Policies and Procedures Can Help Your Organization

“Why do we need policies and procedures?”  Have you heard that question before?  Perhaps you were even the one asking it.  How happy were you with the answer you gave, or with the one you received?  Frequently people struggle to give a clear and meaningful response to such an obvious question.  It is, however, probably one of the most important questions to answer before starting or updating a system of policies and procedures.

There are page-long lists of why policies and procedures are necessary, but, of course, such long lists lose meaning and value.  By the time you read to the bottom, you don’t remember what was at the top of the list.  Plus, such long lists have too much overlap and repetition.  A simple approach may be more useful.  The purpose for creating an internal control system through defining and documenting processes with well-written procedures boils down to a few very basic reasons:

• Compliance
• Operational Needs
• Manage Risks
• Continuous Improvement

Policies & Procedures Can Improve Compliance

Complying with laws and regulations should be the most basic function of an organization.  Even the smallest of organizations must comply with tax laws and with state and local regulations (i.e. zoning, licensing), while some organization must cope with a myriad of federal and state laws and regulations.  Other compliance issues may deal with quality standards like ISO 9001, ISO 22000, or UL.

While procedures themselves may not demonstrate compliance, well-defined and documented processes (i.e. procedures, training materials) along with records that demonstrate process capability can make evident an effective internal control system and compliance to regulations and standards.

Let’s face it; if your organization is having trouble in performing the rudimentary function of obeying laws and regulations, then it is likely struggling even more at being effective and successful in fulfilling its core missions.  If compliance is an issue in your organization, then creating well-defined processes documented by procedures in order to meet your legal and regulatory requirements should be a high priority.

Ensure Operational Needs Are Met through Policies and Procedures

What is really important in your business?  What is fundamental for its success?  Are practices associated with them being steered by top management?  How much visibility and transparency is there into the effectiveness of these key processes?

This brings us to the next important role of procedures; to ensure processes fundamental to the organization’s success are properly guided by management, are performed in a consistent way that meets the organizations needs, and that important related information and data are captured and communicated.

For example, if regularly introducing new and improved products is essential to the success of your business, shouldn’t you be in control of your sales and marketing cycle that captures customer requirements and desires so they can be translated into your product design?  Shouldn’t there be well-documented design review and product launch processes?  Policies and procedures are a way to document such key activities so they are executed consistently and implement the best practices for the organization.

Compliance and meeting operational needs are two very important reasons for implementing a system of policies and procedures.  But it is still only half the story.  Next week, we will discuss the role of policies and procedures in managing risks and in continual improvement.

Learn more about developing policies, procedures and processes, or improving your organization by attending the next Implementing Lean Thinking or How to create well-defined processes classes.

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Posted on Monday, November 5th, 2007 under Writing Policies and Procedures