5 Reasons Startups Need to Have an Employee Handbook

Founder, robot with feelings. From planet Aiur.

By defining policies, procedures, and strategies, a good employee handbook for startups ensures that your company grows and runs like a finely-tuned machine.

Running a startup can be extremely difficult, especially if it’s still in the early stages of growth.

You have to think about the relevant laws and regulations, the financial aspects of the business, hiring and keeping top talents, while showing everyone the ropes, and all the other challenges needed for the company to run smoothly—all while trying to get your company to the top.

You have to admit, it can be a lot to handle.

But you can make this process a lot easier if you create an employee handbook.

By defining policies, procedures and strategies, a good employee handbook will ensure that your startup runs like a finely-tuned machine, leaving you more time to deal with management tasks.

In this post, we gathered five good reasons why creating an employee handbook is a must if you want to have a successful and organized company. Let’s dive in!

Complying With Labor Laws

In the beginning, most startups will not immediately start thinking about creating an employee handbook.

After all, they have more important things on their minds. They need to put together a sellable product, work on developing the company, create a website, and take care of the marketing, among other things.

But when the number of employees reaches double digits and startups start hiring more talent, they should no longer postpone this vital task if they want to effectively welcome new team members and prevent potential legal issues from arising.

For example, after the pandemic took hold, the Family and Medical Leave Act extended its policies.

Even small companies with less than 50 workers, previously exempt from the FMLA, now had to provide paid leave to the employees under certain circumstances related to COVID-19.

Without a handbook in place, policies and changes like these become much more difficult to communicate throughout the company, meaning workers may not get a chance to exercise their legal rights.

And that can get your company in trouble with the law.

So if you want your startup to operate legally, you should make sure to include these policies in your employee handbook in order to avoid potential litigation.

Also, an employee handbook should leave no room for doubt when it comes to other vital parts of employment regulations, such as paid time off and leave of absence policies, benefits policies, equal opportunities, and non-discrimination policies.

This is important because many startups simply wing it when it comes to employment rules and regulations.

By offering one set of paid time off days and health insurance to the one hire, and an entirely different package to another, they pave the way for long-term employee dissatisfaction, lower productivity, higher turnover, and in some cases, discrimination.

It’s a common misconception that employee handbooks are a list of tedious rules, especially when it comes to policies.

But startups, often regarded as more forward-thinking companies, can set the rules of play in a more engaging way, as the example from Element Three shows.

Example from Element Three
Source: Element Three

Element Three is a marketing agency, and their expertise is clearly visible from their employee handbook.

Visually appealing and creatively informative, it recaps all the major policies and procedures, not leaving employees in the dark when it comes to their rights and expectations.

By outlining employment rules and regulations, employee handbooks such as this ensure that all employees have equal opportunities and are employed under similar conditions.

A well-written employee handbook sets consistent policies for your startup and ensures that you are a fair employer, treat all your employees equally, and offer them a similar package of benefits.

To conclude, conflicts, misunderstandings, and lawsuits can be very unpleasant and cost your startup financially, not to mention the damage it can do to your reputation.

That is why it is essential to create an employee handbook, preferably at the beginning, to minimize the risk of liability.

Supporting Startup Growth

With the help of an employee handbook, you will also be able to scale and support your startup's growth in a more straightforward and consistent way. Let's see how.

Suppose you are growing fast and don’t have an employee handbook in place. In that case, all the critical strategies and procedures may be passed down from employee to employee in a way that resembles a game of Broken Telephone.

Essential questions and issues that are crucial for the development of the startup can become open to interpretation and distorted by being passed around, thus leaving the doors open for critical errors.

Writing down all the essential information in the employee handbook will ensure there is no room for misinterpretation and that all the employees are on the same page when it comes to the startup's strategies and procedures.

The social advertising platform Smartly does a great job with this.

Their employees receive a beautifully designed handbook that thoroughly explains what the startup does, how they approach customers, build their product, and even scale their company.

Smartly - social advertising platform
Source: Smartly

By giving their new hires all the key facts from the start, they ensure that the possibility of making mistakes is kept to a minimum.

