The ROI of an Employee Handbook: Does My Company Really Need One?
July 24th, 2013 by Mindy Flanigan
As the business owner, you probably know the basic policies and practices you want included in an employee handbook so that current and future employees follow. But do you know what labor laws you are required to comply with, and what optional policies might benefit your organization? As a national professional employer organization (PEO), one of the most common questions we get asked by small business owners and clients is how much does an employee handbook cost. In short, the answer is that it depends. Books or software can run anywhere from $50 to $100, and then you must decide whether to do the work yourself or delegate to an administrator who may or may not know appropriate content for the handbook.
Several often ask if it would be more efficient or effective to hire a consultant to aid in the process of creating an employee handbook. Experienced human resources consultants run from $80 to $120 per hour, and legal counsel costs can tend to run much higher than that. So, is the cost worth it? YES! Here is why.
Time is Money
First, let’s evaluate how much your time is worth. On average, it is likely that your time or that of other senior managers is worth at least $100 per hour. You and these other senior managers likely handle day-to-day employee questions and spend time focusing on revenue generating activities such as sales or business development. So if you spend just 15 minutes, four times a month answering the same company policy questions over and over, you are losing $100 a month or $1,200 a year. Not to mention diverting attention away from generating more revenue for your business. To avoid this, simply invest in getting an employee handbook created so the answer to these questions can easily be found and accessed. While an employee handbook project may initially cost $800, in just one year (in this scenario), you would save $400.
Consistency and Accountability
There is no better way to create an equitable, non-discriminatory organization where employees are held accountable for their conduct and performance, than through the implementation of a compliant and thorough employee handbook. It clearly informs your employees of the rules and provides a roadmap for managers and supervisors on how to handle policy violations, performance concerns and other employee management challenges. This roadmap will save you time and money; allowing you to comfortably delegate to your supervisors. Without an employee handbook in place, it is likely that you would be called on to address an employee management concern. Perhaps this occurs just once a month for a 30 minute session. But wouldn’t you rather save the $600 of your time for more productive activities?
Wage and Hour Guidelines – Cost of Overtime
Do you have hourly employees who are bleeding you dry in unnecessary overtime? Do you have to pay them if the overtime wasn’t approved? While the answer is yes, why not let a policy in your employee handbook address how to handle the matter? The compensation section of your handbook should not only include paycheck and payday information, but also a very clear policy on non-exempt overtime and that supervisor approval is required before working overtime. If an employee continues to violate that policy, it is grounds for corrective action–including termination–if repeated.
Employee Conduct and Performance
Did you make a bad hiring decision? Has a complaint about harassment or a hostile work environment landed on your desk? Whatever the challenge, don’t delay in correcting the situation and taking appropriate action. An employee handbook should always include a section on standards of conduct, clearly state zero tolerance in regard to harassment and outline your right as an employer to correct the situation with the appropriate disciplinary action–up to and including–termination. Let an employee handbook give you peace of mind that you can trust your supervisors to handle any type of misconduct properly. A charge of discriminatory treatment from the equal employment commission or a complaint of harassment is a huge hassle and can be very expensive. The contents of your employee handbook are your best assurance and best defense that a situation has been handled in a fair, consistent and compliant manner.
Get a Signed Acknowledgement
Addressing employee misconduct or poor performance is never easy and is often dreaded and avoided by those of us who don’t like confrontation. But that underperforming employee may be costing you money; directly or indirectly. If the situation has been properly addressed, you’ll have the documentation to show for it. This will include proof that the employee handbook has a policy regarding conduct and performance and discipline, along with signed acknowledgement by the employee. If you can show both of these things and the problem hasn’t been resolved or continues, don’t be afraid to terminate. When you do decide to terminate, you don’t want the employee collecting unemployment benefits. Protect yourself from an unemployment rate increase with good documentation and a signed employee handbook acknowledgement.
Click the link to view our recent blog post The Fair Labor Standards Act (FLSA): Four Things Every Business Should Know or check back next week for more on human resources, payroll, insurance and benefits.