Year: 2020

Canons of taxation refer to the administrative aspects of a tax. They relate to the rate, amount, method of levy and collection of a tax.

In other words, the characteristics or qualities which a good tax should possess are described as canons of taxation. It must be noted that canons refer to the qualities of an isolated tax and not to the tax system as a whole. A good tax system should have a proper combination of all kinds of taxes having different canons.

According to Adam Smith, there are four canons or maxims of taxation on the administrative side of public finance which are still recognised as classic.

To him a good tax is one which contains:

1. Canon of equality or equity.
2. Canon of certainty.
3. Canon of economy.
4. Canon of convenience.

To these four canons, economists like Bastable have added a few more which are as under:

5. Canon of elasticity.
6. Canon of productivity.
7. Canon of simplicity.
8. Canon of diversity.
9. Canon of expediency

Chart represent the different canons of taxation.

Every fiscal economist, along with Adam Smith, stresses that taxation must ensure justice. The canon of equality or equity implies that the burden of taxation must be distributed equally or equitably in relation to the ability of the tax payers.

Equity or social justice demands that the rich people should bear a heavier burden of tax and the poor a lesser burden. Hence, a tax system should contain progressive tax rates based on the tax-payer’s ability to pay and sacrifice.

Canon of Certainty:

Taxation must have an element of certainty. According to Adam Smith, “the tax which each individual is bound to pay ought to be certain and not arbitrary. The time of payment, the manner of payment, the amount to be paid ought to be clear and plain to the contributor and to every other person.”

The certainty aspects of taxation are:

1. Certainty of effective incidence i.e., who shall bear the tax burden.
2. Certainty of liability as to how much shall be the tax amount payable in a particular period. This the tax payers as well as the exchequer should unambiguously know.
3. Certainty of revenue i.e., the government should be certain about the estimated collection of revenue from a given tax levied.

There are some incomes which do not form part of total income and thus, are also called as income exempt from tax. Such exempted incomes are given under section 10 of the Income-tax Act, 1961.

Some of those incomes are explained below:

Agricultural income [Sec. 10(1)]:

Agricultural income in India is totally exempt from tax. However, such income is to be aggregated in case of certain assessees for the purpose of determining rate of tax on non-agricultural income.

Receipts by a member from a HUF [Sec. 10(2)]:

Any sum received by an individual as a member of a Hindu Undivided Family either out of income of the family or out of income of estate belonging to the family is exempt from tax.

Share of profit received by a partner from a firm [Sec. 10(2A)]:

In case of a person being a partner of a firm which is separately assessed as such, his/ her share in the total income of the firm is exempt from tax.

Interest on Non-resident (External) Account [Sec. 10(4)]:

In the case of an individual who is not resident in India, any income by way of interest on money standing to his credit in a Non-resident (External) account in any bank in India shall be exempt from tax if certain conditions are satisfied.

Remuneration to persons who are not citizens of India [Sec. 10(6)]:

In case of an individual who is not a citizen of India, the following income shall be exempt from tax:

• Remuneration received by diplomats, etc.
• Remuneration received by a foreign national as an employee of a foreign enterprise.
• Non-resident employed on a foreign ship.
• Remuneration of employee of foreign Government during his training in India.

Allowance or perquisites outside India [Sec. 10(7)]:

Any allowances or perquisites paid or allowed, as such, outside India by the Government to a citizen of India, for rendering services outside India, are exempt.

Payments under Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 [Sec. 10(10BB)]:

Any payments made, under the above Act or any scheme made thereunder, shall be exempt from tax in the hands of the recipient.

Exemption for compensation received or receivable on account of any disaster [Sec. 10(10BC)]:

Any amount received or receivable from the Central Government or a State Government or a local authority by an individual or his legal heir by way of compensation on account of any disaster shall be exempt from tax.

However, the exemption is not allowable in respect of amount received or receivable to the extent such individual or his legal heir has been allowed a deduction under the Income-tax Act on account of any loss or damage caused by such disaster.

Tax on non-monetary perquisites paid by employer [Sec. 10(10CC)]:

The tax actually paid by the employer on a perquisite provided to the employee [other than the perquisite provided by way of monetary payment within the meaning of section 17(2)] shall be exempt from tax in the hands of the employee.

