Question

Regulation is important in the study of corporate decision-making. Explain how and why. In addition, what do firms do in order to respond to actual or potential regulatory decisions?

Answer 1

A business policy is a set of rules defined by the owner or leadership of the company. Some policies are defined by regulations, such as federal privacy laws, while others are designed by corporate leadership to make sure that things are done by certain standards. Business policies are generally found in the operations manual or in the employee handbook. Although different businesses may have different policies, any business policy has the same seven features. A business policy must be specific, clear, uniform, appropriate, simple, inclusive and stable.

Establishing policies generally starts with a business owner or his initial leadership team writing an employee handbook and business plan with mission and vision. The team must consider what are standard policies regulated by federal and state regulations. Some regulated policies include privacy policies, anti-discrimination rules, overtime and holiday pay and even healthcare programs.

Most businesses will find these regulated rules are similar among many companies though some companies decided to go beyond the required policies. Then there are the operations and cultural policies. These include the image that leaders want the company to have and the internal corporate culture they are working to establish. Everything from dress code to smoking at work might be defined by a business policy.

Preparing for market changes now by purchasing essential goods and equipment, setting aside extra liquid capital, and renegotiating contracts with suppliers could help insulate you from the worst impacts of rising tariffs and trade negotiations down the line.

While health reform efforts failed multiple times in Congress last year, changes to the Affordable Care Act aren't off the table yet. The newly proposed tax policy changes include a provision that reduces the ACA's individual mandate penalty to $0, effectively repealing the provision through tax policy rather than congressional action. However, according to Paychex, the reporting provisions will not change, and employers and other self-insured individuals should be prepared to comply with existing requirements.

Paid leave bills were also introduced in Congress, but any that surface this session are unlikely to gain traction in either Republican-led chamber. For entrepreneurs, offering paid leave benefits represents an attractive incentive when courting talent, but mandatory paid leave policies would likely require additional considerations in planning and budgeting.

Once the main policies are created, business leaders must keep a pulse on how employees and customers respond to the policies. If a policy is having a negative impact on the overall productivity of the company, feedback must be sought and adjustments considered. Every business leader must have this as his own policy for success. Businesses are fluid entities that are always changing. Being too rigid can result in negative performance and negative results. Troubleshooting production problems sometimes start with troubleshooting business policies.