Understanding HR Basics: How Should Small Businesses Develop Policies, Systems, and Procedures?

What is the difference between policies, systems, and procedures?

What are the standard HR policies, systems, and procedures a small organization should follow? What criteria should be considered when forming these policies, systems, and procedures?

Hello Hema, You have asked something that needs reams to fill up. Here are my two cents:

Policies: Frameworks for decisions - should not be restrictive; they should be progressive, practical, and forward-looking. Cultural compatibility is an important variable.

Procedures: Detail how the policy rolls down, step by step. It has to be congruent with the organization's objectives, policies, and boundary level restrictions (legal, environmental regulations).

Systems: Real-life manifestation of information flow that makes the policy live up to expectations. Systems also take care of interlinkages.

Practices: Actually what happens. Procedures and systems are necessary to ensure that what is practiced is what is intended (policy).

Thank you,

Prof. Biju Varkkey Indian Institute of Management Vastrapur, Ahmedabad 380015 Tel: [Phone Number Removed For Privacy-Reasons]

Hello Prof. Ji! I may not add any value to your expertise, but I just thought of sharing this information with you as you have the opportunity to spread knowledge among the future managers of the Indian community.

POLICY & PROCEDURE

POLICY

The origin of the term policy (from the Greek word "policie" meaning citizenship) could lead to the interpretation that policy should be a reflection of the greater good, or the larger population. Policies:

- Tell the organization WHAT is to be done;
- Are generally set by Top Management;
- Generally provide both vision and inspiration to the organization; and
- Permeate all aspects of an organization.

"Good Policies":

- Are philosophically based and reflect values. They state what is believed, valued, and desired;
- Tell why certain things are wanted;
- Constitute a clear basis for the development and implementation of regulations and procedures; and
- Provide positive direction by the Top Management to the staff, but do not prescribe the methods for arriving at the result.

PROCEDURES

A procedure provides the descriptive narrative on the policy to which it applies. It is the "how-to" of the policy. Procedures:

- Tell the organization HOW a policy is to be carried out;
- Are generally defined and carried out by the administrators;
- Are tools used to assemble, create, and operate the organization; and
- Can be and are often specific to certain aspects of an organization.

SYSTEM

An established or organized procedure; a method.

Shankar Anappindi

[Phone Number Removed For Privacy-Reasons]

HR Executive

KARVY Group

Hi! Let me add to the great definitions already provided by the earlier replies.

Small organizations with a few employees do not need the same bulk of policies, systems, and procedures that bigger organizations need. On the HR side, an organization with fewer than twenty people may only need: 1) an Employee Handbook to clarify the terms and references of employment; 2) a grievance procedure; and 3) a Code of Ethics and Discipline.

Of course, every organization, big and small, needs an Accounting Manual and an Administrative Manual.

Organizations with plants will need a Standard Work Operations Manual, Safety Manual, and a Security Manual.

Big multinational organizations tend to need an HR Policy Manual and related Guidebooks, especially if there are subsidiaries or branches in other areas, whether local or overseas. The HR Policy Manual provides consistency in direction and policies in the eleven (11) critical areas of the HR function.

Best wishes.

Regards, Ed Llarena, Jr.

Managing Partner

Emilla Consulting

(Helps improve corporate governance worldwide, especially in Asia and the Pacific Region)