Policy Issues

Each and every organization has it’s laid down Human Resources Management (HRM) policy depending upon their business activities and policy followed by their competitors. There is no hard and fast rule that certain organization has to follow a particular policy.

A policy is a plan of action. Brewster and Richbell defined HRM policies as, “a set of proposals and actions that act as a reference point for managers in their dealings with employees”. Personnel policies constitute guides to action. They furnish the general standards or bases on which decisions are reached. Their genesis lies in an organization’s values, philosophy, concepts and principles”. Personnel policies guide the course of action intended to accomplish personnel objectives. The following example helps to understand the personnel policy clearly.

Business problems are often discussed in terms of current policy issues. A policy that works for one firm may not work for another. Some business policies apply to the entire company and may cover long periods of time. Several general policies receiving attention in recent years are:


Large companies often guide their activities into many different lines of business to avoid having all their eggs in one basket. Among other reasons, diversification is employed to: insulate the company against violent fluctuations in the sales of a single product; give the company growing room (in those cases in which the current share of the market in one industry is looked upon with disfavor by the justice department); follow up discoveries made in a research and development program which provide new knowledge in areas not previously considered to be of company interest.

Many companies decide against a diversification policy. They reason that diversification can lead a company into areas in which they have little knowledge or experience and in which competitors have strong advantages.

The latest trend is instead of diversification increasing core competency, increasing volumes of production and producing at a lesser cost per unit.

Vertical integration:

Some companies strive to operate at all stages of production, from the raw material to find sales to consumers. An integration policy gives more security to the source of supply for raw materials and more control over the quality of parts and supplies used in production. In some industries such as oil and steel, the manufacturing process dictates that a single company handles the product at different stages in order to attain economical operations.

Search for niches:

A firm may concentrate on looking for those areas of operation that are overlooked by its competition. This policy stresses the development of those operations in which the firm has a comparative advantage and avoids trying to “beat a competitor in his own backyard.”

Departmental policies may apply to personnel matters, marketing guides, financial questions, or any other operational phase of the business. The following are several illustrations of some personnel policies.


Should the company avoid hiring the persons who are closely related to a present employee in a key position? The purpose of an anti-nepotism policy is to curb favoritism; however, should a company refuse to hire the best applicant for a job because she is the daughter of the man in another plant of the same company?

Racial Discrimination:

A current policy issue involves the manner in which the company views the hiring of different races and nationalities. Such policies are directly affected by the social customs and legal decisions of the time. Affirmative action programs have focused on elimination of racial discrimination.

Mandatory Retirement at a given Age:

The increase in the length of human life has caused the retirement policy issue to receive increased attention. A mandatory retirement policy has the advantage of providing openings for aggressive young people and of preventing older people from remaining on their jobs past the age at which they are effective. On the other hand, individuals differ as to their physical and mental capacities at a given chronological age; some men at age 70 can provide great services to a company, whereas others, at the same age, are quite feeble. Federal laws have restricted the use of the policy of mandatory retirement. —

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