Author: Gillian Flynn

Today’s top women candidates are taking closer looks at potential employers to ensure they have a supportive culture. Don’t just assume your company is female friendly—make sure it is. Mary Mattis, vice president of research and advisory services for Catalyst, a New York City-based organization “working with business to effect change for women,” offers this advice:

Conduct internal research.
Look at your company. Don’t assume the face of your company is a smiley face. See if women plateau at a certain level or whether they tend to be over-represented in some areas and under-represented in others. See if you have women in international assignments.

Gather data.
Get the facts. Look at promotion rates and how long women tend to stay at one level. Look at relative turnover between women and men. If companies don’t have those kinds of numbers, they need to start working on them and keeping that data systematically.

Talk to women.
Listen to women. Start an advisory or focus group of women that you meet with on a regular basis. This gives you a better sense for how women are feeling and how they’re faring.

Revisit female-focused programs.
There are a lot of companies out there with excellent work-family programs. But they shouldn’t assume that the programs will meet the needs of all women. Companies may assume that work-family is a woman’s issue, and that if they’ve dealt with that, they’ve dealt with women’s issues. But there’s a whole other side—for instance, what’s happening in the company with women’s career mobility?

Have a plan.
Companies need to have target goals not just for recruiting women, but for moving them up as well. Until companies start treating this just like any other business issue, for which they state the result they want, measure whether they got it and reward the people who got it for them, they’re not going to change organizational behavior.

Because we all have our employees’ best interests at heart, it’s easy to get sidetracked from the primary issue: We help out employees as a means of boosting the bottom line. Here are some considerations as you look over your programs:

Ask yourself:
Do our employee-service programs aid retention?

How to be sure:
Listen to employees’ reasons for leaving the company. Track them by category: more money, relocation, fewer hours. Comments like “more time” or “flexibility” should sound the alarm for you. These are areas where low-cost employee-service programs may help. Ask the person whether he or she would stay for more flexible hours or two-thirds hours. If the person says yes, and restructuring is possible, you can save the company some money. Track every employee who chooses to remain because of such an arrangement. Calculate the combined money saved for future reference.

Ask yourself:
Do we maintain a competitive advantage with our benefits?

How to be sure:
Benchmark, benchmark, benchmark. Look at what benefits companies in your industry offer. Are yours equitable? Although you probably don’t want employees coming to your company specifically because of the benefits—you want them there because they want to do the job—you also don’t want to lose out on good ones just because you’re lagging behind. But note the word “equitable.” It could be a competitor offers many more benefits than you, but your company offers higher compensation and excellent referral services. Study your recruiting market and ask recent hires what attracted them to your company.

Ask yourself:
Do our benefits boost productivity?

How to be sure:
Identify the areas that seem to lag behind. If you have a high absentee rate, find out why through an employee questionnaire. It could be many people are staying home to care for sick children. Calculate the amount of days missed on average due to child-care fall-throughs to determine if a care center would pay off. Similarly, tracking absenteeism before and after an employee is referred to an EAP program can help cost-justify that service.

Stop right there. Don’t make another move. We may have a problem. It all began with the best of intentions. HR just wanted to help. But somewhere along the way, things have taken a wrong turn. Remember back to the darkest days of the recession. Scores of employees are being laid off. Survivors are running on short fuses and long hours. Everyone seems at the breaking point. Then HR has a novel idea: Jump-start a few programs that will help employees battle through. Offer after-hours day care so employees can work without worrying about Junior. Provide counseling so employees can voice their frustrations in a healthy way. Open gyms to help them work off stress. Toss in a few parenting programs and cultural enhancement seminars to round them out-and voila!-problem solved.

Sorry, you’re not getting away that easily. All those programs and services and benefits haven’t solved the problems permanently. In actuality, they’ve allowed bigger problems to grow roots. And now they’re endangering your company.

How? To begin with, we’ve been engaged in such an all-out rah-rah celebration of employee-service programs, we’ve glossed over the actual problem. Employees are overworked, stressed out, exhausted. For the most part, our little offerings do nothing to truly help them-they’re more like booby prizes for breaking all overtime records. We’re not solving the problem.

Instead, we’re providing an elaborate coping mechanism. Errand services and take-home meals do not make up for the countless hours employees have lost over the past few years, as much as we may like to think they do.

Secondly, these programs are undermining our companies’ efforts to reach Workplace 2000. Everything we hear indicates that in the not-so-distant future only a handful of employees will be permanent, and the rest will be firmly ingrained with an independent-contractor mentality. And from one side of its mouth HR is indeed spouting such proper buzz-words as empowerment and contingent staffing. But the other side is calling even more loudly for more benefits, more programs, more services that will only tie employees closer to the company. We claim we want our employees to be empowered to solve problems on the job, yet we’ve taken on the responsibility of solving so many of their other problems: child-care needs, psychological, physical and personal needs. We’re encouraging them to become dependent on us.

