Pros & Cons of Company Policies & Procedures

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Company policies help create consistency in the workplace.
Company policies help create consistency in the workplace. (Image: Patrick Ryan/Lifesize/Getty Images)

Company policies and procedures outline the way business is conducted within that organization, providing guidelines for both employees and managers. Policies and procedures are typically bound into employee handbooks for efficient reference. Establishing clear-cut policies and procedures can help companies undergo smooth and effective growth, but there are drawbacks to building these guidelines into your company's infrastructure.

Pro: Liability Protection

Installing and enforcing policies and procedures can help prevent legal problems, including compliance issues, which limits the company's liability. Outlining and enforcing company policies related to compliance with government standards makes it more likely that employees will observe legal restrictions related to your company, since they're incorporated into your infrastructure.

Documented policies and procedures also help protect your company from liability in court, since formalizing and enforcing these company rules shows that your business has made an effort to prevent negative occurrences such as sexual harassment or accidents related to on-the-job employee substance abuse.

Pro: Professionalism

Another benefit of creating company policies and procedures relates to professionalism. Codifying potentially controversial work-related topics, such as disciplinary procedures, increases consistency and reduces the chances of unfair employee treatment. Running a fair, consistent company helps attract quality workers and builds a positive reputation for professionalism in your industry and community. You’re also less likely to run aground in government compliance tangles, which adds credibility, safety and professionalism to your business reputation. Your employees are more likely to meet your expectations with clearly delineated processes, expectations and consequences.

Con: Investment

Although establishing policies and procedures has clear benefits for your business, there are cons associated with instituting these elements. Researching, writing, incorporating and enforcing company policies and procedures takes time and money. You’ll need to hire someone to develop these policies, or assign this responsibility to trusted managers and administrators. Each component must be researched to ensure that nothing contradicts existing federal, state and local laws governing worker rights, health codes and safety rules. Over time, policies and procedures must be assessed and evaluated for effectiveness, since inefficient procedures can impede company growth. They must also be revised and updated on a regular basis.

Con: Restrictions

Having policies and procedures in place restricts your company's ability to make rapid decisions, shift strategies, make promotions or fire ineffective workers since these processes are formalized. Smaller start-up companies tend to be more nimble and able to make more efficient strategy changes, since they’re less encumbered by established guidelines. Policies and procedures restrict a company's autonomy, since their purpose is to establish processes that discourage spontaneous actions and decisions.

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