Need and Importance of Policies:

Sound and clear-cut policies provide he following benefits:

1. Quick Decision:

Policies speed up decision-ma king at lower levels by providing a framework within which decisions can be made. Policies provide guidelines which help to keep toe activities of the organization on the proper lines. Policies reflect the intentions of top management and the behavior expected from subordinates.


They set up broad limits. for exercise of discretion and judgment. Subordinates need not seek approval for each and every individual action in repetitive situations.

A policy helps to clarify objectives by elaborating the way in which goals are to be achieved. Policies foster initiative and future thinking. They serve as ground rules for operating plans. They ensure a steady course of action. Policies predefine issues and avoid repeated analysis thereby saving time and effort.

2. Better decentralization:

Well-denned policies are the main instru­ment for the delegation of authority. Policies provide guidelines for action so that subordinates need not consult their superiors frequently. Policies facilitate communication and executive development.


“Policies provide guidelines to the delegate in order to help him in determining what appropriate action to take and what action will be within the limits of the stated policies.

In effect, a policy informs the delegate what is to be attained by making known the general course of action to be followed.”Policies make actions of organizational members predictable.

Need for close supervision is minimized. Policies serve as a safeguard against the improper use of authority by the delegate.

3. Effective coordination:


Sound policies facilitate unity of efforts and uniformity of action by focusing attention on organization goals. They are helpful in securing unified action in various units of the organization.

They ensure that the actions of officials at different times are consist­ tent. They promote intelligent cooperation. The fabric of organization is bound together by the wrap and woof of policies.

Thus, policies have a considerable contribution to make to coordination of individual efforts and diverse activities.

4. Simplified control’:


Policies help to prevent unwarranted devia­tions from planned course of action. They provide a rational basis for judging the actions and behavior of subordinates.

By setting up policies management ensures that actions taken by subordinates will be consis­tent with the goals of the organization. Policies also facilitate “manage­ mint by exception’.

5. Realization of objectives’:

Policies serve as the means for accom­plishing desired objectives. They give a practical shape to objectives by elaborating the way in which goals are to be achieved. The abstract state­ment of objectives gets translated into concrete terms when policies pro­vide guides to thinking and action.


To sum up, “policies tend to predefine issues, avoid repeated analysis and consideration of general courses of action and give a uni­fied structure to other types of plans, thus pointing managers to dele­gate authority while maintaining control.”