What Are Business Rules And How To Use Them

January 14, 2023
Process Management

Can you imagine running your organization successfully without clearly laid out rules? Certainly not.

Without well-defined guidelines for conducting business, companies might be riddled with issues such as inconsistent results, dissatisfied customers, and employees who aren't invested in the company and its products and services.

Thus, it's important to establish specific rules to supervise the conduct and to lay out the conditions and parameters that facilitate efficient decision-making.

This is why establishing and implementing business rules become imperative. So, here is an extensive guide to help organizations understand the implications, significance, and real-world implementation of business rules. Let's get started.

What are Business Rules?

Business rules refer to a series of guiding principles, directives, or instructions that outline specific company actions and, in some cases, limit or regulate certain operations.

Since their primary objective is to promote effective and consistent decisions, they are almost always put into place to ensure that better corporate actions can be taken. 

These rules can exist in any business sector or industry. They might be tailored to employees, an entire division, or the entire corporation.

Generally, business rules depict the following characteristics:

  • They are explicit and define individual actions
  • They contribute to an organization's overall reliability, compliance, and consistency,
  • They serve as a source of information for the formulation of corporate rules, systems, and procedures
  • They can represent both internal procedures and external regulations (those driven by the company or the government)
  • They provide employees with clear directives on their duties, reducing time consumption, efforts, and expenses.

Common Types of Business Rules

No matter how a rule is categorized, its primary function is to define the types of conduct appropriate for a given business setting. The following are some typical classifications of business rules according to professional requirements:

  • Formula Rule

A formula rule is a type of business rule that enables users to make and manage computations in a no-code format, like spreadsheet templates.

After the formulas have been developed, companies can recycle them to utilize them while designing necessary processes.

  • Facts

Facts serve as the foundation for the development of fundamental norms. They could be organized into several categories according to their qualities, structures, and interrelationships.

  • Decision Table Rule

The decision table rule is a robust piece of business logic that enables non-developers to generate and depict conditional decisions or "if-then" logic in an accurate fashion.

Some areas that use decision table rules include approvals and determining loan eligibility.

  • Derivations

These rules are put in place to define the conditions under which facts and information could be gathered from many other sources.

Inference rules and computation rules are two other subcategories that can be derived from these rules.

Inference rules are used to determine whether or not a particular conclusion may be reached from a given fact. In contrast, computation rules leverage algorithms to emanate inference rules.

  • Timing Rule

A timing rule specifies what actions must be taken after a particular amount of elapsed time. One example could be a customer support issue moving to a higher priority level if it has not been resolved within 24 hours of its initial submission.

  • Trigger Rule

The components of a trigger rule are an action and a trigger. If step 1 took place, step 2 would proceed subsequently.

Why Do Business Rules Hold Any Significance?

The establishment of rules in a corporate environment is beneficial not only to the company itself but also to its management, employees, clients, and customers.

Business rules are instrumental in establishing expectations and providing a framework within which to carry out day-to-day business tasks. Organizations can gain a variety of benefits from business rules, including the following:

  • Enhanced Operational Efficiency 

Incorporating business rules into processes and daily operational procedures can save a substantial amount of time.

For instance, when a company has established guidelines for a particular process, employees can refer to those guidelines rather than waiting for instructions.

It may assist them in saving crucial business time, which they may then employ to complete that task.

  • Better Control Over Business Operations and Processes

Establishing standards for a company makes it far simpler to identify weak spots and opportunities for growth.

When these problem areas are identified early on, either the management or the staff can immediately implement solutions to fix them.

For instance, if a manager discovers that putting in place a new guideline makes a particular procedure go more quickly, they can consider devising plans to incorporate similar standards in other domains.

  • Effective and Quick Conflict Resolution

If there is ever a disagreement between team members, having guidelines to follow can be very helpful.

For instance, if a sales representative complains to a supervisor that another sales rep poached her lead, regulations on how leads get generated and dispersed can be monitored and discussed.

It allows the supervisor to make an informed decision regarding who is on the right side and to impose discipline in a manner respectful to that decision.

  • Ensuring Workforce Safety

It is essential to have precise standards in place, particularly those that relate to the safety of the staff.

Safety protocols, proper operating regulations, and equipment-use guidelines not only help decrease a company's liability but also lower the likelihood of accidents and injuries occurring.

For instance, personnel entering a manufacturing facility should be required to carry protective gear and safety eyewear to comply with the dress code standards specified.

  • Superior Consistency and Reliability

Business rules can help guarantee that employees understand how to carry out activities by stating the required criteria that must be met before they can do so.

For instance, companies can design personalized feedback templates with needed fields for their staff members to fill out. As a consequence, the information the company gathers may have a higher degree of accuracy.

When organizations effectively utilize business rules, it can provide managers with the peace of mind that comes with knowing they are following compliance legislation and regulatory standards.

