Should Very Small Businesses Have an Employee Handbook?
As a human resources consultant for small businesses I get asked a lot about employee handbooks. Actually, I get told a lot about employee handbooks.
Small business owners tell me that they think handbooks are overkill for a company their size.
I’ve been in Human Resources for more than 25 years, and I can tell you without a doubt that employee handbooks serve the small business owner’s interests much more than the employee’s.
“It is a misnomer to call these ‘employee handbooks’” says Stuart M. Silverman, a leading management-side employment attorney in Boca Raton, FL. “If companies would realize these are ‘how to get out of lawsuits’ books, they would be running to create them.”
Employee handbooks not only help businesses of all sizes avoid financial penalties by showing employment law compliance, but they’re also a significant tool to promote employee engagement, retention, and positive performance – all good outcomes that small companies deserve.
No company with more than one employee should be without some kind of employee handbook, and here’s why.
Align your staff to your mission and values
SCORE, a nonprofit organization that helps small businesses launch and grow, preaches the importance of formalizing and communicating your company’s mission and values.
“Whether your business is well established or just starting up, if you don’t have mission and vision statements or a set of values to help guide decision-making, it’ll be difficult for your company to thrive over the long-term” says Bridget Weston, CEO of the SCORE Association.
Employee handbooks let you take the company mission and values that are in your mind and heart and memorialize them in writing for your employees to read, understand, and refer back to. Think of it as a North Star to guide employees in their day-to-day decisions, priorities, and behavior.
Even better, by formally communicating something personal and unique about your company, you give your staff something to embrace and get excited about – helping them to be fully engaged, supportive, and proud to be a part of your team.
Employee handbooks establish the workplace culture you want
So much has been written about the impact that a company’s culture has on attracting, retaining, and motivating great employees. There’s no doubt that happy employees perform better for you and your clients – and more than ever, employees will quit a job and find another in a perpetual search for work happiness.
But how do small businesses “create” culture?
Busy owners can either leave it to chance and hope that the employee finds everything to his/her satisfaction, or they can use an employee handbook to set the right tone on Day 1 for the employee.
Years ago, employee handbooks were thick and intimidating manuals, chock full of overly-prescriptive rules and instructions. Now, employee handbooks are written to reflect the tone and culture that an organization wants to promote.
I’ve helped clients create employee handbooks that were casual, comical, micro-managing, rigid, short, long – all different types of styles.
An employee handbook allows a small business owner to decide what expectations he has, then communicate them to all employees consistently – which helps prevent unintentional favoritism or discrimination.
Workplace culture is ultimately created in the actions – not the words – of the company leaders, but by deliberately selecting the workplace standards that are important to you and the tone in which you communicate with your employees, your employee handbook sets your cultural foundation intentionally.
Comply with employment laws that you don’t even know exist
Would you be surprised to know that there are hundreds of local and state employment laws that pertain to companies with just one employee?
And the larger a company grows from there, the more laws there are that cover employees’ rights and require certain actions by business owners.
Federal laws like Title VII of the Civil Rights Act, the Americans with Disabilities Act, and the Fair Labor Standards Act are complicated but relevant to very small businesses. And non-compliance – even unintentionally – is expensive! The Department of Labor regularly sues even small businesses who violate their laws, and settlements often cost small businesses hundreds of thousands of dollars.
“(Employee handbooks) create defenses in Title VII cases and reduce the risk of lawsuits, all while managing your employee’s expectations,” advises Silverman.
No business owner should be responsible for knowing human resource compliance – that’s what you hire an HR expert to be on-call – but by setting out the laws’ requirements in a Handbook, you go on record with your good faith intentions. And believe me, if and when your company falls under government scrutiny, they’ll be asking to see your employee handbook first.