Small business policy, the eyeroll that may save you a headache.

This definition and outline of common policies may help you understand how having effective policies can help your business in the long run. But first, what is a policy?

I didn’t know the answer for this for way longer than should be acceptable during my first years as an entrepreneur. Given, I was only 20 years old, so I didn’t know a lot of things. Let’s set you up for success by understanding this key business term and how it may affect you.

Briefly, a policy is a principle, rule, or plan of action adopted by a government, institution, or individual to guide decisions and achieve desired outcomes. Policy is where a handshake understanding morphs into the written word. The words become the reference, which transmutes into the culture, that defines the business.

Harvard Law School states Policymaking thus refers not only to the end result of policies, but more generally to the analysis of […] decisions and the way in which different groups attempt to […] act in a particular way. We gather that policy is important to business as it is the cornerstone of your culture, what you stand for but possibly more importantly, what you won’t stand for.

A popular spot for business policy is in the employee handbook, that binder that we all most certainly read, right boss? Okay, yes policies are an eyeroll. If only there was some business owner turned legal nerd who could help (smash the contact button)! Here’s some top reasons why policies are important and how they can help protect you, your business, and your employees in the long run.

1)    Legal compliance. Yes, you need it. There are regulations (we cover this in another post) that businesses must adhere to or they’ll be suitable to fines out the wazoo. You don’t want a lawsuit, so you need the binder.

2)    Fairness. Having well defined policies implement clear cut pay, raise, and promotion guidelines, ensuring that employees feel confident in what to expect from their careers. It may help resolve disputes among coworkers or negate them by providing no-tolerance codes and codes of conduct.

3)    Protection. For example, in retail, avoid potential awkwardness if a customer comes to you asking for a refund/return 60 days after purchase. Simply point to your policies and the customer will know what to expect.

Any business can avoid headaches or worse by having clearly stated policies that establish expectations upfront to their employees and customer base. Additionally, policies can help you regulate yourself, ensuring you meet your highest standard of practice even on days when you want to call it in.

FUN FACT: Businesses can really take the reigns on their policies. In this post on yourtango, they highlight a company that forbid its employees from riding in hot hair balloons or skydiving. Since the company paid for their insurance, they didn't want the employees engaging in risky behavior. I personally don't think workplace policies have a place when you're clocked out, but this is an interesting one. See, they can be exciting right?