Employee Manual: Why Your Business Must Have One

Willy Wonka employee manual memeDo you have a written employee manual for your business?

If you don't, it may be costing your business money, and possibly opening up you and your business to potential liability.

What is an employee manual?

It's a valuable communication resource for both the employer and the employee.  It provides information and guidance on your company's values, mission, history, policies, procedures and benefits in a written format.  It's an easily accessible guide for your new employee, and it can help protect your company from discrimination and unfair treatment claims.

There are numerous reasons to have a written employee manual for your business.  It's hard for an employee to feign ignorance when they were given their expectations in writing, and they have personally signed and acknowledged the document.  Managers are also more effective because they actually have a written document to reference when making decisions, leaving a sense of fairness among employees.

Below are 5 important reasons you need a written employee manual for your business.

Answers Employee Questions

You have a million questions when you start a new job.  Everything from “How is vacation time accrued” to “Where's the key to the bathroom”.  If you don't want to answer hundreds of questions every time you hire someone, put a FAQ section in your employee manual.  This will drastically cut down on your question answering,  make sure you don't miss anything important, and to ensure everyone is treated fairly because they are all getting the same information.

Documents Employer's Expectations

This is probably the most important reason you should have a written employee manual.  Properly aligned expectations between employer and employee can be the makings of a great relationship.  Everyone wants to do a good job when they start a new a new position, your responsibility is to clearly define what success means for them.  A well written Employee Manual will describe performance expectations, as well as review policies such as vacation, sick leave, codes of conduct, work hours and employee reviews.

Reduce The Possibility of a Harassment Lawsuit

A well written sexual harassment policy can offer your business significant protections from legal action.  A well written policy can provide your business with a crucial “affirmative defense” in case of an employee lawsuit alleging sexual harassment.  In giving your employees a written guide on how to respond and report sexual harassment, you compel them to share responsibility for the work environment and can limit your liability in instances where the policy is ignored.

Explains Your Employment At-Will Policy

As an employer, it's important to clearly state that employment is At-Will, allowing you as the employer the ability to terminate the employment at any time, for any reason.  Expressly stating At-Will employment in writing will protect you in the case of a  verbal allegations of contract or fix termed agreements between you and your employee.  The courts have repeatedly upheld the Employment-At-Will doctrine, though it's very important to have it in writing.

Avoid Legal Disputes

Well written policies create a uniform experience for your employees and can help prevent disputes.  If you consistently follow and enforce your own policies, it can help you avoid legal action as your policies have been laid out clearly, in written form for every employee.  Accusations of favoritism, discrimination, retaliation and harassment are all possibilities when you have employees, and a well drafted (and enforced) Employee Manual can help ward off these allegations.  Basically, it will help you avoid court altogether.

Ready to create your own Employee Manual?

As you can see, a well written Employee Manual can help you start the employer/employee relationship on the right foot by clearly outlining expectations and answering important questions.  It can also lead to faster employee productivity and help you and your business stay out of the courtroom.

Note: Do you think employee manuals have to be boring and full of jargon?  While it's not your traditional employee manual, this employee manual from Valve is certainly easy to read and starts the employer/employee relationship on the right foot.



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CEO at 3Bug Media
Gary Shouldis is the founder of 3Bug Media, a web marketing company that helps businesses create 360 Marketing Strategies to dominate their market. His blog is read by over 20 thousand small business owners a month and has been featured in the N.Y. Times Small Business, Business Insider and Yahoo Small Business.
2 replies
  1. Julie Morgan
    Julie Morgan says:

    I read your article on creating an operations manual, I guess now I have to create an employee manual too! I totally see the point on setting proper expectations with new employees, we just had an employee ask if they get vacation time…..they’ve been with us for over 6 months! You forget to tell people a lot of things when it’s not written down in front of you. Maybe you can give us a sample to download ; )

  2. Gary Shouldis
    Gary Shouldis says:

    Hi Julie,
    Documenting your business practices and processes is a slow, sometimes painful process. It’s one of those things that you’re glad you did later on down the line, especially if your business starts to grow and expand. A business can’t grow when everything is in the head of the business owner. I’m working on a download, I’ll let you know!

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