Before we proceed to the discussion of development of functional policies, it is desirable to make a comparison of policy and procedure. A procedure is a series of related tasks that make up the chronological sequence and the established way of performing the work to be accomplished. Thus, a procedure provides guidelines to organizational members about how to accomplish a work. A policy also provides guidelines for actions. Thus, there is a likelihood that confusion arises between policy and procedure as both provide guidelines for future course of action. However, this guiding aspect is different in policy and procedure. The major difference between the two can be identified as follows:
- Policy provides guidance for managerial thinking as well as action: As a result, it does not tell a manager, how to do the things; it merely channels his decision-making along a particular line by eliminating his span of consideration. On the other hand, a procedure simply provides guidelines to the action by prescribing how an action can be performed step by step.
- A policy is more flexible as compared to a procedure: Policy is more flexible because it prescribes the areas of discretion to managers, while procedure prescribes the exact sequence of the activities without scope of any variation. This difference between policy and procedure may be understood by an example. An organization may have a policy’ of granting vacation to its employees. For implementing this policy, certain procedure may be followed through which an employee may get leave and related benefits. A manager can refuse the leave to the employee concerned depending on the organizational situation. But the employee will have to follow certain procedure of applying for leave, completion of certain formalities to avail the benefits if leave is granted.
- Policy is more pronounced at higher levels while procedures are more prevalent at lower levels: At higher levels, managers are more concerned with looking into the totality of the organizational functioning and, therefore, they should prescribe policies so that uniformity is maintained for particular action. People at lower levels are engaged mostly in routine work which can be better accomplished if the set standards are prescribed without leaving’ any scope of discretion. Since external situations play more important role in policy formulation and its implementation, managers at Policies are guides to action. They are in the form of specific statements or general understanding which provides guidance in decision making to members in respect of any course of action. They indicate how the tasks assigned to the organization at higher levels have to make many decisions which are not similar to the previous ones. Therefore, they have authority to vary an action according to the needs. At lower levels, no such problems arise.