A well-written policy and procedure manual can improve your company by establishing clear guidelines, setting goals and communicating organizational knowledge. Sounds great, right? But how should you begin?

A good place to start is by looking at policy and procedure manuals of other companies with similar sized businesses. You also can look online for templates you can download, such as Microsoft Office Policy Manual. It offers 140 updated policies & procedures, human resource forms, labor posters, and job descriptions that will help you get started on a comprehensive office policy manual.

Although these forms and templates can give you a good head start, they are not customized for your particular business, or even your particular industry.

Some companies, such as those in the banking industry, for example, are steeped in regulations and policies and, therefore, need a large amount of policies and procedures. Other businesses, especially small businesses, may only have a handful of policies. Chances are good that your business is somewhere in the middle.

To customize your manual, the best place to start is with your company philosophy. Do you have one? Do your customers and employees know what it is?

Top executives will often say something like, "That is not the way we do things around here." If they mention a company philosophy, they may assume everyone in their employ knows what it is. The truth is that they may not.

Many companies operate under general beliefs, involving honesty and integrity. Those values are good ones, but when it comes down to making decisions for your company, those words are not enough.

So what is a business philosophy? It is a term for the basic beliefs by which a company runs. It is the often unwritten guidelines that employees are expected to follow. Company philosophies are often established over time and often over the course of trial and error.

Relying on "understood" policies can lead to confusion and misunderstandings. Are your employees guessing at what your company philosophy is? If so, creating a policy and procedure manual can be the opportunity to make those unwritten guidelines written for all to see.

Although business philosophies vary from company to company, Marvin Bower in his book, The Will to Manage, offers the following concepts as typical components of a successful company:

• high ethical standards

• a fact-founded, thoughtful approach to decision making

• sensitivity to changes in the business environment

• employees judged on the basis of their performance

• a sense of competitive urgency

If you haven't done so already, it is time to develop a strong statement that clearly summarizes your company's main beliefs and goals. An effective mission statement answers these four questions:

1. What do we do?

2. How do we do it?

3. For whom do we do it?

4. What value do we offer?

Your company's mission statement should not be a copy of any other statement. Forget overdone words and phrases that everyone else uses – such as "visionary," "world-class," "cutting edge" and "outstanding" --and boil it down to what makes your company, well, your company.

A mission statement should reflect the unique character and objectives of your organization in just a sentence or two. Take time to think about what your firms stands for. What philosophy do you want your employees to keep in mind?

After developing your mission statement, the next step is to include a company overview, including your key officers and staff members and a brief history of your company. You may have already drafted this information for your company website's About Us page. but for your manual, keep your staff members, particularly your new hires in mind.

What do you want them to know about you and the founding of your company? By sharing your story, you can go a long way in building company loyalty.

Zappos feels its company history and philosophy are so important that it offers a four-week course on it for new employees. At the end of the course, these new hires are offered $2,000 to quit. Many of them decide to stay.

Just as you did with your mission statement, use facts, not superlatives in writing your company story. Let your background, your service, and your products speak for themselves.

Now it's time to brainstorm a list of what headings or sections your manual should include. To help you get started, here are a few suggestions:

Organization chart. This chart shows who reports to whom in the company.

Job descriptions. This section of the manual will outline the role of employees and how their positions fit into the overall organization. The description should include duties, decision-making authority, and supervisory responsibilities.

Personnel policies. Depending on your organization, this section gives details on hours, salary, vacation time, sick leave, benefits, and retirement.

Conduct and Behavior. This section addresses issues of honesty (theft), of appearance, and of job performance. It also details what constitutes misconduct and how misconduct is handled. These policies may regard substance abuse, smoking, sexual harassment, and workplace violence.

Health and Safety. Depending on the appropriate national and state regulations for your area, this section relates clear guidelines for safe behavior on the job, including the safe use of equipment and supplies.

Emergency Procedures. This section gives your staff direction on what to do in the event of a natural or man-made emergency.

