Writing Your Company's Operating Policies

By Caryn Tolpa
Staples Editor

Operating policies are vital to the health and well–being of your business. Your policies are the roadmap for how you will hire people, how those employees will be expected to act, and how your staff will be paid and receive benefits.

Because of the weighty decisions about what to include and exclude, compiling these policies can be a daunting task. However, not having any guidelines could put your company at risk, causing confusion and exposing you to employee disputes, which could lead to lawsuits.

Where should you begin?

"Before diving in, you've got to know how you want people to operate and think," says Mary M. Fitzer, a Certified Compensation Professional and Principal with MMF Consulting Services, a human resource consulting firm in West Springfield, Massachusetts. Consider what you want to convey to your organization prior to putting pen to paper. "Before you even get to what the policies are going to be, I always suggest that whoever is writing the manual think about what role they want managers, supervisors, and employees to play, especially in a small business."

Don't put something in writing unless you are 100% committed to following it 100% of the time.

Four types of policies

Time clocks

Certain items are universal among businesses, no matter what your operating style, and should be part of every employment manual. This content falls into four categories:

Behavioral policies. These policies describe the company's culture and provide standards for conduct. Include orientation procedures for new hires, non–disclosure agreements, a non–harassment policy, technology and privacy guidelines, a substance abuse policy, dress code, and performance review process. Warning: Rules should be included, as well as a clearly stated policy on the employer's right to terminate any employee.

Time–off policies. "Time off covers so much," says Fitzer. "It could cover being late, snow storms, hospitalization, or family leave." This category would also include operating hours, work schedules, attendance policies, overtime, holidays, vacation leave, personal days, bereavement leave, sabbaticals, and other leaves of absence.

Benefit–eligibility policies. This section details how and when employees are paid, as well as procedures related to benefits such as health, dental, and life insurance, retirement and stock plans, tuition reimbursement, and flexible benefits spending plans. Here, describe how full– and part–time employees become eligible for benefits, any vesting schedules, or special exceptions. Forms could be included for direct deposit authorization, payroll deductions, etc.

External regulations. Every company must abide by certain externally–imposed rules. "These are rules that are forced upon all of us by federal and state law," says Fitzer. These include laws such as the Family and Medical Leave Act, or safety guidelines mandated by the Occupational Safety and Health Administration. Tax laws regulated by the Internal Revenue Service and citizenship regulations imposed by the Immigration and Naturalization Service also fall under this heading. If applicable, this section of the manual would also cover regional or industry–specific laws related to your business. Because of the variety of regulations that may apply to your business or your geographical location, you should seek the advice of a labor and employment lawyer for guidance.

Avoid overload

Despite the vast amount of information that could be part of your manual, there's no need to list every possible contingency, or describe every policy in detail. Just put in writing the guidelines you believe your company needs to operate effectively, but make sure you do not eliminate the option for case–by–case decision–making. "The more recent manuals that I've done have gotten shorter rather than longer," says Fitzer. "My view is that less is more. You need enough in a policy so that it's clear and that it's consistent, but you need enough flexibility to meet individual specific situations."

What you do put in writing you should be prepared to live by. Fitzer states, "I always tell my clients, don't put something in writing unless you are 100% committed to following it 100% of the time."

Need help? Use forms

Forms

There's nothing wrong with getting help when writing your operating policies. In many cases, forms or templates can be useful guides, both for new business owners or for those who want to update or add to their policies.

Issues to keep in mind

Seek legal help. Have an employment attorney review your policies before you distribute them to your staff.

Keep updating. Once your policies are drafted, you aren't finished. Ever. Operating policies need to be looked at critically and updated at least annually. If you are growing rapidly, consider reviewing your manual quarterly.

Reserve the right to change. "Most manuals will include a statement that this is not a contract, and management reserves the right to revise policies with or without notification," says Fitzer.

Get the word out. Employees should receive the manual on the first day they report to work. Make sure they read it and have an opportunity to ask questions. Some companies require their employees to sign a form indicating that they've read the manual; others have an HR representative go over the policies with the new hire as part of orientation.

Find a workable format. Since you'll be updating your manual at least once a year, you'll want to use an easy–to–modify system. Paper copies may work for some companies, as long as the pages are dated and revised pages are removed and destroyed in all copies when updates are issued. Putting your handbook on your Intranet or network may be a good choice, since electronic files are easier to refresh.

Translate carefully. If some of your workforce speaks a foreign language, have your manual professionally translated into that language. Fitzer says, "when you're dealing with policies, you need to make sure that you're translating them accurately."

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