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Is it dangerous to knowingly underreport your income to the IRS? We could argue about the definition of the word "dangerous" (maybe some people wouldn't mind lifting weights in the prison yard with guys named Crazy Pepe and Johnny No-Thumbs), but the entire question only becomes relevant if you're caught. If you get away with something, be it a flagrant act or just a mix of ignorance and neglect, it becomes harder to think of your actions as "risky." Ask the lifelong, chain-smoking drinker with the clear chest x-ray and the pristine liver if they regret their dangerous habits? Not likely. Consequence is the oxygen that reveals the flame of risky behavior and bad choices. Without consequence decision makers will believe they not only have great judgment, but that they also possess awesome psychic powers.

The Most Dangerous Manager

Let's face it—management decisions are often based on risk analysis and probability. Unfortunately, analysis like that can be terrifically faulty because so few people truly understand the governing laws of risk and occurrence. There's little in this world more dangerous than a decision maker who's unaware of the boundaries of his/her actual knowledge. Management choices become tragically unsound when the most basic rules of critical thinking or just everyday likelihood aren't known or employed. Do you choose to forego the cost of flood insurance because your region has gone without a bad storm for 10 years running or, conversely, do you skip flood insurance this year because the last three years have had record-breaking rainfall? The answer to that might depend on whether you believe in the myth of the hot hand. (Example: basketball fans cheer that the player with the supposed hot hand take the last second shot, incorrectly believing there's a higher percentage of success.) You will find that these "data-free" decisions dot the management landscape. Do you go out on a limb for a slow payer on a big commercial job because the individual has never once failed to make good on an invoice? Often, we release the order. But was his history alone a meaningful factor? You might see less risky choices if, after green-lighting the shipment, the manager had to report her choice to a room full of shareholders seeking an explanation for such a faith-based thumbs up.

More to today's point, many owners think that organizing their personnel policies in writing would be more trouble than its worth because they have a cozy group of friendly employees who just aren't likely to cause any big trouble. Doesn't that sound a little like an owner with a management hot hand? My first question to those owners would be, "Is your trouble-free personnel history relevant to choosing a new course of policy action?" I'd follow up by asking if their staff's own behaviors and the way they have reacted to different behaviors of others over the years (in an environment now brimming with new statutes, potentially new employees, ever-changing case law and continuing social upheaval) really plays any legitimate predictive role when making a choice to either maintain the casual policies of days gone by or replace those nonexistent written policies with a new comprehensive HR system?

Casual Policies Can Have Formal Consequences

Written personnel policies are like paid vacation; generally speaking, they are not a legal requirement of businesses. To be fair, there are a small number of companies who may not yet have a compelling reason to formalize their personnel policies.

Most management specialists, being the picky kill-joys that they are, would still call for documented HR guidelines, but perhaps some micro-organizations could skate by. To qualify (if there is such a thing), U.S. firms could have no more than 15 employees. Because of their smaller size, these firms would be exempt from certain sticky discrimination laws (Americans with Disabilities Act, The Family and Medical Leave Act, Title VII of the Civil Rights Act, etc.). However, there is more to it than just the technicality of staff size. Most experienced owners and consulting specialists would agree that 15 employees operating without any written policies are on the brink of anarchy. In fact, a mutiny policy might be in order!

From a practical standpoint, justification to keep policies unwritten and casual would have to include a trend of zero employee growth. Best bets for an ideal environment without waves would call for veteran workers only overseen by just one mature, calm and well-grounded owner. A utopian staff in these still waters would be all one gender, and these employees would have life circumstances that never called upon them for intervention or support. Does this sound likely? Finally, this Shangri-la would have no visitors, no politics, no Internet access, no e-mail, no thermostat, no variations in pay, no bereavement, no teacher conferences and a staff so mature and self-secure that no one would ever believe that favoritism could exist between humans. If you can't put this together, please start sharpening your pencils.

Beware Smaller Employers

Beware smaller employers, because even if you fit this bill and you steadfastly believe that organizing personnel policies would be more troubling than valuable, you might already have polluted your soil by issuing written policies without even knowing it. When it comes to HR policies, not much is worse than a mixed bag of outdated and possibly even contradictory communications. How could this happen? Employment-offer letters you've given out may have explained your vacation and sick leave policies. Other documents, like a posted memo that outlined pay procedures could be one of many culprits. With this inevitability, smaller employers would be well-advised to compile these communications into a brief handbook that could be given to every employee.

Why Have Written Policies?

Far too often, disbelieving business owners have hidden behind the nonsensical excuse that written policies could land a company in court and, therefore, must be avoided. Technically speaking, policies could infer that you offer lifelong contractual employment. They could also be dangerous if you enacted these policies and then applied them randomly or in a vindictive manner. If that is your plan, you are hereby ordered to stop reading this article and never again contemplate incorporating written policies into your organization! Silly, right? If we are being fair, it's like pointing out that using delivery trucks will bring you extra liability, especially if you intend to instruct your drivers to aim for crowded bus stops. Anything poorly planned and carelessly executed could be dangerous.

When putting together the reasons why any company should seriously consider making the move to a formal set of written human resource policies, an assumption must be made that these documents would be well-written, clear, concise and fair with no unintended contracts that might bind an organization. (A broad disclaimer repeated regularly within the documents will maximize your rights and eliminate this worry.) You should assume that they would be legal, regularly updated, comprehensive in scope and evenly applied; worded in such a way as to be strong, flexible and fully supportive of management's rights and objectives. Please remember that having great written policies is not only about having a stronger legal position when an employment relationship goes sour. Written policies are, first, a common language created to minimize misunderstandings, keep people informed and bring efficiency to human beings struggling to coexist peacefully. With those goals and ground rules established, they can offer these powerful advantages: