For effective management, the solving of day to day problems is not enough. What is required is the proper assessment of all kinds of activities and operations taking place in the organization. After the assessment, they are to be defined in clear cut way, so that objectives could be met. For definition of the business activities and their efficient implementation, the selection and application of policies is required. Without a guiding light, it would become very difficult for the business to go on and policies act as guide and facilitate the manager to direct all the activities towards the same goal.
- Policies are needed to carry out the business activities in a smooth manner.
- They provide clear cut courses for attainment of business objectives.
- If a proper explicit policy has been formulated, many of the details could be conveniently handled by the subordinates and management would not unnecessarily waste its time and energy in doing them.
- Policies provide a guide and framework for decision making.
- Policies encourage delegation of the power of decision making.
- Good policies provide a direction in which all management activities are focused.Policies provide stability to the action of the members of the firm.
- Policies deter the subordinates to rethink on the day to day issues and thus avoid repetitive analysis of issues.
- Policies facilitate evaluation of performance by acting as a standard.
- They enhance employees’ enthusiasm and loyalty for the organization.
- They help in solving the problems for optimum utilization of scarce resources.
- The sound policies help in building good public image of the business.
- Polices provide the firm with clear objectives with which the managers can decide about the future course of action.
- They act as tool for coordination and control.
Thus, corporate policy is very important for an organization and helps in the overall development and growth. A sound policy provides satisfaction to the employees in terms of working conditions, culture, authority, responsibility and relationships.