From Rulebook to Roadmap: Building Policies That Work

Like routes on a map, company policies mark the way through a given terrain—in this case, through the rules, standards, and benefits an organization sets for all its employees and managers.

Employee policies save members of your organization time by offering ready answers to questions about acceptable procedures, standards and on-the-job behavior. They safeguard your company from ill will, regulatory hassles and lawsuits by helping ensure you make personnel decisions consistently, fairly and lawfully. If an employee or ex-employee takes your organization to court, your company policies can also form the bulwark of an effective defense.

Policies simply represent management’s choices about how the company will operate and what it expects of its people.

Do you expect employees to live up to any ethical standard? Do you formally appraise their performance? Do you give them rest breaks, paid or unpaid holidays and vacation days, personal days, and time off for jury duty or religious observances? Can you fire them at will or only for cause? Do you allow them to telecommute, moonlight, or work on flexible schedules? Do you post job openings? Do you test applicants for skills, honesty, or drugs? Do your employees know how to ask for reasonable accommodations for religious needs, disability, or pregnancy? Do they understand how to report wrongdoing, harassment, or other workplace problems?

Those are just a sampling of the myriad questions that arise as an organization builds its workforce. Every company in its own way develops answers to them. Whether or not you consciously weigh your choices and formally communicate them to employees, over time you will develop a set of policies through your ongoing decision making. Thus, policies exist no matter whether you choose to write them down. But even though you need not write policies, there are many persuasive reasons for documenting them:

• You force yourself to decide how you want your company to operate. Thus, you don’t leave important decisions to the pressures of the moment or to individual managers and supervisors, who may not act consistently or make the same choices you would.
• You communicate written policies easily, which means employees are more likely to follow them. Everyone works from the same page.
• You make it easier to keep policies in sync with new legislation and the evolving work environment. You can review them regularly and revise them to suit changes in your operations as well as technological, regulatory, and legal developments. That’s important because policies form a key element in a company’s culture, and cultures must adapt to the changing environment to survive and grow.

Why Consistency Matters

Unless your workforce is so small that all members of the organization stay constantly in touch, you find it almost impossible to deliver consistent answers to personnel questions without considering the options, choosing among them, then communicating those to your people. And inconsistency can get a company into trouble. Haphazard decisions lower employee morale by causing confusion about rules and procedures. They may also give rise to outright ill will by creating impressions of favoritism; without clear policies, you’d have a tough time applying the same rules to everyone.

Moreover, in today’s highly regulated, litigious society, you risk time, money, productivity, your company’s reputation, and many a good night’s sleep when you fail to formulate and communicate consistent policies that meet federal, state, and local requirements. For example, let’s say you fail to communicate a clear policy on your commitment to equal employment opportunity and a work environment free from intimidating, hostile, or offensive conduct. That would leave your company—and, in some states, you and your supervisors personally—open to lawsuits charging discrimination and harassment. Or your failure to post safety policies not only might get OSHA on your back but also could result in on-the-job injuries and accidents, which obviously lower morale, damage your reputation, and increase costs.

What Makes a Good Policy?

Effective policies clearly communicate an organization’s rules and expectations. You write them in standard, easily understandable language, not in legalese. And you make them specific. For example:

• “Full-time employees get one week of vacation after one year on the job.”
• “The company does not discriminate in hiring on the basis of race, color, religion, ancestry, national origin, sex including sexual orientation and gender identity, pregnancy, disability, age, genetic information, or any other characteristic protected by applicable federal, state, or local law.”
• “We hire employees with the understanding that the first 90 days of employment are a trial period during which either party may terminate the employment relationship without cause or notice.”

Of course, some policies will be more specific than others. On some issues, such as corporate ethics, you will simply state your position or philosophy and the standard you expect employees to uphold. In contrast, policies on benefits like time off will have to be very explicit. For some issues, such as internet use or sexual harassment, you will even want to spell out the disciplinary measures that will apply when employees don’t follow the policy.

How to Communicate Your Policies

You communicate your policies most effectively through clearly written employee manuals or handbooks (we use “manuals” in the plural here because you will probably want to give one manual to all employees and a second, supplementary manual exclusively to managers and supervisors with hiring, firing, and disciplinary responsibilities).

Using manuals allows you to gather all relevant policies into a single text, which members of your organization can consult whenever they wish. You can date and revise or replace the manuals as needed. Plus, they enable you to state plainly that neither the manual nor any oral or written comments your managers make may be construed as a contract or an implied contract. The latter can provide an important defense if you should someday find yourself on the wrong side of a breach of contract or wrongful-termination suit brought by an employee who misunderstood your policies.

