I have worked for multiple organizations, of small to medium size and ALL of them have implemented a Policy and Procedures Manual/Employee Handbook. But now, as I'm venturing off into this new gig of supporting small businesses, I often meet clients of small size who say to me, "I don't really need a policy manual - if a decision needs to be made, I'll deal with it on the go." While I appreciate this insight, my advice is that if you are going to set yourself up for growth (which all businesses should be doing), setting policies and procedures you can live with today, will also help you tomorrow when you have less time to think about the small stuff and need more energy geared towards growing your empire.
That said, they take a while to produce in the beginning. The first step is brainstorming questions/issues/ideas that need to be dealt with regularly (and I even have a questionnaire that can help this process be quick) and then come up with answers that you can manage to and stick with. From there, the entire process is easy and simple.
The cool thing about an employee handbook is you can actually create the culture you want inside it. It's how you word your policies that make the difference. On top of it, management (especially middle management) can now manage to the policies, allowing the business owner to deal with the strategic side of the business. And if everyone is rowing their boat in the same direction, just imagine how fast your company can grow.
Finally - I should note that I'm a big proponent of breaking policies for the right reasons. They are there as a guide, but because people are not cut from the same cookie-cutter, nor are the various situations encountered when dealing with employees - policy and procedure manuals shouldn't be there to "manage" but there as a "guide". You will be able to develop, maintain and preserve any culture you want utilizing this strategy.
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