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4 Check-points to Draft a Good Company Policy

4 Check-points to Draft a Good Company Policy_Yellow Spark Blog
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4 Check-points to Draft a Good Company Policy

Whatever the size of your company, it is pretty obvious why following rules are important – all the more, to have it written down.

Far too many companies, especially small businesses, neglect to get the basics down in writing early enough. There’s a tendency to tackle other priorities first, and the belief that spoken instructions, or writing an email will be enough as far as company rules go.

However, as soon as a company starts growing the drawbacks of this approach become obvious. Putting company policies down in writing makes it official. Employees know where they stand, firstly. Secondly, they also know what the company stands for, what it takes seriously, and can keep up-to-date with the dos and don’ts. Also, it is clear what the employee’s rights are and their responsibility and ownership towards their job are established.

Conflict of opinions are bound to come up. Establishing the ground rules in black and white terms is the best way to tackle it when it arises. In case the issue escalates, it also gives a process to ensure a swift outcome.

Different types of company policies:

There are basically three types of policies a company can put in place. The first is mandatory policies, basically, those that are mandated by law. These include prevention of sexual harassment in the workplace (POSH), employee benefits like gratuity, bonus, minimum wages, etc. Not having these policies could attract heavy fines from the government (in some cases, backward calculated fines), could result in the suspension of licenses or even closure of the company in certain extreme cases.

The second is the must-have policies. These can include administrative policies like a code of conduct; leave policies, policies on work timings, and work culture, performance appraisal, promotions etc. or policy for working overtime. These are essential to lay down the foundation for a ‘good workplace’. They enable the organisation to ensure smooth functioning on an everyday basis without any surprises or glitches.

Third types of policies are the good-to-have policies. These are often seen as differentiating policies, like offering loans against salary or choosing to offer paternity leave, dental insurance, medical insurance, offering childcare etc. These are policies that can be used to promote the brand value among employees. They also become strong retention tools if developed keeping the employees’ interests in mind.

When we have reviewed a few company policies, we’ve noticed that the organisations often confuse policies with processes and procedures. While organisations can have standalone processes, for example, a process for recruitment which will outline the steps to be followed while recruiting. There could also be a standalone procedure, for example, a procedure to book the conference room for meetings or interviews.

Whereas a policy includes processes and procedures and is detailed to ensure that there are few or no grey areas with respect to the concerned topic. For example policy on loan against salary or policy about equal opportunities which will have an impact on our recruitment process. Every organisation must have all three types of documents to guide your workforce on their responsibilities.

Here are the top 4 points to cover to draft a well-rounded company policy.

1. What is the policy for?

It is good, to begin with a proper definition. This includes identifying the need for the policy, whom it covers, and what the scope for the policy is, as well as who is responsible for each task. Make sure the corresponding processes and procedures are linked to each policy.

If for instance, we are drafting a basic policy on compensation for overtime, stating what is classified as overtime and what is considered as extended hours or compensation for missed hours should be very clearly defined. And it should be clear who is covered in this policy. For example, you may choose to exclude consultants from this policy. So thumb rule number one is making a clear classification. Make the policy as clear as possible to lay down the ground rule.

Next is to explain in very certain terms, where the company stands on the issue, and reiterate the company’s core values. You could have a policy that states as an organisation we don’t subscribe to working overtime and hence there will be no compensation for the same or define the number of hours beyond which you are willing to consider an overtime or you could be a company with fixed working hours (shifts) and then you will be required to have a clear policy to compensate for overtime. In case it is a mandatory policy, you should not only make sure it is compliant with the law but also try and raise the standards and go beyond the minimum requirement and aim to formulate a model policy.

2. What are the exclusions and inclusions?

The document should precisely state what a breach of policy is. This includes the rules, and exceptions, and what penalty an employee will be subject to in case they violate these rules. A breach of a policy should be dealt with promptly and according to the procedures set out in the policy. The consequence of the breach should also suit the severity of the breach – whether it be a warning, disciplinary action or dismissal. These can be clearly defined in the company code of conduct, or employee policy handbook.

