Mastering the Process: Creating an Employee Handbook That Works

By Jeanette Coleman, SPHR & SHRM-SCP on Dec 14, 2023
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Embarking on the journey of creating an employee handbook can transform the way your small business communicates with its team. Far from being a mere formality, an employee handbook serves as the cornerstone for clear, consistent interaction between your business and its employees. 

In this blog, you'll learn the essential elements that make an employee handbook both informative and engaging. We'll focus on three critical inclusions: a welcoming statement that sets the tone, a clear depiction of your company's culture and a straightforward presentation of company policies.

However, an effective handbook isn't just about what you include; it's also about what you leave out. I'll guide you through four common pitfalls to avoid: overly detailed procedures, legally non-conforming policies, over-complicated content and any form of discriminatory policies or confusing jargon. By balancing what to include and what to omit, you can create a handbook that not only complies with legal standards but also resonates with your employees and reinforces your company's values.

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What to Include in an Employee Handbook   

A well-structured employee handbook for small businesses hinges on three pivotal components: an introductory welcome, a comprehensive overview of the company culture and a clear outline of the policies. Here's what to include in an employee handbook:

  • Welcome statement for employee handbook

A welcome statement for employee handbook should instantly communicate to employees that you are glad they have joined your company. Typically, this message is conveyed in a letter from the owner/president/CEO that should be written in a style that aligns with your culture. 

For example, if your culture is more formal and structured, the welcome letter should adopt the same tone. Likewise, if yours is a more laid-back, jeans-and-polo-shirts workplace, a conversational tone is a better fit. As part of the welcome letter, briefly sharing the company’s story – why and how the business started –helps new hires quickly feel like they’re part of the team. 

  • Culture 

    Call it culture, company brand, employer value proposition or any of several other similar terms. Regardless of what phrase you use, defining what makes your small business unique should be a key component when creating an employee handbook. 

Include information such as your mission, vision and values. Explain your expectations for employees and outline the core behaviors the company wishes them to follow.  

If community involvement, volunteering or company-sponsored give-back activities are important in your culture, talk about them in this section. Are certain holidays recognized with company-wide, all-in celebrations? Is everyone encouraged to come in costume on Halloween, for instance? These are examples that can be included when creating your employee handbook to help new hires understand and embrace who your company is. 

  • Policies

    An employee handbook is not a legally binding employment contract unless it is specifically defined as such within the content. However, it should serve as a resource for understanding the consistent application of policies. 

The policies section may include topics such as employee benefits, paid time off, company-recognized holidays, compensation details such as pay periods and policies such as a code of conduct, anti-harassment and non-discrimination policies.

One purpose of your handbook is to reduce risk, and leaving out crucial policies opens your company to legal issues. Work in partnership with Axcet HR Solutions for insights into policies that should be included in your organization’s handbook.  

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What Not to Include in an Employee Handbook 

  • Over-complicated content

While the components noted above encompass the main elements of your small business employee handbook, one major “watch out” for small businesses is over-complicating the content. Keep it simple and make the content engaging.

This living document will evolve. It can (and should) be updated as your small business grows and changes. 

  • Procedures

    Employers are not legally required to have a procedures manual and, because procedures change frequently, leaving them out of your handbook relieves you of having to make updates every time a change occurs. 
  • Legally non-conforming policies

Employment laws vary by state. If your company operates in more than one state, policies on overtime, sick leave and other employment law-related issues must be delineated in your handbook specific to their states. 

  • Discriminatory policies

    Most companies are careful not to write their policies in overtly discriminatory ways. However, it can be easy to miss unintentional discrimination in policy language. 

    Make sure, for example, that your dress code or mentions of company-wide holiday celebrations don’t infringe on the rights of someone in a legally protected class. 
  • Jargon

    You and your leadership team probably know your industry inside and out and may comfortably use all sorts of jargon in your day-to-day conversations. As your company grows, newcomers may be less familiar with industry terms and acronyms. 

    Minimize jargon in your employee handbook. If there are important industry words and phrases everyone needs to know, consider adding a small glossary section that defines them. 

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Employee Handbook Processes

In addition to its content, make sure from the outset that you establish processes related to your employee handbook. Here are four best practices: 

  • Make your handbook as easy to follow as possible

    While it’s unlikely employees will read every word, help them understand what information is included in the handbook and why it is important they review it. 

  • Ensure employees acknowledge receiving the handbook 

    An employee signature page is a must. 
  • Assign an administrator 

    It’s easy for employee handbooks to become something created and forgotten. Making the employee handbook part of a person’s – or a small team’s – job helps ensure accountability for regular tracking and updating of important information.   
  • Establish a process for notifying employees about changes

    In the course of their daily work, employees will rarely revisit the employee handbook. When significant changes are made, communicate them proactively to your employees. You also may need to collect new signatures from employees to acknowledge that they have received the changes.   

RELATED: Creating the Perfect PTO Policy - 4 Expert Steps >>

Need Expert Assistance Creating an Employee Handbook?

As you conclude this journey on the essentials of effectively creating an employee handbook for your small business, remember that expert guidance can make all the difference. Contact Axcet HR Solutions, Kansas City's trusted professional employer organization (PEO) since 1988, for comprehensive support.

Our seasoned team specializes in creating employee handbooks tailored to your unique business needs, ensuring compliance, clarity and engagement. Get in touch with us today for expert assistance that will bring your handbook to life!

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