Policy in strategic management refers to the specific guidelines, methods, procedures, rules, forms, and administrative practices established to support and encourage work toward stated goals, ensuring that a chosen strategy is implemented effectively.
Understanding Policies in Strategic Management
Policies serve as the bridge between strategic planning and operational execution. They provide a framework for decision-making and action at all levels of the organization, ensuring consistency and alignment with the overall strategic objectives.
Key Characteristics of Policies
- Specific Guidelines: Policies offer clear and concrete directives, leaving little room for ambiguity.
- Methods and Procedures: They outline the specific ways tasks and activities should be performed.
- Rules and Regulations: Policies establish boundaries and limitations, ensuring compliance and ethical behavior.
- Administrative Practices: They encompass the routine processes and systems that support the organization's operations.
The Role of Policies in Strategic Implementation
According to the provided reference, "Changes in a firm's strategic direction do not occur automatically. On a day-to-day basis, policies are needed to make a strategy work." Policies are crucial because:
- They provide direction: Policies guide employees in making decisions that are consistent with the overall strategy.
- They promote efficiency: Standardized procedures streamline operations and reduce errors.
- They ensure consistency: Policies ensure that similar situations are handled in a uniform manner across the organization.
- They facilitate control: Policies provide a framework for monitoring and evaluating performance.
Examples of Policies in Strategic Management
To better understand the nature of policies in strategic management, here are some examples:
- Pricing Policy: A retail company might implement a "price matching" policy to attract customers and maintain a competitive edge. This policy outlines the conditions under which the company will match a competitor's price.
- Customer Service Policy: A bank might have a policy outlining the steps its employees must take to resolve customer complaints, ensuring efficient and satisfactory customer service.
- Employee Promotion Policy: This policy defines criteria for promotions and the procedure for evaluating candidates, ensuring fairness and transparency.
- Social Media Policy: This policy helps to ensure that all online postings or online activities accurately represent the company and are in line with its mission and values.
Why Policies are Essential for Strategic Success
Without well-defined and consistently enforced policies, a company's strategic goals are unlikely to be achieved. Here's why:
- Coordination: Policies ensure that different departments and functions within the organization are working towards the same goals.
- Communication: Policies communicate the organization's values and priorities to employees and stakeholders.
- Accountability: Policies establish clear lines of responsibility and accountability.
- Adaptability: While providing structure, well-designed policies also allow for flexibility and adaptation to changing circumstances.
