We talk about policies and procedures all the time but what really is a policy and how does it differ from a procedure?
What's a Policy?
A policy is a guiding principle used to set direction in an organization. It can be a course of action to guide and influence decisions. It should be used as a guide to decision making under a given set of circumstances within the framework of objectives, goals and management philosophies as determined by senior management. But is it?
There are really two types of policies. The first are rules frequently used as employee policies. The second are mini-mission statements frequently associated with procedures. Think rules versus missions.
Employee Policies
An employee policy is a business rule you put in your Employee Handbook. This includes things like no smoking, no drinking, and other business practices like dress codes, vacation policy, or your company's codes of conduct. Clearly, employee policies are human resource policies about your office rules used to support your management philosophies.
Employee policies are used to set a standard for projecting your company image or to communicate regulations that apply to all personnel. What kind of image are you projecting as a company? They typically come from top management as a result of interpreting the company mission and vision statements, laws and regulations, or industry standards and practices.
Procedure Policies
Think of your procedure policy as a mini-mission statement. A mission statement contains the target user, the stated purpose, and some type of effectiveness measure to communicate how users know the procedure is working.
An example Inventory Counting Procedure Policy:
Warehouse personnel shall count physical inventory on a frequent basis to ensure the accuracy of the general ledger balance.
In the inventory counting policy you see the target user is the warehouse personnel. The stated purpose is to count inventory and the effectiveness measures are frequency and accuracy. The procedures will need to define the actual frequency and accuracy amounts. In fact, the amounts could be objectives for process improvement if there are inventory issues.
What's a Procedure?
A procedure is a particular way of accomplishing something. It should be designed as a series of steps to be followed as a consistent and repetitive approach or cycle to accomplish an end result. Once complete, you will have a set of established methods for conducting the affairs of your organization, which will come in handy for training, process auditing, process improvement, or compliance initiatives.
Procedures provide a platform for implementing the consistency needed to decrease process variation, which increases procedure control. Decreasing process variation is how we eliminate waste and increase performance.
The Difference between Policies and Procedure
A policy is a guiding principle used to set direction in an organization. A procedure is a series of steps to be followed as a consistent and repetitive approach to accomplish an end result. Together they are used to empower a process with the direction and consistency necessary for successful process improvement.
