Research software is essential to modern science, yet many research-performing organisations lack coherent policies to support its development, sustainability, and recognition. Despite its central role in research outcomes, research software and its personnel are often excluded from research institution policies. This article discusses the work of the Policies in Research Organisations for Research Software (PRO4RS) Working Group, exploring current gaps, including limited support for research software personnel, and offering recommendations for embedding software into policy frameworks to ensure the software is valued, sustained, and aligned with broader research goals. The analysis proposes a three-layer framework to guide policy development: central policies that explicitly recognise software as a scholarly output; middle-layer policies that align related areas such as open science, intellectual property, and research evaluation; and outer-layer mechanisms like guidelines and frameworks that enable practical implementation. Institutions are encouraged to assess existing practices, adopt international declarations, and engage stakeholders to advance software recognition. Stronger institutional policies can foster good practices, boost collaboration, support reproducibility, and strengthen researcher development, to maximise both institutional value and research impact, and position organisations as leaders in open, sustainable, software-driven science.