With a large number of mistakes taken out of the equation, more resources and time can be directed into company growth, instead of damage control.

The truth is, when we start working in a new company, we are usually bombed with a lot of information that we need to remember from the beginning.

Some new hires struggle to understand how a startup works, what their role is in the company, and what is expected of them.

With an employee handbook that will pass on all that information from the start, they will understand their roles and assignments easily and become integral members of the team in no time.

Startups are usually scaling and growing very quickly, and the strategies outlined in the employee handbooks will enable them to face the challenges within the company more rapidly and efficiently.

Finally, just a quick glance at the company’s values and principles will give startups more confidence in making decisions and ensure that they are on the right track.

All in all, a good employee handbook can serve as an excellent reference point for addressing challenges in everyday work endeavors, thus eliminating a lot of doubt and possibility of error and making more room for unrestricted growth.

Capturing Operational Knowledge

Startups are known to expand rapidly and hire a lot along the way.

With the growth of the business and the workforce, startup founders need to quickly develop their procedures and standardize their business model to cope with all the challenges they are facing.

To put it differently, to ensure that your startup runs smoothly, it would be advisable to capture operational knowledge in the employee handbook.

Operational knowledge is basically a guide for the daily operations and most frequently repeated tasks. It may include office policies, emergency procedures, and the hierarchy and contacts of the employees.

It can also describe the practices in case of a data breach, define how to approach clients, use company technology, and claim payment for products and services.

In short, it contains workflows and processes so that employees know what they need to do, how they need to do it, when they need to do it, and who they can turn to for help.

The importance of having this kind of knowledge summed up in the employee handbook cannot be stressed enough.

The benefits of systemizing operational knowledge
Source: Archbee.com

First, it can be great for the onboarding process and help startups to train and retain top talents.

Instead of repeating the same procedure over and over again to each new employee, they can simply refer them to the employee manual.

Secondly, it also helps startups to centralize all their processes and procedures, where everyone can find them when they need them.

In the hustle and bustle of developing a startup, important documentation can quickly become lost.

Therefore, it would be good to store it in one place that everyone can go to if they have questions without having to pull someone else by the sleeve for additional explanations.

That is why many startups use documentation software for building their operational knowledge libraries.

For example, our own software, Archbee, lets you store all your documentation so every employee can find it in no time.

Archbee Employee Handbook
Source: Archbee.com

With Archbee, all the important knowledge will be published online and easily accessible at all times, so your employees will be able to consult it in their day-to-day tasks.

A big plus is that you can quickly edit and update all of your documents, so they are always relevant.

Remember, putting operational knowledge in one place can help your startup streamline its systems and procedures. So make sure to feature it in your employee handbook.

Defining Your Startup Culture

A good employee handbook can genuinely wear many hats–with all that’s been said so far, it can also help you build a great culture in your workplace environment.

Many startups don’t even consider creating an employee handbook until they have about 25 employees, which is quite understandable, as it takes time to become profitable and find its place in the market.

With priorities elsewhere, it is easy to postpone creating the company’s manual for some less hectic future time.

But it could actually be a good practice to start drafting your employee handbook from the start, as you will be able to define what kind of company you want to be, where you want to go, and what type of culture you want to cultivate in your workplace more clearly.

This will allow you to see your business from a different perspective and perhaps redefine areas like your mission, vision, values, core principles, goals, and your definition of success.

However, suppose you start with this as soon as possible, preferably from the beginning.

In that case, you will notice that your goals for the future will come into focus, and you will be able to understand the direction of your business better.

This, in turn, will enable you to convey it to your current and future employees.

Let’s look at an excellent example from Admind to explain this further.

Excellent example from Admind
Source: Admind

Their culture handbook is a treasure trove of inspiring practices on how you can quickly outline your company’s culture so everyone involved, from startup founders to new hires, can benefit from it.

With outstanding illustrations and clear statements of the company’s mission, vision, and principles, it gives the employees a better understanding of what the company stands for and what kind of culture it hopes to create.

Skillfully crafted culture manuals like this also inspire employees to align mindsets and actions in order to work towards a common goal, which shouldn’t be underestimated, knowing its positive impact on employees' productivity.

