How To Create An Employee Handbook

By Chris Kolmar - Apr. 28, 2021

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Every business, whether it’s a two-person operation or a team of thirty and growing, should have a set of workplace policies and procedures in place. Whether these expectations have been announced formally or informally, it’s important that employees are aware of the rules and understand them.

Creating an employee handbook will help you manage an effective organization that follows state and federal laws. It’s an important tool in the onboarding process and allows for employees to reference a written set of guidelines, so you don’t have to deal with the “yeah, but you told me this last week, and now you’re saying the rules are different” kinds of conversations.

With a handbook, there’s no hearsay or misinterpreted verbal agreements, and there’s a uniform set of rules for everyone. That doesn’t necessarily mean everyone will follow the rules, but it gives you a basis to defend your position if someone isn’t adhering to a procedure and you’re able to point at the specific rule they’re breaking.

What Is the Purpose of an Employee Handbook?

To put it simply, you’re the coach, and your employee handbook is your playbook. But your handbook has a lot more valuable information than just the rules of the game.

A good handbook goes beyond the basic rules and regulations and can actually set the tone for your company’s culture, brand pillars, and vision. An employee handbook should contain:

  • Company Values / Mission Statement

  • General Employment Information

  • Standards of Conduct

  • Federal, State, and Local Employee Protection Laws

  • Employee Benefits and Perks

  • Disciplinary Policies

  • Confidentiality / Non-Disclosure Agreement / Conflict of Interest

  • Disclaimer

Having an employee handbook sets the guidelines and expectations for both the employees and the employer. You are dictating the rules you expect your employees to follow, and you are also indicating how you will respond with disciplinary action if those rules are not adhered to.

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Since the manual is not a formal contract, it doesn’t necessarily guarantee compliance. However, it does provide clarity to all parties on the expected standard of operation, and it can protect your small business from a lawsuit, which can devastate you financially and harm your company’s reputation.

The Federal Department of Labor doesn’t require an employee handbook as long as you inform employees of their rights in the workplace. This can be in the form of visible workplace signage or a formal manual. Opting for both is a smart move to cover all of your bases.

The Parts of an Employee Handbook

The handbook is intended to serve as a general guide, so you don’t have to dictate every single law, healthcare benefit, or process inside. Some business owners like to update their handbooks every year as the company grows and changes. Others make updates only if necessary.

  1. Company overview, mission, values, brand pillars, vision

    Defining these elements right away lets employees know the principles that are guiding your company forward and driving every aspect of your business. This also gives your employees a sense of purpose as well. They know exactly in which direction you are leading them.

    Carefully considering your company’s mission is helpful if you haven’t already done so. If you’ve had a basic idea of what you want to stand for but haven’t written it down or fully thought it through, this section of the handbook may prove to be just as beneficial to you as it is to your employees.

    Resources you might consider adding into this section include:

    • Welcome letter from the founder or current owner

    • Your company’s origin story

    • Photos of staff in the workplace at the early beginnings of the company

    • Impactful sales or statistics

    • Company-sanctioned events such as annual outings or volunteer efforts

  2. General employment information

    This section should be the nuts and bolts of the operation. Employees should be able to locate basic policies and immediately get a clear picture of when they’ll be paid, how they’ll be paid, how often they can take breaks and for how long, security measures, safety procedures, et cetera.

    Other relevant pieces of information this section can include:

  3. Standards of conduct

    Here is where you clearly spell out the personal company policies you’ve set in place in addition to the regulated federal, state, and local laws.

    You should give your employees basic guidelines on how to dress, i.e. business casual with jeans acceptable on Fridays, company uniform, et cetera. This section can also cover drug and alcohol usage, ethical standards, data management and customer privacy, who to send a sick leave email to, et cetera.

    Other topics that can be included here:

  4. Federal, State, and Local employee protection laws

    At a minimum, you’re required by law to explicitly state that your company hires and promotes in adherence to nondiscrimination and equal opportunity laws.

    Any other laws that may affect your business, such as anti-harassment laws, should also be listed in this section. This is the best way to protect your business while also providing clear messaging, so employees know their rights.

  5. Employee benefits and perks

    It shouldn’t come as a surprise that this will be everyone’s favorite section referenced most frequently because who doesn’t love perks?

    Talking about the benefits you offer can help attract new talent to your company. The younger workforce is looking for more flexibility and extra perks such as unlimited paid time off and opportunities to work remotely. These are important factors to consider when deciding on which perks you want to offer.

    The employee handbook doesn’t necessarily need to go into explicit detail about things like the health insurance plan since those can be extensively detailed and subject to change year by year, but it should still cover the basics such as eligibility, enrollment period, types of plans offered, spouse and dependent coverage, et cetera.

