How to Write a Small Business Employee Handbook

  •  09/13/2019
  • By Andrea Collatz
  •  Applicant , Employer , How-to articles

While you might be focused on tasks that are driving your top-line, you need to carve out time to formally document procedures and policies to help keep your employees informed. It is essential that your employees know and understand these policies because it can help solidify the success of your small business. Without the guidance and structure that an employee handbook can provide, your team could unknowingly be breaking rules or causing confusing in the office, which could lead to employee turnover

At a high level your employee handbook will:

  • Detail important office protocols
  • Establish a positive work environment
  • Define your unique company culture

Keep reading to learn tips on how to write a small business employee handbook, what to include, and ways you can benefit.

How to Write a Small Business Employee Handbook Step by Step

Your new hire is through the door and eager to get started. During their orientation, you should devote ample time for the new team member to read through their employee handbook. It is an essential first step to proper onboarding. You can make their reading experience easy and effortless by writing a small business employee handbook in a clear, logical structure.

What’s included in an employee handbook?

Your employee handbook should be well-organized and broken into distinct sections:

  1. Introduction, Welcome Letter, and Mission Statement

Consider the introduction as your first impression. In this section, you’ll want to amplify your excitement for your new hire and trumpet your enthusiasm about the company. Aim to place inspiring language that pumps them up to learn about their new job—without sounding artificial or tacky. They likely have a heavy reading load, so keep the tone fun yet professional.

The introduction is a perfect time to include your company’s mission statement. The mission statement should define your core values and inform your new employee about important aspects of the company. If you haven’t written your company mission statement, then devote time to articulate the company’s focus and values so that you have a clear and concise ethos that everyone can get behind (which will help you attract customers just as much as employees!).

  1. Legal Notices

There are many legal notices you’ll want to include in your small business employee handbook.

You can state these at the beginning and get them out of the way or save them for the end; either way, be sure to touch on these two policies at a minimum, as enforced by the U.S. Equal Employment Opportunity Commission (EEOC).  You should consult your own attorney on what legal notices should be included in the handbook.

  1. Employment policies

This section of your small business employee handbook breaks down various terms of employment, such as paid time off, sick leave, overtime eligibility, and so forth. If there’s a difference in these structures based on employee tenure, be sure to include that information as well.

Here are some examples of what you’ll find in the typical employee handbook:

  • Hours of work
  • Behavior expectations
  • Dress code
  • Remote work policies
  • Attendance and punctuality
  • Proper Internet usage
  • Social media policy
  • Company equipment
  • Process for filing complaints
  • Personnel records
  • Email policy
  • Telephones
  • Screening policy
  • Substance policy
  • Smoking policy
  • Alcohol policy
  • Safety rules
  • Review processes
  • Progressive discipline policies
  • Compensation
  • Payroll practices
  • Salary deductions and withholding
  • Direct deposit rules

This list is by no means exhaustive but gives you a great starting point to consider.

  1. Company benefits

Does your small business offer employee benefits? Here’s the place to showcase them. Mention the benefits that the new employee can expect to enjoy, such as employer contribution matching, short-term disability policies, long-term disability policies, life insurance options, and more. If you provide medical, dental, and vision insurance, relay all of the relevant provider information in this section.

Make a note of any retirement plan you might offer, the open enrollment period, and your employer contribution policy (if applicable). Be sure to tell your new employee where to go if they need more information on their benefits packages.

It’s also important to mention vacation and holiday policies and other types of leave, including bereavement and sick leave.

  1. Disclaimers

Finally, include any necessary disclaimers, such as the process for filing a complaint. Describe the reporting system and make it known that anyone who submits a report will be kept confidential to whatever extent possible. Also let your staff know that any report or complaint will receive a prompt, thorough, and impartial investigation.

Hitting these five steps are essential for learning how to write a small business employee handbook. That said, there’s supplemental information you could (and should!) consider including, such as:

  • Ideal work environment
  • Employee review procedures
  • Promotion and pay raise guidance
  • Annual office closures

Your handbook should be exhaustive—but not exhausting. As you’re sure to include all the essentials, be careful not to be overly-detailed or too informative. Keep it light, but concise so that the new hire can quickly read through the material and absorb the information.  If your new hire merely glosses over important information, then they could inadvertently skip some key points. According to research from GuideSpark, 43% of workers in Generation Y are not reading the majority of the employee handbook and 33% of non-Generation Y are also not fully reading the handbook. What’s worse, 11% of Generation Y have not actually opened it while 36% of non-Generation Y have no idea where their book is.

As you can see, it’s vital that your handbook is simple yet well-written. This helps ensure you aren’t bombarding your employee with too much information, causing them to close the book for good.

