GENERAL POLICIES OF ADMINISTRATION

Organization: Line of Authority and Responsibility

1. There are to be definite, non-overlapping lines of authority. There

must be no crossing of the lines of authority.
2. There must be complete organizational charts, including foremen
and supervisors and all engineering and office jobs above the
rank of clerk and stenographer. (Division heads’ private copies
should have the name of each person, accompanied by age and
approximate length of service with the company.)
3. One and only one person is to be responsible for the
implementation of every individual decision. This will fix
responsibility and avoid buck passing.
4. All instructions are to be channeled through the proper
organizational structure or given only to those delegated to
receive them.
5. A number of property organized, actively functioning, permanent
committees are to be maintained, and these committees must
meet promptly at regular, specified intervals, with additional
meetings whenever required.
6. Each division head shall hold staff meetings at least once in
three weeks.
7. Cooperation must be the rule among all members of
management and supervision and their personnel.
8. All decisions involving more than one person or more than one
division or department are to be the result of consultation with
all necessary persons.
9. In every scheduled group discussion a chairman is to be
appointed to conduct the meeting, in order to guide discussion
and to insure that one and only one person is made responsible
for the implementation of each decisions.
10. Adequate notes are to be kept of all group discussions and
decisions.
11. Decisions by individuals and by groups are to be made
promptly.
12. All decisions are to be implemented promptly and
according to schedule.
13. After installation of agreed-upon procedures, prompt
follow-up is to be instituted and continued at intervals thereafter
when deemed necessary.
14. Every executive is to give full consideration to the ideas for
his superiors, equals and subordinates.
15. The ideas of all employees are to be freely exchanged for
the overall benefit of the company.
Development of Leadership

Objectives and self-organization

16. Every executive must have, at all times, a clear

understanding and a complete listing of the company’s general
and specific objectives and policies, as well the objectives and
policies which apply to his or division or department.
17. Every executive shall prepare a list of his duties and
responsibilities for his superior, and shall require similar lists to
be prepared by those reporting to him, and so on down the line.
These lists will be reviewed and amended at regular intervals,
and more frequently if required.
18. All project objectives shall be listed in groups according to
the relative importance of their accomplishment and the urgency
of their completion. First things first must be constantly borne in
mind.
19. Every supervisor must learn to organize himself and
schedule his work.
20. Every executive must consciously avoid waste of time.
Meetings, interviews, telephone calls, appointments, visits and
trips must be kept as short as possible, consistent with adequate
result.
21. Every executive must put the company’s interests above
his own immediate personal interests.
22. Executives should maintain a cooperative spirit and avoid
jealousy guarding the prerogatives of their offices to satisfy
personal pride.
23. Every executive must remember that, whether he wishes it
or not, his enthusiasm, drive, efficiency, firmness, honest,
firmness, consideration, tact, courtesy and general deportment
will be an example to his entire personnel. The executive sets
the pace.

Delegation of responsibility

24. Every executive must carefully choose and thoroughly train

a competent understudy. Wherever practical, the understudy
should be some years younger then his superior.
25. Every executive is to delegate authority to, and place
responsibility upon, subordinates wherever possible.
 26. Every executive is to delegate to subordinates as many of
the necessary procedures and details of his division or
department as practicable.
27. Every executive must organize his work and delegate
duties to his subordinates I such a way as to provide himself with
ample time for thought and study, in order to obtain an over-all
view of company operations, as well as his division or
department operations, and to make plans for the future.
28. Every executive is to train and encourage his subordinates
to develop initiative and use their own judgment to the greatest
practical degree.
29. Subordinates are to be selected and trained so that it is
unnecessary, and hence undesirable, for their superiors to check
anything but end results.
30. Every executive is to enforce strict discipline throughout
his organization.
31. Absenteeism, lateness and loafing must be held to a
minimum.
32. Executives are to be judged by the general performance
and morale of their units; by their breadth of view of company
operation and interest, as well as by their individual acts and
ideas.
33. Judgments of personnel must be based on facts, not
prejudices.
34. Individuals’ accomplishments are to be recognized.
35. Give praise wherever justified, but only when justified.
36. New positions are to be filled and promotions made from
within the company wherever possible.

