Three Key Workplace Policies that Startups Can’t Afford to Ignore

6/3/14Follow @metricstream

Most startups are focused on getting their business off the ground. As a result, they usually delay policy development until a later date. But here’s why it’s important to draft and implement certain policies right at the start of your business: Policies pre-empt and prevent misunderstandings between employees and employers about obligations and behavior at the workplace. More importantly, they help protect a business against lawsuits and employee disputes which could otherwise wipe out a startup before it has had a chance to take off.

Here are a few key policies that startups would do well to focus on:

Paid Time-Off (PTO)

Many startups provide a consolidated bank of vacation days and sick days that employees can draw from. Other startups offer an unlimited time-off system. Whatever your approach, remember that a time-off system is only as effective as the policy surrounding it.

In one of the companies I worked for, a PTO policy wasn’t implemented until the business was ten years old. By then, significant expenses resulting from accrued vacation had built up. So, even though the PTO policy was eventually established, a number of people were immediately out of compliance since they had accrued more time off than the policy maximum. Addressing these exceptions took considerable time and company resources.

To avoid such mishaps, proactively draft a time-off policy with clear requirements. For instance, in a PTO policy, sick employees should understand that it’s best for them to stay away from work and avoid infecting other people, rather than come into work just because they want to save on their sick days.

Create a chain of approval. So, if employees want time off for a vacation, your policy might require them to get the approval of their team lead as well as their local manager. If there are times of the year when all hands are needed on deck, create a policy that establishes “freeze vacation” periods.

Educate managers to counsel employees who misuse the time-off policy.

Sexual Harassment and Equal Opportunity Policies

In 2013, the Equal Employment Opportunity Commission (EEOC) received over 7,200 charges of sexual harassment. Meanwhile, in a HuffPost/YouGov survey, 32 percent of respondents reported having been harassed by a boss/superior or co-worker.

Instances of workplace sexual harassment or even discrimination due to race, religion, disability, and other factors can not only result in expensive lawsuits, but also severely damage the trust that other employees and customers have in your business. That’s why it’s important to establish policies around sexual harassment and discrimination, up front.

Make sure that these policies clearly define what constitutes sexual harassment and discrimination. Provide clear, real-life examples of the same. For instance, if an employee repeatedly asks a coworker out on a date despite being refused multiple times, it could be construed as sexual harassment. Emphasize zero tolerance for these behaviors.

Encourage employees to raise complaints if they are harassed. Clearly describe in your policy how they should go about it.

More importantly, walk the talk by translating policies into procedures. At one of the companies I worked for, an employee raised a case of sexual harassment against her manager as well as her department head and others. Despite there being a sexual harassment policy in place, appropriate action was not initiated in response to her claim in a timely manner.

So, make sure to train all managers on their roles and responsibilities in preventing as well as responding to sexual harassment or discrimination. Ensure prompt and impartial investigations and action.

Expenses

In a startup, cash is always scarce. To make sure that it isn’t unnecessarily wasted, implement expense policies that cover things like internet and cell phone usage, travel, hotels, meals, and entertainment.

Netflix is known for its unusual expense policy which simply asks employees to “act in Netflix’s best interests.” Depending on the culture/ philosophy of your startup, you might implement a similar policy, or perhaps go further, and outline what exact expenses will be covered by your policy, and what won’t.

A 2012 Robert Half Management Resources survey found that CFOs receive many unusual items on expense reports, including cosmetic surgery, lottery tickets, pet food, and even teepees! To avoid such out-of-policy claims, make sure that there’s no ambiguity in your expense policies. At the same time, keep the policies flexible depending on each employee’s roles and responsibilities. For instance, a sales representative could be allowed to spend company resources on taking prospective buyers out to lunch.

Set clear deadlines for submitting expense claims. Reimburse these claims in a timely manner. And ensure that your policy isn’t a maze of complicated processes. Employees shouldn’t have to read a 25-page document of how to submit travel expenses. Keep things simple and straightforward.

Finally, invest in a system that will help you enforce expense policies effectively, and also automate and streamline expense tracking. A cloud-based system is usually cost-effective to implement, and has the flexibility to adapt to changes and growth in your startup. One of the most popular options is Concur.

Policy Management Best Practices

Here are a few other tips to keep in mind while implementing your policies:

—Create a common, central repository of all policies so that employees can easily access them whenever needed.

—Get the help of a lawyer to properly word your policy documents and to make sure that all relevant laws/regulations are covered.

—Don’t just have your policies exist on paper—communicate them to all employees through effective training programs.

—Implement surveys and certifications to make sure that employees have read and understood the policies.

—Don’t let policies become outdated—periodically review and update them.

—Simplify and accelerate policy development by using pre-existing policy templates like this one from Trustmark National Bank, or this employee handbook from Small Business Notes, or these sample employee policies from TotallyLocalHR.com. But make sure to customize these policies to suit your business model, instead of copying them verbatim.

At the end of the day, it’s important to strike a balance between too many and too few policies. Too many policies, especially in a startup, will only create additional administrative complexities. Too few will open your organization to multiple legal and compliance risks. So identify and focus on those policy areas that are important to your organization. More importantly, hire employees who will behave in a way that’s consistent with your company culture, and who will act in your company’s best interests without needing strict compliance monitoring.

Shellye Archambeau is CEO of MetricStream, a Palo Alto, CA-based company offering governance, risk, compliance, and quality management solutions to enterprises in the pharmaceutical, medical device, high tech manufacturing, energy, financial services, healthcare, manufacturing, food and beverage, and automotive industries. Follow @metricstream

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