    Other valuable parts to include in this section:

    • Paid time off (PTO)

    • Holidays

    • Merit increases

    • 401K or other retirement plans

    • Insurance coverage such as life insurance, accident protection, and short-term/long-term disability

    • Training benefits such as tuition reimbursement

    • Company-specific benefits such as on-site gym, snacks, et cetera

  6. Disciplinary policies

    It’s important to let employees know what kind of disciplinary action will be taken to ensure they remain accountable. By setting the standards and disciplinary processes in the handbook, employees feel more confident that they’re being treated fairly.

    It also puts you in a better position if someone claims they didn’t know they were breaking the rules or doesn’t feel the punishment is fair. They already signed that they read and understood the handbook; now you have protections in place if they try to call foul.

  7. Confidentiality / non-disclosure agreement / conflict of interest

    This section is optional and dependent upon the business you’re in. Companies that have trade secrets and work within highly competitive industries may want the extra layer of legal protection that comes with signing a non-disclosure agreement.

    At the very least, including a conflict of interest policy in the handbook isn’t a bad idea.

  8. Disclaimer

    Although an important tool to maintain order and establish the rules, your employee handbook is not a contractual agreement between you and your employees. If it were, an employee could sue you for not upholding any of the policies and procedures you outlined in the handbook.

    Adding a disclaimer that the employee handbook is not a contract will give you the necessary protection to prevent that from happening.

How to Create an Employee Handbook

If the task of actually sitting down and writing an employee handbook is daunting, don’t panic. Many small companies don’t put a ton of thought into their exact policies until they have to dictate them in writing.

If you aren’t quite sure where to start, look at some examples of employee handbooks from other companies to see how they did their layout. While you definitely don’t want to copy someone else’s handbook word for word, it can be worthwhile to skim through different samples for inspiration.

  1. Define your culture and values. Give yourself a big picture idea of exactly what you’re all about. Once you’ve defined your goals, culture, values, objectives, and overall direction, the specific policies and procedures will be easier to tie together.

  2. Develop your company’s policies. Remember that your policies need to directly reflect on the culture and values you set in Step 1.

    Ideally, you should strive to find a good balance for flexibility, as more and more millennials are seeking a fair level of strictness when it comes to rules that just can’t be bent if your business is going to be successful.

    And don’t forget that writing a policy in the handbook doesn’t mean it’s set in stone. Trial and error are to be expected. If something isn’t working out quite the way you’d hoped or the language is too ambiguous, you can always make updates later to correct and clarify.

  3. Know and understand the laws that will apply to your business. From anti-discrimination laws to state-specific “leave laws” such as jury duty, it’s important that you’re up to date on the guidelines and able to clearly communicate them in your handbook.

    Although the handbook isn’t meant to be a contract, it does set expectations, so these types of laws need to be accurate.

  4. Review your handbook with trained professionals and stakeholders. This is the best way to cover yourself on all fronts to make sure you haven’t opened yourself up to misinterpretation, uncertainty, or legal liability.

    Lean on trained professionals such as HR representatives, consultants, or employment lawyers who are familiar with the latest federal, state, and local laws.

    If your company has key stakeholders, it would also be a good idea to run it past them as well. Taking the time to get feedback can save a lot of time, headaches, money, and even potential legal trouble down the road.

  5. Design, print, and distribute. You can get fancy or not — If you have the budget or the design know-how, you can create a visually pleasing handbook using your brand colors and fonts with fun patterns, designs, illustrations, and photos.

    Employees are impressed when they receive professionally bound manuals.

    But there’s no shame in simply typing up your handbook in Microsoft Word, using some fun fonts to break up the sections, and then printing out the pages and sticking them in a binder or folder.

    It’s the information that’s important. Young businesses just getting started aren’t likely to have the budget or resources to make a big production out of the handbook, and that’s okay. As long as the substance is there, the design can come later if and when you decide it’s a worthwhile investment.

    Delivering an employee handbook to new hires during their orientation period should become standard practice once your handbook is ready to be distributed. In addition to a printed version, it’s not uncommon in today’s digital age to send an electronic copy as well, often attached to a new employee’s welcome message.

  6. Make periodic updates. Revising your handbook on a regular basis doesn’t necessarily mean that you failed with your first draft. Our world is constantly changing, especially after the pandemic. Technology and laws are always being updated.

    Likewise, be open to constructive criticism. Listen to your employees, supervisors, HR staff, lawyers, stakeholders, and personal observations as your company evolves.

    Maybe certain policies worked out well when you had only five employees, but now that you’re pushing fifty, you need to make some changes. Maybe you’ve been struggling with a difficult employee who finds loopholes that need to be addressed.

    Your handbook is going to need to evolve with your business.

Never miss an opportunity that’s right for you.
Chris Kolmar

Author

Chris Kolmar

Chris Kolmar is a co-founder of Zippia and the editor-in-chief of the Zippia career advice blog. He has hired over 50 people in his career, been hired five times, and wants to help you land your next job. His research has been featured on the New York Times, Thrillist, VOX, The Atlantic, and a host of local news. More recently, he's been quoted on USA Today, BusinessInsider, and CNBC.

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