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University of Massachusetts Amherst

Family Business Center

Should You Create An Employee Handbook?

by Shel Horowitz

Is stabbing another employee grounds for dismissal? One local business owner was shocked to discover that it isn't necessarily; he was forced to pay unemployment compensation to the assailant. The reason? His company's employee handbook didn't specify that violent crime was a firing offense.

Unbelievable as it may sound, it's just one among many horror stories that were shared at the Family Business Center's final meeting of the 20th century: The Hows and Whys of Creating an Employee Handbook.

Panelists Erwin Millimet (a retired labor relations lawyer and professor), Jannie Morton (an organizational development consultant and coach), Terry Nelson (conflict management consultant and former manager at Monsanto)), Linda Lacaprucia (human resources director for Balise Motor Sales), and Mary Fitzer (human resources and compensation consultant)-with lots of comments and questions from the audience-discussed whether to have an employee handbook, and if so, how to compile and use it.

Fitzer provided attenders with a 9-page tutorial and 10 sample pages. But Millimet says doing a handbook is not always the appropriate solution. “Many times, we say, 'don't have a handbook.'” Fitzer explained the logic: “As soon as you deviate, you have exposure” to legal liability.

All the panelists emphasized that if you do use a handbook, make it something that employees will actually read and understand. Nelson noted that managers can have large volumes going into intricate detail, but “employees can carry around the day-to-day rules in a pocket. Keep it simple-something the employee can relate to.” This is how it works at Balise. Lacaprucia showed the thin, odd-sized brochure, filled with antique photos from company archives, that she developed to manage over 700 employees at 15 locations.

And let it be driven by the company culture. Fitzer: “Don't copy someone else's. The values, beliefs and norms are very important and need to be articulated. Splatter your mission statement on the wall and use it as a test.” For example, Patagonia, the sports clothing company, actually provides employees with up to two weeks paid leave to volunteer at environmental organizations.

Morton suggested using the process of developing and implementing a handbook as a chance to help employees take ownership of the company's core values. “Look at how it's being used and what problems you can solve. How much time and money is spent on communication, educating employees on the big picture?”

Millimet pointed out that the handbook has to clearly define responsibilities and expectations. “The problem arises on those matters that are up in the air. What is sexual harassment? What is employment at will? What is nondiscrimination?” Yet, Nelson cautioned, “the more you write into the handbook, the more it becomes a contract.” Thus, legal review is crucial.

As to the original quandary about the employee who stabbed? Here's Fitzer's advice: “You cannot define every situation. Don't have a list of ALL the reasons for termination.” Someone will be terminated for another reason, “and at the least, they will collect unemployment.”

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