Why Your Small Business Needs an Employee Handbook

Thomas Hughes
July 28, 2023

Some small business owners may feel that investing in an employee handbook is a waste of time, money, and resources. Perceived as an excessively long document, employee handbooks may be seen as unnecessary, unreadable, and providing no benefit to their business. If you are a business owner who feels this way, I encourage you to keep reading. Employee handbooks are so much more than a formality. A well-crafted handbook is a cornerstone of any successful business and it has a significant impact on your organization’s success. Aside from the necessary policies and procedures, it plays a vital role in establishing a strong culture and helps employees align themselves with organizational values. Additionally, its ability to help mitigate legal risks and improve productivity makes it an invaluable resource for any small business. 

Five Reasons Why Your Small Business Needs an Employee Handbook 

1. Ensure Compliance With Laws and Regulations 

Whether a business is registered in one state or multiple states, your business is required to adhere to all state and federal laws. A company handbook provides employers with a space to communicate compliance with their employees. For example, including pertinent policies such as Anti-Harassment and Equal Opportunity clearly shows the company’s commitment against any form of discrimination or harassment. While legal speak might not be the most entertaining content to read, it simultaneously helps minimize company risk (more on this later!) while creating a safe and inclusive workplace for all of your employees. 

2. Communicates Expectations 

Clearly outlined policies will go a long way in effectively communicating expectations to your employees. Aside from covering standard policies, many handbooks will touch on areas such as performance expectations, communication guidelines, and safety protocols. By providing support and information on these topics, the handbook ensures your employees’ behavior aligns with the organization’s goals. While unforeseen circumstances can arise, the employee handbook generally provides a strong understanding of the standards and behaviors the company expects from its workforce. 

3. Makes the Onboarding Process Smoother

In every professional journey, there inevitably comes a time when you find yourself as the new employee. You are confused. You have endless questions surrounding policies, procedures, and company expectations. However, you don’t want to come across as bothersome or as a burden to your new co-workers. 

It’s situations like this that prove why having a quality handbook can go a long way, for multiple reasons, in making the onboarding process smoother. Your handbook provides new employees with a centralized source of information where they can easily access the answers to most, if not all, of their questions. Additionally, during the onboarding process, new employees are often overwhelmed by the amount of information being thrown in their direction, making it challenging to absorb everything at once. Having access to a handbook provides your new employee the opportunity to learn all about the company and its policies at their own pace. 

4. Sets the Groundwork for Company Culture 

Aside from serving as a tool to communicate policies and procedures, the employee handbook also provides an outlet for companies to promote their unique company culture. Throughout the pages, you will find sections dedicated to core values and the overall purpose of a company. Supplying employees with this information can give them a better idea of who your company is, its core beliefs, and its vision for the future. 

Your handbook may also include unique policies that place an increased emphasis on not only “what” employees are expected to do, but also “who” they are as part of the organization. These policies go beyond normal responsibilities and spotlight the organization’s character and commitment to various initiatives or philosophies,  including diversity, equity, and inclusion initiatives or employee well-being. 

5. Helps to Minimize Risk and Conflicts 

One common misconception amongst small business owners is that every employee loves working for their company and operating without a handbook carries little risk. Sadly, this isn’t the case. It’s likely there will come a point where you have a disgruntled employee threatening to pursue, or actually taking,  legal action against your company. 

In order to best protect your business, it’s essential to create a handbook that clearly outlines all policies, procedures, and laws that both the employer and employee must observe. In the event that disciplinary action does need to be taken against an employee, using the handbook to guide all decisions will ensure that consistent, fair practices are followed. If company standards are written effectively it will limit miscommunication and should greatly decrease the likelihood of potential conflict. 

Work With an HR Consultant to Create Your Employee Handbook

Every company, regardless of size, should have an employee handbook. If you find the task of creating this essential tool overwhelming, reach out to a Red Clover HR consultant today! Our proven processes have assisted many small and mid-sized businesses in successfully navigating the development of their handbooks. Take the time, be proactive, and ensure you have a handbook that will benefit your company and employees in the long run. 

Photo Credit – Photo by Christin Hume on Unsplash

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