Policies vs. Procedures: a definitive difference

What do you think? You find a couple pieces of paper each with statements printed on them. On the first sheet, one of the statements reads, "Employees will keep their work spaces efficient and neat, presenting a business-like appearance,"

On the second sheet, the statements read like this, “Select files at least seven years old. Shred the contents in a crosscut shredder. Place reusable folders in the cabinet and discard the others.”

What are those statements? They are intrinsically different. The first statement is a guide. It explains “what” is important and “why.” It is a policy statement. The second tells employees how to do a task. It is a procedure.

People accept that Boards are policy-making bodies. People also accept that people who do the work are best able to draft procedures. Somewhere along the way, a myth emerged. Perhaps this common statement best represents that myth, “boards make policy, and management carries it out.” The implication is that boards write policies, and management writes procedures. Taken a step further, one concludes that if a statement comes from the board it is a policy. If a statement comes from management, it must be a procedure.

We know better. Let us today bust that myth. The content of a statement makes it a policy or a procedure; the authorizer does not. Therefore, the first sheet of paper above could show authorization by a Board or by management. Either way, it is a policy.

We can acknowledge that policies emerge from many levels in an organization. In our context of good governance, here is a simple way to differentiate board governance policy from management’s operating policy. If the policy addresses company-wide issues, if it speaks to management, it is a Board governance policy. If the policy statement speaks to employees, it is an operating policy.

The policy example above, guiding employee workspaces, is an example of an operating policy because it speaks to employees. In some organizations, the board could authorize such a statement, but that would not change it to a “governance” policy. It clearly addresses an operational-level issue. In a large or mature organization, the board would delegate operating policies to management through its governance policies.

A model manual is available for credit unions. In the future, there will be one for other non-profit organizations. Join the newsletter now at www.danclark.com to know when it is available.