  • Devising and Deploying Better Strategies

The application of strategic plans can be made more effective with the assistance of business rules.

When conducting a review of the policies and objectives of the firm, managers can investigate the responses of employees and customers to particular business rules and take such findings into consideration as one of the factors.

When they do this, it helps them design plans that will boost business processes so the organization can reach its goals.

  • Enhanced Operational Procedures

The input that an organization receives from its clients and customers regarding their interactions with a certain business rule may assist the company in determining the procedures that it can further develop.

Resultantly, businesses can now direct resources toward the revision of that rule.

  • Improved Litigation Practices

Establishing ground rules for employees to follow helps safeguard a company from the threat of legal action.

For instance, if claims are filed over workplace violence, discrimination, etc., the organization gets better placed to defend itself, given that management adheres to the rules as they are written and can document their approach.

Where Do Organizations Put Business Rules to Use?

When we analyze when and where business rules are typically applied, their significance becomes even more readily apparent. Business rules play a vital role in the following segments:

  • Closely monitoring change management
  • Putting together top-level operational systems
  • Continuous launch of brand-new firm projects, products, procedures, and plans
  • Automating work platforms
  • Conducting a requirements assessment for the company's operations

There are three primary domains in which companies implement business rules to facilitate time savings, error prevention, and continued progress of tasks.

  • Assessments that Call for Decision-Making

If a team of product developers inspects and evaluates a new prototype, they might be required to adhere to a predetermined set of guidelines to determine whether the prototype should be approved, rejected, or revised.

  • Procedures in Which One or More Prerequisites Have to Be Satisfied

This could include the purchase order process of a business in which an employee's requisition for particular office supplies or equipment needs to be approved by a manager at a specific point along the route.

  • Methods Specifically Developed for Result Filtering

Taking the example of a team responsible for the onboarding of new clients, new client accounts are frequently qualified or denied based on the policies and outcomes of credit checks.

Furthermore, companies need to discover a trustworthy method of documenting and communicating their business rules to all the individuals obligated to adhere to them. This is true regardless of how or where the rules are intended to be used.

Business rules, like any other type of firm information, are only genuinely valuable when they can be easily accessed and comprehended by employees.

Some Real-World Examples and Use Cases of Business Rules

  • Fraud Protection in Banking Systems

Banks and other financial institutions rely on rule-based automated decision-making to thwart fraudulent activity, transactions, and claims. Business rules set off the authentication processes in financial institutions like banks.

For instance, when a significant number of transactions are made with a credit card, the fraud protection division of the bank is required to get in touch with the customer and inquire about the legitimacy of the transactions.

  • Dynamic Pricing Strategy

Businesses frequently adjust their prices to reflect changing market conditions by employing a pricing method known as dynamic pricing. They are also responsible for the price changes that might occur within a couple of minutes.

Their primary goal is to sell the same product or service under a variety of conditions at a selection of different prices.

This tactic is frequently utilized in the airline industry. It serves as the core of their entire business model.

They revise the ticket prices depending on numerous factors, such as the number of unreserved seats, the season, days left before departure, etc.

  • Extending Customer Discounts

Customers might be encouraged to spend more by offering discounts on their purchases. However, if these discounts are not explicitly stated, employees might use them in a different way, or they might not use them at all.

Several brands put certain business rules in place that automatically apply discounts to invoices that are more than a particular value using a workflow engine.

One possible example would be offering a 5% discount to customers who spend more than ₹5000.

The fact that the discount gets automatically determined and applied is a benefit of this system since it frees staff from engaging in yet another time-consuming process.

  • Processing Customer Service Requests

Establishing business rules assists companies in providing improved experiences for their end customers.

Support teams could build a dynamic form and then develop a rule that directs support tickets to the relevant department based on the selection made by the user.

A support staff member can take notes on the specifics of an issue and then forward them to the respective departments, like sales, billing, tech support, etc.

Once a customer's ticket gets handled, the customer can choose to receive a notification informing them of this fact.

  • Underwriting of Insurance Policies

In the insurance industry, the underwriters are responsible for gathering data about applicants to assess whether or not they are eligible for coverage.

The underwriter evaluates the applicant's income, career, medical issues, lifestyle factors, and family medical history, among other factors.

The business rules laid down facilitate the underwriting procedure by conducting a risk assessment. So, if the applicant meets the eligibility requirements, the application gets advanced to the review stage quickly.


Ultimately, the success of a business depends not only on increasing its revenue or the top and bottom lines but also on the quality of the service it offers to its clientele or customers.

When businesses establish ground rules, they can ensure that their workers adhere to those standards as well as to one another during the workday.

It aids in keeping everything operating efficiently and minimizes expenses, which frees up one's attention to concentrate on offering excellent products or services.

Another crucial thing to remember is that although every company has its own set of rules, the fashion in which those rules are documented and put into practice determines whether or not they lead to simplified operations, channelized efforts, or ambiguity.

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