Policy Decisions

The Heading of the Constitution of the United States.
The United States Constitution is an example of a policy statement. It states in broad terms what the government can and can’t do. It demonstrates that a policy statement can be amended. It can also be interpreted in differing ways as the meaning of words change. Most policy statements are much more easily updated than a nation’s constitution.

Policy decisions are defined in management theory as those decisions that define the basic principles of the organization and determine how it will develop and function in the future. Policies set the limits within which operational decisions are made. Examples include:

  • Vision, Mission, Aim
  • Budget and Finance Practices
  • Allocation of Resources
  • Organizational Structure
Policy decisions limit the actions an organization and its members can take without changing the policy.
In sociocracy, policy decisions are made by consent. Operational decisions are made within the limits set by policy decisions and may be made autocratically by the person in charge or by other means determined by the people whom the decisions affect.

Examples of Policy Statements

We set policies in our everyday lives without realizing it or writing them down. Examples include:

  • Deciding not to drink coffee or consume animal products
  • Pledging to complete  tax forms before their due date
  • Sending your children to public schools by choice
  • Deciding not to have children to devote time to political causes

In non-profit organizations the policies might include:

  • Following the IRS regulations that set requirements for 501c3 status to receive tax-deductible contributions
  • Limiting membership to professionals with a demonstrated expertise
  • Serving meals to the homeless
  • Using contributions only for administrative costs and not staff salaries

In business they might include:

  • Annual and departmental budgets
  • Employee compensation schedules
  • Union agreements
  • Future donations of money and employee time to charitable causes
  • Production of certain products and not others
  • Limiting sales and marketing to retail or wholesale customers

These are all decisions that define the scope of day-to-day  decisions about how we will conduct our personal or work lives, our operations.

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