Provident Fund [Sec. 10(11)]:

Any payment from a provident fund to which the Provident Fund Act, 1925 applies or from Public Provident Fund set up by the Central Government shall be exempt from tax.  

Educational scholarships [Sec. 10(16)]:

Scholarships granted to meet the cost of education are exempt from tax. In order to avail the exemption, it is not necessary that scholarship should be financed by the Government.

Daily allowances of Members of Parliament [Sec. 10(17)]:

The following incomes shall be exempt from tax in the hands of the persons specified:

• Daily allowance received by any person by reason of his membership of Parliament or of any State Legislature or of any Committee thereof;
• Any allowance received by any person by reason of his membership of Parliament under the Members of Parliament (Constituency Allowance) Rules, 1986;
• Any constituency allowance received by any person by reason of his membership of any State Legislature under any Act or Rules made by that State Legislature.

Pension received by certain awardees/ any member of their family [Sec. 10(18)]:

Any income by way of pension/ family pension received by an individual or any member of his family shall be exempt from tax if such individual has been in the service of Central/ State Government and has been awarded Param Vir Chakra or Maha Vir Chakra or Vir Chakra or such other gallantry award as may be notified.

Exemption of the family pension received by the family members of armed forces (including para-military forces) personnel killed in action in certain circumstances [Sec. 10(19)]:

Where the death of a member of the armed forces (including para-military forces) of the Union has occurred in the course of operational duties, in such circumstances and subject to such conditions as may be prescribed, the family pension received by the widow or children or nominated heirs, as the case may be, shall be exempt from tax.

Annual value of one palace of the ex-ruler [Sec. 10(19A)]:

The ‘annual value’ in respect of any one palace which is in occupation of an ex-ruler is exempt from tax, provided such annual value was exempt before 28.12.1971 by virtue of any law or order then prevailing.

Income of minor clubbed in the hands of a parent [Sec. 10(32)]:

Under section 64(1A), the income of a minor child is includible in the total income of the parent under the circumstances mentioned therein, section 10(32) provides that such parent in whose income the minor’s income is included shall be entitled to exemption to the extent such income does not exceed of ` 1,500 in respect of each minor child, whose income is so includible. In other words, the exemption shall be allowed to the extent of the income of each minor child included or ` 1,500 per child, whichever is less.

Capital gain on transfer of units of US-64 exempt if transfer takes place on or after 1-4-2002 [Sec. 10(33)]:

Any income arising from the transfer of a capital asset, being a unit of the Unit Scheme, 1964 where the transfer of such asset takes place on or after 1-4-2002, shall be exempt from tax.

Dividend to be exempt in the hands of the shareholders [Sec. 10(34)]:

Any dividend declared, paid or distributed by a domestic company shall be liable to dividend distribution tax @ 15% plus surcharge @ 10% plus education cess @ 2% plus secondary and higher education cess @ 1% of the amount so declared, distributed or paid. Hence, such dividend received by the shareholders shall be exempt from tax in their hands.

Income from units to be exempt in the hands of the unit-holders [Sec. 10(35)]:

Like dividends, income received on units of UTI (now known as specified undertaking and specified company) and Mutual Funds covered under section 10(23D) shall be exempt from tax in the hands of the unit-holders.

Exemption of long-term capital gain arising from sale of shares and units [Sec. 10(38)]:

Any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund shall be exempt from tax provided:

• Such equity shares are sold through recognized stock exchange, whereas units of an equity oriented fund may either be sold through the recognized stock exchange or may be sold to the mutual fund.
• Such transaction is chargeable to securities transaction tax.

Exemption of amount received by an individual as loan under reverse mortgage scheme [Sec. 10(43)]:

Any amount received by an individual as a loan, either in lump sum or in installment, in a transaction of reverse mortgage referred to in section 47(xvi) shall be exempt from tax.

The Constitution of India → Schedule VII → Union List → Entry 82 has given the power to the Central Government to levy a tax on any income other than agricultural income, which is defined in Section 10(1) of the Income Tax Act, 1961. The Income Tax Law consists of Income Tax Act 1961, Income Tax Rules 1962, Notifications and Circulars issued by Central Board of Direct Taxes (CBDT), Annual Finance Acts and judicial pronouncements by the Supreme Court and High Courts.

