When developing policies for your social business, it’s important to understand how the hierarchy of authority affects decision making.

Consider also investment policies and external political factors which may affect the environment your business operates in.

Hierarchy of authority in a social business 

At the top of the hierarchy of authority in every social organisation is the law of the land, followed by your governing document. This document includes the Articles of Association, Articles of Incorporation or Rules (depending on the legal form) by which your social business is incorporated. 

Next in the line of authority are the various policies of your social enterprise, with procedures and working practices ranking just under them.  

Practices and policies in the social enterprise sector 

Policies can be adopted by the Board (or equivalent) or the membership of a social business by resolution in a general meeting, although some governing documents allow additional mechanisms in addition. The membership is a higher authority than the Board so policies decided by them take precedent.

Policies (or secondary rules as they are sometimes referred to, especially in co-operatives) are less 'entrenched' than governing documents (or primary rules) which usually require a more exacting procedure and larger majority to pass and which have to be lodged with the appropriate regulator. The exact process for setting policies will normally be described in the governing document.  

Policies cannot change what is stipulated higher up the line of command in the governing document or beyond that, the law, but what they do is set the rules that the organisation, its members and its servants must abide by in its real life and day-to-day existence. In this way they differ from other forms of business decision and it is important to recognise when one has been created.  

How to develop a social enterprise policy framework 

Policies have a certain shelf life as legislation and best practice advances. It is a good policy to have a policy on policies! To keep policies coherent, consistent and up to date, list, date and store them in a digital policy folder. That way you can check against minutes of meeting and ensure it is real. 

When filing a policy, make sure to also include when it was last reviewed, when it is scheduled to be reviewed next and who is the internal expert in charge. If the prompt gets issued automatically by a computerised diary rather than relying on the worker to seek out the work, so much the better.  

There are certain policies that are legal requirements even though they do not have to be registered with governing bodies, for example a Whistleblowing Policy. Begin by looking into minimum legal requirements and work up from there. The area of policies relating to employment are particularly likely to change regularly due to legislation.  

Policy development is a process rather than an event and it is probably best to begin by abandoning all hope of ever completing the process but commit to work away at it steadily and determinedly with an affordable time budget. 

Get started on developing your social business policies with our checklist and our guide to employing people: