Sometimes I'll get a call from a client because they're ready to fire Bob. I'll ask a few follow-up questions and discover that there is no major policy violation, they're really just irritated with him for an accumulation of stuff that seems important today but is somewhat minor in the big picture. In most cases I'll convince them that they're probably better off keeping Bob than trying to replace him and recommend they just have a conversation with him regarding their frustrations and expectations.
Then I'll get a call a couple of weeks later to be informed that Bob's just been promoted to supervisor. "Since our talk, he's been doing great!"
I call this the talent assessment elevator - the speed of movement between "the penthouse suite" and "the basement." Some small to mid-sized businesses have express elevators. A worker can go from hero to bum and back to hero within a few days or even hours.
Organizational Behavior textbooks they call this "availability bias," which is defined as our tendency to make decisions based on information that is readily available in our memory. Decision makers can easily overvalue information that we recently received. So when we get word that Bob screwed up, "Bob's a bum. Fire him!" When we get word that Bob pulled us out of a ditch with an important client, "Bob's great. Promote him!"
One of my heroes, basketball coach Dean Smith, once said, "if you make every game a life and death proposition...you'll be dead a lot." He knew - he lost 254 games in his Hall of Fame career! The same applies to making important personnel decisions such as whom to keep and whom to promote, based almost exclusively on recent events. The problem is, the stuff that's in your short term memory may not be the best information to base an important organizational decision on.
So when it's time to decide whether to fire Bob or promote him, take a few minutes and consider:
1. What knowledge, skills and abilities (KSAs) does Bob add to the team and how easily will it be to replace those if we send him packing?
2. What performance metrics can we use to evaluate Bob's performance over the course of a year (or longer), so that we don't overvalue his most recent short-term performance?
2. What KSAs plus any intangibles does Bob potentially bring to an expanded role with the organization?
If Bob has solid KSAs and has historically been a solid contributor, don't over-manage as a result of a recent wobble. Have a conversation, if need be, or even a documented disciplinary write-up, if warranted. But investing in getting Bob back on track is going to be less costly than replacing him, almost guaranteed.
If Bob has done something worth celebrating, consider a one-time bonus or some form of public recognition, but don't rush to put him in that supervisor role that just opened-up based solely on this single victory or recent short-term success. Evaluate his KSAs and fitness for this new position separately from his recent star performance. Otherwise, you may have just taken a solid individual contributor and put him in a supervisor role where he's miserable and might soon be underperforming.
When it comes to your talent assessment elevator, it should be like a slow freight elevator - faster than the stairs but doesn't make your ears pop. Organizations with an express elevator seem to habitually lose good people that they needn't have lost because of over-reacting to both short-term performance failures and short-term performance successes.
Tuesday, October 17, 2017
Improve Your Good Hire Percentage
Many small companies choose their new employees based on a single interview. Unfortunately research shows that interviews have extremely poor validity when it comes to selecting the right employees. (In case you've forgotten, "validity" means an instrument measures what it's supposed to measure). Interviews are supposed to measure the likelihood that a candidate will be a good fit for our organization and our job vacancy. Casual interviews are pretty good at measuring interviewing skills, but they don't do very well at measuring how well a candidate will perform in the job we're trying to fill.
Studies show that we are subject to so many biases when it comes to a typical interview process that we are probably just as likely to pick a star employee from a stack of resumes, sight-unseen, than from bringing five people in for interviews.
So, how do we improve the validity of our process?
First, screen resumes against a predetermined set of KSAs (knowledge, skills and abilities) only. Consider having an administrative employee scrub information that might lead to biases from the resumes' themselves. For example, as a Carolina grad, I might have a negative opinion about a resume from a Duke grad. Another common bias is unintentionally rating a resume lower based on the candidate's name (assumptions rooted in gender, age and ethnic stereotypes). If you can't see the university name or the candidate's name, you are more likely to evaluate the resume on the KSAs alone.
Second, develop good interview questions! Write questions that have a likelihood of predicting the behaviors that you want. Use an interview guide and ask each candidate the same questions. Practice interviewing your current stars and see how they answer those same questions.