Efficiency and Quality

General efficiency

37. Every employee must be trained to be cost-, quality-, and

service-conscious.
38. High standards of quality for all products and services are
to be maintained.
39. Simple, clear, written instructions are to be given wherever
feasible.
40. Adequate and accurate records must be kept of all
company operations.
41. All promises must be kept.
42. Promptness must be the rule for all established routines,
scheduled meetings and appointments.
43. All routine procedures are to be handled on definitely
maintained time schedules.
44. Proper care and preventive maintenance are to be
provided for all equipment and supplies.
45. Systematic conservation of supplies and services is to be
practiced and checked.
46. Housekeeping is to be good (cleanliness, orderliness and
elimination of fire, explosion and accident hazards).
47. Useful information or data should be freely passed
between departments, preferably in writing.

Improvement of efficiency

48. There must be continuous analysis by division and

department heads to eliminate unnecessary functions, jobs,
procedures, paper work, reports and duplication of effort.
49. All established procedures are to be carefully checked at
stated intervals by division and department heads to prevent
deterioration or lapse, and periodically reexamined for
improvement.

Control of operations

50. All of the company’s expenses and projects, including

departmental expenses are to be carefully and completely
budgeted.
51. Complete control of all manufacturing and other company
operations must be maintained at all times y means of adequate
but simple systems.
52. Accurate perpetual inventories and complete control of all
stock-raw stores, parts, sub-assemblies, work-in-process and
finished units; also all equipment. Tools, jigs, dies, furniture,
fixtures, supplies and other physical property-must be
maintained.

Individual responsibility

53. It is the business of every executive to see that in every

instance company inefficiency is eliminated, whether the failure
occurs within his or someone else’s jurisdiction.
 54. The cause of errors, failures and inefficiencies, wherever
discovered, must be promptly investigated and the cause
eliminated.
55. Repetition of errors must not be tolerated.
56. Excuses, alibis, and buck-passing must be completely
eliminated.
57. Each individual must accomplish what he is assigned to do
at the time he is supposed to do it, or offer an acceptable
explanation to his superior at the earliest possible moment.
58. Every executive should be constantly familiar with
contemporary practices of competitors and with the current
technical literature applicable to his work.

Employee selection and welfare

59. Scientific selection and placement of applicants for

employment ( and candidates for upgrading) by means of
adequate physical examinations, psychological tests and
personal interviews, followed by thorough indoctrination and
instruction of selectees.
60. Routine periodic check-up of the physical health and
general welfare of each employee.

Morale Building

Information

61. Explanation of the company’s policies, aims and plans to

all executives and superiors.
62. Dissemination of adequate information among employees
in the form in which they can best assimilate it.

Supervision

63. All employees are to be treated as human beings, not as

machines.
64. Reasonable privileges are to be extended to all deserving
employees.
65. Any employee may freely discuss company or personal
problems with the department head or division head, or with the
manager of industrial relations, with recourse to the executive
vice-president of the president.
66. Every employee is entitled to a fair hearing by his superior
when his efficiency or behavior is questioned.
67. All supervision must be fair, courteous and considerate, but
exacting.
 68. Every employee is to be kept busy on essential work, but
no one is to be overloaded except in emergency.
69. Favoritism must be eliminated.
70. Prima donnas, big shots, trouble makers and drones are to
be eliminated.
71. There is to be minimization of internal politics and false
rumors.

Labor – management

72. Cooperation with, rather than appeasement of, the Union.

Job performance and promotion

73. Adequate job instruction and upgrading incentive for every

employee. This includes department heads and all sub –
executives, as well as bench workers and clerks.
74. Every worthy employee to be encouraged to improve his
job performance.
75. Periodic merit reviews for all employees and individual job
performance counseling with a view to merit increases
( according to schedules adapted by company) or upgrading
whenever appropriate.
76. Promotions in accordance with specific ability, loyalty,
cooperation and length of service with the company.
Working condition

77. The best possible working conditions consistent with

reasonable economy are to be maintained.

