Do Small Businesses Need an Employee Handbook?


Ralph Peters

Jul 14, 2020


category folder


Human Resources

Every small business owner faces many challenges in running their enterprises. Business growth, cash flow, inventory, and managing employees are just a few of the many functions every owner handles each business day.

Employee Handbook with a pair of glasses on top

Managing employees can be the most time-consuming aspect of running a small business. An employee handbook can make this more straightforward and more efficient by presenting a pathway for you and your associates to have better communication and productive business relationships.

However, we must understand what an employee handbook is before discussing why it’s essential.

What does an employee handbook include?‍

An employee handbook is a reference guide for company policies, general expectations, procedures, and other company-related information. Following are common topics that employee handbooks cover:

  1. Employment-at-will statement
  2. Sexual harassment and other non-discrimination policies
  3. ADA policies and accommodations procedures
  4. Code of ethics
  5. Working hours
  6. Attendance and leave of absence policies
  7. Employment classifications
  8. Benefits summary and eligibility requirements
  9. Pay policies
  10. Performance reviews
  11. Electronic communications policies
  12. Standards of conduct
  13. Workplace violence and safety
  14. Alcohol and drugs
  15. Termination
  16. COVID-19 policies
  17. Dress code
  18. Etc.

Handbooks apply to businesses of any size, preferably installed during the earliest phases of a company’s existence. It’s not just about when small businesses need an employee handbook, but why.

Why do small businesses need an employee handbook?‍

Although not legally required, there are many reasons to develop and institute employee handbooks. Following are a few areas where a guide visibly benefits a small business:

1. Employee handbooks help define employee expectations‍

Clear workplace guidelines reinforce employee expectations. They also reduce misunderstandings and result in more defined job roles. These expectations also provide a foundation for your company’s culture as your business grows.

2. Employee handbooks can minimize or deter legal liability

Book with a gavel

A handbook that establishes clear guidelines supports the fair treatment of employees by instituting consistent procedures. Some states also require the presence of specific policies at the beginning of employment. A handbook is critical to help your company remain compliant with internal and external rules and regulations.

Texts may also outline complaint procedures that provide employees recourse if policies are broken during the employment relationship. On the other hand, If employee lawsuits occur, the handbook becomes a supportive document for your business.

Some small business owners distribute policy memos in place of an employee handbook, but memos aren’t comprehensive, and they run the risk of inconsistent application.

3. Handbooks help onboard new employees.‍

Woman explaining to a new employee about the company's handbook

Employee handbooks provide content that helps small businesses establish a positive first impression and help new employees feel important in their new roles. Reviewing policies, procedures, and other important information at the start of employment reduces confusion and questions during the employment relationship. New employees also begin their jobs with confidence since they are aware of company values and norms.

However, don’t include content that is too detailed, such as new job role training. For example, if you want to train new salespeople on handling objections, prepare a separate training manual for that content.

4. Employee handbooks promote company culture.‍

A small business’s values and mission statements are among the most critical strategies in developing a company’s culture. A useful employee handbook provides an accessible way for employees to review this information and apply it in their everyday roles.

Implementing employee handbooks‍

Now that you know why employee handbooks are essential, you need to pay attention to several factors as you roll out the content.

Attorney Review‍

Once you develop your handbook, it is vital to present it to an employment law attorney for review. They will ensure that you are performing all legally required information and provide general feedback on all contents.

Communicate changes/revisions‍

Establish a system to communicate changes, so all employees have a timely chance to review and apply regularly updated policies. This is important because unknown changes may result in complaints and other unforeseen circumstances.

Handbook accessibility‍

Online Document - Hands coming out of the monitor

Placing the manual on an electronic employee portal or secured website provides quick ways for your workforce to reference all policies and updates. Hard copy handbooks are more expensive, difficult to update, and can pose version control issues when policy changes are made.

Overall, an employee handbook offers many advantages for small businesses. When developed and appropriately applied, it serves as a cultural guidepost, keeps employees informed, promotes fair treatment, and fulfills legal requirements.

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