Several decades ago, some business attorneys were advising business owners that a company policy manual could do more harm than good.  This advice came after several employees, including some here in Colorado, sued for breach of an employment contract because the employer's actions were allegedly in violation of the company's own policy manual.  This was especially troublesome where the employee successfully argued that the employee was not "at will" and could only be fired for cause.  The employee based his argument on provisions on the policy manual that arguably leg to the impression that employees could only be fired for cause.

However, I agree with James Hubbard's analysis an employee policy manual still does more good than harm. 

Avoiding the harm: Colorado case law provides that a policy manual does not create an employment contract if the manual language is written correctly. 

Reaping the Good:  A well-written policy manual that is given more than lip service will give the employer a stronger defense in many employee claims.  Consider a claim of sexual harassment.  Wouldn't you rather have as part of your defense a written policy strongly worded against any forms of sexual harassment with complaint procedures and consequences for violation versus no policy at all?  With medical marijuana laws in Colorado in such limbo, complying with a well-worded drug use policy can minimize the likelihood that an employer will be hit with ADA lawsuits such as this one. 

More Than A Book on A Shelf:  Notice that I place my faith most in a policy manual that is both well-written and followed.  It may do more harm than good to have a policy that is not followed or even violated frequently.  It will also make it harder to fire an employee who does violate the policy if you don't have a track record of enforcing the policies.