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Why Every Small Business Needs an Employee Handbook

Contributor: Evita Lara, PHR

December 14th, 2023 | 5 min. read

By Tony Calavitta

Why Every Small Business Needs an Employee Handbook

[Yes or no?] Did your vehicle come with a detailed user manual? Yes (And it probably saved the day when you had to change a headlight).

[Yes or no?] Did your cell phone come with a clear set of instructions? Yes (And it surely guided you through the setup process).

Even the packaging of yesterday’s frozen lunch offered me step-by-step directions on how to prepare it, which I followed exactly to avoid causing a kitchen catastrophe in the office breakroom.

Truth be told, we all follow instructions every day to complete even the most trivial of tasks.

With this in mind:

[Yes or no?] Shouldn’t your business operations, with far more complex procedures than simply reheating Lean Cuisine®, come with instructions too? Yes (And spoiler alert – these business instructions are better known as an employee handbook).

In this article, we will discuss why every small business needs an employee handbook.

By reading to the end, you will learn:

  • What an employee handbook is
  • Why having one is imperative to successful business operations
  • And 5 ways that small businesses can benefit from a comprehensive employee handbook

What is an employee handbook?

Your employee handbook serves as the operational instruction manual for your business.

It consolidates every policy, procedure, and expectation into a single, well-organized, and readily accessible document. It should provide a clear framework for every employee to understand and commit to these guidelines in their daily work.

What is the purpose of an employee handbook?

The primary goal of an employee handbook is to serve as a comprehensive resource for your entire organization, ensuring uniform communication of vital company information to all staff members.

To achieve this, your handbook should be:

  • Well-written
  • Straightforward
  • Easily comprehensible

When properly developed and implemented, your employee handbook serves as a tool to align your employees with the standard operational practices of your workplace (More on this in our article, 5 Benefits of Having an Employee Handbook).

Why every small business needs an employee handbook

Effectively running a small business requires more than just intuition and experience – it demands a clear set of actionable guidelines. This is where an employee handbook becomes indispensable.

Here are 5 ways that an employee handbook can set your small business up for success.

Your employee handbook can cultivate a common company culture

Company culture is defined by the values, beliefs, attitudes, and practices that your workplace promotes. When employees share these, it can shape positive at-work decisions, behavior, and interactions.

And, 94% of executives along with 88% of employees believe that a strong company culture is key to small business success. The importance of which is underscored by the fact that, 91% of managers in the U.S. agree that employee alignment with company culture is an equal to or even greater asset to business success as skills and experience.

So, how do you make sure your business has a strong and well-aligned company culture? By communicating your mission and vision with all of your employees and making sure that they embrace these as the foundation of business operations.

An employee handbook is the ideal tool for sharing these core concepts with your entire staff and, thus, developing a common company culture.

By doing so, day-to-day work goals will reflect your company’s priorities. And, as a result, your employees will be more connected with your company and will see the value of their contributions toward the overall success of your business.

The employee handbook, therefore, is not just a standard document – it's a catalyst for cultivating a company culture that will drive your company forward.

Your employee handbook can promote company cohesion across work locations

Now let’s consider creating a positive company culture in light of the following statistics:


Just as a strong company culture is vital for business success, so is ensuring that this culture permeates every corner of your organization, regardless of physical boundaries. However, in the modern landscape of remote work, uniting your team can be challenging. With small business dynamics, where teams are typically smaller and more closely-knit, this challenge can be especially pronounced.

So, how can you make sure that your remote employees are as integrated and aligned with your company's ethos as those in-house? Enter the employee handbook, again.

A well-developed handbook can play a pivotal role in bridging gaps between various work arrangements and locations to help remote or hybrid employees feel more connected as a part of the team.

By embedding the pillars of your company culture into the pages of your employee handbook, you create a shared understanding that resonates with every employee. This not only enhances a sense of belonging but also ensures that your company's objectives and values will be reflected in the work of your remote team.

In essence, your employee handbook becomes a tool to build both a shared purpose and a shared process for your team, making it an indispensable asset for small businesses navigating the complexities of a remote workforce.

Your employee handbook can enhance company-wide communication

Consistent communication is paramount to small business operations. And a well-designed employee handbook can act as a cornerstone of this, providing all employees with uniform company guidelines.

An employee handbook is particularly effective during the onboarding and training process. By offering a thorough overview of your company, it can significantly reduce the learning curve involved in new employees becoming productive team members. This is especially beneficial for small businesses where resources are limited, and efficient use of time is essential.

With a comprehensive employee handbook, you can make sure that your entire team, from the newest hire to the most seasoned manager, is fully on board with your company's core values, standards, and goals.

This clarity not only streamlines policy implementation but also creates an environment where transparency and equity are fundamental workplace principles.

Your employee handbook can guide operational effectiveness

A well-crafted employee handbook can also be a resource for managers, offering them a clear and consistent approach to staff management.

Key areas where your handbook can be advantageous to management include:

  • Policy Enforcement – Clearly details company policies and how to apply them, ensuring consistency across the board.

  • Conflict Resolution – Provides step-by-step guidance for resolving workplace disputes quickly and equitably.

  • Performance Management – Outlines procedures for assessing employee performance, including setting expectations and giving feedback.

Policy Enforcement – Clearly details company policies and how to apply them, ensuring consistency across the board.
Conflict Resolution – Provides step-by-step guidance for resolving workplace disputes quickly and equitably.
Performance Management – Outlines procedures for assessing employee performance, including setting expectations and giving feedback.

With these built-in guidelines, your employee handbook becomes an essential tool for managers, enabling smoother and more effective day-to-day operations.

Your employee handbook can protect your business

Sure, an employee handbook is an instructional guide. But it can also operate as a protective shield, offering multiple layers of security against common business pitfalls.

How? Well, when developed with compliance in mind, your employee handbook can serve as a valuable legal tool, ensuring adherence to labor laws and safety requirements. By preventing any deviation from federal, state, and local regulations, your handbook can directly reduce your risk of paying unnecessary violation penalties.

Additionally, In the event of an employee grievance or lawsuit, your handbook can serve as a legal document. As a written and agreed-upon record of company policies, procedures, and workplace behavior expectations, it can protect your company from paying undue damages.

Simply put, an employee handbook is a must-have asset for any small business aiming to build a strong, legally sound foundation.

Are you an employer in California? 

Here's a must-read for 2024 compliance:

Need help developing your employee handbook? Combined can help!

If you’re here, you now understand how a well-developed and effectively implemented employee handbook can be an asset to your business.

But, crafting such a handbook can be challenging, requiring clear and comprehensive construction customized to your small business's specific needs.

That’s where we can help!

Here at Combined, our experienced HR team is ready to assist you with this process! 

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Schedule a meeting with an HR expert to create a personalized employee handbook designed to benefit your unique business.

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This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.