The government imposes a tax on taxable income of all persons who are individuals, Hindu Undivided Families (HUF’s), companies, firms, LLP, an association of persons, a body of individuals, local authority and any other artificial juridical person. The levy of tax on a person depends upon their residential status. The CBDT administers the Income Tax Department, which is a part of the Department of Revenue under the Ministry of Finance, Govt. of India. Income tax is a key source of funds that the government uses to fund its activities and serve the public.

The Income Tax Department is the biggest revenue mobilizer for the Government. The total tax revenues of the Central Government increased from ₹1,392.26 billion (US$20 billion) in 1997–98 to ₹5,889.09 billion (US$83 billion) in 2007–08. In 2018–19, the direct tax collections reported by CBDT were approximately INR 11.17 lakh crore.

Modern Times

The 19th century saw the establishment of British rule in India. Following the Mutiny of 1857, the British government faced an acute financial crisis. To fill up the treasury, the first Income-tax Act was introduced in February 1860 by James Wilson, who became British-India’s first Finance Minister.[7] The Act received the assent of the Governor-General on 24 July 1860 and came into effect immediately. It was divided into 21 parts consisting of no less than 259 sections. Income was classified under four schedules:

• Income from landed property
• Income from professions and trade
• Income from securities, annuities and dividends
• Income from salaries and pensions. Agricultural income was subject to tax.

Subsequently, many laws were brought to streamline income tax laws. For example, the Super-Rich Tax was introduced in 1918, and the new Income-tax Act was passed in 1918. However, the Act of 1922 marked an important change from the Act of 1918 by shifting the administration of the income tax from the hands of the Provincial Government to the Central government. Another remarkable feature of this Act was that the rules were to be enunciated by the annual finance Acts instead of the basic enactment. Again, a new Income-tax Act came in 1939.

The 1922 Act, was amended not less than twenty-nine times between 1939 and 1956. A tax on capital gains was imposed for the first time in 1946, although the concept of ‘capital gains’ has been amended many times by later amendments. In 1956, Nicholas Kaldor was appointed to investigate the Indian tax system in the light of the revenue requirement of the second five-year plan (1956–1961). He submitted an exhaustive report for a coordinated tax system and the result was the enactment of several taxation Acts, viz., the wealth-tax Act 1957, the Expenditure-tax Act, 1957 and the Gift-tax Act, 1958.

The Direct Taxes Administration Enquiry Committee, under the Chairmanship of Mahavir Tyagi, submitted its report on 30 November 1959 and the recommendations made therein took shape of the Income Tax Act, 1961. The 1961 Act came in to force with effect from 1 April 1962, by replacing the Indian Income Tax Act, 1922 which had remained in operation for 40 years. The present law of income tax is governed by the Income Tax Act, 1961, which has 298 sections and 4 schedules and is applicable to whole of India including the state of Jammu and Kashmir.

The Direct Taxes Code Bill was tabled in the Parliament on 30 August 2010 by the then Finance Minister to replace the Income Tax Act, 1961 and Wealth Tax Act. The bill, however, could not go through and eventually lapsed after revocation of the Wealth Tax Act in 2015.

Charge to Income Tax

For the assessment year 2016–17, individuals earning an income up to ₹2.5 lakh (US$3,500) were exempt from income tax.

About 1% of the national population, called the upper class, fall under the 30% slab. It grew 22% annually on average during 2000–10 to 0.58 million income taxpayers. The middle class, who fall under the 10% and 20% slabs, grew 7% annually on average to 2.78 million income taxpayers.

Any Amendment Please Comment

Previous Year indicates the financial year immediately preceding the assessment year. It is the year in which a person or entity earns income, which becomes taxable in the assessment year. In Income Tax Act, 1961, the term “previous year” is defined under section 3.

Previous Year is a period of 12 months, but it can be shorter than that too, such as in the case of a newly set up business or profession, the previous year will be less than 12 months, starting from the date of commencing the business and ending on 31st March of that financial year.

Further, if a source of income commences in a particular financial year, then also the previous year begins from the date on which the income generation starts and ends on the 31st March, of that particular financial year.

It is a common rule that the income of the previous year is assessed in the immediately following financial year. However, there are certain instances when the income of the previous year is assessed in the same year. These are:

• Shipping business of non-resident.
• Person leaving India, permanently having no intention of coming back.
• Association of persons, Body of individuals or any artificial juridical person established for a definite objective.
• Discontinued business
• Person is likely to transfer, sell or dispose of assets to avoid the payment of taxes.

