Difference between Policies and Objectives

Policies and Objectives are two types of Standing Plan. Policies are the general statements that guide thinking and channel energy toward a particular direction. However, Objectives are the endpoints towards which all business activities are directed.

What are Policies?

The general statements that guide thinking and channel energy toward a particular direction are known as Policies. Policies are a type of Standing Plan and they provide a basis for interpreting strategy. A manager uses policies at his discretion. E.g. Decisions taken under recruitment policy can be in the case of recruiting employees for a new division, such as whether to recruit from the existing employees or to explore other external sources of recruitment, various policies under it regarding the salary structure, etc. A policy is used by organizations as a guide that avoids confusion and provides a structured and unified framework.

What are Objectives?

The endpoints towards which all business activities are directed are known as Objectives. It is the first step of planning. It is the desired place that an organization wants to reach. These are very basic and are mostly set up by the top-level management for the whole organization, but different departments can also set their objectives accordingly. Objectives should be measurable in quantitative terms, in written statement form, and should be achieved in a given time period. 

Difference between Policies and Objectives

Basis	Policies	Objectives
Meaning	Policies are general statements that guide thinking and channel energy toward a particular direction.	Objectives are the endpoints towards which all the business activities are directed.
Aim	Its main aim is to determine how the work is to be done.	Its main aim is to determine what is to be done.
Scope	It is narrower than objectives as they are derived from objectives.	It is wider than policies as policies are derived from objectives.
Period	They do not have any particular time period or dimensions.	They have time period or dimensions as organizations have short term, medium term and long term objectives.
Need	They are useful in achieving objectives, but an organization can exist without them.	They are necessary for the existence of a firm. Without objectives, an organization will have no idea what it wants to achieve.
Formulation	They are formulated by managers at all levels of management.	They are usually formulated by managers at the top level of management.
Source	They are derived from objectives.	They are derived from goals.
Example	Policy of a company can be to retire employees at the age of 59.	The objective of a bakery can be to increase its customer base by 10% in 6 months.