What is a policy manual?

A policy manual is an internal document of an organization containing guidance for employees to follow the policies and practices of the organization.

When an organization is small, it’s easy for the management to guide the employees in person. There is usually no need for a policy manual. However, once the organization starts to grow, number of employees and number of offices also increase. A point comes when guiding the employees in person about how things are done in the organization becomes impossible. In such situations, policy manual comes on to the scene.

Executive management with its experience and sometimes with the help of external experts, develop the policies and best practices and document them. These policies relate to all areas of an organization such as HR, procurement, sales, treasury policies etc. This document is called policy manual which is shared with all the relevant employees. As in large organizations, employees are greater in number and different functions are usually performed at various geographical locations, policy manual is often used to share the organization’s policies with employees. There can be single manual with sections for different areas or separate manuals for each area may be prepared such as HR manual, Finance manual, procurement manual etc.

All employees are expected to read their respective areas from the policy manual to know the policies of the organization. Furthermore, the manual should also be readily available to the employees for reference.

For example, a new procurement manager is hired by an organization. During his initial days, he is expected to get an understanding of his job and go through the procurement manual which may include:

  • Detailed procedure of procurement
  • How the list of authorized suppliers is maintained
  • What documents are used during procurement cycle
  • Authorization matrix