Essential HR Policies: Creating a Disciplinary Policy for Your Small Business

​Hiring employees is often an exciting time for small businesses and nonprofits. But not every new hire will turn out to be a great fit for your organization. Perhaps an employee’s performance simply isn’t up to par. Or an employee commits a major violation of some company policy. Or maybe an employee keeps repeating the same relatively minor infraction over and over again (like spending a little too much time texting while working). Regardless of the size of your business, at some point, managing people means having some tough conversations.
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Perhaps you’ve already tried dropping not-so-subtle hints to get an employee back on track. When less formal measures don’t seem to be working, it’s time to turn to more formal disciplinary policies and procedures for addressing employee misconduct. Your employee disciplinary policy is not about becoming a stereotypical corporate overlord and ruining the collegial environment that makes working for a small businesses or nonprofit so appealing. Instead, having a formal disciplinary policy is all about maintaining your organization’s standards in a way that is fair and maintains morale, all without getting you and your company into legal trouble.

1. Outline Your Expectations and Establish Consequences
If you’ve been following along in our Essential HR Series, then you should already have policies in place letting employees know what is expected of them. After all, you can’t start handing out discipline if you haven’t first set expectations and defined what behaviors will be considered unacceptable. But once you’ve done that, it’s helpful for your employees to know the potential consequences of their actions before they violate a rule or policy.

Of course, the discipline you issue for any given infraction should be proportionate to the violation. An employee who shows up a few minutes late might only warrant a verbal or written warning, but an employee discovered drinking on the job may warrant a more serious response. If you’ve outlined for your employees what behaviors are unacceptable, then you can set some standards for how your business or nonprofit will respond to such behaviors.

2. Be Consistent in Applying the Disciplinary Policy
One of the fastest ways to land your business or nonprofit into legal trouble over an employment action is to treat two similarly situated employees differently. This is why it’s so important to have an established policy and follow it every single time. For instance, if your employee handbook says that employees will be sent home for violating the company’s dress code, then you can’t cut John some slack while sending Susie home for the same violation.

Your disciplinary policy must also be flexible enough to address the seriousness of any given situation while also ensuring fair treatment. A first time dress code violation typically doesn’t warrant a full-blown HR investigation, but a sexual harassment complaint certainly does. And while you want to treat similarly-situated employees the same, unfortunately, the facts and circumstances surrounding a given disciplinary issue may sometimes warrant a different outcome. Your policy should reserve your company’s right to issue a more or less severe penalty when the circumstances warrant. You should also reserve your organization’s right to revise the policy at any time. This is especially important for small, but growing organizations that don’t yet know what problems growth might present.

3. Document, Document, Document!
While a well thought out policy is a great start (and will certainly help to defend your decisions if a disgruntled former employee were to file a complaint against you), in real life, policies are often overlooked in the heat of the moment. This is why it’s so important that you train supervisors to document their actions when dealing with employee disciplinary issues. For example, a typical progressive discipline policy might call for a verbal warning the first time an employee is late to work. Such a policy would then progress to a written warning if the employee is late again. But what will you do when an employee complains that their supervisor skipped the verbal warning in their case and is just being especially hard on them, while simultaneously letting their other co-workers get away with similar tardiness? Did the supervisor document the fact that they had previously given this employee a verbal warning?

The reminder to document everything also applies to employee performance. Even if an employee doesn’t explicitly violate any rules of your workplace, they might still be underperforming in other ways. Regular performance reviews give employees the feedback they need to do their jobs well while also helping you evaluate what your business’s talent needs are. Just be careful that your employment decisions aren’t contradicted by your employee’s performance reviews. It’s all too easy (and human) to write up a generic performance review and ignore performance issues because you don’t want to have the uncomfortable conversation. But when you finally reach a breaking point and decide that the employee in question just isn’t working out, the personnel file doesn’t support your decision. This often leads to accusations that the employee must have been fired for some other, more nefarious reason such as discrimination.  

4. Maintain Employment at Will
Finally, your disciplinary policies should reiterate that employment with your business or nonprofit is “at will,” meaning both the organization and the employee can end the employment relationship at any time. The disciplinary policy does not create an employment contract entitling an employee to remain employed so long as they do just enough to avoid the ultimate penalty of termination.

Workplace cultures and expectations can vary so much from one workplace to the next, even for two workplaces in the same industry. Because of this, you really need to think through the disciplinary situations that might come up in your unique workplace and how you plan to deal with them in a way that is fair to both you and your employees. 

If you have questions or concerns about your employee disciplinary policies
​or how to handle instances of workplace misconduct:

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