Why You Need to Formalize Workplace Policies

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You probably tell your financial planning clients to develop directives such as healthcare directives, wills and powers of attorney before they actually need to rely on these planning documents. Why? Because they have the time to objectively evaluate their options and plan before the situation occurs. You want to reduce your clients’ stress and help them avoid making costly and foolish decisions.

These are the same reasons why employers should decide what policies should be formalized for team members. I’ve been asked to help clear-up misunderstandings among team members where an existing policy would have avoided the whole mess. Here are some examples:

Situation No. 1: January through April is the busiest time of year for one particular planning firm, so the owners tell the new hire that he cannot take a vacation during this time. The new employee finds out that other employees don’t know about this new policy, and he sees one of the business owners taking a vacation in March.

Situation No. 2: An employee tells the firm owners that she is pregnant.  The firm wants to offer this valued and longtime employee some paid time off and wants the employee to return to work after her child is born.    The firm gives the employee four weeks of paid time off, and later the employee decides not to return to work. A male employee requests four weeks’ of paid time off to care for his ailing father. The firm denies the time off.

How Could Policies Have Saved the Financial Planning Firm Money?

Situation No. 1:  Hopefully the new employee won’t leave after seeing how policies are communicated and followed through. If the new employee leaves there is the cost of hiring again. Having a written policy defining how vacation is earned and taken would have easily resolved this. The employee would feel she had joined a professional, quality organization.

Situation No. 2: The firm lost an employee and has paid out a month of wages. The firm could potentially lose another employee by denying leave. The second employee could leave to care for his father, file a discrimination complaint, and potentially receive unemployment benefits. A policy covering leaves of absence can define the amount of unpaid or paid leave. You can look at options to help an employee get benefits during the leave (accrued vacation, supplemental insurance paid by employee or accrued sick or personal time, for example), and/or also look at how to reward an employee for returning to work after a leave of absence.

Mary Dunlap, CFP®
Mary Dunlap Consulting
Pottstown, Pa.

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