What Are Business Rules? Why They Are Important?

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Written By Haissam Abdul Malak

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Business rules are important to an organization’s efficient operation. Organizations lacking defined rules and procedural standards will frequently discover a chaotic workplace with uneven outputs, low employee morale, and unsatisfied consumers.

Business rules are the set of instructions, guidelines, and regulations that guide how a company should conduct its business. They can be used to determine what actions should be taken in various situations, and they can also be used to prevent certain actions from happening.

The purpose of business rules is to help maintain consistency across all departments in an organization. This helps streamline operations and ensures that each employee is following the same set of procedures.

Business rule examples might be legislation, a regulation, a policy, a control document, a process description, or anything else. There are several regulations that we must follow when conducting business.

Documenting your business rules can be very important in today’s world, where there is an increased risk of cybersecurity breaches. Documented business rules provide a way to maintain control over your company data and ensure that it is not being accessed by unauthorized parties.

what are business rules

What are Business Rules?

Business rules are statements that regulate business decision-making in order to help a company achieve its goals. They set expectations, provide job performance standards, monitor compliance, and support organizations in automating operations.

Business rules are usually created with the use of a business rules engine or business rules management systems. This type of software is designed to store and manage all types of company-specific information, including financials, policies, procedures, product information, and more.

The best way to find out what your business logic needs is to ask yourself these questions:

  • What are the most important things that we need to accomplish?
  • What decisions do we need to make?
  • How do we want people to react when they encounter these decisions?
  • How should people feel about our decision-making process?
  • What kind of tools or systems do

While it may be informal or unwritten, properly documenting the rules and ensuring that they do not contradict is a worthwhile task.

Consider them to be conditions used to assess various bits of information that can result in a variety of outcomes ranging from a simple yes/no decision to a complicated scoring based on numerous criteria.

All organizations leverage business rules in order to define how certain operations should be implemented, automate business decisions, and prevent inconsistent outcomes.

How to Write Business Rules?

Before writing business rules, it is important to understand what they should be doing. There are four aspects: defining the scope, setting expectations, communicating expectations, and measuring progress.

Here are the step to master writing business rules:

1- Defining the Scope

This is the first step in writing business rules. It involves determining which business activities should be included in your rules, what changes they should make, and how they are to be monitored and implemented.

2-Setting Expectations

The second step of writing business rules is setting expectations. This includes making sure that employees develop a mutual understanding of what is required of them and what they can expect from the business.

3- Communicating expectations

Communication includes explaining the process and how it will work, as well as creating a reporting system to track progress.

4- Measuring Progress

The final step in writing effective business rules is measuring progress. This includes setting goals and measuring whether your company is meeting them, using metrics such as time or cost.

What are the Types of Rules?

There are three types of business rules:

1- Implicit Rules

Implicit rules are the ones that are not written down but are implicitly understood by all stakeholders.

2- Explicit Rules

Explicit rules, on the other hand, require a written form such as a set of instructions or guidelines.

3- Procedural Rules

Procedural rules guide how one should go about doing something.


Some Business Rules Examples

Some business rules examples include leave requests with an annual entitlement, daily cash withdrawal limits, discounts on items purchased in quantities higher than a certain number, loan calculations and acceptance, budget approvals, speed violations, and so on.

Business rules examples may be found anywhere. Every business is governed by rules. Rules dictate whether opportunities are pursued or rejected, who has the authority to approve or reject, and even who is employed in your business.

Business rules

5 top business rules examples include:

1- Leave Request

One of the most common examples of business rules is the condition applied to your corporate leaves.

For example, when you seek a new leave, the system or HR will verify the balance of leave requests allowed each year. In order to avoid a gap, your supervisor will also ensure that no overlapping occurs amongst individuals with the same skill set.

With the help of business process automation tools, these rules can be automated in order to guarantee the same high-quality results and reduce errors.

2- Promotions

Another item in the list of examples of business rules is when the logic and conditions that companies implement when promoting their key employees.

To get promoted inside a company, there are typically various conditions that should apply to an employee profile, such as the degree of experience, the years of seniority, the skillset gained, the sales target accomplished, and so on.

3- Invoice Processing

A decision-making hierarchy for invoice processing in which the worth of certain bills is graded to decide which management can approve them.

4- Bonuses

Employee bonuses are often determined based on a variety of factors such as the year’s performance, the company’s net profit, sales objectives, and so on.

5- Customer Transactions

Customer transactions are another examples of business rules that govern transactions by identifying which goods to sell based on prior behavior, calculating discounts depending on transaction size, or computing commissions.

Why Are Rules Important In Business?

Rules assist a business in achieving its objectives, removing barriers to market expansion, preventing costly mistakes, improving communication, complying with legal business requirements, maintaining consistency, supporting transparency, increasing operational efficiency, and building customer loyalty.

