Difference Between Rules and Policies (with Examples and Comparison Chart)

Rules, in an organization, are made to inform its members, what they can do or what they are not allowed to do. It states the acceptable behaviour, along with the consequence of disobedience. Rules do not just ensure discipline in an organization but it also helps in regulating the work culture and environment.

On the other hand, the formulation of policy accounts for an integral part of planning, which is meant to act as a guide to decision making. It recommends the broad considerations which must be taken into account while taking any decision. It also sets the boundaries within which the decisions are to be taken.

Both rules and policies are types of plans, which helps in the smooth functioning of the organization. So, here we are going to discuss the differences between rules and policies.

Comparison Chart

Basis for Comparison	Rules	Policies
Meaning	Rules imply a set of clearly stated standards, which regulates the behavior of an individual, at the workplace.	Policies refer to the principle of action laid down by the top-level management, which acts as a guide for the decision making under various circumstances.
Represents	An order, which needs to be followed.	A framework within which the decisions are to be made.
Determines	What should be done and what should not be done by the employees.	What is to be done in different circumstances.
Sources	Policies and Procedures	Objectives
Rigidity	Highly Rigid	Comparatively less Rigid
Type of Statement	Specific Statement	General Statement
Objective	Rules are made to govern behavior and ensure compliance, to maintain discipline.	Policies are formulated by the management to guide the decision making, to ensure uniformity in decisions.

Definition of Rules

Rules – a set of instructions, regulations and guidelines for standard behaviour. It determines the acts which are to be performed or not to be performed, within the organization. It is indicated in the form of orders, warnings, prohibitions and norms, so as to maintain discipline or to standardize or restrain, the behaviour of individual and group.

It prescribes the minimum acceptable behaviour with the help of norms and instructions, on expected behaviour.
These are applicable to all, i.e. rules are for everyone, irrespective of the level of management to which an individual belongs. For Example: In an education institute, there is a rule that ‘Use of mobile is prohibited during working hours’. Now, everyone has to follow this rule, no matter if someone belongs to top-level management or low-level management.
They are precise and clear so that employees can understand them easily, without any confusion and chaos.
It lessens the need for close supervision, as rules are known to all, and managers can easily predict what subordinates will do in a particular situation.

Rules demand obedience and so any person who does not adhere to the company’s rules are subjected to punishment or penalty. Hence, strict action is taken by the company, against the people who violate or disobey the rules. Further, there is no room for discretion in case of rules, so they need to be followed stringently. Exceptions to the rule might be there, but only in certain circumstances, and they are also limited.

Also Read: Difference Between Rules and Regulations

Definition of Policies

Policies can be defined as the basic statements which are used to guide the thinking and direct the efforts of the managers towards the accomplishment of objectives. Simply put, it is the typical response, to a specific problem, which dictates the manner in which the organization handles issues, in different cases.

Policies are formulated for every level, as decision making is done at each level of management. And, so policies do the job perfectly by predetermining the problems which are encountered frequently and repeatedly, so as to avoid redundant analysis of the same issue and resolve them without much discussion. Moreover, it provides an integrated structure or base to the managerial decision making.

Policies are standing plans, which provides an immediate solution to recurring issues.
It acts as a route or map to achieve the business objectives.
It is a comprehensive guide, that provides scope for managerial judgement and discretion.
It exists for all the departments, levels, segments and units of the organization.

Further, while making the policies for the organization, the top management must invite the views of the employees, as they are the ones who are actually going to deal with it. It determines the limitations and draws a line, for discretion and judgement of the managers, at the time of decision making.

These provide general direction to the managers to follow so as to handle situations appropriately, at the time of decision making. However, deviations can be there in the form of exceptions and also in case of extraordinary situations. It determines the way in which a manager should try to tackle routine management responsibilities.

Policies play a crucial role, as it facilitates the lower level management to handle issues at their own, without going to the top management, for every matter.

For example, Human Resource Policies relating to employee hiring, termination, performance appraisal, increments, leaves, add on benefits, etc.

Also Read: Difference Between Single Use Plan and Standing Plan

Key Differences Between Rules and Policies

The points stated below give a clear insight into the differences between rules and policies:

Rules are basically a list containing the do’s and dont’s, which aims at maintaining uniformity, in the treatment as well as in the behaviour of the employees. On the other hand, Policies alludes to the directives that lay out a constant framework for executive actions on recurring managerial problems.
Rules can be in the form of orders, instructions or norms that needs compliance. As against, policies determine the framework, within which the executive decisions can be taken.
Rules determine what the employees must and must not do, whereas policies determine what needs to be done in various circumstances.
Policies are derived from the objectives of the business, i.e. policies are created keeping in mind the objectives of the organization. As against, rules are based on policies and procedures.
When it comes to rigidity, rules are more rigid in comparison to policies, in the sense there is no scope for thinking and decision making in case of a rule, but, there is a certain degree of scope for thinking and decision making, in case of policies.
While rules are specific statements, i.e. it specifies the actions or non-actions of the employees. On the contrary, policies are general statements which guide the decision making of the managers in general, by stating the problems encountered on a daily basis and their readymade solutions.
Rules are created to regulate the behaviour and ensure compliance, to maintain discipline in the organization. In contrast, policies are formulated by the management to guide the decision making, to ensure uniformity and consistency.

Examples

Examples of Rules	Examples of Policies
Every employee has to wear formals in the office on all working days except on Wednesdays.	Company purchase policy states that only the purchase manager has the authority for the procurement of materials. Further, it states the items that could be purchased and up to what amount.
Employees are not allowed to use the internet for any other purpose (such as news, entertainment, social media, games etc.), apart from their work.	A company's customer service policy, to handle the complaints instantly, if they encounter issues with the product, within one month of the sale.
Personal use of office tools, equipment and stationery are not permissible.	A company follows a cost-based pricing policy, for its products and services.
Smoking during office hours is strictly prohibited.	Distribution policy of the company determining the category or a class of customers to whom the products are sold.

Conclusion

So, what we have understood is that policy is the organization’s personalized approach to deal with the issues. It determines the overall framework, as to scope and limits, within which a manager has to work. Further, the basic motive behind the making of rules is to ensure an environment of discipline. Therefore, rules are the instructions which the employees has to follow them as they are, i.e. without modifying them.