Third, use assessments! Utilize skills assessments - having them demonstrate skills they claim to have. This can range from taking a keyboarding test, to taking them out in the warehouse and allowing them to demonstrate their ability to operate your forklift. (There are some do's and don'ts regarding "auditions," so make sure you don't cross a line). Behavioral assessments will show if their personality style is ideal for the demands of the position. Driving Forces/Motivators assessments will show if their motivators align with the rewards and demands of the position. Competencies assessments will show what types of core competencies the candidate brings to the team.
Small employers frequently tell me, "I'm not spending $50 or $100 on a test - I know how to hire!" Considering the high cost of a poor hire and the science that shows utilizing valid assessments increases the validity of the selection process exponentially, that might be a penny-wise, dollar-foolish commitment.
Fourth, check references! LinkedIn is a great resource to see referrals and endorsements on many of your candidates. It's also a venue to conduct "unofficial" reference checks. If the candidate is connected to someone you know, you might be able to gain valuable insight. Many people dismiss the references the candidate submits - but I've gotten honest references from these in the past, so don't neglect them either. The best predictor of future success is past success!
Fifth, make sure your background screening criteria match your risk profile. Some organizations screen too tightly here and miss out on potentially good workers due to invalid criteria. If your company provides residential services and a candidate has a recent breaking-and-entering conviction, that candidate clearly doesn't fit your risk profile. But screening out a candidate who has a 12-year-old misdemeanor possession conviction might be an invalid selection criteria if you have an opening on a production line or on a commercial construction site.
Finally, if you're doing all these things but you're still losing people, it's probably not your selection process. It's likely something else, like job design, compensation, benefits and perks, or most likely, your supervision and management style. But that's a subject for another blog!
Studies show that we are subject to so many biases when it comes to a typical interview process that we are probably just as likely to pick a star employee from a stack of resumes, sight-unseen, than from bringing five people in for interviews.
So, how do we improve the validity of our process?
First, screen resumes against a predetermined set of KSAs (knowledge, skills and abilities) only. Consider having an administrative employee scrub information that might lead to biases from the resumes' themselves. For example, as a Carolina grad, I might have a negative opinion about a resume from a Duke grad. Another common bias is unintentionally rating a resume lower based on the candidate's name (assumptions rooted in gender, age and ethnic stereotypes). If you can't see the university name or the candidate's name, you are more likely to evaluate the resume on the KSAs alone.
Second, develop good interview questions! Write questions that have a likelihood of predicting the behaviors that you want. Use an interview guide and ask each candidate the same questions. Practice interviewing your current stars and see how they answer those same questions.
Third, use assessments! Utilize skills assessments - having them demonstrate skills they claim to have. This can range from taking a keyboarding test, to taking them out in the warehouse and allowing them to demonstrate their ability to operate your forklift. (There are some do's and don'ts regarding "auditions," so make sure you don't cross a line). Behavioral assessments will show if their personality style is ideal for the demands of the position. Driving Forces/Motivators assessments will show if their motivators align with the rewards and demands of the position. Competencies assessments will show what types of core competencies the candidate brings to the team.
Small employers frequently tell me, "I'm not spending $50 or $100 on a test - I know how to hire!" Considering the high cost of a poor hire and the science that shows utilizing valid assessments increases the validity of the selection process exponentially, that might be a penny-wise, dollar-foolish commitment.
Fourth, check references! LinkedIn is a great resource to see referrals and endorsements on many of your candidates. It's also a venue to conduct "unofficial" reference checks. If the candidate is connected to someone you know, you might be able to gain valuable insight. Many people dismiss the references the candidate submits - but I've gotten honest references from these in the past, so don't neglect them either. The best predictor of future success is past success!
Fifth, make sure your background screening criteria match your risk profile. Some organizations screen too tightly here and miss out on potentially good workers due to invalid criteria. If your company provides residential services and a candidate has a recent breaking-and-entering conviction, that candidate clearly doesn't fit your risk profile. But screening out a candidate who has a 12-year-old misdemeanor possession conviction might be an invalid selection criteria if you have an opening on a production line or on a commercial construction site.
Finally, if you're doing all these things but you're still losing people, it's probably not your selection process. It's likely something else, like job design, compensation, benefits and perks, or most likely, your supervision and management style. But that's a subject for another blog!
