Rules and regulation of the business organization are framed in the form of policies. These are the guiding principles of an organization. It should not be confused with procedures, as both are are created by top level management for middle and low-level management. Procedure implies the step by step sequence, for the performance of activity within the organisation.
Policies are general statement that sets out the limits within which decisions are taken by the managers and thus assures the consistent performance. On the contrary, procedures, suggest the exact way of performing an activity. It indicates the sequence for handling various business activities. In this article excerpt, you will find all the substantial differences between policies and procedures,
Content: Policies Vs Procedures
|Basis for Comparison||Policies||Procedures|
|Meaning||A precise statement which contains the set of principles acting as guidelines for achieving the goals of an organization is known as Policy.||The Procedure is a systematic sequence for an activity or task which is predefined by an organization.|
|Nature||Policies are flexible in nature, i.e. they allow exceptional situations.||Procedures are rigid in nature.|
|Reflects||The mission of the organization.||Practical applicability of the policies.|
|Best Implemented when||Fully acceptable by the people.||Follow a logical process.|
|In support of||Strategies||Programs|
Definition of Policies
Policies are also known as the mini-mission statement, that are formulated by the top management, for serving as guidelines to take quick and rational decision regarding the day to day operational activities of the company.
Policies affect the internal structure and routine activities of the entity which requires periodic decision making. They are generally in the form of the concise statement. While crafting the policies of the organisation, some points are to be taken into consideration:
- They must be based on past experiences, facts, and knowledge.
- People who are going to be influenced by these policies must actively participate at the time of framing it.
- They need to be modified with the modifications in the operations of the entity.
- They should be versatile and completely acceptable by the people.
Policies are an integral part of the big organisation which helps in its smooth functioning. They provide some common parameters over which the management can take a consistent decision over a long period.
Definition of Procedure
A schedule of activities which needs to be performed, one after the other, in a fixed period, having a proper beginning and end is known as the procedure. The idea of procedure has been developed to avoid the overlapping of actions and haphazard manner of performing activities. This saves a lot of time and a proper series of actions is framed, which will reduce chaos. Procedures are made for the successful completion of a program. They are made for directing the lower level workers of the organisation.
In government offices, procedures are known as “Red Tapism” where you have to follow sequential steps in the performance of activity, like for making a driving license or a passport or PAN card, etc. Procedures can be framed taking these points into consideration:
- Based on experience, knowledge and facts.
- They are made for difficult tasks.
- A specific objective must be there behind any procedure.
- The procedure should give the required outcome at the end.
Key Differences Between Policies and Procedures
The difference between policies and procedures in management are explained clearly in the following points:
- Policies are those terms and conditions which direct the company in making a decision. Procedures are the sequential steps which direct the people for any activity.
- Policies are not hard and fast rules as they permit any extraordinary and unconventional situation. Conversely, Procedures are strict in nature, which needs to be followed in the series.
- Policies reflect the ultimate mission of the organisation. Unlike Procedures, that are made to show the practical application of the policies.
- Policies are made to support the strategies while Procedures are helpful in the implementation of programs.
- Policies are decision oriented, but procedures are action oriented.
- Policies need to be thoroughly accepted by the people who are influenced by them. On the other hand, there should be a methodical process in the procedure.
Examples of Policies
- Recruitment policy
- Credit Policy
- Mark up policy
- Payment policy
Example of Procedure
Suppose an order of materials has to be placed then the following procedure needs to be followed.
- Step 1: Stores Department will send a Purchase Requisition to Purchase Department.
- Step 2: Purchase Department will analyse and compare the Bill of Materials.
- Step 3: Sourcing and Advertising of Materials.
- Step 4: Receiving Quotations from various suppliers.
- Step 5: Evaluation of Quotation concerning price, quality, quantity, etc.
- Step 6: Placement of order.
- Step 7: Receiving materials from suppliers.
- Step 8: Checking of materials.
- Step 9: Preparation of Material Received Note.
- Step 10: Making payment to suppliers.
Policies and Procedure both are a part of the internal structure of the organisation, so they are ‘inward directed’. They are concerned with the middle or supervisory level management. Both of them are made for a short period and so they can be changed periodically without having any adverse effect on the management of the company. They focus on bettering the efficiency of the firm from the operational activities. They are not contradictory to each other, but complementary to each other. Hence they go side by side.