The term previous year is very important because it is the income earned during previous year which is to be assessed to tax in the assessment year. As the word ‘Previous’ means ‘coming before’, hence it can be simply said that the previous year is the financial year preceding the assessment year e.g. for assessment year 2014-15 the previous year should be the financial year ending on 31st March 2014.

In simple words, it may be said that the year in which income is earned is called previous year and the next year in which such income is computed and put to tax is known as assessment year: For example, income earned by an assessee in the previous year 2013-14 is taxable in the assessment year relevant to the previous year 2013-14 and so it is taxable in the assessment year 2014-15. The simple rule is that the income of a previous year is taxed in its relevant assessment year subject to certain exceptions.

(a) Previous year in case of a continuing business. It is the financial year preceding the assessment year. As such for the assessment year 2014-15, the previous year for a continuing business is 2013-14 i.e. 1-4-2013 to 31-3-2014.

(b) Newly set up business or profession. The assessee is free to set up a new business or start a new profession on any day and the first previous year in case of a newly set up business/profession or newly created source of income shall be on the day it is set up and end on 31st March next following. So the first previous year may be of 12 months or less than 12 months but all subsequent previous years shall be of 12 months duration and always be starting on 1st April each year.

(c) In case of a Newly created source of Income. In such case the previous year shall be the period between the day on which such source comes into existence and 31st. March next following

Before implementing a new or revised strategy, company leaders must ensure the organizational structure can support the planned activities. After identifying the tasks that the company must perform well to succeed, company executives configure organizational hierarchies to support primary strategic goals and achieve competitive advantages. They also identify areas of weakness that pose risks and devise techniques for handling crises. Successful strategic implementation depends on structuring the organization’s employees so they can most effectively use the tools and resources available to create quality products and services.

Structuring Activities

To prevent their staff from spending time on activities not directly related to achieving companies’ strategic goals, managers identify tasks that can be outsourced to third-party vendors. Structuring work this way allows experts to perform these jobs, typically at a lower cast, while employees focus on their core competencies supporting main businesses. For example, computer manufacturers typically outsource assembly while focusing internally on design, sales and distribution duties.

Aligning Functions to Strategic Objectives

Before corporate leaders can implement new strategyies, they need to ensure that all personnel in the organizational structure possess the necessary skills, knowledge and resources to accomplish the tasks. Work must flow from one function to another so leaders should establish clear processes with policies and procedures that define roles and responsibilities. The strategy must be consistent across all departments, adaptive to changes, competitively advantageous and technically feasible.

Establishing Authority

Successfully implementing a new strategy requires that managers and employees understand what activities require executive approval and which decisions employees have the empowerment to make without further approval. Ideally, decision makers should be those people who are closest to the situation and most knowledgeable about the impact. By avoiding micro-managing the organization, managers streamline operations and eliminate wasteful tasks. If the organization is structured to allow employees the flexibility to make critical decisions, they must also be held accountable for their actions.

Developing Partnerships

Strategic implementations require personnel to work together to achieve specific, measurable, attainable, relevant and time-constrained goals and objectives. Establishing a common balanced scorecard prevents groups from competing against each other to succeed individually at the expense of the whole company. If company executives foster a cooperative environment between departments, managers share resources, personnel and knowledge effectively. Additionally, the organizational structure should encourage new employees to seek out coaching and mentoring from corporate executives. By encouraging learning and development, company leaders establish a framework for sustainable growth.

An organizational system is, quite simply, how a company is set up. A good organizational structure lays out both a hierarchy and the flow of communication in a company. It is important for every business, no matter its size, to implement an organizational system. There are many benefits to having a well-defined organizational structure, including improved efficiency, productivity and decision-making. Each structure has its strengths and weaknesses. Ultimately, these pros and cons depend on the type of business you run, your industry, the size of your organization and other factors. It is important to consider every kind of organizational system before deciding which is right for your company.

Organizational Systems

An organizational system is the structure of how an organization is set up. That structure defines how each division of a business is set up, the hierarchy of who reports to whom and how communication flows throughout the organization. Broken down even further, an organizational structure defines how each role in an organization functions. With a well-defined organizational structure in place, all employees know what is expected of them and to whom they report. Business owners should think long and hard about which system to choose, as each organization has unique needs. An organizational structure that is right for one company will not be right for another.

