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Policy Deployment


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Policy deployment is a process for ensuring that a company's policies for quality, cost and delivery (QCD) are understood and implemented from the highest to the lowest levels in the company.

You might ask why you should introduce policy deployment when you already have a process for cascading objectives throughout the organisation.

The problem with an objectives cascade is that although an objective is appropriate when it is set at the top of an organisation, it might not make sense or seem relevant when it reaches the departments and individuals.

Imagine a company wants to reduce its costs by 10 per cent. The traditional method of cascading objectives would see a 10 per cent budget cut imposed on every department. This may be a good objective for the company as a whole, but does it really make sense to impose a flat 10 per cent cut on every department? Some departments may be able to reduce their budgets by 20 per cent, while others may need a 5 per cent increase to be able to function at all.

Another company might have an objective of improving customer satisfaction by 15 per cent, but what does that mean to a person who never meets a customer? The answer to these questions is provided by policy deployment.

The way the system works in practice is that the policy is cascaded to the next level down and is also translated across the organisation. It is this translation that makes it relevant to every person and every department.

Cross-functional communication of policies is also very important because it binds the functions together in pursuit of the company goals. It helps functions co-operate instead of selfishly pursuing their own objectives at the expense of others. It is this subtle but important distinction that separates policy deployment from Management by Objectives (MBO).

Definitions

A more formal definition of policy deployment is:

The progressive translation and cascade of an organisation's vision, priorities and goals and into detailed, measurable objectives within the organisation.

In this article you will come across many other terms (vision, mission, priorities, goals, strategy, policy, objectives) that are often used loosely or interchangeably in discussions about business processes, so to avoid confusion, this is probably a good point to share the definitions that we will be using in this article.

Vision

A vision is a 'picture' of where the organisation wants to be in the future. By describing the future in emotional rather than measurable terms a vision can exert a strong pulling force which helps keep the organisation aligned. Describing events in pictorial terms, and from a future viewpoint where success has already been achieved, greatly enhances the probability of a vision coming to fruition. A vision, like a company's philosophy, provides a basis for deciding which actions should be taken.

Mission

'Mission' is often used interchangeably with 'Vision', but in this discussion it is about the present - what the organisation is here to do today - it's 'reason for existence'.

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Priorities

In order to fulfil its vision, an organisation will make an assessment about its current state and carry out a diagnosis as to what needs to be done. In any real situation, a million problems need to be solved, but following the Pareto Principle, there will be a relatively small number of issues (typically four to six) that will account for the majority of problems. The organisation then makes these significant issues its priorities. Examples of priorities would be:

Goals

Goals are quantitative figures, such as sales, profit and market share, that are established by top management. Goals put the flesh on the priorities. Without goals the vision will remain only a dream.

Strategies

A strategy is the means of achieving the goal. Once set, it should only be changed reluctantly. If you find that a strategy is deviating from the plan, it is better to change tactics to bring the strategy back on course rather than change the strategy which could throw the whole business process into instability.

Objectives

'Objectives' are often used interchangeably with 'goals'. An objective is set at a lower level than a goal and is more specific. The difference will become clearer when we look at the different levels of policy deployment.

Policies

A policy is a course of action comprising a 'what' and a 'how'. Without the 'how' a policy is only a slogan like 'Work Harder' or 'Think Smarter'. Imploring people to improve without providing the means cannot, and does not, work. Be careful of how the word 'policy' is used, as it is often used interchangeably with 'philosophy' which has quite a different meaning.

Policy Deployment Process

As a policy cascades down, the 'how' at one level becomes the 'what' at the next level down. All line managers are expected to translate their 'what', into a 'how' that will achieve the 'what'.

Policy Deployment

Figure 1 Policy Deployment

A process of negotiation - sometimes called 'catch ball' - occurs when the 'how' at one level is converted to the 'what' at the next level. This ensures that what needs to be done is thoroughly understood, achievable and relevant to the department, or individual, responsible for its achievement.

Policy deployment is a cyclical process. Progress against the goals should be checked, the reasons for any deviations (both positive and negative) diagnosed and the policies modified in the light of the diagnosis.

Policy Deployment in Practice

Let's take the example of a company that has a vision of being the most respected brand in the business. In order to do this the board has identified the following priorities:

In this case the vision is the 'what' and the priorities represent the 'how'. Each of these priorities are then cascaded down to the next level.

In the case of the customer satisfaction priority, senior management start discussions with the Customer Satisfaction Manager to identify a customer satisfaction goal which would help achieve the vision. Let's say, that in this case, the company customer satisfaction goal was agreed to be 10 per cent.

Once this goal has been agreed, the Customer Satisfaction Manager needs to put together a strategy which will achieve the goal. A strategy with the following elements is identified:

Here the goal is the 'what' and the strategy is the 'how'.

The Customer Satisfaction Manager then starts negotiations with the managers responsible for each of the strategic elements. Notice, that in each negotiation, a different objective or 'what' will be negotiated. Possible examples are:

This flexibility is one of the major differences between policy deployment and objectives cascade. The 'hows' will be the work processes associated with these objectives.

Levels of Policy Deployment

As a policy is cascaded down and translated across an organisation, it becomes more specific. In this way, senior management can paint in broad brush strokes and individuals have the precise objectives they need to carry out their work. The table summarises this and gives a clearer distinction between visions, goals and objective.

LevelWHATHOW
1VisionPriorities
2GoalsStrategies
3ObjectivesWork processes

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