"Do we get Martin Luther King Day off?" "Does our insurance cover orthodontia?" "Do we have a pension plan?" "What is our sick leave policy?" "Are employees supposed to conform to a specific dress code?" If your employees ply you with questions like these, it may be a good idea to spell out the answers in an employee handbook.

Along with saving you time, such manuals can improve employee morale, prevent disagreements and even keep the company out of court. And with all the facts at hand, your employees can promote the business in the community,  spreading the word that it's a good place to work. Chances are you'll subsequently attract a higher caliber of applicants for job vacancies.

Despite these pluses, not all firms need handbooks. In very small companies with a lot of face-to-face interaction, a handbook probably isn't necessary, says William Anthony, a human resources professor at Florida State University in Tallahassee. "However," he continues, "as companies grow to 20 or 30 employees, it's advisable to put policies in writing."