Crafting a personnel handbook: your legal guide to establishing company policies and procedures.

Looking for a way to convey your company's philosophy while laying out guidelines for employees to follow? You can do it easily with an employee manual. Whether you create it yourself, as a business owner, or have a human resources manager oversee the job, an employee manual is an invaluable document. It can even protect you from possible litigation.

We'll begin by asking the question, Do you need an employee manual? While most experts say it depends on the size of your organization, even a business with as few as 10 employees still has need for a handbook providing written information on company policies and procedures. The manual can be as short as five or as long as 65 pages, and usually takes from one to three months to compose.

What is the primary function of the employee manual? First, it allows you to present information in a clear and concise manner, serving as a reference document; and second, it can be used as a legal defense if an employee claims ignorance at violating company policy.

Here are four steps to get you started on creating your own handbook:

* Step 1. The best format for an employee handbook is a three-ring binder or loose-leaf folder that allows you to update information by subtracting and adding pages. In deciding what to include, think in terms of the importance and complexity of information and how often it will change. Depending on your business, industry mandates may affect work requirements. Topics should cover general organization information, benefits, work rules and salary issues.

* Step 2. An employee handbook can; be simple and conservative or wrought with details. Kerry V. Scott, director of employee relations at the National Rehabilitation Hospital in Washington, D.C., is in the process of revising his company's employee handbook. According to Scott, "You should make your employee manual as attractive as 11 possible. Include photos of staff in different departments, shots of employees at work, scenes from what your organization does--dress it up." In addition to information, he says, the employee handbook may boost employee morale. "Employees can read the handbook and say to themselves, Look at all the things the organization does for me."

* Step 3. Begin with a one-page welcoming statement or letter from the president introducing the employee to the company. It should contain four to five paragraphs articulating your organization's philosophy and expectations. Next, describe the history of your business in one to two pages. This should give a sense of how the company came into being.

* Step 4. Follow with a one to two page letter describing the company's mission statement and purpose. For example, the National Rehabilitation Hospital's mission is stated as: "To serve the community and return disabled persons to levels of efficiency." Your mission statement should also be included in your business plan. If you don't have a formal business plan, make time to create one, drawing on the policies and procedures you've established by operating your business.

In putting together your employee handbook, err on the side of simplicity. Avoid legalese and wordiness. The language should be clear. As Scott suggests, you want your employee manual to be "user friendly."

Next month, our second installment on crafting an employee manual will go into detail, exploring benefits and policies.

To obtain copies of this series, please call our Circulation Department at 212-886-9568.