Examples of Organizational Systems in Business

There are four main types of organizational structures: functional, divisional, matrix and flat. Each system has unique features.

1. Functional organizational structure

A functional organizational structure is a traditional hierarchy. Many companies, especially larger corporations, follow the functional structure. This system features several specialized divisions such as marketing, finance, sales, human resources and operations. Then a senior manager oversees all the specialized divisions. The reporting flow is clear. Each employee reports to their senior, including division heads, who report to the senior management. Senior management oversees the entire structure. Because the company remains split up into specialized divisions, employees tend to become specialized as well. This causes a clear path for promotion and growth. However, the divisions can have trouble communicating with one another. Because all departments report upwards, there is little horizontal communication between them, leaving little space for holistic, whole-company thinking, except at the top management level. This makes the functional organizational system slow to adapt to change.

2. Divisional organizational structure

A divisional organizational structure divides the business up into teams based on the projects the employees are working on. This system includes many different types of teams, including legal, public relations, research and business development. Further, teams are created around specific projects. For example, a pharmaceutical company might have separate teams dedicated to each medication they manufacture. Each project team has a director or vice president and exercises a certain level of autonomy within the organization. The divisional structure allows employees to become deeply familiar with their team’s work. However, divisions are often unaware of what other teams are doing, and do not communicate with each other. Employees may not be able to work effectively across divisions when necessary. Ultimately, this system can be challenging to manage due to its spread-out structure.

3. Matrix organizational structure

A matrix system is a cross between a functional structure and a divisional structure. From a birds-eye perspective, the business is set up in a functional structure, with a traditional hierarchy and specialized divisions. However, when you look at those divisions up close, they are each set up in a divisional organizational structure. This means they are split up into projects and smaller teams. The matrix type of organizational structure is quite complex and requires a lot of planning, not to mention strong systems of communication across the organization. However, when the matrix structure works well, it eliminates a lot of the issues that pop up with divisional or functional-only organizations. Communication can travel to the right people, which increases productivity and holistic thinking. Further, employees are exposed to other departments and projects, encouraging cross-collaboration. On the downside, the matrix structure can quickly become confusing for employees when there are too many managers, and it’s not clear who to report to.

4. Flat organizational structure

Flat organizational structure flattens much of the hierarchy and allows employees more autonomy over their work. Often, flat organizations are split up into temporary teams, although they usually do not have formal structures. There are still some top-down dynamics in a flat system. Often, there is at least some senior leadership steering the ship. However, this system is predicated on disrupting the traditional hierarchical structures of businesses. Many startups and tech companies tend towards a flat organization, as it encourages innovation and employee input. The thinking is that when employees are not tamped down by red tape, they will think freely and generate fresh, profitable ideas. This increases communication across teams and eliminates some of the communication issues that can happen when messages travel up a top-down structure. Unfortunately, a flat system is difficult to maintain as a company grows, and the need for more structured communication systems comes into play. Further, employees in a flat organization can become overwhelmed with doing too many different tasks, and do not have a lot of room to grow or be promoted.

Why Businesses Need Organizational Systems?

Organizational systems are important for businesses of every size. Having a solid, well-defined structure in place erases confusion and lays out simple processes for employees to follow. Each worker should know exactly who they report to. Without some type of hierarchy or structure in place, a workplace can become chaotic. Employees may not understand who is responsible for what, causing important things to fall through the cracks. A solid organizational structure streamlines a company and keeps everyone on the same page.

An organizational system puts every person in their correct place, able to contribute their part to the company. Having a system improves overall efficiency, heightens productivity and provides clarity to everyone in the organization. Every department can work better when roles are clearly defined and objectives are shared. Further, the proper organizational system can improve decision-making, as information flows throughout the organization. Upper-level managers can collect information from all divisions, giving them greater insight into the entirety of a company’s operations.

A solid organizational system eliminates many business problems, including the duplication of work and conflicts between positions. If a business has been well-thought-out, each employee has a distinct role, and roles do not overlap with one another. There is no “runaround” where nobody is sure who is responsible for a particular task or project. Because of this, cooperation is increased and employees feel a sense of pride in their work. Workers avoid the frustration of having ever-shifting roles and goal posts. They can focus on what they do best.