Monday, September 11, 2017
Referral Bonuses - Good or Bad?
The battle for talent is heating up. Unemployment rates have been steadily declining over the past few years and we've reached that point where I'm hearing, "we're having a hard time finding people" even from my clients who hire low skill workers.
One temptation during times like these is to add a referral bonus incentive or increase the one already in place. I've heard of companies offering as much as $4,000 for an employee referral!
Here are some things to think about when considering an employee referral bonus program:
1. If you have a healthy culture, you don't need one. Employees will refer people they want to work with for no referral at all if they consider your place to be a good place to work. If your culture is lousy, they won't refer people they like, but they may refer people they don't care about if the bonus is tempting enough.
2. The higher the bonus, the weaker the referrals get. Good employees will refer "A" players whenever they get the chance. However, they'll also screen out people they don't think would be a good fit or whom they'd be embarrassed to be linked to. However, the higher the bonus, the easier it is for them to convince themselves that "Bob" who they know is lazy and has never been able to hold down a job, might just work out this time. I remember one of our supervisors took a bunch of application forms, wrote his name in the "referred by" space, and went down to the local mall and handed them out like fliers. Not exactly what we had in mind.
3. Referral bonuses can weaken your employment brand. Research recently published by Applied Psychology suggests that candidates, upon learning that the company has a referral bonus, may question the motives of the referring employee and change their perception of the hiring organization.
4. Too much dependence on employee referrals can increase discrimination risk. People tend to refer people like them (same race, age, gender, etc.). So bragging that 100% of your vacancies are filled by employee referrals could result in a discrimination claim by someone who doesn't look like the rest of your employees.
This is not to say that you should trash your employee referral bonus altogether. There are some benefits. Positions filled by referral tend to be filled more quickly and those referred tend to last longer and perform better (on average). But make sure your bonus is a token of gratitude, not an incentive to refer every bum they know or distribute applications like a ticker-tape parade. When the candidate finds out the employee referring them is getting something, it shouldn't be large enough to bring into question the referring employee's motives nor make it look like your organization is desperate and willing to settle for just about anybody.
One temptation during times like these is to add a referral bonus incentive or increase the one already in place. I've heard of companies offering as much as $4,000 for an employee referral!
Here are some things to think about when considering an employee referral bonus program:
1. If you have a healthy culture, you don't need one. Employees will refer people they want to work with for no referral at all if they consider your place to be a good place to work. If your culture is lousy, they won't refer people they like, but they may refer people they don't care about if the bonus is tempting enough.
2. The higher the bonus, the weaker the referrals get. Good employees will refer "A" players whenever they get the chance. However, they'll also screen out people they don't think would be a good fit or whom they'd be embarrassed to be linked to. However, the higher the bonus, the easier it is for them to convince themselves that "Bob" who they know is lazy and has never been able to hold down a job, might just work out this time. I remember one of our supervisors took a bunch of application forms, wrote his name in the "referred by" space, and went down to the local mall and handed them out like fliers. Not exactly what we had in mind.
3. Referral bonuses can weaken your employment brand. Research recently published by Applied Psychology suggests that candidates, upon learning that the company has a referral bonus, may question the motives of the referring employee and change their perception of the hiring organization.
4. Too much dependence on employee referrals can increase discrimination risk. People tend to refer people like them (same race, age, gender, etc.). So bragging that 100% of your vacancies are filled by employee referrals could result in a discrimination claim by someone who doesn't look like the rest of your employees.
This is not to say that you should trash your employee referral bonus altogether. There are some benefits. Positions filled by referral tend to be filled more quickly and those referred tend to last longer and perform better (on average). But make sure your bonus is a token of gratitude, not an incentive to refer every bum they know or distribute applications like a ticker-tape parade. When the candidate finds out the employee referring them is getting something, it shouldn't be large enough to bring into question the referring employee's motives nor make it look like your organization is desperate and willing to settle for just about anybody.
Wednesday, September 6, 2017
NC Cracking Down on 1099 Workers
Last month, North Carolina governor Roy Cooper signed legislation that creates an office within the North Carolina Industrial Commission to investigate companies who might be misclassifying employees as contractors and to discourage the practice.
