Why is it important to clarify Organisation policies and legislation to personnel and how can this be achieved?

The world of corporate compliance uses many terms of art, and one of the most common is “policies and procedures.” Yet, somehow, it also ends up being one of the most vague phrases we use, too. This is why even the most seasoned compliance professionals need a refresher on why policies and procedures important in the workplace.

Think about it: when was the last time you encountered a compliance issue that didn’t somehow involve better policies and procedures? No matter how your corporation operates or the particular problem is haunting you today—when management asks, “How do we assure this doesn’t happen again?” part of the answer inevitably involved better policies and procedures. 

So clearly it’s important, but why do we have policies and procedures? Let’s review.

What Is the Purpose of Policies and Procedures?

As we’ve mentioned previously, the purpose of policies and procedures is to bring uniformity to corporate operations, and therefore reduce the risk of an unwanted event. 

Another way to phrase it: policies and procedures organize employees to behave in certain ways, which lets the business achieve its objectives more efficiently. Sometimes policies and procedures help to achieve operational objectives—say, ways to develop a new product, or how to handle a customer service call. 

Other policies and procedures help to achieve compliance objectives: how to treat all job candidates equally in hiring or promotion; how to perform due diligence on a third party; when to seek consent from a customer before collecting personal data. Tasks like those can be done in any number of ways, but policy and procedure show the employee how to do those tasks in your preferred way. 

That’s important because every company sets its own tolerance for risk. Policies and procedures help employees to keep their actions within those tolerances. For example, all hiring managers might think they’re fair in hiring and promotions—but some might be more diligent about fairness than others. If a manager is sloppy about policies and procedures for hiring, he or she is acting outside the company’s risk tolerance, and bringing more compliance risk to the organization.

Why Is It Important to Update Policies and Procedures?

Well, that’s easy: because business operations change. If you don’t update policies and procedures to keep pace with that change, they’re no longer fit for purpose. 

A better way to think about this question is to consider all the ways your business operations change. That gives a sense of all the ways you should assess your policies and procedures to see whether circumstances have changed so much that your policy manual deserves an update. For example:

• You could move into new geographic markets. That might bring compliance obligations from those new jurisdictions (a new country’s consumer protection laws, say), or new compliance obligations here at home about how your business behaves there (no bribing foreign officials; no selling weapons technology).  

• You could offer new products, or target new customers. That might entail new compliance duties such as gaining consent to collect personal data that previously your business never collected; or creating procedures to let customers return products they no longer need (such as Japan’s rules for recycling consumer goods). 

• Your business might embrace new technologies. That could be something like moving to cloud-based software vendors for your business applications, or letting employees conduct business on their personal devices. Either move would create new data privacy obligations, which means new procedures to log onto systems and keep data safe.

Aside from all those forces, the laws, regulations, and enforcement priorities that affect your business might also change. Consider all the new anti-bribery and consumer privacy statutes we saw around the world in the 2010s, or the climate change disclosures we’re likely to see in the 2020s. Those new regulatory requirements have to be met somehow. Policies and procedures tell employees how. 

Why It’s Important to Have Policies and Procedures

Those are some of the big, conceptual reasons why policies and procedures are important in companies. That said, they’re also important for several practical reasons.

1. Regulatory Requirements

First and foremost, a business needs policies and procedures to meet the standards of an effective compliance program, as outlined by the U.S. Justice Department. The department’s guidelines on evaluating corporate compliance programs contain a whole section on policies and procedures, covering points such as the design, accessibility, and comprehensiveness of your policies and procedures. 

Other regulators around the world also stress the importance of policies in the workplace. For example, Britain’s Serious Fraud Office has guidance on compliance with the U.K. Bribery Act, where policies and procedures are a significant theme. Individual U.S. states, industry regulators such as the Department of Health & Human Services—many of them cite the need for policies and procedures. If yours aren’t sufficient, neither is your compliance program. 

2. Hold Employees Accountable

As we mentioned, policies and procedures guide employees on how to behave. So when they don’t behave as instructed, you now have a mechanism to hold them accountable: they weren’t following policy and procedure, as they’d been told to do.

This does drive up the importance of clear policies, so employees can’t claim they didn’t know what they were supposed to do. It also reflects the accessibility of policies, as mentioned by the Justice Department’s guidance: employees need to be able to get their hands on a copy (written, electronic, whatever), and it has to be in a language they understand.