Company dealings with outsiders

78. All dealings with persons outside the company ( such as

customers, sales agents, licenses, competitors, suppliers, banks,
professional consultants, government agencies, trade
associations) must be based on the same principles of fairness,
courtesy and consideration as have been outlined for the
company’s internal operations. Company business with persons
outside the company must be conducted in a business-like and
efficient manner in order to induce confidence in the company.
79. Executives and other employees should speak with pride of
the company’s products and methods where merited, to increase
the company’s reputation.

Planning for the Future

 80. All unusual expenditures and all changes and additions in
product, policy, methods, systems and equipment must be
viewed on the long-term as well as short-term, effect on the
company.
81. Continuous effort to improve quality and reduce costs.
Such effort must be redoubled at those times during which the
company is most prosperous and its operations most profitable.
82. Continuous development of all products and services and
establishment of inspection standards to maintain
improvements.
83. Continuous simplification and improvement of existing
policies, methods and systems.
84. Installation of fundamentally new systems, methods and
mechanization.
85. Continuous fundamental research on all phases of the
company’s products, and related problems.
86. Development of new products and methods of
merchandising and distribution a indicated by market
requirements and over-all profit value of the company.
87. Continued market investigation of acceptability (and the
reverse) of the company’s products and methods of
merchandising and distribution.
88. Routine, scheduled visits to the plants of other companies
in both related and unrelated industries for the examination and
evaluation of their policies, equipment, methods and systems
with a view to adaptation and application to the company.
89. Executive and other employees should be encouraged to
take active part in trade and civic organizations.

CATEGORIES OF FUNCTIONAL OPERATING

POLICIES
Marketing

Advertising, branches, brands, business inquiries, competitor

relations, complaints, contracts, credit customer relations, discounts,
expenses, exporting, forecasting, freight charges, intra-company sales,
inventory records, market research, markets, new business, new
products, packaging, pricing, proposals, reciprocity, return of goods,
sales promotion, sales to employees, services to customers, territories.

Distribution
 Freight, inventory levels, labeling, materials handling, product
shipments, receiving, stock shipments, traffic, warehousing.

Purchasing

Buying for employees, centralized purchasing, conservation,

contracting, control of material, gifts, interdivisional purchasing,
inventory control, inventory levels, investments, make or buy, material
purchase, procurement, reciprocity, standards, supplier relations.

Finance

Accounting, assets, auditing, banking, billing, budgets, capital

appropriations, capitalization, collection, cost control, credit,
depreciation and amortization, dividends, expenditures, expense
accounts, expenses, financial reporting, forecasting funds, incentives,
insurance, leases, loans, payment of suppliers, payroll, pensions,
profits, reserves, return on investment, securities, surplus property,
taxes.

Employee Relation

Absenteeism, appraisal, benefits, compensation, complaints,

discharge, education, equal employment opportunity, federal and state
employment regulations, hiring hours, leaves, loans, manpower
utilization, medical examinations, outside employment, pensions,
promotion, recreation, recruitment, retirement, selection, seniority,
sickness, termination, training and development, transfer and
relocation, union, vacations, working conditions.

Production

Contracting, cost estimates, equipment, facilities, inventory,

maintenance, plant protection, plant test, process specifications,
product specifications, production control, quality control, quantity,
safety, scheduling, standards, time studies, tooling utilities.

Engineering

Bids and quotations, construction, contract services, design,

equipment replacement, job orders, leasing, patents, product
engineering, product reliability, projects, quality, rental, safety and
security, standards, technical services, testing, value engineering.

Research
 Applied research, basic research, coordination, copyright,
development inventions, laboratory, patents, payout of projects,
product development, projects, royalties, secrecy agreements,
security, selection of projects, trademarks.

Public Relations

Associations, communications, community relations, conferences

and conventions, contributions, educational activities, gifts,
government relations, institutional advertising, legislative activities,
meetings, membership, participation in public affairs, political
activities, press relations, public speeches, publications, release of
information, stockholder relations, tours, visitors.