Internet and e-mails. An important aspect of a modern effective policy and procedure manual includes the use of the Internet.

According to a 2014 survey by Robert Half Management Resources, 32 percent of the more than 2,100 chief financial officers interviewed said non-business-related Internet use is the biggest time-waster at their workplace. Employees chatting with each other came in second at 27 percent.

Your policy and procedure manual can include details on what Internet use is and is not appropriate at the office. It also can include forms and templates on proper e-mail etiquette.

Stationery and forms. By including other templates and forms in your manual, you can be assured that your employee's correspondence conveys the professional look and consistency that you desire for your company.

We will delve more fully into formatting in a later chapter. You will see that there are many more areas your manual can cover. As technology continues to remap the business landscape, be aware that you may have to make frequent updates to keep your manual up to date.

Now it's time to do some research. Are you revising an old outdated manual, or are you starting from scratch?

Either way, you will need a solid understanding of how your business functions before you can develop a policy and procedure manual. Here are a few key steps:

• Make sure that a valid need exists for each new policy. Is that need already addressed elsewhere? For example, do you need an e-mail or texting policy, or can it be part of your communication policy? Perhaps a brief addition to an existing policy will be enough to address a new concern.

• If you are starting from scratch, you can look at policy and procedure templates online, such as templates from Microsoft Word or QuickBooks, as a starting point. Use a template's table of contents as a place to begin, adding and subtracting sections according to your company's needs.

• Write an introduction or "Forward" for your manual. The Forward can be in the form of a letter from your company president, and it should clearly describe the company's philosophy and objectives. This letter should be an encouraging show of support for the policies and procedures that follow and should reveal the importance of the manual as a whole.

During this initial stage and throughout the writing process, you can use your table of contents as a way to organize your manual. You can change the wording of the headings or section titles as you go along. You also may want to add new headings or sections that pertain to your industry.

Depending on the length of your manual, you may find it helpful to include to both a table of contents (in the beginning of the manual) and an index (at the end).

Your next step in beginning your manual is to create a set of objectives that mirror your mission statement. You will use these goals to guide your wording for each section of the manual. Since most companies focus on customer service, let's look at that category as an example.

What are your goals for customer service? In other words, what do you want your employees to focus on when it comes to customer service? Here are a couple of ideas to get you thinking:

• satisfaction

• quick response time

• personal attention

As you consider these points, you will soon see that they reflect your mission statement. How much autonomy do you want your employees to have in dealing with your customers? Your policy and procedure manual can spell things out.

Zappos' CEO Tony Hsieh has related the story of one of his company's customer service representatives who sent flowers to a new widow without consulting a supervisor. The woman was returning boots she had ordered for her husband just before he died in a car accident. At her husband's funeral, the widow related the kindness of Zappos to her friends and family.

That employee felt empowered to live out Zappos' "above and beyond" service credo. Would your employees feel they could do the same thing? Remember, policies do not just provide restrictions; they can offer freedom.

Does your company use a collection of forms as part of your regular day-to-day business dealings? Take the time to review these forms to see if any of them need to be revised, updated, or even abandoned.

Be sure you understand exactly why a form is used. Ask what is the intent of the form and does it require a need for a written policy? You may find that some of your forms are not linked with any existing policy and are, in fact, not needed at all.

Now consider if you have any new aspects of your business that require forms. New products, new services often require new policies and procedures to go with them.

When you look at it this way, the process of developing a policy and procedure manual is a way of streamlining your business.

Whether you are using a boilerplate -- or template – for your manual, or you are starting from scratch, your manual should be seen as a work in progress. Research is a big part of the process of creating a policy and procedure manual.

One of the main goals of your policy and procedure manual is to provide a clear framework for consistency in your workplace. The policies you make define your firm's standards for decisions on personnel and organizational issues.

Clearly defined policies and procedures help your company run more efficiently, and help you make fair decisions. This evenhandedness can contribute to a better workplace environment and promote staff loyalty.