But fundamentally, policies and procedures allow the organization to hold employees (and third parties) accountable for unacceptable behavior. That’s just as important as encouraging acceptable behavior. 

3. Identify Anomalies

When most employees follow policy and procedure most of the time, most of the company’s transactions will unfold in the same way—which, in a roundabout way, helps compliance and audit teams to identify transactions not happening in the usual way. That is, policies and procedures bring anomalous events into sharper relief.

For example, if all expense reports are supposed to include itemized receipts (that’s the policy), and all reports are to be submitted via a certain online system (that’s the procedure) you can more quickly find those employees who aren’t submitting expense reports with itemized receipts. Then come the obvious questions: Why not? Are the reports illegitimate? What else should we examine? And so forth.

Moreover, if employees keep coming to management asking for exceptions to policy, or complaining that a procedure is too onerous—that’s a warning sign that perhaps your policies and procedures are the anomalies, rather than reluctant employees. 

4. Build a Stronger Culture

Ultimately, the most important reason to have policies and procedures is that they help to build a stronger corporate culture. When all employees understand how they’re supposed to go about their daily routines, and they understand the core ethical values and priorities behind those policies and procedures—that builds a more unified, trusting culture. 

Once an organization has a culture like that, all manner of benefits emerge: greater efficiency, lower employee turnover, and yes, fewer compliance failures. Traits like those can provide an invaluable strategic edge over your competitors. 

So as vague as the phrase “policies and procedures” might be, strong policies and procedures are hugely important. Whatever the time and effort to get them right, it’s worth it.

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Policies and procedures go hand-in-hand but are not interchangeable.

A policy is a set of general guidelines that outline the organization’s plan for tackling an issue. Policies communicate the connection between the organization’s vision and values and its day-to-day operations.

A procedure explains a specific action plan for carrying out a policy. Procedures tells employees how to deal with a situation and when.

Using policies and procedures together gives employees a well-rounded view of their workplace. They know the type of culture that the organization is striving for, what behavior is expected of them and how to achieve both of these.

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The Importance of Policies and Procedures

Regardless of your organization’s size, developing formal policies and procedures can make it run much more smoothly and efficiently. They communicate the values and vision of the organization, ensuring employees understand exactly what is expected of them in certain situations.

Because both individual and team responsibilities are clearly documented, there is no need for trial-and-error or micromanaging. Upon reading the workplace policies and procedures, employees should clearly understand how to approach their jobs.

Formal policies and procedures save time and stress when handling HR issues. The absence of written policies results in unnecessary time and effort spent trying to agree on a course of action. With strict guidelines already in place, employees simply have to follow the procedures and managers just have to enforce the policies.

Implementing these documents also improves the way an organization looks from the outside. Formal policies and procedures help to ensure your company complies with relevant regulations. They also demonstrate that organizations are efficient, professional and stable. This can lead to stronger business relationships and a better public reputation.

How to Develop Policies and Procedures in the Workplace

When creating a policy or procedure for your workplace, start by reviewing the mission statement, vision and values. According to the New South Wales Government Industrial Relations, “a workplace policy should:

• set out the aim of the policy
• explain why the policy was developed
• list who the policy applies to
• set out what is acceptable or unacceptable behavior
• set out the consequences of not complying with the policy
• provide a date when the policy was developed or updated”

Once you implement your policies and procedures, the next step is to inform and train employees on them. You can’t expect employees to follow guidelines if they aren’t aware of them. Be sure to schedule regular refresher training sessions, too, to keep employees on track.

Paychex WORX says that “employees may be more likely to embrace rules when they understand their purpose and that they are not meant to be a form of control or punishment.” For this reason, keep a positive attitude during training sessions and leave plenty of time for employee questions.

Policies and procedures should not be written once and left alone for decades. Reviewing these documents regularly and updating them when necessary is key to their success. In addition to an annual review, consider updating them when you:

• adopt new equipment, software, etc.
• see an increase in accidents or failures on-site
• experience increased customer complaints
• have a feeling of general confusion or increased staff questions regarding day-to-day operations
• see inconsistency in employee job performance
• feel increased stress levels across the office

Organizations need policies and procedures for a wide range of HR topics. Below are some of the subjects you should consider creating guidelines for.

Polices and Procedures for Attendance

Absenteeism costs wages for the employee who doesn’t show up, wages for a replacement worker, and delays and disruptions to the whole organization. That’s why you need to write (and consistently apply) attendance policies.

