Explain “Policy” and “Procedure” as types of plans.

(i) Policies: Policies are those general statements which are decided for the guidance of the employees while taking decision. Their purpose is to lay down a limit within which a particular work can be done or a decision taken. Objectives decide what is to be achieved and the policies tell us how it can be achieved. Sometimes we hear the following in connection with policies:

Personnel Policy: Under this policy it can be decided that the basis for the promotion of employees will be their age. Once this is decided, no departmental manager will need the permission of the General Manager regarding the promotion of the employees.

(ii) Procedures: Procedures are those plans which determine the sequence of any work performance. For example, the recovery of money from the debtors can be done in the following order: (a) Writing letters, (b) Contacting on telephone, (c) Meeting personally, (d) Taking legal action.

This is the procedure of collecting money from all the debtors.