Recommendation: You may print policy manuals, post them online, or use both methods. Online policy manuals offer the advantage of instant updating. With online manuals, you can send a notice via email that you’ve made an updated version available for viewing and require employees to log in using their username and password. That way, you can track their access as verification they received the update. And if you want to be doubly sure they not only received the update but understood it, you can require them to complete a short test online. Keep the score to prove they read and understood the changes. Of course, if you have some employees who do not have online access, you should provide them with paper copies of the manual.

Keep Managers Informed

Take special care to see that your managers and supervisors fully understand your policies, and that they stay up to date on any revisions and apply your rules consistently. For example, if your policy calls for progressive discipline for tardiness or unexplained absences, make sure every supervisor uses the approach your management policy manual outlines when dealing with every employee who arrives late at work. Haphazard application of your policy will leave you open to charges of unfairness and even unlawful discrimination should the supervisor crack down on an employee in a protected group after ignoring similar behavior by others. To show even-handedness, you may even have to punish a top performer who arrives consistently late.

Communicate to your managers exactly how to interpret your policies and what to do when policies appear to conflict. For example, let’s say your policy states you will accommodate your employees’ religious beliefs whenever possible, but your dress code prohibits wearing headgear indoors. What if a Muslim or a Sikh employee wants to wear a head scarf or turban indoors for religious reasons? Would you want a manager to (1) accommodate this employee without further ado, (2) discuss the matter with you before acting, or (3) accommodate the employee but let you know so that you could consider amending the dress code? Or does a compelling business necessity, such as safety, require you to uphold your no-headgear policy? Bear in mind that while you might prefer to uphold the dress code without exception (for example, to avoid charges that you favor one individual, or one religion, over another), doing so could open you up to legal action unless you can show a compelling business reason for your no-headgear policy. Because of recent Supreme Court decisions restricting when an employer can turn down a request for religious accommodation, you must show that turning down the request would create an undue burden because doing so would impact your bottom line in a significant way.

Your supervisors and managers must understand the reasons for your policies, the legal issues involved, and how you want them to resolve any apparent conflicts between one policy and another. And if a supervisor or manager makes a wrong call, prepare yourself to apologize quickly to the employee and reverse the action. It not only might save you a lawsuit but also might help you retain the goodwill of a valued employee.

If a new or revised policy is complex or marks a major change in procedure, consider calling a meeting, a teleconference, or an online “chat” with your management and supervisory personnel to discuss the specifics and answer any questions. Make it clear that you expect them to follow and enforce the policies and that their own career advancement will depend in part on how well they fulfill that mandate.

Enforce Your Policies

Enforcement starts with ensuring that your employees know your policies. Even though judges in criminal proceedings have ruled that ignorance of the law is no excuse for breaking it, courts are likely to consider it a powerful mitigating factor in civil actions that employees (or, more likely, ex-employees) bring against their companies. Courts don’t like it when managers play “gotcha” if the employer neglected to inform workers about the policy in the first place.

For example, say you fire an employee for misconduct, and she subsequently sues claiming she had never seen or heard of the policy she’d breached. The court might order you to reinstate her. For this reason, it’s a good idea to ask employees to sign a statement acknowledging their receipt and understanding of your policies and agreement to abide by them. After all, receiving a policy or a company manual and reading it are entirely different matters. The acknowledgment might read: “I hereby acknowledge receipt of the company handbook. I have read and fully understand the rules and procedures it contains. I acknowledge my full responsibility to follow them faithfully in all respects. If I am unclear about a rule, I will ask my supervisor or HR for clarification.”

Call attention to the acknowledgment when you distribute the handbook. Ask each new employee to sign it and return it to you within a week. Then keep the signed statement in the employee’s personnel file. Do the same when you distribute new policies, policy revisions, or updated manuals to your entire workforce. For online versions, require the employee to access the document with their user ID and password. Then have them digitally sign the acknowledgment. As an alternative, put the acknowledgment up front and require agreement before allowing the sign-in.

Keep Your Policies Up to Date

For good or ill, you can seldom set policies in stone. Changes in the organization’s needs and operations, new legislation, and the ever-evolving work environment will necessitate revisions in your policies. Be sure to review them regularly—at least once a year—with your managers, as well as any time there’s a new local, state, or federal statute that affects your relationship with employees. Then ask your legal adviser to review potential changes to be sure they don’t run afoul of any laws related to your business.