Friday, January 06, 2012

SOP Friday: Employee Handbook

This isn't really a procedure as such. It's really a policy with a handbook attached. The policy is really simple:

You need an employee handbook.

That's it.

The first question is, "When do I need an employee handbook?" The answer is that you should have one as soon as you have an employee. But don't freak out!

My basic philosophy is that you should make your employee as small as possible, not as comprehensive as possible. This advice applies to small businesses, of course. Once you have lots of employees and lots of extra regulations, then the advice reverses. But to start out, Keep It Simple!

You need an employee handbook basically because you need a place to put YOUR policies and clarifications. With every lesson you learn, you will create a policy and expand the handbook a little. With luck, it will never be too fat. Fat employee handbooks are not read.

Your employee handbook contains three kinds of information:

- Required information

- Really smart things to do

- Optional information

Despite everything I'm about to say, your employee handbook might be as small as five pages. You only NEED a few things.

Beware State Laws

Here's the deal with employee rules and regs: Almost everything you can think of (and a whole bunch you can't imagine) has been regulated by the government already. This includes how many hours an employee can work, who you can't discriminate against, when lunch has to be taken, wages to be paid, taxes, worker's compensation insurance, privacy, vacations, etc.

The good news for you is that you don't have to cover any of that crap. You have to somehow stay inside the law. But your employee handbook only needs to address the topics and issues that you believe need special attention.

You can find dozens of employee handbooks on the Internet. They cover all kinds of things that you consider to be common sense. Believe me, there is no common sense when it comes to human interaction. In my opinion, there's no point creating a document so big and cumbersome that no one reads it until an issue arises. What do you want employees to know? That's what counts.

Required Information

The first set of things you should include in your employee handbook are the most important things to keep your business running smoothly and cover your butt when an issue arises. These include:

- Your company vision and mission. Many people consider this "fluff," but it's really the most important thing. If you have a vision that actually guides your business, the rest of the book is almost irrelevant.

- Non-Disclosure Agreements. You should state that NDAs are required of all employees. Your NDA will be a separate document that you can keep in the employee folder, but you will state in the employee handbook that an NDA is a requirement of employment. This in turn allows you to tell clients that you require NDAs from all employees.

Believe it or not, that's it. 99% of everything else you come up with is covered by state and federal laws. So other than creating a document that educates people about the law, you don't need all that stuff.

Really Smart Things to Include

The second set of things to include in your employee handbook are "good ideas" like . . .

- Dress Code. Particularly in our line of work, technicians seem to think that torn jeans and an old t-shirt are acceptable. In our business, they are not. When we charge someone $150-300 per hour, we think they need to see a tech who looks professional.

- Work hours and philosophy. It is good to set the ground rules for when employees may work and when they are expected to work. For example, if you want to enforce a rule that you work 8 AM to 5 PM, you should state that. It eliminates many irritating discussions down the road.

- Pay Periods and Pay Dates. You should lay out when people get paid (e.g., 1st and 15th or 10th and 25th or whatever). Separately, you can publish the specific pay dates for the year.

- Holidays. You should list the holidays when your office will be closed. Again, you can separately distribute a list of specific holiday dates for this calendar year.

- Smoking policies. You should lay down when and where smoking is allowed, including what your rules are regarding smoking while at client offices.

- Company property. There are two parts to this. One is a statement that email, computers, files, and all electronic communications provided by the company are the property of the company. Therefore, you can read all emails, review all hard drives, etc. with no prior approval or knowledge of the employee. The second part has to do with tools and equipment. Very often in our profession, employees have hardware, software, cables, and other things that belong to the company. You need a statement that makes clear that these must be returned or paid for at the end of employment.

- Drug Free Workplace Policies and related policies. If you have clients who require a drug-free workplace policy of you, you should include a note to that effect in the employee handbook. As with NDAs, you will execute the drug-free agreement as a separate document if needed. You may be able to get by with just making a statement in the employee handbook.

Optional Information

Everything else is optional. There are an unlimited number of topics you don't need to worry about.

The basic rule here is that you will add sections as the need arises. If you have an argument with an employee about conflict of interest, then add a section on conflict of interest. Otherwise, don't worry about it.

And when you write up these policies, keep it brief! One or two paragraphs for each policy is all you need. Don't create a massive document that covers more than it needs to.

Optional things you might include are: Welcome message, at-will employment message, attendance policy, benefitsconflict of interest policy, disciplinary procedures, employment classifications, equal employment opportunity memo, harassment policy, how personnel records are handled, performance evaluation policy, personal phone call policy, and workplace violence policy.

See all the stuff we didn't put in the document? Keep it simple!

Sample Employee Handbook

Google "Employee Handbook Sample" and you'll find about a million hits. Some cost money. Some are free. Some are specific to your state or province. If you belong to ASCII or CompTIA, they also have resources and samples you can use.

As with any legal document, be very careful about simply downloading something and implementing it in your business. First, you might "implement" something that's actually illegal in your area. Second, you will probably end up with a document that neither you nor your employees will read. That is pointless.

In California, the state Chamber of Commerce has a toolkit for building an employee handbook based on a series of questionnaires you fill out. We bought this and used it. The final document is nice, but the process is very cumbersome. And the final "document" isn't a document at all: You have to generate it each time in order to print another copy since it does a series of database queries to generate you document. I think it's much better to have a Word document you can easily edit.

I'm kind of picky about these things, but I think you should have your employee handbook reviewed by an attorney that specializes in employment law. Yes, it will cost $250-500. But how many lawsuits will be avoided? Find someone who is willing to review your document and not write a whole new handbook for you. Shop around.


Implementing your employee handbook is easy. First you create it. Second, you have it reviewed by an attorney. Third, you present it to your employees.

You should have employees sign a document that they have received and read the employee handbook. We frequently distribute the handbook on day one and have them sign the document on day two.

That's it.

You need an employee handbook because you need to start building YOUR policies and procedures, and the employee handbook is a great place to start. Hit the basics. Add to it as needed.

Your Comments Welcome.

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About this Series

SOP Friday - or Standard Operating System Friday - is a series dedicated to helping small computer consulting firms develop the right processes and procedures to create a successful and profitable consulting business.

Find out more about the series, and view the complete "table of contents" for SOP Friday at

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Next week's topic: Hardware Replacement Policy


The Best I.T. Service Delivery BOOK EVER!

by Erick Simpson

- Deliverables - Pricing and Positioning - Staffing Requirements -
- Hiring, Managing and Training - Technical Roles and Responsibilities -
- Processes and Procedures - Target Markets - Customer satisfaction and Loyalty -

and More!

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