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Question

Explain policies and procedures as types of plans. Differentiate between the two on any four basis.

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Solution

Basis Policy 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. The practical applicability of the policies.
Involves Decision Making Actions
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 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.

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