Policy is a deliberate system of
guideline A guideline is a statement by which to determine a course of action. A guideline aims to streamline particular processes according to a set routine or sound practice. Guidelines may be issued by and used by any organization (governmental or priv ...

s to guide decisions and achieve rational outcomes. A policy is a statement of intent and is implemented as a procedure or protocol. Policies are generally adopted by a
governance Governance is all the processes of interactions be they through the laws Law is a system of rules created and law enforcement, enforced through social or governmental institutions to regulate behavior,Robertson, ''Crimes against humanity ...

body within an organization. Policies can assist in both ''subjective'' and ''objective''
decision making In psychology Psychology is the science of mind and behavior. Psychology includes the study of consciousness, conscious and Unconscious mind, unconscious phenomena, as well as feeling and thought. It is an academic discipline of immense s ...

decision making
. Policies used in subjective decision-making usually assist senior management with decisions that must be based on the relative merits of a number of factors, and as a result, are often hard to test objectively, e.g.
work–life balance Work–life balance is the equilibrium between personal life upright=1.00, Humans have traditionally lived within family-based social structures and in artificial shelters. Personal life is the course or state of an individual An individual i ...
policy. In contrast, policies to assist in objective decision-making are usually operational in nature and can be objectively tested, e.g. password policy. The term may apply to government, public sector organizations and groups, as well as individuals, Presidential executive orders, corporate privacy policies, and parliamentary
rules of order Parliamentary procedure is the accepted rules Rule or ruling may refer to: Human activity * The exercise of political Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social gro ...
are all examples of policy. Policy differs from
rules Rule or ruling may refer to: Human activity * The exercise of political Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, or other forms of Power (social and po ...

law Law is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, surrounded and influenced by its environment, is described by its boundari ...
. While the law can compel or prohibit behaviors (e.g. a law requiring the payment of taxes on income), policy merely guides actions toward those that are most likely to achieve the desired outcome. Policy or
policy study Policy is a deliberate system of guidelines to guide decisions and achieve rational outcomes. A policy is a statement of intent and is implemented as a procedure or protocol. Policies are generally adopted by a governance body within an organiz ...
may also refer to the process of making important organizational decisions, including the identification of different alternatives such as programs or spending priorities, and choosing among them on the basis of the impact they will have. Policies can be understood as political,
managerial Management (or managing) is the administration of an organization An organization, or organisation (Commonwealth English The use of the English language English is a West Germanic languages, West Germanic language first spok ...

, financial, and administrative mechanisms arranged to reach explicit goals. In public corporate finance, a
critical accounting policy In public corporate finance Corporate finance is the area of finance that deals with sources of funding, the capital structure of corporations, the actions that managers take to increase the Value investing, value of the firm to the shareholders, ...
is a policy for a firm/company or an industry that is considered to have a notably high subjective element, and that has a material impact on the
financial statement Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form which is easy to un ...



The intended effects of a policy vary widely according to the organization and the context in which they are made. Broadly, policies are typically instituted to avoid some negative effect that has been noticed in the organization, or to seek some positive benefit. Corporate purchasing policies provide an example of how organizations attempt to avoid negative effects. Many large companies have policies that all purchases above a certain value must be performed through a purchasing process. By requiring this standard purchasing process through policy, the organization can limit waste and standardize the way purchasing is done. The State of
California California is a U.S. state, state in the Western United States. With over 39.3million residents across a total area of approximately , it is the List of states and territories of the United States by population, most populous and the List of ...

provides an example of benefit-seeking policy. In recent years, the numbers of
hybrid cars A hybrid vehicle is one that uses two or more distinct types of power, such as submarines that use diesel when surfaced and batteries when submerged. Other means to store energy include pressurized fluid in hydraulic hybridHydraulic hybrid vehi ...
in California has increased dramatically, in part because of policy changes in
Federal law Federal law is the body of law created by the federal government of a country. A federal government is formed when a group of political units, such as state (subnational), states or provinces join together in a federation, delegating their indivi ...
that provided USD $1,500 in tax credits (since phased out) as well as the use of
high-occupancy vehicle A high-occupancy vehicle lane (also known as an HOV lane, carpool lane, diamond lane, 2+ lane, and transit lane or T2 or T3 lanes) is a restricted traffic lane In road transport, a lane is part of a carriageway that is designated to be used by ...
lanes to hybrid owners (no loew hybrid vehicles). In this case, the organization (state and/or federal government) created an effect (increased ownership and use of hybrid vehicles) through policy (tax breaks, highway lanes).


Policies frequently have side effects or
unintended consequences In the social sciences Social science is the Branches of science, branch of science devoted to the study of society, societies and the Social relation, relationships among individuals within those societies. The term was formerly used to ...

unintended consequences
. Because the environments that policies seek to influence or manipulate are typically
complex adaptive systems A complex adaptive system is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea of a two-way effect is essential in the concept of intera ...
(e.g. governments, societies, large companies), making a policy change can have
counterintuitive {{Short pages monitor and ''reinforcement learning'', a policy prescribes a non-empty deliberation (sequence of actions) given a non-empty sequence of states. * In
debate Debate is a process that involves formal discourse on a particular topic, often including a moderator and audience. In a debate, argument In logic Logic is an interdisciplinary field which studies truth and reasoning Reason is the ca ...
, the term "policy" is slang for policy or cross-examination debate.

See also



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Further reading

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External links

* * {{Authority control Politics by issue Decision-making