mail with no structure is not practical. There must be more rigor in the process. To assist with creation, making sense out of policies as well as access, a standard format should be Text Box: Figure 1, Policy Hierarchical  Congruenceestablished.  Such topics as policy title, purpose, rule statement, related procedures and explanations, approving authority and date of implementation are important ingredients. Figure 2 illustrates an example of a policy format. When a format is agreed on, it should be the standard with no exceptions; it becomes policy.



Text Box: Policy Name:		Process/Category: 
Dept/Division: 		Revision:		Rev. Date:	
Approving Authority	Name	Approve Date

Figure 2, Policy Format Example

Policy Makers - Who are the policy makers? While corporate management is ultimately responsible, it is not necessarily the source of all policy. Any staff member should be able to recommend policy or changes. Why? Because they are involved in the day-to-day operations and see what works or doesn't as well as what is missing. Therefore, the policy making process should include opportunities for all individuals to participate, even though their ideas may not always be useful. Nevertheless, team, department or division managers should be responsible for final policy creation and approval for their respective areas. However, policy should be reviewed at each management level, to include corporate, to insure conformity, uniformity along with usefulness.


Conflict Resolution - There is bound to be disagreements over proposed or existing policies. Consequently, a process for addressing them should be established.  To come to resolution, those who raise issues about such things as obsolesce, inappropriateness or enforceability should have the opportunity to discuss them with the policy makers/approval authority. All differences of opinion should be in writing expressing such areas where problems may or are occurring, as well as suggestion as applicable. Major disputes and those with actual or potential implications for corporate policy should involve related representatives. All final resolutions should be in writing and distributed to the staff so there is no misunderstanding about the outcome.


Compliance - It is one thing to have policy, quite another to insure compliance. At times some individuals find policy stifling to their way of operating; others just forget. Relative to the latter indoctrination is key. Providing a handbooks or access on the Web, is not the answer. Individuals must periodically be reminded through various methods. For example staff meeting should be used for highlighting policies and the impact on the company and clients when not followed; internal newsletters/sheets can be used in the same fashion. In the case of those who chose to ignore policy, they must be counseled with as soon as possible to determine the reasons, reminding them of the proper channels for addressing conflicts. When necessary the individual(s) may be placed on written notice to conform. Further violations may be consideration for probation, then dismissal if continued.


Distribution and Maintenance - While policy making may involve literally everyone, distribution and maintenance (D&M) should be the purview of one designated individual once approval has occurred. Further a single point of contact helps to eliminate concerns about who is the go to person for conflict resolution or to initiate changes. When  problems arise or changes are suggested D&M should be responsible for receiving and reviewing such information, followed by establishing a meeting with interested individuals when applicable. Additionally, D&M should be the policy keeper so to speak maintaining and distributing approved policy in the form designated by corporate.


Policy Exceptions - Someone may be asking…How do you handle exceptions to policy? One way is for the individual requesting the exception to discuss it directly with the managers being impacted. Normally an exception request should be in writing along with its approval; key corporate managers should be informed unless it is an insignificant matter, such as arriving late for work because of a doctor's appointment. Major exceptions may require adhering to the D&M process; for example, if sales person wanted to eliminate an underwriting requirement on a prospect for some reason, this more than likely would precipitate a rigorous review by all management.




Limiting Policy


How much policy is enough or too much policy? Policy is like government you can have too much of it! I'm not sure who said…"government that governs least governs best"… I think a PEO/ASO needs to create a well thought out set of rules that provides the basic structure within which staff can operate and make decisions feeling comfortable they have the freedom to do their best. Consequently, management should only create essential policy at the outset; with time there can be additions or adjustments. An example of a question to ask when creating policy might be…What rules are needed to minimize errors, maximize efficiency, insure proper and timely communication, keep clients satisfied and meet profit requirements? Remember, keep the amount of policy to a minimum and add only as necessary. If you govern least, you'll probably govern best.