Compliance Cop to Compliance Coach

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

In the previous two posts of this three-part series (here and here), I discussed the often hidden but real cost of continuing to employ problematic employees, and why this problem is so widespread. In this post, I’ll talk about how HR can help by replacing a compliance enforcement paradigm with a compliance coaching paradigm.

Can We Fire Him Now?

In his meeting with the HR director and me, the executive painted a bleak picture. For years, “Tom” had been a poor performer, alienating co-workers, disappointing and even offending customers. The executive talked about how he’d switched Tom to different supervisors and given him performance improvement plans. However, no sustained positive change had occurred.

The executive explained that there was a new and real urgency: technological and market changes had created industry upheaval. Moreover, a competitor was raiding employees in Tom’s department and had succeeded in recruiting two of the best.

“We can’t afford to carry this guy any longer,” the executive said, “besides, nobody wants to work with him, which makes us vulnerable to our competitor’s talent raids. We’ve just got to get him out of here!”

The HR director said, “Okay, let’s look at the documents.”

As you might imagine, the documents weren’t terribly helpful.

“But what about the performance improvement plans?” the executive asked.

“They’re not current; besides, technically speaking, they were complied with,” the HR director replied.

“Yeah, but in his last performance review, his manager checked ‘needs improvement’ in several places.”

“Yes he did. But checking ‘needs improvement’ on a performance review is not the same as a performance improvement plan, and it’s not clear disciplinary notice to an employee that he faces termination of his employment.”

“But here’s a copy of an email I sent him two weeks ago pointing out how he screwed up a project and what it cost us!”

After reading it, the HR director said, “It shows he screwed up a project but it doesn’t talk about his facing discharge.”

“I told him face-to-face last week that he should look for another job.”

“You may have told him that but I don’t see anything in writing.”

Tension crept into the room. The HR director turned to me and said, “What do you have to say?”

From Left Brain to Right Brain

I said, “In these situations, I like to start ‘right brain’ and then go ‘left brain.’”

They both looked at me quizzically. I continued. “Let’s see if I understand,” I said to the executive. I summarized the problem from his perspective: the long, frustrating years of employing Tom, the failed attempts at improvement, the heightened sense of urgency due to industry challenges and crisis created by a competitor’s talent raids.

After the executive confirmed that I’d accurately summarized the problem, I said, “That’s the right brain part—making sure HR understands the problem from management’s perspective. Now we turn to the left-brain part.

“Even when a strong business case can be made, HR has an obligation to the company to run the desired action through a checklist. There are four prongs:

  1. Is the action substantively fair?
  2. Is the action procedurally fair?
  3. Is the action consistent?
  4. Are legal issues of significance present?

“As for the first prong, I’d say you’ve made an excellent case that it would be substantively fair to let Tom go. It’s not a personality conflict or a manager’s vendetta. You’ve given him repeated opportunities but he remains unwilling or unable to close the gap.

“The next item is procedural fairness. Has adequate notice been given so that firing Tom won’t be a surprise to him? From experience, I can tell you that employees will surprise you with the degree to which they’re surprised when the hammer comes down. To avoid such surprise, clear advance oral and written notice should be given. Unfortunately, I’m afraid that what you’ve shared probably wouldn’t pass the surprise test. But let’s continue.

“The next question is whether firing Tom would be consistent with company policy, procedure and practice in other situations.”

“Understand,” I said to the executive, “this isn’t HR being difficult. It’s not just a matter of protecting the company against claims. It’s supporting a culture where employees feel they will be treated fairly. When companies start deviating from their own policies, procedures, and practices because a particular situation strikes them as compelling, they often pay a price in creating a sense that leadership acts arbitrarily and can’t be trusted. Given your concern about retaining talent, this perception would not be helpful.

“I’ve got some concerns on this point as well. Firing Tom now would appear inconsistent with the disciplinary procedure stated in the handbook as well as with past progressive disciplinary practice.”

“Finally,” I said, “there’s the legal risk. In this case, Tom is well over 40 and I understand he could be replaced by someone under that age. That fact, plus the problems with checklist items (2) and (3) could well result in a painful litigation experience.”

The room was silent.

Business Costs, Benefits, and Risk Options

I said, “Clients often find it helpful to analyze legal risk in relation to business costs or benefits. It’s also often useful to identify multiple options and weigh them against each other.

“For example, one option would be to fire Tom now. That would cut off the business cost of continuing to employ him. However, this approach would maximize legal risk—the likelihood that Tom would sue and collect a substantial judgment or settlement.

“An option at the other end of the risk spectrum would be to give Tom another performance improvement plan, keep playing the game, and tolerate him as best you can. That essentially eliminates the legal risk but comes at a high business cost.

“Something in between might involve bringing Tom to the precipice of discharge while leaving yourself some wiggle room. For example, you could lay out in detail why it’s in his best interest to leave. And perhaps incent him with a severance/release offer. That approach has some legal risk but creates a good chance of a benefit in getting Tom out of the company sooner versus later.”

The Outcome

A few weeks later the HR director called me. She said, “The executive and I met the next morning. Together, we created the mother of all performance improvement plans.

“We met with Tom and walked him through his entire employment history, pointing out each failure and each failed attempt to make things work. We told him we were at a crossroads and it seemed to us that the best thing for all would be for Tom to find other employment. We offered Tom a narrow window in which he could elect severance.

“Tom went home, came back in the morning, took the severance offer, signed a release and quietly and cooperatively left the company.”

“That’s great!” I said.

“I agree,” the HR director said. “But you know what one of the best things was?”

“What?” I asked.

“It’s how I interacted with the executive when we met again. It wasn’t a negotiation between HR and management. We didn’t exchange concessions. Instead, we collaborated on a joint solution. And what’s really great is that the approach we took with Tom has carried over to how we interact on other matters.”

Compliance cop to compliance coach. Amen!

P.S.:  For more reading on this topic, here’s my HR Magazine article.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ogletree, Deakins, Nash, Smoak & Stewart, P.C. | Attorney Advertising

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Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

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