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Policies for Your Business: A Human Resource Guide


Creating policies for your business is an important step in the management process. Human resources policies effectively communicate expectations and other crucial information to employees while allowing those in management positions to follow through. Although every organization has its own priorities and needs, effective HR policies are key to guiding employee behavior and outcomes. Before setting up your HR policies,it can help to review some of the most important ones and how they can benefit your business.

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What are HR policies?

HR policies are the formal guidelines and rules that exist to hire, reward, train and assess the employees of your business. The main purpose of these policies is to prevent misunderstandings and confusion among both you and your employees, as well as to avoid problems that can occur when employees do not understand their obligations or rights. Creating and implementing HR policies is just as important for a small business as it is for a large corporation, as the process allows the leaders of the organization to outline the key guidelines for how the business will run.

In addition to creating formal policies, it is equally important for small business owners to apply them equally and consistently for all employees. When you take the time to establish and enforce human resources policies, you’re better equipped to succeed when hiring employees and managing the tasks that come with having a workforce.

Advantages of formal HR policies

When you have formal policies set in place, one of the key advantages is a clear understanding of your company’s standards. When your organization implements its policies from the start and provides them to new employees as soon as they are hired, those employees will have clearly drafted information about what they are expected to do, what benefits they will receive and how they can contribute to the overall goals of your business.

Another advantage to creating HR policies is the time it can save. The members of your management team can focus their time and efforts on other tasks, such as developing new products, creating marketing campaigns or analyzing the competition. You can also use the policies to establish the tone of your business, which is important when bringing on new employees. An employee can review these guidelines to better understand what you expect from them in terms of performance and behavior while at work.

Related:How to Hire Your First Employee

Key factors for determining what business policies you must have

As a business owner, it is also your responsibility to determine which business policies are most important to include in your HR guide. Some of the most common subjects covered by HR policies include:

  • Dress code and appearance
  • Equal Employment Opportunity
  • Time and overtime compensation and tracking
  • Employee classification
  • Meal and break periods
  • Attendance
  • Paid time off (vacation, personal, sick time and/or holidays)
  • Performance improvement and evaluations
  • Workdays and paydays
  • Payroll deductions
  • Salary increases
  • Termination

When deciding which business policies to implement, the first step is assessing what is legally required in the area where your organization operates. Some of the policies, such as those related to harassment, equal employment, wages, overtime and employee classification, must comply with state and federal regulations. Other policies will be up to you to include, depending on how your organization operates, the number of employees you have and how you want to manage your workforce.

Related:How to Create a Time Off Policy

Some examples of policies

As you create your own business policies, you can review these examples to determine how you want to formulate yours and which to include:

  • Dress code and appearance
  • Time and overtime compensation and tracking
  • Meal and break periods
  • Paid time off

Dress code and appearance

Our objective in establishing a dress code is to allow our employees to work comfortably while maintaining a professional atmosphere and image. The dress code in the office is business casual, which includes slacks, dress pants, skirts and dark jeans, collared tops, blouses and turtlenecks. Short, tight skirts, shorts, frayed or ripped denim, tank tops, T-shirts and overalls are inappropriate for the workplace. Footwear should be comfortable and conservative.

Jewelry, makeup, hairstyles and fragrances should be used in good taste and with respect to the sensitivities of others in the workplace.

Time and overtime compensation and tracking

All employees classified as hourly workers must track all hours worked by clocking in upon arrival, clocking out for meals and breaks and clocking out before leaving the premises. Employees must also review their time records by the first and 15th days of the month for accurate payroll to be made on the fifth and 20th days of the month. Time records must reflect all hours worked within the period and include all relevant departmental or project codes and labor distribution codes. Any hours worked beyond 40 in a workweek will be paid at the agreed-upon overtime rate.

Meal and break periods

It is our policy to comply with all state and federal laws regarding breaks, meals and rest times for employees. Each employee who works six or more hours in a day will receive two 15-minute rest breaks and one 30-minute lunch break. Each employee who works fewer than six hours in a day will receive one 15-minute rest break. When taking your rest break, you should remain clocked in (if applicable). When taking your lunch break, you should clock out and back in upon your return.

Paid time off

All full-time employees are eligible for paid time off that can be used for vacation, personal needs, recovering from an illness or other purposes. Full-time employees will receive four hours of paid time off per pay period. PTO can be used in one-hour increments. Employees should make PTO requests as early as possible, with the exception of unexpected illnesses or emergencies.

Business policies FAQs

Below are some commonly asked questions about setting up business policies.

What are small business policies?

A small business may choose to include certain policies while omitting others. The most important HR policies for a small business owner to implement include those related to employee performance, attendance, time tracking and payroll, as these will ensure that all employees understand the expectations for their roles.

What HR policies are required by law?

Some of the policies that are legally required of employers include those related to pay, minimum wage, equal employment opportunities and labor. The U.S. Department of Labor manages all federal laws regarding employment, while individual states and cities may also have their own labor laws and regulations for employers.

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