Creating an employee handbook helps you develop concrete policies and procedures for your employees to follow while working for your company. Whether you've written them or not, most companies already have these policies and procedures. Creating a handbook is just one way of formalizing them which helps your employees know that everyone is working from the same set of rules.

A company handbook also helps you avoid legal problems. With regulations becoming more and more invasive, you can't afford to run a business in which you're hiring, firing and managing employees without a written explanation of how your company is dealing with employment issues.

The goal is to define the rules and expectations while allowing each manager and employee's individuality to shine through. Your employees don't need direction on every little thing. Better to allow them to grow by making some decisions on their own. With this mind, concentrate on writing a concise document that covers the major issues.

A handbook is a communications tool for showing people how your business works. The bottom line is that the better the communications with your staff, the more profitable your business will be and the fewer misunderstandings you'll have.

According to an article in Inc. magazine, "The (Handbook) Handbook" by Tom Ehrenfeld, the employee handbook should:

• communicate indispensable company policies and practices;
  
• make explicit the mutual agreements between employees and employer without being an actual contract;
• state and express a company's philosophy;
  
• excite and motivate an employee about his or her job; and
  
• convey a broader sense of the company mission.
  

In addition, it has to have the right "look." To be effective, an employee handbook should be easy to read with graphics and lists, provide information in a logical easy-to-find format, and encourage your employees to use it if they have questions about policies within the company. Don't fall into the trap of thinking of this document as just a tool to cover yourself from problems. That tone will turn employees off. However, the wording used in an employee handbook can be used against you so any materials created should be reviewed by your company attorney. Each employee should receive a handbook and sign a receipt to show that they did, indeed, read it and understand it.

Here are several of the items that a typical employee handbook will include:

Mission Statement/Company Philosophy
Work Environment
Compensation & Benefits
Employee Conduct
Organization Chart
Legal Requirements
Staff Development
Discipline and Termination
Grievance Procedures
Safety and Security procedures and policies
Confidentiality Clause

Mission Statement
The first step in the process is to formulate and clarify your company's mission statement. Think about the image you want to have among your clients and in the community. Your mission statement should include direction on not only what you want to accomplish, but how you intend to accomplish it. Use it to share your company philosophy with your employees as well.

Work Environment
Basic information on issues such as equal employment opportunity, job posting, work hours, performance reviews, leaves of absence, and jury duty should be discussed in this area. Include a special section on the specific job requirements of the individual. Add information on the company's attitude toward promotion, reporting for work, time recording, tools and equipment the employee is expected to provide, care of tools and equipment provided by company, personal property, security, personal phone calls, car parking, lockers, and notice boards. Include information on any probationary periods that new hires must complete.

Compensation & Benefits
This section covers fundamentals on issues such as regular and overtime pay, health, dental, life and disability (both short and long term) insurance, workers' compensation, vacations and holidays, personal and sick days, retirement programs, tuition reimbursement, tool reimbursement, mileage reimbursement, and employee-assistance programs.

Employee Conduct
Information on themes as specific as employee hygiene, personal dress code, condition of truck, radios or snacking on the job. Is moonlighting acceptable? What about drugs or alcohol? Smoking--either on the job and in the client's home?

Organization Chart
Let's everyone see the chain of command. Keeps bottlenecks from occurring as employees know who to see about specific problems.

Legal Requirements
Many local, state and federal laws affect employment policies and procedures. In fact, most employers are now subject to more than 100 federal and/or state laws that affect the content of and the word choice used in employee handbooks. Laws such as the Americans with Disability Act, Immigration Reform Act, the Family and Medical Leave Act, and many other non-discriminatory statues may seem burdensome but you could pay a great deal for not including them. A clause also must be included regarding your company's handling of sexual harassment complaints. The Department of Labor has more detailed information. Be sure that your handbook cannot be construed to be a contract for employment with an employee. To avoid that, include a disclaimer such as:

"This handbook is not a contract, express or implied, guaranteeing employment for any specific duration. Either you or the company may terminate this relationship at any time, for any reason, with or without cause or notice."

Include a warning that the company can change, rescind or add to any policies in the handbook at its discretion, with or without warning as well. These clauses must be posted clearly and conspicuously to meet legal requirements. Think specifically about which policies apply to whom. Do they apply to all people or just to full time employees? Are they just for salaried or hourly employees too? Does the employee have to work for your company for a certain amount of time before they can receive certain benefits? Be sure to have your attorney review any handbook before distributing it.

Staff Development
This area should address at least the appraisal of staff performance plus the training and education that the company provides. This would also be a good spot to discuss what the employee needs to accomplish in order to be considered for advancement.

Discipline and Termination
Be sure that all employees know what it takes to get fired. Many companies work on a three-offense system: the first offense is a verbal warning with a write up being added to the employee's file, the second is a written warning and a possible suspension, and the third means dismissal.

Grievance Procedures
If there is a complaint against another employee, how should employees go about reporting it to management? What action will be taken if the employee feels an issue hasn't been properly dealt with? Will you work through arbitration?

Safety and Security Procedures and Policies
Make a commitment to safety through written policies. Injuries on the job can cost your company thousands of dollars so it pays to be adamant about the company's safety procedures. Include materials on accident prevention, reporting on-the-job accidents and injuries, and fire emergencies.

Confidentiality Clause
In today's competitive business environment, confidentiality can be crucial. Employees should know that confidentiality regarding vendors, customers and private financial information is a key toward your company's continuing success. Some company's make the disclosure of this information grounds for dismissal. Former employees should also respect this request.

These are just some of the details that should be included in any employee handbook worth its salt. It will be well worth your efforts to put your policies and procedures in writing now before your company grows or before a misunderstanding occurs. For informed employees with a clear understanding of their responsibilities, an employee handbook is an indispensable business tool.

Resources:
Industry trade associations
Chamber of Commerce
Small Business Administration

Or go to your local bookstore for a variety of books on the subject.
Here are some examples:
How to Write Your Employee Handbook by Stephen Bruce
Guide to Employees Handbooks by Robert Nobile
The Employee Handbook Audit by The Alexander Hamilton Institute.