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What is a Company Policy?

Felicia Dye
Felicia Dye

A company policy refers to a business’ approach to a given issue. That approach is generally detailed and may include components such as forbidden behaviors, rights, and dispute procedures. One company may have several policies. and they may pertain to issues involving clients or employees. When a company policy involves employees, it is likely to be overseen by either management or human resources. When clients are involved, policies are often handled by customer service agents or managers.

The term policy may mislead people to think that a single idea or rule is being communicated. On the contrary, a company policy is usually a collection of ideas that pertain to a single issue. It normally communicates what a person should expect of a company, what a company expects from individuals, and what will happen in events that deviate from the norm.

Businessman with a briefcase
Businessman with a briefcase

It is often necessary for a company policy to be established to ensure that a business complies with an obligatory regulation. For example, in many jurisdictions the law forbids discrimination on a basis such as religion or pregnancy. A company, in addition to the guilty individual, may be held liable for any violations of this law. To help prevent the occurrence and to reduce what may be interpreted as complicity, companies usually develop policies.

Such a policy is likely to consist of several major components. First, it may define the issue, in this case discrimination. It may then outline forbidden acts. The procedures for those who believe that they are victims to have their complaints addressed will usually be included. There is also likely to be a disciplinary action plan for violators outlined in the policy.

A company policy that pertains to clients usually addresses how they will be treated and the obligations that they consent to. For example, a store may have a return policy to address situations where a customer does not want an item that she has purchased. That policy may specify items that cannot be returned. It may outline the requirements of the customer, such as having the receipt and the original packaging. Additionally, it should specify the company’s obligations, such as providing a refund for a purchase made within 30 days and doing so in the same form of payment originally used.

There are numerous benefits of company policies. They encourage fairness because the terms are outlined on a general instead of an individual basis. Policies can make businesses more popular because people are aware of how they will approach an issue in advance. One drawback of a company policy, however, is that it may impose legal implications on the businesses that implement them. When someone deviates from a policy, the company may be held liable because courts may interpret it as a breach of contract.

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Discussion Comments


Much like many school districts do, it is a good idea to confirm understanding of company policies by obtaining individual employee signatures. That way, no employee can come back at a later date, when a policy has been violated, and say they didn't receive or understand the policy in question.

Although ignorance of the law is no excuse, there is so much gray area in potential lawsuits. It is smart for a company to eliminate as many variables as possible from the start.

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