So if your startup is growing fast and hiring at speed, capturing your company culture in an employee handbook can go a long way in steering your new and existing employees in the common direction and boosting their performance.

And that is an excellent way to create a workplace culture that fosters a sense of belonging and where employees take great pride in being a part of the company.

Building Your Startup Brand

If you are still not convinced that you should roll up your sleeves and start creating an employee handbook for your startup, maybe you will change your mind when you discover that it could be great for your brand.

If you create a great company handbook and share it with the world, it will quickly build your brand presence in ways you may not have even imagined.

First, although its primary purpose is internal, an employee handbook can be a great helping hand in the hiring process by telling the story of how outstanding your company is.

We all know how hard it is nowadays to attract and keep top talents.

If you publish your beautifully-designed and well-thought-out employee handbook online, you will give your potential new hires a glimpse of your culture and working environment.

By sharing your values and mission statements with them, you will be able to persuade them more effectively to come and work for you, and they might even get excited about it even before the job interview.

As an employee handbook covers a lot of policies and procedures, from the dress code to health insurance, your potential new hires will also get the notion that your startup is highly professional and well-organized, and that it values transparency.

That will inevitably be good for your reputation.

Just look at Trello, the work management tool, and how they used their publicly available employee handbook to build a brand presence.

How Trello use their publicly available employee handbook to build a brand presence
Source: Trello

By putting all the relevant information out in the open, potential new hires will immediately get the impression that Trello is a highly professional company and an excellent potential employer.

Furthermore, by hosting the employee handbook on their own platform, they basically showed their work management tool in action. That is indeed a clever way to use an employee handbook to your advantage.

Many specialized online platforms often write posts about employee handbooks and the best examples in the industry.

And if your employee handbook finds its place among the select few, you will be the talk of the town, get plenty of leads, attract new clients, thus building your brand presence.

Who knows, you may even end up on our list of best employee handbooks in the industry.

Based on everything we’ve said so far, it’s clear that you can significantly build your brand on the market by putting your employee handbook online.

As it can have multiple positive effects when it comes to branding your startup, it’s worth the effort to put some thought into creating your employee handbook from the start.


In this post, we’ve described the five biggest reasons you should create an employee handbook for your startup.

From protecting your growing business legally and helping you to scale it more easily, through capturing all your operation knowledge in one place, to creating an exceptional culture and brand presence, the employee handbook is a powerful weapon that protects and promotes your startup, as well as enables it to grow faster.

So if you haven’t been convinced that you need an employee handbook for your startup yet, we hope this post will do its part in changing your mind.


Frequently Asked Questions

Why is it important for startups to have an employee handbook?
Expand FAQ
An employee handbook is essential for startups because it helps define policies, procedures and strategies to ensure smooth operations. It helps maintain compliance with labor laws by clearly stating employment rules, thus preventing possible legal issues. Also, it supports company growth by inhibiting miscommunication and ambiguities.
How does an employee handbook support startup growth?
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An employee handbook supports startup growth by minimizing misunderstandings and promoting consistency throughout the company. Articulating strategies and procedures in the handbook prevents distortions that may be caused by word-of-mouth transmission of important information, providing employees with a clear understanding of the company's strategies.
What is the role of operational knowledge in the employee handbook?
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Operational knowledge guides the daily operations and frequently repeated tasks. It outlines office policies, emergency procedures, hierarchy structures, and contact lists. It lays out practices in case of a data breach, use of company technology, and claim payment procedures. Capturing this knowledge in the employee handbook ensures that key workflows and processes are well-defined and accessible to all employees.
How does an employee handbook define startup culture?
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An employee handbook helps build workplace culture by clearly outlining the company's mission, vision, values, core principles, goals, and definitions of success. It sets a clear direction for current and future employees. A well-crafted handbook also fosters a sense of belonging and pride among employees.
How does an employee handbook build a startup's brand?
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By making an employee handbook publicly available, a startup demonstrates its professionalism and transparency. This can attract potential hires, promote the company's culture, and boost its brand presence. The handbook could also be used to display the company's offerings or services, serving as an effective branding tool.

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