Policy vs. Regulation — What's the Difference?

A policy is a course or principle of action adopted or proposed by an organization or individual, intended to influence and determine decisions, actions, and other matters. In contrast, a regulation is a specific rule or law designed to control or govern conduct, usually created and enforced by governmental bodies. Regulations are legally binding and must be followed by individuals and organizations within the jurisdiction.

Policies serve as frameworks within which an organization operates, offering guidelines that shape its culture, processes, and decision-making. Regulations, however, are established to protect public interests, safety, and welfare; they have the force of law and often come with penalties for non-compliance.

The development and enforcement of policies are typically internal to an organization and can be adjusted or revised according to the organization's needs and objectives. For instance, a company may revise its privacy policy in response to feedback from customers or changes in business strategy. On the other hand, regulations are developed through legal processes and can only be changed through legislative action or regulatory bodies. This means that while organizations have control over their policies, they must comply with external regulations that apply to their operations.

Policies often reflect an organization's values and mission, serving as a tool for implementing strategic goals and ensuring consistency in decision-making and practices. They can apply to a wide range of areas, including but not limited to, human resources, IT security, and customer service. Regulations, in contrast, are focused on compliance and legal requirements, aiming to ensure fairness, safety, and standards across industries and society. They can cover areas such as labor laws, environmental protection, and financial compliance.

The relationship between policy and regulation is dynamic. Policies within an organization can be influenced by existing regulations, and at times, organizational policies may advocate for or lead to the development of new regulations. For example, a corporation's environmental sustainability policy may exceed current regulations and set a precedent that influences future regulatory standards. Conversely, new regulations can require organizations to adapt their policies to ensure compliance.