How much essential is an HR policy for an organisation?

Virtually, every company has an HR policy, whether it is in practice or written or circulated through notifications. HR policies serve as a tool to regulate employee behaviour for doing what is best for him and for the organisation. Some companies that have established a culture of transparency maintain this policy in the company's internal website/ portal, to ensure a culture that every employee gets acquainted with what is expected from him or her. Under such instances the management feels relaxed, as there is no need to dig into documents.
Where written policies are absent, the management plays an impulsive role towards their employees. In some organizations policies exist but no employee other than HR know about it.  In many instances, employees seek explanation from the HR Department to know what leave rules are, what benefits they are entitled.
HR policies are, in fact, effective at supporting and building a desired organizational culture. Consider the example of recruitment and retention policies - this clearly reveals the way an organization values its workforce. All policies are in some way interlinked with one another. When the formal document is absent, the management and the employees are volatile, therefore decisions made are fickle that differ from person to person.
People of different characteristics and nature, work in an organization, and it is not surprising, they react differently to the need for policies and practices based on their individual differences. Some may prefer a written policy for everything, while others favour having no policies at all. Some management also feels threatened to have policies written, that limit the space for open subjective interpretation to different situations.
Legal necessities
Employments are related laws of the land that create a need for a policy and it fulfils definite specifications, such as occupational health and safety laws, workplace harassment and grievance handling procedures, redundancy and retrenchment laws and so forth. Where no policies exist, this may create an offence under the court of law, if a lawsuit is filed against the employer.
Policies that are required by the law and every organization must serve the minimum legal rights and responsibilities of both the employer and the employees. Any employer violating the rights of an employee becomes a wrongdoer. A policy is not only a guide to treatment toward employees but also a set of guidelines for regulating employee behavior.
Regulating codes of conduct
Organizations establish policies often on matters not regulated by law, but to maintain standards set by the employer with the expectation to guarantee a high standard of behavior in the workplace. These are behavior at work, chain of authority, language, dress codes, alcohol, drugs, smoking, confidentiality, other employment, maintaining the workplace, upkeep of  company property, theft, and statements to media,  as well as their responsibilities towards the employer and to organization property. The policy should also clearly define the set of consequences.
Conditions of employment
There are a whole range of conditions of employment that may not be prescribed by law, but that are agreed to by the employer and the employee at the commencement of the employment contract. Most of the contract and employment letters carry the basics such as date of employment, designation and pay, all other conditions that apply are normally quoted in the HR policy that govern the employee's entry till exit.
Conditions of employment include: attendance, absenteeism, punctuality, transfer, training, promotion, probation, performance review, discipline, abandonment of employment, exit interviews, notice, and termination and elaboration of these rules cannot be appended in a contract letter.
Employee entitlements
When written policies on employee entitlements are prescribed by formal procedure, it gives the self-planning for the employees for setting his or her purpose within the framework of organizational business rules.
It is also easy for the human resources staff, who can easily asses what the entitlements are, thus maintaining a culture of transparency and practice. These policies would include annual leave, long service leave, bereavement leave, parental leave, career's leave, jury leave, quarantine leave, study leave, special leave, overtime, shift work etc.
Employee benefits
Some organizations provide a whole range of benefits that employees enjoy as part of their job, which are often not prescribed by conformity of the senior management, legislation on awards. These are provided by the employer for the benefit of employees - sometimes as incentives aimed at increasing productivity. Other benefits are provided with the idea of increasing employee morale. All these relate to such things as employee health, or assisting employees to balance work and family responsibilities. It is important to clarify how such benefits are awarded to employees in a company policy in order to ensure that all employees know of their availability, and are distributed fairly, and that any conditions applying are well understood. For example, elements in this entitlement policy include: company cars, mobile phones, employee assistance programmes, salary packaging and study assistance.
Entitlements are related with performance improvement and are all about the process of setting expectations and meeting them. The focus in any business is not just about meeting specific goals, but about how to achieve them. And the "how" affects the employer-employee obligation in the process.
Roles
All employees like to have a clear understanding of their role in an organization as well as the roles of others. Every successful team has well-defined positions for its members, and a clear concept of what he or she is to do, how to do it and how their performances create an impact on the business. This means there needs to be a clear reporting structure that spells out who is in charge and how tasks are to be accomplished. Here an organization structure becomes essential and role definition is a foundational part of establishing clear performance expectations for each employee and the management.
Having a clear set of behavioural expectations is vital for establishing specific behavioural standards in the form of rules that establish a framework for addressing violations of those standards. If the organization is founded on loosely defined general standards that are not properly documented, violations become subjective and open to interpretation. The result of such ambiguousness is often litigation.
By nature, people are complex beings who will stun in one minute and astound the next. It is usually a wise, compassionate and financially prudent course to help people strengthen their character. This is extremely important because an employee who feels they have been treated unfairly can create a great deal of liability. In many cases, the key issue is not whether they were actually treated unfairly but whether the employees perceive that they were treated unfairly.
The question of how to support the employees in the organization when faced with a specific personnel issue, what resources are available to them? Do they have an employee handbook or a policy guide? What about regular training in organization policies and practices? Is the management giving them a clear directive on working with human resources personnel?
Whatever the approach may be, the key to success is to devote the time and resources to develop HR policies and practices strategy before such need arises. It is an investment that can pay large dividends in increased productivity and having happy employees with minimum litigation. HR policy certainly becomes an essential component of an organization.