Why Does My Company Need an Employee Handbook?

Creating a Policy and Procedures Manual

Why Your Business Needs an Employee Handbook
Why Your Business Needs an Employee Handbook. JGI/Jamie Grill/Getty Images

Consider this: Even one employee can cause you problems.

And the problems multiply exponentially the more employees you have.

Image this scenario: Your one employee is consistently late for work; sometimes he calls to let you know he will be late, and sometimes he doesn't. You want to fire him for continued absence, but your attorney says you have no handbook that tells the employee what to expect about what happens in the case of chronic absenteeism.

Trust me, If you don't have something in writing about this situation, the employee can charge that he didn't know he could be fired for not showing up on time. And this could lead to a lawsuit.

The purpose of an employee handbook

In general, having an employee handbook or policy manual is a good business practice, but specifically, there are some good reasons, from a legal standpoint, to create an employee handbook:

  • Employees like to know what is expected of them and they want to know that they are being treated the same way as other employees. The perception of unfair treatment can lead to disgruntled employees and, ultimately, to lawsuits. For example, if all employees know how many vacation days they receive, they won't be wondering if other employees are getting more days.
  • Having the same rules for all employees makes running the business easier. There's no need to think about what to do in a specific situation. Sure, there are times when there's no written policy on an issue, but having some general guidelines can help deal with specific situations.
  • Written policies show employees that your business wants to be fair. That intent goes a long way towards good morale in general and in dealing with individual employees who are discontented.
  • Finally, written policies and procedures can help you deal with lawsuits. The policy manual can be used as evidence in a discrimination lawsuit; in fact, such a manual might even prevent a lawsuit.

    Why an Employee Handbook isn't Enough

    After you have prepared that employee handbook for your business, there are several more things you should do:

    Attorney review. Have an attorney review the handbook for language, for conflicting or confusing language, and for legal issues. For example, your attorney can help you craft language that won't make employees think they have a job for life.

    Communication. Make sure all current employees know about the handbook and that it is available to them. Give each employee a copy (make sure you get a signature so you can show that all employees have received their copy).

    Put a copy up on the company website. Remind employees about specific policies. In other words, make sure there's no way an employee can plead ignorance of the policies and procedures in the manual.

    Implement. Follow the handbook. Take action when you need to. Using the handbook to deal quickly with employee issues reinforces your intent to be fair and your intent to follow the handbook.

    Revise. Re-visit the handbook periodically. Update policies that have changed (make sure you communicate the changes immediately!) and consider other changes to address issues that have come up. If you change a policy and you don't change the handbook, you're inviting legal issues.

    Susan Heathfield, Human Resources expert, has some suggestions for managing employee absenteeism problems. Will an employee handbook solve your problem? No, but it will let the employee know what to expect and set up an assumption that you won't tolerate absenteeism.

    No matter how many employees you have, an employee manual or employee handbook is an essential tool in running your business.

    So have you created an employee handbook yet?

    More from Susan Heathfield: Examples of Employee Policy Manuals/Handbooks