These documents can include guidelines on tardiness, vacation time, sick leave, appointments and paid volunteer hours. You can also include the amount of notice required before booking time off. Take your corporate culture into consideration when developing these rules.

Policies and Procedures for Employee Conduct

This is a broad topic and may require multiple, separate policies. Including guidelines on drugs and alcohol use, smoking, performance management and discipline helps employees know what is and is not acceptable behavior at work.

Policies and Procedures for Use of Company Property

The number of ways employees can misuse company property is never-ending. “Renting out the company’s equipment to third parties, intentionally producing scrap product that is actually being sold by the employee, taking vehicles for recreation, hosting their own websites on company servers, even directing other employees to preform tasks that unknowingly benefit the ghost business” are just a few examples of risks your organization could face, according to ASG Investigations.

Employees have to use company property in order to do their jobs. Depending on your industry, this could include electronics, medical equipment, vehicles, tools and uniforms. Include guidelines on how to care for company property, as well as how much (if any) and what types of personal use are permitted using company property.

Policies and Procedures for Harassment and Discrimination

Did you know that the average harassment lawsuit costs the employer $250,000 to defend? With rules in place, you can prevent these incidents and protect both your company and your employees.

Harassment and discrimination affect the entire workplace culture. Keep employees safe and treat them fairly by developing policies and procedures that prohibit behaviors such as:

• sexual harassment
• bullying
• verbal and physical harassment
• stalking
• hiring discrimination
• workplace discrimination

Include information on how to report harassment and discrimination and explain that the company will not retaliate for reporting.

Policies and Procedures for Internet and Social Media Use

Make employees aware that any internet use at work is not private. Urge employees to limit personal internet use and ensure everything they do online in the workplace is legal, ethical and appropriate (and explain what these mean). Add guidelines about what is and is not appropriate to post on social media regarding your organization as well.

RELATED: 16 Tips for Managing Social Media in the Workplace to Help You Avoid Scandals

Policies and Procedures for Health and Safety

In 2020, OSHA awarded workers $30.1 million in settlements, nearly double the total from the year before. Without strong health and safety policies that are actually enforced, your employees and your organization are at risk.

Protecting employees’ safety and well-being should be every organization’s top priority. When writing your health and safety policies, include information about how to deal with illness or injury at work, equipment safety guidelines and how to report a health or safety concern. Also include procedures to follow in the event of a fire or natural disaster.

Policies and Procedures for Expenses

If your employees travel or purchase things for work, having an expense reimbursement policy in place is essential. Explain what types of expenses are acceptable for reimbursement (airfare class, transportation, meals, etc.). Include procedures on how to submit a reimbursement claim.

Policies and Procedures for Remote Work

With a desire for more flexibility in location and hours, as well as the COVID-19 pandemic, many companies and employees are choosing to work remotely at least some of the time. If you allow employees to work from home, you need two main policies to ensure the set-up is safe and runs smoothly.

First, a general remote work policy should describe who can work remotely and how often. What hours do remote workers need to be available? What communication standards must they meet? Will you provide necessary work equipment or reimburse employees for their purchases?

In addition, include health and safety procedures for remote work in either your remote work policy or your regular health and safety policy. These should address how you’ll handle potential ergonomic issues, environment-caused injuries and illnesses, mental health, and fire and weather emergencies.

Why You Need to Enforce Policies and Procedures

Policies and procedures are helpful for making your workplace run more efficiently, but they are only effective if you enforce them. Enforcement of the guidelines guarantees your organization’s operational procedures and decision-making processes are uniform and consistent across cases.

When you don’t enforce your procedures, you put your organization at risk. If an employee or external person comes forward with an allegation against your company, having formal policies and procedures in place strengthens your case.

RELATED: Employee Policy Manuals: What to Include in Your Annual Review

For example, say someone sues your organization for hiring discrimination, claiming that they were not given a job they interviewed for because they have a disability. Having an anti-discrimination policy in place is a strong piece of evidence in your defense.

Or, say that you refuse to reimburse a first-class plane ticket an employee bought to get to a conference. Pointing out that first-class airfare is not eligible for expense reimbursement and having proof of this in your policy protects your organization from legal actions and reputation damage.

Without formal policies and procedures, your organization may not be reaching its potential. Developing and enforcing policies that reflect your workplace’s values make it a better environment for all employees.