Choosing the proper organizational system can take your business to the next level. For example, if your business is product-based, a matrix or divisional structure will likely be ideal. These are project-based structures that focus on specialized teams. Small startups, on the other hand, may consider a flat structure to allow all employees to contribute their skills and expertise without the hierarchy interfering.

Examples of Businesses with Organizational Systems

Examples of the functional system: Functional organizational systems have historically been used by the military, universities and government entities. Over the years, functional hierarchies have become less popular, and many organizations have moved away from them. However, they are still in use by certain businesses. One example of how this type of organizational system might be used is in a traditional factory setting. The factory manager oversees the different divisions of the factory, which are each specialized. Each division has its own manager, all of which report directly to the overseeing factory manager. Another example could be a retail store. A store manager oversees the operations from the top of the pyramid. Below are different departments. Perhaps there is one for inventory, one for customer service and one for marketing and promotions. Each has its own supervisor, and all report to the general manager.

Examples of the divisional system: Divisional systems are popular with large, multinational corporations. For example, Johnson & Johnson has a divisional structure. Each of Johnson & Johnson’s brands operates as its own company, with its own leadership and internal structure. All of those brands report to the parent company. Another example of a divisional organizational structure is General Electric. The CEO sits at the top, and beyond that, the company is split up into different groups. There are some operational groups, such as those for finance, legal, public relations and global research. Some teams are devoted to specific projects, including aviation, energy, health care and more.

Examples of the matrix system: A matrix organizational system is complex, and therefore mostly adopted by large, well-established companies. One famous example of a matrix company is Starbucks. The world’s largest coffee company uses a functional structure to split its business up into divisions, including HR, financing and marketing. These departments are located at the brand’s corporate headquarters and report to the upper levels of management. The HR department, for example, creates policies that affect all Starbucks locations across the board. Next, Starbucks has separate divisions for each geographic region. These regions include the Americas, China and Asia-Pacific, Europe, Middle East, Russia and Africa. The Americas region, being the most popular for the company, is further split into four smaller divisions. Starbucks also has product-based divisions. For example, there is one division for merchandise like the Starbucks mugs and another for baked goods. At the lower levels of the organization, Starbucks has teams of employees, especially at the store level. This complex matrix structure serves the coffee giant well, allowing the company to operate thousands of stores across the country successfully.

Examples of the flat system: Flat systems are popular among startups and tech companies. One famous example of the flat system is Zappos. In 2013, the massive shoe company’s CEO announced a new management structure called holacracy, a setup to encourage collaboration by eliminating workplace hierarchy. The company banned manager titles. It would no longer have job titles and there would be no bosses. Every employee would be in charge of their own work. The company hoped to spark innovation and creation by doing away with the red tape involved in hierarchy and decision-making. However, Zappos struggles to keep operations truly flat.

This is a struggle of many large companies that implement a flat structure. Many startups have spoken about the difficulty of maintaining a flat organizational structure when experiencing exponential growth. Studies find that employees find hierarchical structures comforting and practical. So, a flat organizational structure is perhaps a good option for a business that is in its early stages, to spur innovation and growth. However, most larger companies move away from a flat system as it can become cumbersome to manage over time.

Implementing corporate strategy requires a team effort headed by your organization’s leadership team. Each person involved in change management has their responsibilities, and it is important for the entire organization to understand the role of leadership in strategic implementation to make delegating responsibility more effective.

1. Involvement

Strategic implementation of any kind of new company policy or program requires participation from all of the departments that will be affected. Company leadership needs to identify what those departments are and create an implementation team that consists of representatives from each affected group. Management needs to create a structure that identifies various group leaders, the responsibilities of those group leaders and an accountability system that insures that the implementation team meets its timetable for getting the new program or policy in place.

2. Interest

Implementing change or any new strategy within a company requires a feeling of urgency on the part of the entire company. It is the job of management to create that urgency by explaining to the staff why the implementation is necessary. Leadership needs to help the employees understand how the company benefits from the new implementation, but it also needs to get the organization to see the setbacks of not making a change.

3. Monitoring

Strategic implementation within a company is not an exact process. It is a dynamic procedure that needs to be monitored by management and altered to meet implementation goals. It is the responsibility of leadership to put a monitoring system in place, analyze the data that is being generated during the implementation and make any necessary changes to make the implementation more efficient.

