How to Create Your Office Policy Manual

All brokers want their real estate companies to run smoothly. That’s why an office manual documenting your policies and procedures is essential. It should be a people-friendly guidebook that can be used to find answers to questions or conflicts that arise at your company.

“An office policy manual should define how the organization plans to conduct business. It often outlines steps or principles that the company would use to make decisions or take action,” says Sharlyn Lauby, president of ITM Group Inc., a South Florida–based consulting firm that develops workplace training solutions.

Here are topics to think about before delving into writing a policy manual.

The differences between an employee handbook and a policy manual:

An employee handbook is a communications document from the company to the employee. It sets expectations around what both the company and employee can expect from one another. It should also describe the employer’s legal obligations and employees’ rights.

On the other hand, a policies and procedures manual is a reference tool for all parties involved, especially managers and supervisors, according to the Society for Human Resource Management (SHRM). The document should contain references to federal and state laws that correlate with the policies, which makes it more appropriate for the real estate industry than an employee handbook.

What a policy manual should do:

• Give a clear understanding of the relationships between broker, management, sales associates, and employees.
• Clearly define the company’s administrative functions and sales functions.
• Set guidelines to anticipate and resolve problems before they happen.
• Build confidence that both managers and sales associates understand industry and company rules.
• Forbid favoritism among colleagues, since everyone must operate within the framework of the manual's predetermined rules and guidelines.
• Provide stability and permit staff to function effectively in the absence of management.

(Source: National Association of REALTORS®)

Who should be involved in the manual creation:

Management staff and heads of departments such as operations, sales, marketing, IT, legal, and human resources should be part of the discussion, says Leon J. Milobar, director of the U.S. Small Business Administration’s Nebraska district office in Omaha. But you should also solicit input from agents and staff.

“Every department has a vested interest in making the human capital aspect of the business perform as effectively and efficiently as possible. What we do day-to-day crosses so many aspects of the business,” Milobar says. He also suggests contacting SHRM and the National Association of REALTORS® for advice. SHRM summarizes the guidelines and issues that need to be addressed. Lauby adds that those in the company who have first-hand knowledge of its policies are best to help create the manual. Putting policies on paper when they don’t match what actually happens in the company is a big mistake.

Important items the manual should include:

Your manual should become a road map for new hires, longer-term agents, and yourself as the broker-owner. It can help new agents understand what your company is all about, your goals, and what is expected of them. You should include your mission statement and business philosophy along with the company’s background, achievements, mergers, and other business information. A list of services, the company’s target markets, and your marketing plan could also be in the manual.

Milobar says other important aspects to cover in your manual relate to real estate laws, the onboarding of new agents, the Code of Ethics, disclosure (errors and omission), conflicts of interest, discrimination, client representation, transaction security, IT security, sexual harassment, confidentiality, and benefits. “Think of all of the areas where an event might happen and damages occur,” he says.

Specific topics to include in the policy manual:

• Cybersecurity and other technology issues. Any business should adopt a computer usage, electronic communications, and social media policy, says Tara Stingley, law partner at Cline Williams Wright Johnson & Oldfather LLP, in Lincoln, Neb. “The policy should establish clear, written terms of use and privacy policies for all social media sites, services, and applications,” she says.
  
  Your policy, which should be tailored to your brokerage, should consider your company culture and the degree of confidentiality your business requires. It should also extend to your social media platforms, Stingley adds. Those policies should make it clear that it is not intended to preclude or dissuade employees or independent contractors from engaging in activities protected by state or federal law, including the National Labor Relations Act. She suggests working with your human resources department or legal counsel to ensure your policies are compliant with applicable law.
  
  Make sure your manual outlines policies for appropriate computer and software use, including steps employees or agents should take to secure electronic data. This is especially important regarding personally identifiable information you collect from clients.
  
  Many real estate companies are allowing agents to operate on their personal mobile devices. But this could call into question company control of client information, IT security, and issues with system compatibility, says Milobar. Talk with your lawyer and an IT company specialist who understand laws and technology for securing personally identifiable information.
• Advertising. Milobar says that your manual should explain rules regarding advertising, which include signage, promotional language, open house ads, and more. Several states have regulations specific to real estate teams, so be sure to spell out those statutes and rules.
• What to leave out. The U.S. Equal Employment Opportunity Commission has a list of prohibited employment policies and practices that should be taken into consideration when writing a policy manual. Tread carefully with topics such as dress code, discipline and discharge, and pay and benefits. Of course, it’s also illegal to discriminate against personnel based on race, color, religion, sex (including gender identity, sexual orientation, and pregnancy), national origin, age, disability, or genetic information.
   

Even if sales associates are independent contractors, why should there be a policy manual?

There is a contract between the company and the independent agent, Milobar says, and the manual should outline the relationship between the two entities. It should explain procedures, expectations, ethics policies, conflict of interest, security, and use of materials. Think of policies that help establish the company brand and provide everyone who works there with a set of common values.

Once you have drafted the policy manual, it must be reviewed by an attorney who understands human resource law. Lauby says that companies can purchase policy management software that will walk them through the steps. Software programs have templates you can customize to fit your operations.

How should it look?

An office manual needs to be easily accessible and readable. You might consider allowing a period of time for agents or employees to review the draft manual so they can ask questions. That way, changes or edits can be addressed before the manual is finalized.

“Organizations need to be careful not to ‘over-policy’ their business,” Lauby says. “I agree that some policies are necessary and helpful. But too many policies can burden the business. And the minute the company starts ignoring one policy, the rest can go up for grabs. So before implementing a policy, the company needs to ask the question, ‘Do we really need a policy for this?’”

Who should get the manual?

Once it passes the legal review, the published manual should be distributed to everyone associated with your company who has a need to know the policies. The method of distribution is going to be contingent on the office. It might make sense to distribute an electronic copy while keeping printed copies in the office, says Lauby. Let agents and staff know where to find it online or on the company’s intranet. Make sure that every new agent or employee has his or her own copy, and require staff to sign a statement acknowledging they have read and understand the manual.

How often should a manual be updated?

You must commit to keeping the document current. Consider it a living document; it would be a waste of time and resources to create an office policy manual only to let it get out of date. Come up with a system for updating it as laws change and company priorities shift. Schedule regular reviews of the manual and update accordingly. For example, the conflict of interest section needs to be reviewed yearly because the legal standards keep changing, Milobar says. And if a new policy is proposed, be sure to ask the question: “How does this new policy impact our current policies?”

For more information about drafting a policy manual, check out NAR’s office policy field guide.