Relationship of Policies to Business Objectives

Objectives are the principles that guide a business, and policies are the rules that embody these objectives. When policies align with objectives, a business operates in service of an overall idea that unifies its products and its protocols. When a company's policies do not support its objectives, employees may feel disoriented, confused or disillusioned.

A company's objectives can be as practical as earning a profit or as noble as improving the environment. A business that clearly identifies its objectives can make choices that further these objectives regarding everything from where it banks to what it sells. Having clear objectives enables a business to focus its internal operations, making targeted investments in shrewd purchases. Clear objectives also help a company focus its marketing efforts and create a convincing, easily identifiable brand.

Policies are specific rules and guidelines. Businesses create and implement policies in order to achieve consistency and outline protocols. Well thought-out and clearly articulated policies serve as a baseline for day-to-day decision-making as well as guidance for unexpected situations. Policies may be formally written rules and regulations or unspoken conventions that guide company culture. Successful business policies are broad enough to allow employees leeway but specific enough to offer meaningful guidance.

Both objectives and policies are expressions of a company's vision. Both represent guiding principles that embody broad ideas with enough specificity to be useful. For example, a company founded with the objective of creating jobs for inner city youth defines its objective with enough specificity to communicate that it is helping youth rather than adults and inner city residents rather than suburbanites. Its policies express its objective with a greater degree of specificity, outlining the company's strategy for creating jobs and selecting applicants.

Policies are more practical than objectives, addressing situations and possibilities rather than ideas and goals. Policies are based on objectives, which offer unifying themes and long-term visions. Objectives are not based on policies, which offer relatively narrow insights tailored to specific situations. A company that has policies without objectives runs the risk of getting lost in the details, and a business that has objectives without policies will have trouble focusing and getting things done.