A policy can be called sound when it contains the following characteristics:
(i) Policies should be based on objectives and they should contribute towards the attainment of objectives.
(ii) Policies should be properly planned instead of being the outcome of opportunistic decisions. Different policies must be. Properly coordinated, consistent and balanced.
(iii) A sound policy should be clear, precise and explicit. It should not leave scope for misinterpretation. It should be sufficiently comprehensive in scope. It should be definite and understandable.
(iv) as far as possible a policy should be expressed in writing. Written policies tend to be more clear and definite. A written policy tends to be unambiguous and it reveals the intention of top management. It can be communicated easily. A good policy should be based on facts not on guesswork or intuition.
(v) Policies should be based on careful consideration of the resources and environment of the organization. They should be developed with involvement of all the people who are to use the policies.
(vi) A good policy must be flexible so that it may be adjusted with a change in the objective and the planning premises. It should provide scope for judgment and interpretation required by the situation. At the same time a policy should have some degree of stability if it is to serve as a guide.
(vii) Policies should be reviewed and revised regularly to keep them up-to-date and relevant.
(viii) All policies should be communicated to the concerned persons so that the policies and the objective of their formulation are pro pearly understood by those who are supposed to implement them.
(ix) A sound policy should make for consistency in the operations of the organization. The activities and functions in the policy must be in agreement. Various types of policies must be consistent with each other.
(x) Policies must conform to the norms of ethical behavior which prevail in society and to the ethical standards of business.