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Policies are guidelines that regulate organizational affairs. They control the conduct of people and activities of the systems. A policy is a type of position statement. It clarifies the stance of the organization on an important issue. It explains how the organization intends to operate. While policies are organization's guidelines, procedures delineate the normal method of tackling things. They are protocols for implementation. Procedures complement policies. The statement "it is our policy to provide the best customer service in the industry" leaves a lot of unanswered questions, such as the time and costs acceptable toward this end. Procedures outline the steps and their sequence towards attaining policies.


Good policies and procedures should

  1. Provide insight on what the management believes is important
  2. Clarify obligations of the employees, purpose of the obligations and consequences of failure to abide by them
  3. Be consistent and last beyond the term of a particular executive


The differences between policies and procedures can be summarized as follows:

  1. Policies guide decision making, while procedures drive


  2. Policies leave some room for managerial discretion, while procedures are detailed and rigid
  3. Policies are an integral part of organizational strategies, while procedures are tactical tools.
  4. Policies are generally formulated by top management, while procedures are laid down at lower organizational levels in line with policies

Time Frame

Policies are more evergreen than procedures. Procedures change more frequently, because they should be adaptable to the changing operational environment and technological advancements. Policies are meant to anchor the organization on substantive strategic guidelines, while procedures maintain the flexibility of the organization in dealing with environmental change.


Unwarranted ambiguity in policies and procedures can reduce their effectiveness. Ambiguous policies and procedures require users to exercise discretion and sound judgment, but this needs information and help from the organization. There are no precise standards as to how detailed a policy or procedure should be. The level of detail should be both sufficient and appropriate for the audience and the subject matter. Sufficient means the right type of information and the right amount of it. Appropriate means fitting for the topic and audience.

Category: Bank

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