It’s important for businesses of all sizes to have handbooks or employee manuals to protect the business from litigation and to explain the values, policies, and procedures of the company. Whether you have one employee or ten thousand, it is vital to give your team a playbook by which to do their jobs. It’s equally important to make sure that the rules depicted in this playbook are consistently enforced across the whole company.

These are the five main benefits of developing a customized employee handbook for your small business:

1. Lets employees know what management expects of them.

Setting clear and correct expectations is one of the most important keys to success for any person-to-person relationship. In a good employee handbook, there is a comprehensive section on what management expects from employees.

The only way employees can perform at the level that’s expected of them per the required rules is if that level and those rules are specified.

For example, if your business day starts at 9 am but you want all employees to show up 15 minutes beforehand to get the business ready, this would be the perfect expectation to communicate in the handbook. You should also make sure to pay your employees for those 15 minutes.

It’s also important to specify the dates of pay and what periods they cover. Misunderstandings of pay dates, pay periods, and pay amounts are some of the most common mistakes that can be avoided by spelling this info out in the handbook.

2. Lets management know what they can expect from employees.

It is also important for management and co-workers to know what they can expect from employees. Every company is a little different in terms of standards of performance, but it’s worthwhile for management to think about what they believe good performance looks like.

On the flip side, it’s a good idea to outline a clear disciplinary policy in the handbook, so that if an employee isn’t meeting performance standards, they can be notified, given a chance to improve and be terminated if needed. A common structure for this is a verbal warning, followed by a written warning, and finally termination.

This type of progressive disciplinary policy protects the employer from lawsuits, including harassment claims, wrongful termination claims, and discrimination claims.

3. Lets employees know what the benefits and perks are.

Many employers, including startup employers, offer a variety of benefits and perks to their employees. The handbook is a good place to list what they are, who they are available to, and how to use them. For example, providing free coffee, a discounted MetroCard or a gym pass are all great benefits to list in an employee handbook.

When providing benefits, it’s important to plan for how employees using the benefits will affect the rest of the company. For example, perhaps you wouldn’t want everyone taking the same day off, or if someone wanted to use their vacation days, the company would require them to give 30 notice. This would go into the handbook.

4. Sets clear policies which protect the employer from claims.

It is critically important for the handbook to have clear and understandable policies that can be understood by a non-expert without a law degree. Certain policies in various states are mandatory to be included in the handbook, so make sure to ask your attorney what those are and to include them in the handbook if they apply to you.

5. Makes sure company values are clearly communicated.

Don’t underestimate the power of having and clearly communicating company values. Sure, some employees come to work to get a paycheck, but if you can have your team also believe and agree with your company’s values they will be happier, and you will be happier, and your company will do better. I advise my clients to carefully think about what values they want to embody and will embody, and then to put those in the handbook.

My advice to company management and founders is to make sure to live the values (at least at work) that you put in the employee handbook and to hold employees and management accountable if their behavior isn’t aligned with the company’s values.