What are company policies?

Company policies are guidelines that help employers manage the health, safety and accountability of employees and their interactions with customers or clients. Strong policies may also reflect your company’s values and practices and help ensure compliance with federal or state regulatory requirements.

For example, your company policy on data security may enforce the General Data Protection Regulation (GDPR), which governs the European Union (EU) and US companies marketing to its residents. Addressing GDPR compliance in your policy can help your company avoid fines and legal risks.

Why are company policies important?

Policies that apply to everyone equally help create fair and transparent practices, building a company culture of accountability and ethical behavior. Policies also benefit the business by providing guidelines for regulatory compliance. They help your company follow relevant rules regarding employee treatment, environmental protection and workplace health and safety.

Communicating procedures in writing can also help prevent conflicts. For example, a transparent promotion policy can ensure everyone has equal opportunities to advance their careers while maintaining fair hiring practices.

Clear policies communicate your company’s values, which can support your hiring efforts and reinforce your reputation. For example, you might create a policy about equal opportunity to show the company’s commitment to maintaining a safe and respectful environment. These policies may appeal to job seekers looking for an inclusive workplace and encourage employee retention.

The employee handbook: Communicating company policies

An employee handbook contains your company’s policies and procedures, providing employees with a single source for workplace rules, expectations and benefits. An organized, easy-to-read document helps employees understand their rights and responsibilities. You can distribute the handbook during employee onboarding and hold regular workshops to remind team members of existing policies and any updates.

Because the employee handbook also supports your company’s compliance with state and federal laws, your human resources (HR) team should regularly review and update it regularly. You might also update policies when business operations adjust or expand.

8 company policies to create

Effective company policies generally provide structure and consistency, supporting daily operations and helping employees understand behavioral norms. Consider creating the following policies for your business:

1. Equal opportunity policy

The U.S. Equal Employment Opportunity Commission (EEOC) enforces various federal laws prohibiting workplace discrimination. An equal opportunity policy (EOP) can help you build an inclusive experience for applicants and employees.

It explains discrimination and protected classes, which helps company leaders establish fair hiring and management practices. The EOP also provides a place for policies about diversity, nondiscrimination, anti-harassment and workplace violence.

2. Workplace health and safety policy

A workplace health and safety policy generally explains the company’s procedures regarding:

• Known hazards
• Safe practices
• Safety responsibilities for each role
• How to report incidents
• What to do in an emergency

This policy aims to support a safer work environment, prevent safety violations, reduce expenses and protect against reputational risk.

Different work environments introduce various hazards. For example, workers in a manufacturing facility may encounter accidents related to chemicals or machinery, while office workers may experience ergonomic injuries.

Consider writing a separate health and safety policy for each department. As you’re developing the policy, the workplace safety guidelines from the Occupational Safety and Health Administration (OSHA) are a helpful resource for your industry.

3. Employee code of conduct policy

A clear and concise code of conduct generally covers rules regarding behavior and creating an ethical workplace. You might include specific topics such as:

• Respect and communication
• Attendance
• Substance use
• Violence and intimidation
• Sexual harassment
• Restrictions on giving or receiving gifts
• Dress code
• Confidentiality
• Cell phone usage
• Social media usage

You can also outline disciplinary actions to help employees understand the consequences of violating the rules.

4. Attendance, vacation and time-off policies

Time-off and vacation policies can create a consistent and transparent process for managing employees’ time away.

A well-defined attendance policy helps set expectations for punctuality and attendance. A no-call, no-show policy can help employees understand what happens if they skip work. In comparison, a paid time off (PTO) policy outlines how much time off employees receive, the types of time off, when and how they can accrue more and whether the hours carry over to the next year.

It may also provide guidelines for requesting days off and explain how the company manages leave to ensure fairness and organizational continuity. For example, you may mention that only one person from each department can be out of the office at a time. You might create a first-come, first-served policy to help prevent disputes among employees who want to take the same days off. Other businesses may prioritize requests based on seniority or business needs.

Make sure your policies align with applicable federal and state laws, such as the Family and Medical Leave Act (FMLA). Your HR team can review the policies regularly to ensure they reflect current rules and regulations.

5. Employee disciplinary action policy

Your disciplinary action policy should tell employees what to expect if they violate a policy. Consider providing a step-by-step list of disciplinary actions and describing the process to ensure fair and consistent treatment. For example, the steps might include a written or verbal warning, suspension or termination. Make sure to note that, depending on the severity of the issue, some steps may be skipped.

6. Employee complaint policies

A complaint policy explains how employees can file a formal complaint if they have workplace grievances. Employees might file complaints for incidents involving safety, conflict with colleagues, problems with payroll and social circumstances such as harassment or bullying.

Complaint reporting alerts you to potential problems in the workplace so you can resolve them before they escalate. Consider creating a formal process for resolving complaints to help managers and company leaders find solutions. You might also develop a non-retaliation policy to protect employees who make good-faith complaints against their managers or coworkers.

Handling employee complaints fairly can help you maintain a safe and respectful environment. These policies are generally essential for managing employee relations and fostering a positive and supportive company culture.

7. Data security and privacy policy

A robust data security and privacy policy explains safe procedures for handling, storing and transmitting confidential data. This might include customer records, proprietary information and employee data. It also helps you comply with legal regulations, such as the California Consumer Privacy Act (CCPA).

Clear guidelines for data security help safeguard company assets, prevent data breaches and maintain the trust of customers and employees. Because of the technical nature of this policy, your HR team can communicate guidance established by the ​​information technology (IT) team. This can include details on using encryption, implementing access controls and establishing incident response procedures.

Consider hosting regular employee training and awareness programs to help each employee understand their role and responsibilities in maintaining data security and privacy. You can also update policies to align with new technology and evolving regulations.

8. Compensation and benefits policy

A comprehensive compensation and benefits policy can help you attract and retain top talent. This policy typically outlines salary structures, bonuses and benefits packages, which may reduce compensation-related disputes.

Work with your HR team to write this policy in accordance with industry-standard salary structures, performance-based incentives and comprehensive benefits offerings. Consider focusing on skills, certifications or proven performance when determining salary ranges to support a skills-first approach. It can also be helpful to request employee feedback to ensure the policy meets your business’s and workforce’s needs.

How to develop company policies as an employer

Consider following these four steps to develop effective and enforceable business policies:

1. Identify the need for the policy

Assess your operation, paying close attention to:

• Common complaints or questions
• Operational inefficiencies
• Differing management styles that lead to inconsistencies in leadership
• Interpersonal conflicts
• Regulatory compliance challenges

Look for trends and patterns to help you identify areas for improvement. For example, if you’d like employees to arrive during core hours, you might need to write an attendance policy. If your company handles a lot of confidential information, consider a data security policy.

2. Determine what content you need for the policy

Note key issues the policy should address. Consider breaking up larger topics into sections or clauses to address acceptable and unacceptable behaviors, actions and practices, as well as resulting disciplinary actions.

3. Communicate the new policy to employees

Notify current employees about new policies before they’re released or added to the employee handbook. You might also consider adding a signature line to the new policy. By signing, employees acknowledge they’re aware of the new rules and understand the consequences of breaking them.

When you’re onboarding new employees, schedule time to explain and discuss company policies. Allow new hires to ask questions, and consider having them sign a form stating that they were given an employee handbook or a list of your policies, rules and regulations.

4. Update and revise the policy as necessary

Monitor the effectiveness of your policies and potentially make adjustments to improve clarity or align with operations. You may also need to amend or revise policies in accordance with changing company objectives or evolving laws and regulations.