Well-thought-out and well-written policies also protect the legal interests of your company. Your policy and procedure manual defines the rights and obligations of the employee and the employer. The policy manual is a written expression of the rules governing the employer/employee relationship.

It is essential, today more than ever, for a company to protect its rights within that relationship by policies that are both fair and legal. However, when not done properly, a policy and procedure manual could do more harm than good.

Policies that are too specific and too rigid may limit your flexibility in certain workplace situations. Policies that are too general may make it difficult to hold employees accountable for their actions.

Here are 10 common mistakes and how to handle them:

Be aware that your manual is a living document and is subject to change. Keep your policies and procedures up to date.

For example, some states require employers of a certain size to provide paid leave for employees who donate an organ or bone marrow.

2. Lack of acknowledgment

It is not enough to just hand the manual over to a new employee and hope for the best. To be honest, most employees will not read the information unless you require them to do so.

Consider including an employee acknowledgment page in your manual. This page would include a brief statement and a place for the employee's signature and date to verify that the employee has read the manual, agrees to abide by the policies and understands the procedures.

The acknowledgment could read like this:

"I have read XYZ Company Policy and Procedure Manual. My signature below verifies that I understand company policies and procedures and that I agree to follow them."

Signed: __________________

Date: ____________________

Make this acknowledgment page detachable from the manual and keep the signed document in the employee's personnel file.

3. Harassment policy wording

A harassment prevention policy is an important part of a policy and procedure manual. However, your company should be careful in defining the behavior that violates the policy. Avoid focusing on an overly legal definition of what constitutes harassment.

Using a strict legal definition for harassment policy restricts an employer's ability to put a stop to inappropriate behavior before it goes any further. If your policy defines a "hostile work environment" in the same way the law does, then any policy violation of the policy will be a violation of the law.

Instead, you could define "harassment" as "unprofessional conduct that is based on sex, race, or national origin." With this wording, an inappropriate joke would violate company policy, not the law.

Also avoid limiting harassment prevention policies to those based on sexual harassment. Harassment complaints may also be based on race, religion, age, and other areas. Focus on allowing employees several avenues for reporting inappropriate behavior and on training supervisors how to respond to harassment complaints.

4. Rigid electronic communication policy

Many companies today face the security issue and waste of employee time that Internet and texting cause.

The National Labor Relations Board (NLRB) has determined that a rigid policy prohibiting the use of its electronic communication for any non-business purpose may violate union rights or "chill" union organizing, thereby violating the National Labor Relations Act.

Therefore, employers should not have a policy that entirely eliminates electronic communication for non-work-related purposes. Consult your attorney for suggested wordings of your policy statement.

5. Strict vacation policies

Be careful with "use it or lose it" vacation policies. Some states consider vacation and paid time off as a vested wage that cannot be taken away. Instead, consider a vacation policy that allows accrual up to a reasonable certain point, with no additional accrual allowed once that point has been reached.

The Labor Commission has stated that one year's worth of vacation is not reasonable. A policy that allows a maximum of 1.25 times the annual accrual is sufficient.

6. Medical leave policy

Under the Americans with Disabilities Act (ADA), employers may be required to permit an employee with a disability to take time off, if doing so will allow the employee to recover and then return to work. However, not many employers are aware that a policy imposing a maximum amount of time on this leave (such as three months) can cause legal problems.

The ADA requires a flexible leave policy that takes into consideration an evaluation of each individual case.

7. Deductions and reimbursements

Policies that state that salary advances or loans will be deducted from an employee's final paycheck violate some states' laws.

Employers should include a so-called "safe harbor" policy that requires exempt employees to notify the employer immediately if they believe illegal deductions -- such as for partial-day absences -- have been made from their salaries.

Also, employers commonly encourage employees to submit business expenses promptly by stating that failure to do so will result in no reimbursement. That policy violates some states' labor codes, however.