An example of a breach of policy can apply to the employer as well. In a relevant case, we came across, an organisation that has a zero-tolerance policy towards sexual harassment kept issuing unofficial warnings to the employee instead of sacking them (after appropriate investigation). This shows that the company did not take its own policy seriously but also did not set an example for its employees. The subconscious message conveyed is that it was not serious enough about taking action in such a case.

A policy can also clearly define the jurisdiction of the rule – for example, in case of sexual misconduct by an employee, against a colleague, if it reportedly took place beyond work hours, during an unofficial gathering and not in the premises of the office, then the company shall not take action.

In the entire policy, this section is the most critical aspect of the policy statement. It not only makes things clear for the employees to know if they are crossing a line, but also for the management and HR to decide whether or not there is a breach of policy and what is the severity of the breach.

3. What is the process to address the breach?

Once it is identified that a policy has been breached, what does the company do? Defining a clear process is helpful. The process is the high-level view or the map of the task. It’s essential to have a process so an employee or partner can see what is expected and that the task can be accomplished. This should include, who should be informed, what is the proof required, whether the complaint should be written, or by email, who it should address (depending on what sort of policy).

In case of a grievance policy, for example, it is good to define that the policy has to be addressed by a grievance committee that will be fully accountable for the action to be taken and follow up as well. This will ensure that the process is defined and maintained.

While defining the process it is imperative that the process is time-bound. Often organisations have a process in place but no fixed timelines to address the breach in policy. This leaves the matter under investigation for too long. It sets a bad precedent and sends out the wrong message to your employees, one that reads something like ‘what’s the point of raising an issue, nothing will be done about my complaint’ or ‘it’s ok to breach a policy, and no action will be taken’.

Another pitfall of the absence of time-bound policies is the unconscious bias that gets established. Organisations tend to take action on those issues that hamper the day to day working, while employee complaints are brushed under the carpet.

Having a clear process which is time-bound (especially for policies where you need to have a committee in place) goes a long way in creating an efficient work environment with clear accountability and definite outcomes.

4. What are the consequences?

Once a policy is breached, and the process of addressing it is defined, the policy should tackle the consequences of violating the rules. For example, if the company is strict about the number of working hours an employee puts in, and it finds that an employee is repeatedly falling short, what action does one take? The company follows a policy of issuing a warning, after which a penalty is given – which may vary, for example, cutting the pay according to the hours put in.

Not defining the consequences leaves room for personal biases. This is because every manager then deals with the breach in their own way, resulting in inconsistent redressal of issues. The policy should clearly outline what could be the possible actions that can be taken to reprimand a person against a breach of policy. Having said that, you could always also define the circumstances under which no action will be taken. In this way, you get a lot of room to deliberate over the right action that needs to be taken.

These four parameters will ensure that a policy is holistically framed. Company policies and procedures ensure a safe, organised, empowering, and non-discriminatory workplace. Policies protect employees from a free-for-all environment of favouritism and unfair treatment.

Some of the tick marks to make sure your policy is tight are to include your company mission statement, core values and goals and explain how they guided the creation of your policies, processes and procedures. In doing so, you reinforce the company culture.

It also helps to structure and format policies consistently, using the same font sizes, font types and organisation of information. Expect to update your handbook every one to two years. Be sure it is legally compliant and realise that new laws and regulations mean revisions to your handbook to remain compliant.

Don’t assume that everyone will read their handbook cover to cover. Do explain to employees how they can report potential violations of policies and concerns they have. Give employees numerous ways to share concerns, and encourage transparency within the company and an open-door policy.

Finally, make sure you have a system that allows you to audit, review, refine and revise policies and procedures. As your organisation evolves, so should your policies, processes and procedures.

Yellow Spark believes that company policies are the backbone of a good work environment. We can help you revisit your employee policy handbook, identify the gaps and help you to convert your policy manual from a mere book to actual practice. To know more, write to us on – contact@yellowspark.in

Author Profile: Deepam Yogi is an adventurer at heart, socially conscious in her gut and professionally a strategic consultant. She co-founded Yellow Spark to support organisations to build workplaces that people love being a part of. Deepam describes herself as a shy yet opinionated writer and firmly believes that most answers to complex issues lie in simple communication.