HR Policies and Procedures are guidelines that provide transparency to a work carried out by employees in an organization. Especially for small and medium enterprises it is difficult to use more time on developing policies and procedures as they have tasks in hand to focus on and do not have enough resources. Lack of transparency in HR policies and procedures can cause misunderstanding that affect the performance of organization. Setting up a meeting every time when an issue arises makes the organizational performance tardious. There should be a clear and fixed rules for employees and employers.

The policies can cover aspects of human resource management system like recruitment, vacation, sick days and personal leave, vacation, overtime compensation, performance evaluation, termination etc. On top of that, hr policies are mandatory in most countries. But this is not the only reason why HR policies are important.