How different types of organizations formulate their policies? Organizations of different sizes and structures have different approaches to formulate their policies.
This is part of a four-series of articles. The first one discussed why policies matter the most and how they streamline your business operations for growth. The second one explained the impact of policies on management effectiveness. And, the third one explored classification of policies, and understanding the different types of organizational policies
In this blog post, we will discuss how small, medium, and multinational organizations formulate their policies.
Small Organizations
Small organizations typically have fewer employees and operate in a more informal environment. The policy formulation process in such organizations may be less structured and involve fewer stakeholders.
Example: A small restaurant may have a policy of not allowing employees to eat in the dining area during their shift. This policy may have been created informally by the owner or manager based on their observations of how employee dining habits affected customer satisfaction.
Medium Organizations
Medium-sized organizations often have more formal policies and procedures in place due to the increased complexity of their operations. Policy formulation in these organizations may involve multiple departments and stakeholders.
Example: A mid-sized tech company may have a policy of conducting regular performance evaluations for all employees. This policy may have been formulated by the HR department in consultation with managers and employees, and then approved by senior management.
Multinational Organizations
Multinational organizations operate in multiple countries and have a large number of employees. Policy formulation in these organizations is typically highly structured and involves coordination between different regions and departments.
Example: A multinational consumer goods company may have a policy of ensuring all suppliers comply with the company’s ethical sourcing standards. This policy may have been formulated by the company’s sustainability department in consultation with legal, procurement, and supply chain teams across different regions.
Thus, policy formulation processes vary depending on the size and complexity of an organization. Small organizations may have a more informal approach, while medium and multinational organizations have more formal processes that involve multiple stakeholders. Regardless of the size of the organization, effective policies are critical to ensuring the smooth operation and success of the business.
Case Study: The Use of Policy in Management
Here’s an actual case study that highlights the use of policy in management:
Case Study: Ford Motor Company’s Use of Policy in Management
Background: Ford Motor Company is a multinational corporation that designs, manufactures, markets, and services automobiles. The company has a history of using policies to manage its operations effectively. In the early 2000s, Ford was facing several challenges, including declining sales, rising costs, and a lack of innovation.
The Use of Policy in Management: Ford’s management team recognized the need for policies to address these challenges. They identified the following areas that required policies:
- Innovation: Ford developed a policy to encourage innovation across the company. The policy established a framework for innovation and established an innovation team that was responsible for identifying and implementing new ideas. The policy also encouraged cross-functional collaboration and provided resources for innovation.
- Cost Control: Ford developed a policy to control costs across the company. The policy focused on reducing expenses, improving efficiency, and eliminating waste. The policy established targets for cost reduction and identified cost-saving opportunities in areas such as procurement, manufacturing, and distribution.
- Quality Control: Ford developed a policy to ensure consistent quality across all of its products. The policy established quality standards and a process for monitoring compliance with those standards. The policy also outlined the consequences of failing to meet quality standards.
Results:
The implementation of policies had a positive impact on Ford’s operations. The innovation policy resulted in the development of new products such as the Ford Fusion and the Ford Focus. The cost control policy resulted in significant cost savings, which helped to improve profitability. The quality control policy resulted in improved customer satisfaction and a better reputation for Ford.
Conclusion
This case study demonstrates the importance of policies in management. Policies can help organizations to address challenges, encourage innovation, control costs, and ensure consistent quality. Effective policies should be well-defined, communicated clearly, and implemented consistently. By using policies, the management team at Ford was able to improve innovation, control costs, and ensure quality, resulting in a more successful and profitable company.
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