NCEA BUSINESS STUDIES 2.1 - Policies and procedures

Policies:

Policies are guidelines on how decisions are made within a business.

Following are some common examples of policies:

Dress code - Air New Zealand has a uniform and rules around jewellery, hair length; restaurants have a policy which ensure that staff within the kitchen must wear hats (to prevent hair getting into food)

Refunds policy - when a business can give a customer a refund

Dispatch policy - lets customers know when goods that they have purchased will be sent out to them and when they can expect to receive them

Holidays policy - some businesses close down for a period at Christmas and all staff need to take time off, others have times of the year when it is difficult to let staff take their holidays (often at financial year end)

Buying policy - many businesses allow their staff to buy their goods/products at a cheaper price - and may even allow them to buy for family members

Terms of trade - these would outline a business's policies around supplying goods to another business - it would contain information about buying on credit, when they expect payment of amounts owing, what happens if their bills are not paid etc

The importance of policies

- To help managers/employees to be able to make "good" decisions that reflect the business principles. By having policies, mangers/employees know how the business will deal with situations and so can assist in helping the business to have consistent outcomes that will conform to the standards the business wants to achieve.

- Policies allow decisions to be made quickly and regularly. So, if for example, a customer in a shop is complaining about a purchase - the shop assistant knows exactly what needs to be done.

The benefits of policies are:

- Employees are treated fairly (this is through the business having policies around buying of goods, holidays, wages, bonuses etc)

- Customers get consistent experiences (each customer is treated the same, or if there are a number of branches of a store - all branches have the same policies)

- Staff can identify expectations of the organisation

- Increased transparency in the business (so stakeholders can have trust in the business)

Procedures:

Procedures are the way that a business carries out their day to day activities.

Some examples of common procedures:

- Instructions on how to use different machinery / production methods

- Safety procedures that need to be followed are detailed for employees to follow

- How to order goods / procedures around spending / form filling

- The procedure for opening and closing of a store, what needs to be done, how to ensure that the store is safe after hours, instructions about counting cash at the end of the day

- How to deal with complaints - what procedure needs to be followed, does a form need to be filled in.

The importance of procedures:

This allows staff and managers to be clearly informed about how to do things.

These procedures are written down so that:

- The health and safety of customers and employees are protected eg staff know how to operate machinery

- There are fewer mistakes/less wastage

- Both quality and customer expectations are met

- Helps to prevent fraudulent behaviour

What is Corporate Social Responsibility?

- Adopting responsible/ethical behaviour throughout a business that takes into account economic, environmental, social and cultural performance (called the quadruple bottom line). Businesses need to take responsibility for the impact of their decisions on customers, employees, communities and the environment.

- Examples are environmental goals such as reducing carbon footprints, education initiatives, buying locally or otherwise helping the local community, using ethical practices such as participating in Fairtrade.

Benefits of CSR

- The business has a positive reputation and gains recognition, which in turn creates a brand loyalty. This leads to products/services being preferred by consumers - which gives the business a competitive advantage

- High staff morale - employee pride in the business increases. Staff feel good about working for the business and that has a positive influence in the community.

- Business is able to attract and retain skilled employees more readily, they have a slower staff turnover rate and a positive organisational culture. They find it easier to recruit staff as employees may wish to work with a business with the same beliefs/ideals

- Because there is good employee morale and employees feel valued, this leads to greater productivity

- Slower turnover rate and retention of employees leads to lower long-run running costs and this can increase profitability

- Recycling and lowering emissions by the business can reduce costs

- Can give a business a point of difference

Costs of CSR:

- It can be costly for businesses to implement and maintain, which may reduce profitability

- The money spent on CSR could instead be spent on research and development, expanding the business, reducing costs, etc

- It can distract management from their central task - which is running a profitable business

Increased costs can mean increased prices to customers

Philanthropy:

- Philanthropy is improving the wellbeing of humankind - through giving (often of money) that will benefit others. It is not just a case of charity; it is more the support of projects/actions that will benefit society.

- An example could be instead of donating food to a community who is hungry, supplying them with the ability to grow the food themselves - so that they will be able to fend for themselves into the future.

- Businesses do this to be seen as good corporate citizens. It allows them to get promotion for their brand/name through extra marketing/publicity. Other benefits, is it helps to produce a sense of pride in working for that business, often with staff being incredibly dedicated and loyal to the ideals of the business.