This legislation doesn't change the rules regarding how to go about evaluating whether your workers are legitimate contractors or are really employees that you've misclassified as contractors. What's different is that a separate office is now funded with the sole purpose of ferreting-out those the government considers to be abusers of this practice.
Some of my workers prefer to be paid by 1099. Why does the state care?
It's all about the money! When you pay your employees on a Friday, you immediately send a check to the government for income taxes withheld and other obligations like social security and unemployment tax. An employee who makes $10 per hour may gross $400, but they actually take home less because you withheld taxes. When you pay your 1099 worker the same $400, there is a contractual obligation, or at least an implicit understanding, that the 1099 worker will file his or her own taxes. But even if they do file quarterly, the government would prefer to have its money every pay day. The reality is, most laborers paid via 1099 file at year-end, at best. Many never file at all.
I save a lot of money by paying workers via 1099 rather than W-2.
While employers who either mistakenly or intentionally pay workers by 1099 do gain some short-term cost advantage over their compliant competitors, it is generally not as much as they think. For instance, the company's workers comp carrier will often roll those 1099 workers for whom the company can't produce a workers comp insurance certificate right into the company's premium during their annual or semi-annual audit. They've paid out the employee-paid portion of the income taxes to the worker in the form of gross wages, so there's no savings there. They have saved on some of the matching taxes like FICA, SUTA and FUTA, as well the company-paid portion of employee benefits the worker might have been eligible for. But the potential costs associated with being found to be out of compliance are quite high - steep fines, back taxes (even if they worker paid them), and jail time in extreme cases. Seems like a bad risk-reward scenario to me.
What should I do?
Make sure any legitimate subcontractors you use to help during periods of peak demand have an executed subcontract agreement with your company and you have their certificates of insurance on file. Note: many one-person operators will tell you the state doesn't require workers comp on business owners, but if that "business owner" is in the field performing work on your behalf and your work comp carrier sees them as a risk, you're perfectly in your rights to say, the state might not require it but we do...
Second, identify any workers that don't really meet the IRS definition of a contractor and either find a temp agency partner to run them through or hire them as employees.
If you need assistance determining who meets the definition and who doesn't, contact The Davidson Group and we'll be happy to consult with you.
This legislation doesn't change the rules regarding how to go about evaluating whether your workers are legitimate contractors or are really employees that you've misclassified as contractors. What's different is that a separate office is now funded with the sole purpose of ferreting-out those the government considers to be abusers of this practice.
Some of my workers prefer to be paid by 1099. Why does the state care?
It's all about the money! When you pay your employees on a Friday, you immediately send a check to the government for income taxes withheld and other obligations like social security and unemployment tax. An employee who makes $10 per hour may gross $400, but they actually take home less because you withheld taxes. When you pay your 1099 worker the same $400, there is a contractual obligation, or at least an implicit understanding, that the 1099 worker will file his or her own taxes. But even if they do file quarterly, the government would prefer to have its money every pay day. The reality is, most laborers paid via 1099 file at year-end, at best. Many never file at all.
I save a lot of money by paying workers via 1099 rather than W-2.
While employers who either mistakenly or intentionally pay workers by 1099 do gain some short-term cost advantage over their compliant competitors, it is generally not as much as they think. For instance, the company's workers comp carrier will often roll those 1099 workers for whom the company can't produce a workers comp insurance certificate right into the company's premium during their annual or semi-annual audit. They've paid out the employee-paid portion of the income taxes to the worker in the form of gross wages, so there's no savings there. They have saved on some of the matching taxes like FICA, SUTA and FUTA, as well the company-paid portion of employee benefits the worker might have been eligible for. But the potential costs associated with being found to be out of compliance are quite high - steep fines, back taxes (even if they worker paid them), and jail time in extreme cases. Seems like a bad risk-reward scenario to me.
What should I do?
Make sure any legitimate subcontractors you use to help during periods of peak demand have an executed subcontract agreement with your company and you have their certificates of insurance on file. Note: many one-person operators will tell you the state doesn't require workers comp on business owners, but if that "business owner" is in the field performing work on your behalf and your work comp carrier sees them as a risk, you're perfectly in your rights to say, the state might not require it but we do...