8. Overtime policy

Employers often wish to limit employee overtime, and they should feel free to define a workweek to limit unauthorized overtime. An employer may also specify in its policy that employees need authorization for overtime.

Under most states' labor laws, an employer may discipline an employee who works overtime without permission, but cannot refuse to pay an employee who has worked unauthorized overtime.

9. Meal and rest periods

Some states set out specific time standards for meal periods and work breaks, and employers should clearly summarize these standards in their manuals. When policies are worded, such that it is the employee's responsibility to take meal and rest periods, as described, and to notify supervisors if they do not take them, it reduces the employer's potential legal exposure.

10. Discipline policies and procedures

Be careful with detailed disciplinary procedures that have an initial verbal warning followed by multiple steps. They may work against you.

In certain cases, you may want to skip certain steps on a detailed discipline process. For example, an incident of violent behavior on the job may be too egregious to get just an initial verbal warning.

Instead, you can maintain consistency in disciplinary issues by specifying in the manual that violation of any company policy can lead to disciplinary measures up to, and including, termination of employment.

A manual not a contract

From a legal point of view, it is important to point out to your workers that the manual is not a contract and that it does not make promises about the length of employment at your company. It also is important to include in the document that it is not the final word on all company policies. State that the manual is subject to change and revision.

Here is a suggested statement:

This policy and procedure is neither an expressed nor an implied contract nor does it guarantee employment for any specific length of time. Although we hope we have a long-term employer/employee relationship, please be advised that either you or XYZ Company can end the relationship at any time -- with or without notice, with or without reason -- to the full extent allowed by law.

Labor unions

If any or all your company's employees are represented by a labor union, a collective bargaining agreement (CBA) between you and the union may limit your ability to modify your policy manual. Also the provisions of the union contract will apply when they are different from those described in your policy and procedure manual.

Here are some other areas of legal interest that could be included in your manual, depending on your type of business:

Affirmative Action

Alternative Work Arrangements

Annual Performance Review

Background Checks

Benefits Eligibility - Health & Welfare

Benefits - Retiree Medical

Child Sexual Abuse Reporting

Confidentiality of Business Information

Conflict of Interest

Consensual Relationships and Employment of Relatives

Corrective Action

Drug-Free Workplace

Emergency Procedures

Employee Records

Grievance Procedure,

Health & Safety

Holidays and Winter Break

Indemnification of Employees

Intellectual Property

Lobbying

Programs Involving Minors (Office of the General Counsel Website)

Research Misconduct and Other Policies Relating to Research

Retirement Plans

Separation of Employment

Smoking

Solicitation

Time Reporting for Hourly Staff and Student Employees

Travel

Unemployment Compensation

Weapons Policy

Weather

Your policy and procedure manual should be organized so that the content reflects your company's philosophy and mission statement -- including your communication, products, and service -- along with the added benefit of maintaining employee job satisfaction and morale.

Complying with your state and federal laws and regulations should be among the most basic functions of your organization. Even small businesses must comply with tax laws, and with both state and local zoning and licensing regulations.

Well-defined policies and procedures, along with clear records, can help you follow and maintain compliance with legal and regulatory requirements.

All employees need to learn and understand company policies and procedures and have ready access to a policy and procedure manual.

If the cost of producing and maintaining an up-to-date printed policy manual is a concern, there are other options. You can have printed copies available in designated areas at your place of business, and you can have updated copies available online.

If you do not have a lawyer to review your policy and procedure manual, here are some suggestions to help you find the right one for your business:

• Ask colleagues in your industry for recommendations.

• Inquire at your local Chamber of Commerce.

• Ask for names of business attorneys at your local professional associations.

• Contact your state bar association.

Once you get a few names to consider, ask for consultations. Some offices may charge a consultation fee, while others offer them free of charge.

Be ready to talk about your business and your needs in a clear way with key details. During the session, ask about fees for work, such as reviewing your policy and procedure manual, who will do the work, and how long the review might take.