Employee Handbook, Department Policy Manuals Deserve A Dealership’s Real Effort And Attention

Employee Handbook

Don’t make the mistake of just copying from the Internet; follow these steps to craft an effective guide.


In one of my toughest cases defending a car dealership, my client was asked during the lawsuit to produce its policies and procedures manual. The dealer proudly presented me with a manual several inches thick. “Policy Manual of XYZ Finance” appeared on the front. So far, so good, right? Well, you really can’t judge a book by its cover.

As I read further, I noticed that the front cover was the last time “XYZ Finance” appeared. Instead, the rest of the content referred to “ABC Finance,” the manual’s apparent author. When I confronted my client with this regrettable fact, he admitted that he pilfered the manual when leaving an old job and meekly asked, “That’s not a problem, is it?” After spending lots of money of attorney fees and a less-than-favorable settlement, he learned the hard way that it surely was a problem.

Car dealers are constantly lectured about the importance of strong written policies and procedures for every department. Having and adhering to such a manual demonstrates an intent to do business the right way and allows the dealer to argue that any failure in following these policies was an unintentional mistake, not deliberate disregard for the law.

It’s easy enough for lawyers, compliance experts and consultants to preach – but it’s a lot harder for dealers to actually accomplish. After all, they are in the business of selling cars, not writing policy manuals. However, I’ve read and drafted lots of them, and here are my suggestions on how to get started.

Start With Reading Manuals

At the outset, it is important to set goals for the document and its intended audience. An employee handbook, for instance, covers the employer’s policies on topics such as vacation, sick time, benefits available, standards of conduct, and other general topics relevant to all employees. This is very different than a departmental manual, which provides employees with detailed information about the rules and expectations of that department.

Ideally, the dealership would hire an expert to create an effective policy manual. Some lawyers and compliance firms specialize in this practice, and you can find them by attending an industry trade show or browsing trade publications. These experts will ask the right questions, learn how your dealership operates, and craft a manual that fits your business while also addressing the important legal and compliance issues.

Having this done professionally is not cheap, though. For a simple policy manual for a single small store, it may run you $2,500 or more. Multi-location dealerships needing a more detailed manual may shell out more than $5,000. Not every dealer is in a position to make such an investment.

Therefore, I bet many of the folks reading this article have done what my client did. They either copied another dealership’s policy manual or became Internet lawyers and searched Google until they found something “close enough.” In truth, there is plenty of good content online. The trick is to use it as a starting point – not just slap your business’ name on it and think you are finished.

Read through a few manuals to see how they are organized and what topics they cover. Then, ask yourself how well they fit your dealership and adjust wherever necessary. Once a solid draft is complete, share it with managers or other leaders in the dealership and learn whether they agree it comes close to the realities of your business.

Finally, bounce your draft manual off a consultant, lawyer or other professional before printing it and giving it to your staff. It’s much cheaper to have a lawyer proofread and make suggestions in certain areas than to have him or her start from scratch. You’ll still gain an attorney’s perspective and guidance on ensuring the manual doesn’t fly in the face of relevant laws.

How Long Should It Be?

There is a good debate going among compliance experts about whether more is better or less is more, when it comes to policy manuals. I tend to lean toward the “less is more” approach.

While there is no magic number for dealership manuals and handbooks, 20 to 30 pages typically cover sufficient detail while still being manageable. That’s just a guideline, though, because the “right” length truly depends on the complexities in how your dealership is run. Your manual should be thorough enough to cover all relevant business processes, but not so long that an employee can’t possibly grasp all the content.

I’ve seen more than one witness tripped up during a deposition or trial examination because the manual simply had provided too much content to recall. Remember, the manual should contain “best practice” guidelines, not intricate instructions covering every last duty an employee may have. Those are job descriptions, which is a topic for another day.

What To Include

You must strike a balance between practicality and the law. For example, it’s insufficient to simply have the manual proclaim, “We will follow federal law XYZ.” That’s a worthy aspiration, but it gives the reader no specific direction. Your manual must provide instructions on how to apply the law to day-to-day business operations.

Instead, I prefer an approach more like: “We strive to follow the federal law XYZ in our work environment. To do this, we have our employees adhere to the following rules regarding communicating with customers …”

I’ve seen lots of unfortunate examples when employers tried to handle everything in one document, which is confusing. The smart course of action is to have an overall employee handbook and then more specialized departmental manuals, which can vary greatly in length based on the size of the department and areas of responsibility.

Your employees are a key resource in this exercise. Ask them for guidance on how their department is run. Create flow charts that follow your various processes. Only then should you attempt to document each of the stops along the path. I’ve seen many dealerships make the mistake of overvaluing the contribution of outside consultants and undervaluing their internal subject matter experts, with unfortunate results.

Training And Testing

Your policies and procedures manual should work in concert with training and testing efforts. It isn’t enough to publish the material or put it on a shelf. A wise dealer will implement the manual through training and make sure short tests are administered for employees to demonstrate their grasp of the information.

These tests should be given at least once a year and then filed in each employee’s personnel folder. They don’t have to be elaborate; 10 or 15 questions can be enough to reveal if an employee has put in the effort to review the manual.

A dealership wants to make a powerful statement to employees that these policies are part of your company culture. In turn, you’ll send the same message to lawyers or regulators who could knock on your door in the future.