Bylaw or policy? This is a common question posed by boards of directors. The answer is usually apparent if you consider the different purposes of bylaw and policies.
Bylaws are the primary governance document of your organization and can be changed only by the board of directors. They are a snapshot of the topmost internal management of your organization. Bylaws tend to address static matters, such as membership, dues, committees, voting rights, and corporate name/address. Though they can be amended, bylaws are intended to remain in place for the foreseeable future.
Policies are flexible and take into account current regulatory, ethical, competitive, and social norms. In other words, topics and rules that can change are better suited for policies than bylaws. Examples include personnel policies, organizational charts, operational matters, safety policies, codes of conduct. Policies are the procedural and managerial functions that are usually more detailed and concern narrow, issue-specific matters.
In short, if the matter should be etched in the proverbial stone, it is probably a bylaw. If it is likely to change as business practices, technology, and laws evolve, it should probably be a policy.
Christine Jarzab Kuntz is an attorney specializing in the life cycle of businesses and nonprofit organizations. She is enthusiastic to share her knowledge, tools, and tips with the business and nonprofit community. She enjoys the excitement of tutoring start-ups, tackling the challenges of established businesses, and counseling her clients' transitions through all stages of the business life cycle.