Business policy is the analysis of the major issues impacting organizational development, identifying the main roles and duties of top management, identifying the key issues impacting organizational performance and finally the formulated decision on the actions required to bring about change. The importance of a business policy is that it provides a framework that guides and regulates the overall organization and lays down rules and guidelines for its internal functioning. In layman terms, a business policy defines the policies that are important for the organization and provides a road map to achieve organizational objectives. While there are many types of business policies, all of them serve the same purpose and help in providing direction.
There are many instances where the implementation of a business policy has actually improved the performance of an organization. For instance, when an organization adopts a pay review policy, then it has implemented one of the best policies that governs behavior of employees towards their salaries. Employees become aware of their rights and are aware of how much they are entitled to for the work they do. This leads to increased production and quality of work which are then reflected in their pay check.
A business policy also establishes guidelines that employees must follow regarding their behavior. Most policies specify the types of behavior that constitute as grounds for dismissal. For instance, if there is a complaint by an employee that they are not meeting targets due to personal issues, then it may be reasonable to fire that employee because it is reasonable for that employee to expect that performance targets will be set in place. It is only when there is no performance-based ground for dismissal that an employer can use as an excuse to avoid implementing the policy or justify its failure to implement a policy. As such, business policies help improve communication between employers and employees and lay down guidelines for both to work together for the common goals.