Definition of Policies & Procedures

by Beth Philley; Updated September 26, 2017
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Policies and procedures are a vital part of business management because they prevent each employee from having to reinvent the wheel and they provide a standard against which individual performance can be judged.

What's the Difference Between a Policy and a Procedure?

In the simplest terms, a policy defines an outcome, while a procedure defines the means to the end. For example, it might be company policy that all employee purchases be rung up by another employee, while the procedure to achieve that might be that receipts must include both the name of the employee who made the purchase and the name of the employee who rang it up.

How Do I Develop Company Policies?

It would be nice if you could make up a complete set of company policies when you first open your business and never have to revisit them. However, your policy and procedure book should be thought of as a living document, with new policies added as the need arises.

When Might Policies and Procedures Need To Be Changed?

One of the best examples of when a policy might need to be updated is when a business converts from a manual system to one managed electronically.

If Policies and Procedures Can Be Changed, Why Must They Be Written?

Keeping all policies and procedures in written form improves the chances that they will be fairly and impartially applied to every employee in the company. For example, if a manager disciplines an employee for eating potato chips off of the conveyor belt, the employee could claim to be ignorant of the policy if he has not been given a copy of an employee handbook stating the "no eating" policy in advance.

How Can Policies and Procedures Be Used for Performance Appraisals?

Clear policies and procedures enable each employee to know how she will be judged, and each manager can objectively compare individual performance. For example, if the policy is that each employee perform five quality checks per hour and document her checks in a log book, it is very easy for a manager to sit down at the end of the day and see who is meeting the standard and who is not.

How Should a Manager Use Policy and Performance Standards?

On a daily basis, managers can utilize standards as coaching moments, showing an employee where his performance needs to improve or where his performance is stellar. At the end of a certain period of time, each employee can be shown his average performance as compared to the standard, and decisions such as merit increases, promotions or even employee retention can be made on an objective, fair and impartial basis.

About the Author

Beth Philley has been a been a freelancer since 2005, primarily providing ghostwriting services for others. However, she does write under her own name as the blogger at Doggies.com.