Second, identify any workers that don't really meet the IRS definition of a contractor and either find a temp agency partner to run them through or hire them as employees.
If you need assistance determining who meets the definition and who doesn't, contact The Davidson Group and we'll be happy to consult with you.
Wednesday, August 9, 2017
Update on the Overtime Law
Remember the new overtime regulations that were supposed to take effect on Dec 1, 2016? Remember all the headaches you went through last Fall trying to figure out the best way to handle those exempt employees who made less than the proposed new threshold? Remember how it all seemed to just go away but can't remember why and where things stand? Here's a reminder of what happened and an update on where things are today:
Just before Thanksgiving a Federal Judge in Texas issued an injunction to pause the new rules from going into effect on Dec. 1. In one of its last acts under the Obama administration, The Department of Labor appealed that injunction. The DOL, now under the new Trump administration, dragged its feet on that appeal while waiting to get the new Secretary of Labor confirmed and new top administrators in place. Finally, on June 30, the DOL officially dropped the appeal, as expected. So this means the changes are dead, right?
Not so fast! The DOL also submitted a formal Request for Information to another agency in late June signaling that the new administration and Secretary Acosta might still be considering changes. While no one expects the new salary test thresholds to be as high as the $47,476 proposed by the Obama team, even many conservatives agree that the current threshold of $23,660 is too low.
Duties test? To be compliant with the Fair Labor Standards Act, employers must consider both the salary test and the duties test in determining whether an employee is eligible to be classified as exempt (salaried). All the hoopla in 2016 was related to proposed changes in the salary test - but no changes were proposed for the duties test. The salary test has always been the easy part of the FLSA to understand and be in compliance with. The duties tests have always been where the gray areas are and where confusion lies. The Society of Human Resource Management (SHRM) and other lobbying groups have repeatedly asked the Department of Labor to review the duties tests.
Hopefully this Request for Information is the beginning of a process that will lead to a meaningful review of both the salary test AND the duties test this time around! Stay tuned to this blog for updates as they happen.
In the meantime, just because some of your employees meet the old salary test doesn't mean that a wage and hour division auditor would agree that they are exempt. We always recommend reviewing the duties test requirements that apply to each of your exempt positions to ensure that your exempt employee meets both standards.
Just before Thanksgiving a Federal Judge in Texas issued an injunction to pause the new rules from going into effect on Dec. 1. In one of its last acts under the Obama administration, The Department of Labor appealed that injunction. The DOL, now under the new Trump administration, dragged its feet on that appeal while waiting to get the new Secretary of Labor confirmed and new top administrators in place. Finally, on June 30, the DOL officially dropped the appeal, as expected. So this means the changes are dead, right?
Not so fast! The DOL also submitted a formal Request for Information to another agency in late June signaling that the new administration and Secretary Acosta might still be considering changes. While no one expects the new salary test thresholds to be as high as the $47,476 proposed by the Obama team, even many conservatives agree that the current threshold of $23,660 is too low.
Duties test? To be compliant with the Fair Labor Standards Act, employers must consider both the salary test and the duties test in determining whether an employee is eligible to be classified as exempt (salaried). All the hoopla in 2016 was related to proposed changes in the salary test - but no changes were proposed for the duties test. The salary test has always been the easy part of the FLSA to understand and be in compliance with. The duties tests have always been where the gray areas are and where confusion lies. The Society of Human Resource Management (SHRM) and other lobbying groups have repeatedly asked the Department of Labor to review the duties tests.
Hopefully this Request for Information is the beginning of a process that will lead to a meaningful review of both the salary test AND the duties test this time around! Stay tuned to this blog for updates as they happen.
In the meantime, just because some of your employees meet the old salary test doesn't mean that a wage and hour division auditor would agree that they are exempt. We always recommend reviewing the duties test requirements that apply to each of your exempt positions to ensure that your exempt employee meets both standards.
Workers Comp Landmines
One of the more risk-filled areas associated with having employees is Workers Compensation insurance and the issues that surround it. Here are a few thoughts:
1. Make Sure You Have It (if required) - in general, companies with three or more employees (part-time or full-time) are required to carry workers comp insurance. Discuss your specific situation with a licensed insurance professional as there are some exceptions. Penalties for not having it when it's required can be severe. And if you utilize 1099 workers, an injury by one of them can prompt a review of your practices and subject you to even more fines and penalties.
