All Defined A policy statement is an

All organizations need some degree of consistent behavior among employees in certain situations. In this lesson, you’ll learn the definition of policy statements, see some examples, and learn how best to write policy.

Policy Statements Defined

A policy statement is an organization-level document that prescribes acceptable methods or behaviors. Essentially, a policy is simply the way things are done within an organization.

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Policies are different from procedures and standard operating procedures because they are applicable to an entire organization and are primarily intended to set direction. Procedures and standard operating procedures, on the other hand, typically include very specific instructions used to accomplish defined tasks.Well-written and -designed policy statements are general enough that frequent revision is unnecessary. For instance, instead of referring to a specific individual in a policy statement, position titles could be used.

Good policies are written in active voice and are easily understood. Short sentences avoid the use of jargon or acronyms, and using clear terms like ‘must,’ ‘required,’ ‘recommended,’ and ‘should’ make policy readable and easier to use.

Categories of Policy Statements

In a typical business environment, there are five categories of policy statements: human resources, financial, legal or regulatory, safety, and operational. Different organizations will have different policies, depending on factors such as their mission, size, and legal environment:

  • Human resource policies deal with people and include topics such as vacation and sick time, hiring, termination, and employee performance assessment.
  • Financial policies are concerned with money and may include topics such as expenditure approval authority, depreciation schedules, and acceptable investments. Some topics, such as compensation, may fit into more than one category. There isn’t one right way to organize policies, since the only reason for categorizing policy is to make them easier to find.

  • Legal and regulatory policies include topics related to compliance with laws, statutes, and regulations. Multinational organizations usually have a policy that discusses acceptable relationships with foreign government officials, based largely on the Foreign Corrupt Practices Act of 1977.
  • Safety policies focus on topics that help ensure employees, visitors, customers, and other stakeholders remain safe from harm. Companies that use dangerous chemicals may have policies that govern who can handle chemicals and what qualifications they need.
  • Operational policies deal with topics specific to the production and distribution of goods and services, such as excess inventory disposition or returned goods.

Lesson Summary

Let’s review. Policy statements are organization-level documents that prescribe acceptable methods or behaviors. They are important resources for employees and important internal controls for managers. If they are well-written, have full support from management, and are applicable, policy statements can help an organization efficiently achieve their goals and fulfill their mission.

Policy Statement Overview

Human resources
Financial policies
Legal and regulatory policies
Safety policies
Operational policies

Learning Outcomes

The end result of studying this lesson could be your ability to:

  • Provide a description of a policy statement
  • Point out the different categories of policy statements

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