On the personal level, some of the world’s best CEOs aim to keep decisions on ordinary daily activities to a minimum. They take it so seriously that they attempt to concentrate their efforts on more vital matters.

That is precisely how businesses should work. They should have well-defined rules to help with day-to-day operations and give better control over business requirements.

They are pre-determined choices that help processes flow faster and prevent employees from squandering time in this manner.

You define them, put them into action, and automate their control so you can see the performance improvements they bring to your organization in real-time and reduce errors.

Below are some of the most important values:

1- Helps in Cost Reduction

Rules that are established, regulated and monitored can save operation time and improve corporate decision-making.

2- Operational Efficiency

Another consideration while developing company regulations is to represent the corporate ideology. Companies work around critical aspects like the recruiting process, work schedules, and customer interaction since workers are obligated to operate in accordance with the guiding principles.

Employee safety, for example, is one of the most essential issues in the construction business. It is quite normal to get injuries in a variety of ways when working on a large construction job. That is why it is critical to establish regulations and conditions for this personnel to ensure their safety.

Covid 19 operations business rules

3- Enhanced Process Control

Businesses gain more control over their day-to-day procedures by having clearly defined conditions. Employees will have let more time to focus on another aspect of the process and increase their knowledge which will affect positively their performance.

It will be simpler to detect mistakes and business activities and quickly correct them. You may exert greater control over the most important procedures.

4- Decision Making

Business rules assist organizations in making decisions that benefit the business the most.

Well-defined rules help the business operations and decisions to be relevant across the entire organization.

For example, in the field of information management, and particularly in the implementation of an enterprise content management or document management system, it is critical to apply rules to the records that must be archived and those that must be disposed of in order to avoid government penalties and be prepared for legal audits.

Please read this article about the importance of record retention in companies.

What Is Records Retention: Why It Is A Must For Organizations (theecmconsultant.com)

5- Automation

When rules are automated through business process automation, organizations can make sure that these rules are always applied and help employees finalize their job in the most efficient error-free way.

For example, if your company has automated the leave request process, you may apply the rules associated with this procedure in real life, such that workers will be unable to submit their digital form leave request if their balance is not met.

Another example is the use of a digital signature or a wet-signature during an approval cycle for a specific process. Banks, particularly in the Middle East, still need a wet signature for any official paper to be filed, but schools, colleges, and other institutions are transitioning to digital signatures.

This uncertainty can be readily addressed by automation and well-defined business rule management, and the approved signature can be directed to the appropriate channel without the need for human interaction.

6- Employee Management

Employees in any firm are subject to certain regulations (vacations, benefits, working hours, etc.) that must be followed in accordance with the organization’s processes.

Having these business principles clearly stated and publicly available will result in a better working environment, fewer misunderstandings, and improved employee relations.

7- Improved Compliance

Compliance with various laws and industry-related regulations may be enhanced by having these rules clearly stated and appropriately enforced.

Business Rules Automation

Different business rule types exist throughout the business and are frequently used to describe the combined experience of experts who have contributed to the company.

Every time new products or services are added or changed; every time industry regulations change; every time pricing strategies are updated; every time new partners or suppliers join the team; every time sales territories shift or compensation plans change; all of these are triggers for business rule changes.

Consider the time required to update these regulations and tell staff about these changes, as well as the mistakes that might be made that will expose your business.

That’s where automation plays an important role. when they are automated, the rules will be changed centrally and all stakeholders working on different processes will automatically be able to apply the latest changes.

When automating a process like leave requests, these rules should be managed in a business rules engine, and the solution should reflect these rules when employees submit their leave requests.

Because rules and processes are at the heart of any operation, correctly managing and improving them helps businesses become more efficient.

Business process automation, when combined with well-defined and applied rules into processes, will enable businesses to govern, monitor, and ensure that rules are applied to all workers with little to no mistake.

Conclusion

An agile business operating platform is fantastic, but keep in mind that agility is more than just speed of movement. Agility necessitates not just the ability to move rapidly, but also the ability to change direction with precision.

Some process automation software allows businesses to model rules independently of automated processes in order to help them stay flexible and agile. This enables businesses to isolate their business logic from their process logic.

Organizations must take business rules management seriously, and rules must be correctly established, documented, and automated in order for enterprises to be nimble and make changes without errors.

FAQ

What are examples of business rules?

Business rules can be anything from simple to complex. Simple business rules can be something as simple as a rule that says if you want to order more than 10 items, you need to pay for shipping. Complex business rules could include something like how much a customer is charged for shipping and handling based on how much they have spent on their order.

What are business rules in a process?

Business rules are a set of instructions that define the expected behavior for a process. They are usually used to validate inputs and outputs, and to ensure consistency in the process. This is how they ensure that the process is being carried out as intended.

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