In a long-standing organization, the line between the things that are formally stated in policy documents and things that are just accreted tendencies often gets blurred. The former represent agreed-upon standards and practices that have (hopefully) undergone some formal review process and have been signed off at one or more levels of management. The latter represent some combination of once-upon-a-time best practices, inertia, and whim. In many cases, they are simply generally accepted intepretations of policy.

Jewish law is an interesting case of this dichotomy. There is the Torah, which is the policy, and the oral tradition, which is the convention. They are considered to be essentially equal in their binding nature. From Wikipedia:

Jewish tradition holds that the Torah has been transmitted in parallel with an oral tradition. Jews point to texts of the Torah, where many words and concepts are left undefined and many procedures mentioned without explanation or instructions; the reader is required to seek out the missing details from the oral sources. For example, many times in the Torah it says that/as you are/were shown on the mountain in reference of how to do a commandment (Exodus 25:40).

This certainly works for Jewish law, where in many ways the conventions have simply been rebranded as policy. Unfortunately, in most cases, confusion of policy and convention can lead to serious problems.

Consider the following situation: a project manager produces a set of reports every month for her boss laying out costs, work performed, and goals. The boss is happy with these reports, but they are being produced by convention, i.e. there is no document that could be referred to that would explain what the reports are, what should and should not be in them, who should or should not be reading them, etc. That original boss leaves or is promoted, and a new boss comes in. The project manager produces the same report she has always produced, but the new boss does not like these reports. She has her own expectations for project reporting, and thinks that the reports cover the wrong subjects or are at the wrong level of detail and gets a negative opinion of the capabilities of the project manager. This is clearly not fair to the project manager, who is following her previous convention and doesn't understand why the new boss is unhappy. The problem is that convention is being treated as policy. There is an unspoken assumption that things have been done a certain way, and therefore there must be a good reason, but it's really just the whim of the person in charge.

Convention/Policy confusion is also very difficult for new employees who want to understand how things are done. As they learn about the company's practices, they have to spend a significant amount of time figuring out of what they are being told, how much is actual policy, and how much is convention. They fail to do so at their own peril because conventions can often be broken while policies cannot.

Finally, Convention/Policy confusion is dangerous for an organization's cohesiveness over time. Primarily, this is because employees are coming and going and the turnover can lead to a "lurching" of conventions from one form to another wasting time and energy, Additionally it leads to a situation where each part of a company does things in a slightly (or not so slightly) different way, causing huge headaches when parts need to be integrated. A more insidious effect is the weakening of the role of policies in general. When it is no longer clear which things are being done because someone decided it was so, and which things were certified as policies, it stops being possible to drive an organization with policy at all.

It's worth a look around your own business to ask the question: why do we do the things we do? Is it because each level of hierarchy is making up conventions for the level below them, or is it because we all got together and agreed upon the way to do something? You will be shocked by the number of things that you do every day that have no basis beyond historical precedent.