Practice vs. Policy — What’s the Difference?

At first glance, practice and policy may seem similar enough not to warrant investigation. Time is usually a premium in any company and what difference does it make if an employee’s action strays from company practice or policy? It’s the same problem, right? Wrong.

Businesses that don’t clearly define and disseminate practices and policies are setting themselves up for complications when employee problems surface.

A business needs to systematize and formalize as many of its activities as possible. The lowest level of organizational or business behavior is a business practice. And, while business practices are varied in terms of significance, when an issue arises, a practice holds no legal accountability. Huge difference.

The way the law works is that the employees cannot be legally held accountable to follow practices, but can be held legally accountable to follow policies. A policy is just a practice that has been formally presented as an expectation of management. The business owner/operator should elevate from practice to policy. At a minimum, every business that has employees should have an employee policy and procedure manual. This manual provides clarity regarding regular business activities.

Take email for example. A practice might be to check email on an intermittent basis. A policy, however, might be: “Email in our organization is not private and should be restricted to business communication. We reserve the right to monitor email if we consider it appropriate to do so.” Again, a policy is a practice that has been thought through and then formalized. Management has to follow the policies they set up. If the policies are not consistently applied, an issue of favoritism or discrimination can be created.

In addition to the legal ramifications, the more management systematizes its behaviors and expectations, the more predictability and comfort is provided to employees. If there are no systems in place, then management and employees must rely on mood and attitude. Just what you don’t want when a problem arises.

If good people are using good systems, then the results will always be good. If good people are using mediocre systems, or the reverse and mediocre people are using good systems, there may be frustrations, but results will still usually be good. However, if mediocre people are using mediocre systems, the results will usually be mediocre.

Look at McDonald’s as an example. McDonald’s is consistently rated as one of the best-run companies in the world. It is systematized to the maximum. You can always count on the product being good whether it is produced in the Midwest, the Northeast or in Asia. Who operates McDonald’s at the store level? Kids. Who supervises McDonald’s at the store level? It’s the kids who have hung around long enough to be promoted.

Mediocre people using exceptional systems can produce exceptional results. Imagine what good people using exceptional systems can produce. Actually, don’t imagine it—create it yourself! Start by developing, clarifying, disseminating and documenting business policy.

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