Pro-tip:  You might consider sitting down with the new employee during their first week and highlighting areas of the handbook that you believe are of particular importance.

Mistakes to Avoid when Writing a Small Business Employee Handbook


As you begin writing an employee handbook for your small business, be careful to avoid these common mistakes:

  • Manual is not user-friendly

It’s important to stress the need for an approachable employee handbook. As we mentioned, be sure it’s well-organized and follows a logical structure—avoid placing in out-of-sync information. Also, steer clear of jargon and heavy usage of technical terms which could affect comprehension. If it’s not easy to read, then chances are it won’t be understood.

  • Disclosures are omitted

Be sure to include all of the necessary legal disclaimers when structuring your small business employee handbook.

  • Legal review is excluded

On that note, it’s critical to get legal consultation after you learn how to write a small business employee handbook. Failure to include certain information might land you in some legal trouble. An attorney experienced in employment matters needs to review your employee handbook to make sure it reflects the current employment laws, paying special attention to anything that could potentially be read as discriminatory.

The Importance of Learning How to Write an Employee Handbook for a Small Business

So why go through the trouble of writing a small business employee handbook? Let’s take a look:

  • Announces workplace rights

These laws can vary state by state, so be sure to check with your local jurisdiction. The Department of Labor and Industry in Minnesota, for example, could be very different from the laws imposed by the Texas Workforce Commission. Your legal team should be familiar with the legislation that applies to your particular area, which makes their role all the more important.

  • Outlines work performance

Having documentation in your handbook about many aspects related to the workplace can help guide tough decisions that might be extra hard as a small business owner.

When your team is compact, the relationship between boss and employee can be easily blurred.  If someone you’re close to and respect begins to slip up at work, coming in late or performing poorly, it could be challenging to reprimand them and correct the problem. Having clearly stated policies and procedures can help to alleviate awkwardness and potentially hurt feelings by objectively laying it all out there.

Why small business owners create employee handbooks

Benefits of a Well-Written Employee Handbook

An effective small business employee handbook may not only help to clarify policies like the vacation request process, social media usage, and meal break periods, but it could also provide a slew of more advanced benefits.

Sets expectations: To help keep harmony in the workplace it’s important to set employee expectations and to encourage those expectations equally amongst the team. For example, if you expect your employees to begin the workday at 8 AM and end at 5 PM, but one of your employees consistently shows up at 9 AM and leaves at 3 PM without consequence, this may stir up fury amongst other employees.

Aside from equal treatment in the workplace, well-written expectations could also help to mitigate confusion. Because your expectations and policies are written in the same place and are accessible to everyone, the information may be easier for employees to retrieve at any time and receive the same answer.

Helps employees understand the work dynamic: While everyone needs a little reminder from time to time, it’s important that your employees understand their responsibilities and how their work contributes to the overall business goal. This is especially important for your new hires, as there may be confusion or unfamiliarity with what the definition of company success is. By thoroughly outlining your mission statement, you may be able to strategically stray from potential confusion which could result in a lack of employee performance.

Explains benefits: It’s important that your employees are aware of the benefits that they have and how they can easily get access to them. Letting employees know who their health insurance provider is, where they can find their 401K information, and how to use their vacation time may seem like an overly-simple task, but in the grand scheme of things, it may be worth the effort. According to Thomson’s Online Benefits, 81% of employees who can easily access their benefits said they feel loyal to their employer and 79% say they were proud to work for their organization.

 Invites open communication and transparency: Staying true to your mission, purpose, and core values can go a long way in terms of company success. By providing employees with documentation that states the objectives of your company, you’re setting both your business and employees up for success, which could help to mitigate employee turnover and help you keep good employees.

Conclusion

There are many offerings an employee handbook can bring to a small business. From highlighting employee perks and benefits to explaining policies and expectations, an employee handbook is no doubt an essential aspect of your small business’s triumph.

Again, consider the everyday tasks that you are responsible for and the time the tasks consume. As a small business owner, you have minimal time to answer questions that most wouldn’t consider to be “top priority”. If you can create an employee handbook that quickly and thoughtfully answers your employee’s questions as they arise, then you will most likely save time for everyone.

If you need a bit more help when you sit down to create your small business employee handbook, then use these resources to streamline the process.

  • Society for Human Resource Management offers a great employee handbook template
  • Read about the federal laws that impact workplace issues at The U.S. Department of Labor
  • Use the Department of Labor's Occupational Safety and Health Administration's handbook for small businesses
  • This free model handbook from com

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Senior Marketing Analyst, TransUnion ShareAble

Andrea Collatz

She focuses on topics that empower small business owners through data, insights and industry best practices.

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