2. Make Sure You Report Quickly and Accurately - Bob sprains his ankle on the job. Bob says he's fine - he'll go home and put some ice on it. Bob shows up for work the next day, still limping slightly, but powers through. The company doesn't bother to report the incident to their work comp carrier because there are no medical expenses and Bob hasn't missed any time from work. Two months later, Bob's still limping. He finally goes to his doctor and discovers he has a stress fracture which will require surgery and he will be out of work for 6 weeks. Now the work comp carrier is wondering why the company is reporting an injury that happened two months ago and questioning whether the stress fracture is related to the original injury or something that may have happened since the original sprain. The owner spends a lot of time wrestling with his carrier and his broker to get the claim approved - time that he could have spent doing something productive for the business.
Had the company had Bob's injury evaluated at the time it occurred, there would be no question of liability, but the delay has now complicated the claim and, very likely, made the claim much more expensive than it would have been.
3. Make Sure You Don't Retaliate (or even appear to) - Bob is now out of work and Mike is covering his workload. Mike seems to be getting the work done much faster than Bob did and Mike has discovered several errors that Bob made in the weeks prior to his leave of absence. The business owner has decided he really doesn't need Bob anymore because Mike is doing so well. When Bob is released to return to work, the owner tells him that he's no longer needed. Bob sues for retaliation and ultimately wins a large settlement.
The owner is miffed because he thought working in an at-will state allowed him to let Bob go for any reason or no reason. Unfortunately for the owner, his state (as most states do) has legal protections for employees against various forms of retaliation that trump at-will employment statutes. In NC it's the Retaliation Employment Discrimination Act. So the owner tries to shift his argument that the termination was justified on business grounds, but Bob's lawyer has an easy time with it - Bob worked there for several years and his performance reviews were excellent and he was never written up. He got hurt, which cost the company money, so they fired Bob to punish him. Any reasonable person would agree that Bob's termination was in retaliation for his injury and all that stuff about Mike doing better is just a pretext for getting back at Bob. Slam dunk!
The owner now has to file a claim with his insurance policy to cover the settlement, driving up the cost of that insurance at the same time his work comp premiums jump up - not to mention the legal fees he paid to defend his losing position!
Employee injuries and work comp exposure is one of the riskier areas that owners must manage. Unfortunately, owners sometimes outsmart themselves by making mistakes like the ones I identified above and they end up risking dollars in an effort to save nickels.
1. Make Sure You Have It (if required) - in general, companies with three or more employees (part-time or full-time) are required to carry workers comp insurance. Discuss your specific situation with a licensed insurance professional as there are some exceptions. Penalties for not having it when it's required can be severe. And if you utilize 1099 workers, an injury by one of them can prompt a review of your practices and subject you to even more fines and penalties.
2. Make Sure You Report Quickly and Accurately - Bob sprains his ankle on the job. Bob says he's fine - he'll go home and put some ice on it. Bob shows up for work the next day, still limping slightly, but powers through. The company doesn't bother to report the incident to their work comp carrier because there are no medical expenses and Bob hasn't missed any time from work. Two months later, Bob's still limping. He finally goes to his doctor and discovers he has a stress fracture which will require surgery and he will be out of work for 6 weeks. Now the work comp carrier is wondering why the company is reporting an injury that happened two months ago and questioning whether the stress fracture is related to the original injury or something that may have happened since the original sprain. The owner spends a lot of time wrestling with his carrier and his broker to get the claim approved - time that he could have spent doing something productive for the business.
Had the company had Bob's injury evaluated at the time it occurred, there would be no question of liability, but the delay has now complicated the claim and, very likely, made the claim much more expensive than it would have been.
3. Make Sure You Don't Retaliate (or even appear to) - Bob is now out of work and Mike is covering his workload. Mike seems to be getting the work done much faster than Bob did and Mike has discovered several errors that Bob made in the weeks prior to his leave of absence. The business owner has decided he really doesn't need Bob anymore because Mike is doing so well. When Bob is released to return to work, the owner tells him that he's no longer needed. Bob sues for retaliation and ultimately wins a large settlement.
