Classification of Policy– Policies may be of different types. They can be classified on the following basis:

• Originated Policies- These policies are formulated by top managers. They till sub-ordinates how to act in a given situation and these policies have the support of organizational authorities and the subordinates can be asked to follow them strictly. Thus, they are basic policies.
• Appealed Policy- If on any matter, the sub-ordinate is not clear and has a doubt about his authority to handle a situation and if that subject-matter is not already covered by the existing policies, he may refer the matter for his superior’s verdict. Superior’s verdict generates appealed policy and thus becomes a guide for future action of the subordinates.
• External or Imposed Policy- Sometimes outside agencies like Government, trade associations, trade union etc., may also be instrumental in the formulation of the policy by the enterprise. For Example-If the government imposes a condition on the enterprises to reserve a certain percentage of jobs for the backward sections of society or for the persons within the state.
• Functional Policies- Policies which are formulated for various functional areas of management are known as functional policies. They are financial policies, production policy, marketing policy and personnel policy.
• Policies on the Basis of Levels-Policies formulated on this basis may be basic policies meant to be used by top managers, general policies meant to be used normally by middle managers and departmental policies meant to be used by the departmental managers or group leaders etc.

Formulation of Policies: Classification of Policy

The formulation of policies takes place at various organizational levels. Some basic and important policies are developed by the top management while some are developed at middle level, management level. Following are some important considerations which should be taken into consideration while formulating the various policies:

• Policies should be based on facts and not on guess work or intuition
• To ensure successful implementation of policy, joint participation in policy-making should be encouraged. It means before formulating policies top manager in the organization must consult the persons who are likely to be affected by them and are supposed to implement them.
• It should be broad, general and basic not specific because they are guide to thinking and action. They should not lay down the detailed procedure of doing activities.
• It must reflect the internal and external business environment. There must be an element of stability in them. It does not however, mean that they must not be changed. If there is a change in conditions on which these policies were based. Rigidities should be avoided to make policies realistic.
• Policies should be in writing and the language of the policies should be intelligible to those who are supposed to implement them.
• Different policies in the organization should support one another. The must be in conformity with and not conflict with one another.
• Policies should have general social objectives. They must not be detrimental to the interest of society; otherwise their implementation would be difficult.
• Policies should be taught. Organization members must understand them. Policies become meaningless if they are not endorsed by the person who are to be affected by them.

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