Policies – The Key to an Effective Organization

by Stewart Watkins, Staff Associate II

Posted on July 17, 2019

The phrase “running like a well-oiled machine” has been used to describe effective organizations that appear to operate without much trouble. If management and employees are the “gears” of an organization, then the “oil” is the policies an organization has in place. Effective policies give clear direction on how to handle day-to-day tasks as well as uncommon situations that may come up.  They set standards that guide both employees and management as they fulfill their job duties.

Just like oil in a machine, policies need to be maintained to ensure the organization continues to function. Changes in regulations, business practices, or the organization’s environment may require policies to be added or updated. You must make sure you use the right “oil” too; an ineffective policy may only create confusion or hinder an organization’s ability to do its job.

Whether you are creating a new policy or editing an existing one, consider the following:

  • Identify the goal of the policy. Is it to satisfy a legal requirement? Create a “best practice” for the organization? Address a reoccurring problem in the course of business? Policies should have an identifiable objective and purpose.
  • Ask for input from people who will be impacted by the policy. Involve people at different levels who can provide different viewpoints. If needed, seek legal counsel.
  • Be precise. Identify the expectations, procedures, and/or consequences the policy creates. Have someone else not involved in the process review the policy for clarity.
  • Prepare an implementation plan. Inform those who are affected by the policy when it will go into effect. Provide training to both employees and managers on the new or updated policy.

What parts of your organization could benefit from policies?  Some common areas include:

  • Conflicts of Interest – Define what a conflict is, how to disclose it, and how it may affect an employee’s participation in a business activity.
  • Capital Assets – Set dollar thresholds that determine when a purchase should be capitalized, and how to account for depreciation of various types of assets.
  • Record Retention – Determine how long various documents should be maintained, and when they should be destroyed. In addition to paper copies, policies could also apply to electronic documents (such as e-mail, flash drives, and cloud storage).
  • Expenses – Limit who can spend the organization’s money and create procedures to approve spending requests. Reimbursements, credit cards, and petty cash may be included or have their own policies.
  • Office Management – Keep the center of operation in running order by establishing rules over the use of supplies and equipment, access to certain files or technology, and workspace organization.

Remember that the main purpose of a policy should be to help the organization fulfill its mission. Once policies are created and fine-tuned, make sure they are documented and stored in a location that can be easily accessed. They will become a handy resource and help the organization to thrive.