The owner is miffed because he thought working in an at-will state allowed him to let Bob go for any reason or no reason. Unfortunately for the owner, his state (as most states do) has legal protections for employees against various forms of retaliation that trump at-will employment statutes. In NC it's the Retaliation Employment Discrimination Act. So the owner tries to shift his argument that the termination was justified on business grounds, but Bob's lawyer has an easy time with it - Bob worked there for several years and his performance reviews were excellent and he was never written up. He got hurt, which cost the company money, so they fired Bob to punish him. Any reasonable person would agree that Bob's termination was in retaliation for his injury and all that stuff about Mike doing better is just a pretext for getting back at Bob. Slam dunk!
The owner now has to file a claim with his insurance policy to cover the settlement, driving up the cost of that insurance at the same time his work comp premiums jump up - not to mention the legal fees he paid to defend his losing position!
Employee injuries and work comp exposure is one of the riskier areas that owners must manage. Unfortunately, owners sometimes outsmart themselves by making mistakes like the ones I identified above and they end up risking dollars in an effort to save nickels.
Sunday, July 9, 2017
A Practical Approach to Documentation
Bob was late for work again today. It's only a few minutes, but I'm afraid if I don't say something, it'll be a few more minutes tomorrow and a few more the day after that. When do I write him up?
Front line managers face these dilemmas all the time. On the one hand, they know that bad behavior that is not condemned is condoned. On the other hand, they know that if they write people up for every minor infraction, they'll spend an inordinate amount of time processing and documenting write-ups. And the employee being written-up will likely retreat into some deeper level of disengagement - the last thing you want from an employee who is basically a solid contributor with a few flaws.
Some managers take the cautious route and document everything, to the detriment of employee engagement. On the other extreme are managers who don't document anything, then terminate their "Bobs" when they've reached a breaking point. Unfortunately these managers have nothing to use in the defense of an unemployment charge, or worse, an EEOC charge.
Here's a few tips:
1. Distinguish between a true policy violation and a manager pet peeve. Using the "Bob is late" example, the manager needs to ask, is being on-time a basic job requirement for Bob's position? For many roles, being on-time is essential. If the phones start ringing at 8:00 and Bob's the receptionist or a CSR, he needs to be at his station at 8:00 or someone else is forced to do his job. But nit-picking start and stop times with an exempt employee whose immediate presence or absence at 8:00 a.m. doesn't really impact the team or their ability to produce their assigned workload can actually be counter-productive.
2. Start with a conversation. For most relatively minor but annoying infractions where the employee is drifting from standard expectations, simply having a brief conversation with the employee may be enough to get your Bob back on the right path. But be sure to make a note to yourself that you held the conversation with Bob on this day, so that, if necessary, you can...
3. Cleverly get your verbal warning into the record. One way to do that is with a follow-up email. Sometimes the email can even be phrased positively: "Bob, I was pretty direct with you yesterday when we spoke about your struggles to get to work on time, but I want you to know that if you can get that issue under control, there's no reason why you can't have a prosperous career here. You have the skills necessary to be successful." The second way is to let the conversation suffice until the behavior appears again. Let's say two weeks after the conversation Bob is late again. The manager moves to a more formal write-up and includes language like, "On July 11 we had a conversation about your lateness to work an how it affects the team. Today you were late again..." Now, with Bob's signature, you have both the verbal warning and the written warning on the record, but only shoved one piece of paper in front of Bob to sign and it wasn't on his first offense.
Progressive Discipline
The larger the organization, the more it benefits from a formal, defined, progressive discipline process. But most of my clients are small or mid-sized and reside in right-to-work-states, so I don't recommend a formal process for them. I want my clients to legally be able to rid themselves of an employee who is bad for their organization without violating their own policies. If your progressive discipline policy is too defined, bad employees can dance around the edges for months or even years without ever crossing the final line. The company can become a victim of its own policy.
