What is the Policy Formulation process? What are its main considerations?

Policy formulation process: creating policies for the organization is an integral part of the process of planning. In order to ensure that the operations of the organization run smoothly, proper policies have to be formulated by the managers. However, a comprehensive process is involved in creating the most suitable policies for an organization. Therefore, the below mentioned process needs to be followed by the managers while creating policies for their organization:-

1. Identifying the policy area: first of all the managers are required to identify the particular field for which they are going to formulate the policy. At the same time, the managers are also required to consider the objectives as well as the demands of the organization. For example, when the managers are formulating policy related with marketing, they should keep in mind the expectations and the thrust areas of marketing for the organization. In the same way, the scope of the policy formulated by them depends on the area that such policy is going to cover. Therefore, it is a very important that first of all the managers identify the particular area that is going to be covered by the policy that they’re going to create.

2. Identifying various alternative policies: while creating a policy for the organization, the managers should identify all the policy alternatives that are available to them in a particular case. The available alternatives can be decided with the help of analyzing the external as well as internal environment of the organization. While the internal environment of the organization can help in describing the strengths and weaknesses of the organization, the external environment can help in identifying the opportunities and threats that are being faced by the organization. Therefore the alternative selected by the managers should be capable of ensuring that the policy formulated by the managers can achieve its objectives.

3. Assessing the alternatives: the various alternatives that are available to the managers need to be evaluated, keeping in mind the goals of the organization. The managers should evaluate how these alternatives can contribute towards the achievement of its goals by the organization. Therefore the factors like resource requirements, costs and benefits provided by each alternative have to be carefully examined by the managers. In the same way, while creating a policy, the managers should also evaluate the impact of different alternatives on the environment of the organization.

4. Selecting the most appropriate policy: after the managers have carefully examined all the available alternatives, they should select the alternative that is most appropriate for their organization. In this regard, it needs to be noted that selecting a policy for the organization involves a long-term commitment. Therefore if the managers feel that a particular alternative may not be satisfactory, then they should work to find out other alternatives.

5. Testing a policy: before implementing a policy in the organization, the managers should first implement the policy on a trial basis. This can help the managers in evaluating if the policy selected by them can achieve the objectives for which it was created. At the same time, when the policy has been implemented on a trial basis, valuable suggestions may be received from other members of the organization regarding the policy. These suggestions can help in introducing the necessary changes in the policy due to which it becomes even more effective. Therefore it is very important that the policy implemented in the organization should achieve the goals due to which it was implemented otherwise the managers should consider the implementation of a new policy.

6. Implementation of the policy: If it has been found during the trial period that the policy will prove to be successful in achieving its objectives, the policy should be implemented in the organization. However, it is very important that such a policy should be explained in detail to all the persons who are responsible for implementing the policy. For this purpose, a detailed discussion can also be held regarding the probable implications as well as the impact of different provisions of the policy. Therefore if the policy has been properly communicated to the employees, the employees will be aware of the purpose and objective behind the policy and it will also help in the proper implementation of the policy.

Main Considerations in Policy Formulation: There are certain aspects that have to be kept in mind while formulating policies for the organization. These are:-

1. Proper participation: while framing policies for the organization, it should be made sure that the members of organization working at different levels should take part in this process. On the other hand if the policies are created at the highest level of management without being aware of the views of the persons for whom these policies are being created, it is likely that the policy may not be successful in achieving the desired results. Therefore in order to ensure the successful implementation of policies, participation from all the concerned members of the organization is required while creating the policies.

2. Organizational goals: Policies are created with a view to achieve the goals of the organization. These goals can be described as the targets which have to be achieved by the organization and in this way; the policies provide the methods through which these goals can be achieved. Policies should assist in achieving the organizational goals if they are based on relevant facts and figures and if they have not been created on the basis of guesswork.

3. Reflect business environment: while creating the policies, the internal as well as the external environment of the organization needs to be considered. The reason is that the situations prevailing within and outside the organization can provide a realistic basis for these policies. At the same time, it is also necessary that the policy should be flexible enough so that it can be adjusted accordingly in case any change takes place in the business environment of the organization. On the other hand, the rigidity in policies may result in fulfilling the objective of the policies.

4. Proper communication: it is also very important that the policies should be properly communicated to the members of the organization at all the levels. On the other hand, if the persons who have to implement the policies are not aware of these policies, then the purpose of creating the policies will be defeated. In some cases, the members of the organization may not properly understand the purpose behind the policies or they may have certain doubts regarding the policies. Under these circumstances, it becomes the responsibility of the management to properly communicate these policies so that all the members of the organization are aware of the purpose behind the policies.

5. Consistency: it is also necessary that the different policies adopted by the organization should confirm with each other. As a result, there should not be any inconsistency between the different policies adopted by the organization. In case of such an inconsistency, the policies could not be adopted properly. Therefore it is very important to make sure that all the policies are related with the objectives of the organization and at the same time they should not provide any conflicting guidelines.

6. In writing: a policy should always be in writing. This makes sure that the policy is implemented properly and correctly. On the other hand, if a policy is not available in writing, there can be a dispute regarding the purpose of the contents of such a policy. At the same time, it is also necessary that a policy should be written in simple language so that it can be easily understood by all the concerned persons.