4. Communicating Plans

Strategic implementation begins with setting goals and communicating these to workers. Prioritize your objectives, put resources at employees’ disposal, explain the processes and, above all, transmit your vision to your team. Communicating well means your listeners comprehend your words and are able to put them into action. For example, when describing how to implement a new software program, use layman’s terms when talking to those who are not computer specialists. Give the information in small, digestible chunks and test understanding before moving on.

5. Giving Out Assignments

Proper delegation helps guarantee a smooth implementation of business strategy. The manager charged with strategic implementation must be able to pick out the people and teams best able to move the project forward. Leading the implementation requires taking pains to discover and test the abilities gifts of her staff. She should establish mini-leaders over various segments of the process who understand the scope of the implementation. These people will report directly to the overall manager and will be responsible for guiding their own groups. Pick enthusiastic, imaginative and people-oriented employees for these roles.

6. Monitoring Execution

Participate in all avenues of the strategic implementation. Ask questions while observing what your employees do in order to understand all the processes involved. Ask your group leaders for weekly progress updates. Keep abreast of the problems that arise and handle them expeditiously. Document the process carefully so you and others can refer to the literature for future ventures. Be flexible. If something does not work well in the way you have designed it, find other avenues until you find something that works better. Always take care not to micromanage your employees as you monitor the processes but instead be an involved leader who joins in the work to make it better.

7. Encouraging Staff

Your attitude will prove contagious for the staff. If you are energetic and willing to give your best to the company, others will follow suit. When encouraging your staff you need to be a consistent role model who stays on tasks, works to solve problems and keeps to a schedule. You want your employees to emulate your behavior without having to lecture them on what how to act and perform in the workplace. For example, if you are always on time and get to work quickly on the implementation process, your staff will understand the need to do so as well. Create a culture of encouragement by praising hard work, passionate exhibitions and creativity in individual efforts. Your staff will appreciate the recognition.

Company policies and procedures establish the rules of conduct within an organization, outlining the responsibilities of both employees and employers. Company policies and procedures are in place to protect the rights of workers as well as the business interests of employers. Depending on the needs of the organization, various policies and procedures establish rules regarding employee conduct, attendance, dress code, privacy and other areas related to the terms and conditions of employment.

Employee Conduct Policies

An employee conduct policy establishes the duties and responsibilities each employee must adhere to as a condition of employment. Conduct policies are in place as a guideline for appropriate employee behavior, and they outline things such as proper dress code, workplace safety procedures, harassment policies and policies regarding computer and Internet usage. Such policies also outline the procedures employers may utilize to discipline inappropriate behavior, including warnings or employee termination.

Companies are increasingly paying attention to bullying behavior as a serious issue and beginning to adopt policies in this area as well. Anti-bullying policies focus on repeated hostile behaviors, identify reporting mechanisms and describe the consequences for employees who engage in persistent bullying behavior.

Equal Opportunity Policies

Equal opportunity laws are rules that promote fair treatment in the workplace. Most organizations implement equal opportunity policies anti-discrimination and affirmative action policies, for example to encourage unprejudiced behavior within the workplace. These policies discourage inappropriate behavior from employees, supervisors and independent contractors in regard to the race, gender, sexual orientation or religious and cultural beliefs of another person within the organization.

Attendance and Time Off Policies

Attendance policies set rules and guidelines surrounding employee adherence to work schedules. Attendance policies define how employees may schedule time off or notify superiors of an absence or late arrival. This policy also sets forth the consequences for failing to adhere to a schedule. For example, employers may allow only a certain number of absences within a specified time frame. The attendance policy discusses the disciplinary action employees face if they miss more days than the company allows.

Substance Abuse Policies

Many companies have substance abuse policies that prohibit the use of drugs, alcohol and tobacco products during work hours, on company property or during company functions. These policies often outline smoking procedures employees must follow if allowed to smoke on business premises. Substance abuse policies also discuss the testing procedures for suspected drug and alcohol abuse.

Workplace Security Policies

Policies on security are in place to protect not only the people in an organization, but the physical and intellectual property as well. Policies may cover entrance to a facility, such as the use of ID cards and the procedures for signing in a guest. Equipment such as a company laptop or smartphone may need to be signed out.

Computer security is a high priority for firms these days. Policies cover a variety of topics, such as the frequency for changing passwords, reporting phishing attempts and log-on procedures. Use of personal devices, such as a USB drive you bring from home, may also be restricted to prevent to unintended spread of computer viruses and other malware.