With major infractions like violence, threats of violence, sexual/racial/ethnic harassment, theft, fraud, etc., it's certainly not necessary to go through any progressive process (just make sure your handbook is clear about that), but for the types of behavioral or performance issues that tend to build frustration from management over time, you need some type of evidence that you've made a good faith effort to clarify your expectations for Bob's performance and that Bob has acknowledged that you've done so. So starting with a conversation or two, moving to a counseling form that is signed by Bob that incorporates the prior verbal conversations into the record can do that nicely. Make sure the counseling form clearly defines what policy or procedure Bob failed to follow and what your expectations are for Bob going forward.
Then, when you're finally fed-up with Bob, you have a nice paper trail to show an unemployment referee demonstrating what a patient and fair employer you've been. You might even have a shot at winning those difficult to win unemployment charges. But don't wait until you're fed-up with Bob before you start the documentation trail.
Front line managers face these dilemmas all the time. On the one hand, they know that bad behavior that is not condemned is condoned. On the other hand, they know that if they write people up for every minor infraction, they'll spend an inordinate amount of time processing and documenting write-ups. And the employee being written-up will likely retreat into some deeper level of disengagement - the last thing you want from an employee who is basically a solid contributor with a few flaws.
Some managers take the cautious route and document everything, to the detriment of employee engagement. On the other extreme are managers who don't document anything, then terminate their "Bobs" when they've reached a breaking point. Unfortunately these managers have nothing to use in the defense of an unemployment charge, or worse, an EEOC charge.
Here's a few tips:
1. Distinguish between a true policy violation and a manager pet peeve. Using the "Bob is late" example, the manager needs to ask, is being on-time a basic job requirement for Bob's position? For many roles, being on-time is essential. If the phones start ringing at 8:00 and Bob's the receptionist or a CSR, he needs to be at his station at 8:00 or someone else is forced to do his job. But nit-picking start and stop times with an exempt employee whose immediate presence or absence at 8:00 a.m. doesn't really impact the team or their ability to produce their assigned workload can actually be counter-productive.
2. Start with a conversation. For most relatively minor but annoying infractions where the employee is drifting from standard expectations, simply having a brief conversation with the employee may be enough to get your Bob back on the right path. But be sure to make a note to yourself that you held the conversation with Bob on this day, so that, if necessary, you can...
3. Cleverly get your verbal warning into the record. One way to do that is with a follow-up email. Sometimes the email can even be phrased positively: "Bob, I was pretty direct with you yesterday when we spoke about your struggles to get to work on time, but I want you to know that if you can get that issue under control, there's no reason why you can't have a prosperous career here. You have the skills necessary to be successful." The second way is to let the conversation suffice until the behavior appears again. Let's say two weeks after the conversation Bob is late again. The manager moves to a more formal write-up and includes language like, "On July 11 we had a conversation about your lateness to work an how it affects the team. Today you were late again..." Now, with Bob's signature, you have both the verbal warning and the written warning on the record, but only shoved one piece of paper in front of Bob to sign and it wasn't on his first offense.
Progressive Discipline
The larger the organization, the more it benefits from a formal, defined, progressive discipline process. But most of my clients are small or mid-sized and reside in right-to-work-states, so I don't recommend a formal process for them. I want my clients to legally be able to rid themselves of an employee who is bad for their organization without violating their own policies. If your progressive discipline policy is too defined, bad employees can dance around the edges for months or even years without ever crossing the final line. The company can become a victim of its own policy.
With major infractions like violence, threats of violence, sexual/racial/ethnic harassment, theft, fraud, etc., it's certainly not necessary to go through any progressive process (just make sure your handbook is clear about that), but for the types of behavioral or performance issues that tend to build frustration from management over time, you need some type of evidence that you've made a good faith effort to clarify your expectations for Bob's performance and that Bob has acknowledged that you've done so. So starting with a conversation or two, moving to a counseling form that is signed by Bob that incorporates the prior verbal conversations into the record can do that nicely. Make sure the counseling form clearly defines what policy or procedure Bob failed to follow and what your expectations are for Bob going forward.
Then, when you're finally fed-up with Bob, you have a nice paper trail to show an unemployment referee demonstrating what a patient and fair employer you've been. You might even have a shot at winning those difficult to win unemployment charges. But don't wait until you're fed-up with Bob before you start the documentation trail.
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