Finally-problem No. 3-no one seems to know if these pet projects of HR really support the bottom line-at least not beyond general ballpark figures and vague mumblings about how morale is improved and how much employees seem to appreciate them. Not only will this damage a company, it will scar HR’s newly minted status as Strategic Partner.

This little lecture certainly isn’t intended to vilify HR. Nor is it to say that companies should be sterilized into cold shells in which employees and their humanity are completely discounted. Nor is it a call for companies to purge themselves of all employee benefits or helping-hand programs. But it is time to stop and reassess. We need to ask ourselves whether we truly are helping our company and its employees. It’s time to look around at where we are, see if it’s really where we want to be, and decide where to go from there.

The First Mistake: Problem soothing instead of problem solving.
Ever heard the phrase “killing with kindness”? That’s what Laura Nash, adjunct professor at Boston University’s School of Management, believes HR might be doing with its employee-service programs. “HR isn’t asking the right questions about these programs,” she says. “They ask, ‘Are people using it?’ The answer is yes. ‘Is there a need?’ The answer is yes. But does that mean they’re solving the problem? The answer is not really, and they may even be making the problem worse by creating this kind of cure-all that covers up the more acute symptoms of the problem.”

Nash cites two reasons for the continued institution of employee perks and programs. One is that HR is constantly being assessed by how many bigger and brighter benefits it creates. “If the only measure of success is whether I can create a new service for employees, it will never end. You can always find something else that people need, so that’s not a good measure.”

The other factor encouraging the proliferation of these programs is that on the surface they all seem like admirable efforts. Devising ways of helping people is a seductive proposition indeed. There’s always something on the horizon that seems helpful or useful or just plain nice. Says Hal Morgan, publications manager for Boston-based Work/Family Directions: “It’s interesting to see the [programs] that companies come up with. Some of them may really be valuable, and some may not. Where do you draw the line?”

It’s a difficult question. Certainly, employee perks do provide a way of helping employees balance the workload: They’re going to be a bit put off if you pile on more work and don’t give them anything in return. And overwork is definitely widespread. “It’s a very rare company in which employees don’t say that they’re working more now than they were five years ago,” says Robert Levering, co-author of “The 100 Best Companies To Work For in America.” “Many companies downsize without ever intending to reduce the workload. Having talked to hundreds and hundreds of employees at 150-plus companies, the most common complaint is the extra workload. So either you have to compensate by reducing the amount of work or you have to compensate by putting in [work-life types of] benefits.”

It’s true that many of these new work-life, employee-service benefits are of a compensatory nature. They’re a company’s means of acknowledging that employees are being asked to do more than ever before. But this quid pro quo trend-you work more and we’ll give more-has gotten so strong, many HR departments are throwing benefits at the problem without pausing first to see if they can solve it. Certainly employees appreciate a company gym to work off the stress of a 12-hour day. They think it’s nice that you give them access to an EAP to deal with the personal problems that have cropped up since they began working weekends. But maybe they’d prefer HR to cash in all these niceties and hire a few extra people so they don’t have to work late in the first place. Maybe you should give them the money and let them decide what to do with it themselves. Maybe you should ask them.

“I know why companies are offering such things,” says Carolyn Corbin, executive director of the Dallas-based Center for the 21st Century, a think tank on future socioeconomic issues. “They’re doing dry cleaning so people won’t leave to have their dry cleaning done. They’re offering nutritious, low-cost meals so people won’t leave for lunch. It’s all a way of keeping employees doing work so they’ll be less distracted with other thingsÉI think many companies will continue to do some of these things for their own selfish reasons. They want that employee to come in morning to night and be totally captured in doing work.”

Like Corbin, Nash believes some programs have become institutionalized as a means of keeping employees at work. “With all these programs, do you think family time is increasing or decreasing? I’d bet decreasing,” says Nash, co-author of “A Fatal Embrace? Assessing Trends in Human Resources Programs.” “By creating this quick-fix solution, you’re creating a culture that says nothing should keep employees from work. You’re asserting a value on work that overrides family in all circumstances. I don’t think anyone intends to do that. But it’s a complex problem, and we may really be kidding ourselves that we’re solving it. What we’re doing is undercutting the will to really address working hours.”

These may sound like harsh words, but even Levering, a strong proponent of companies’ accepting their responsibilities to employees and assisting where they can, has this to say: “I don’t think the specific little extra benefits are as important as figuring out ways of giving employees back their time.”

So therein lies the problem: Under the blanket justification that we’re aiding employees, we’re actually creating ways to keep them at work longer-which is exactly what they’d rather not do. And that’s only part of the problem.

The Second Mistake: Hand-holding in the era of empowerment.
Don’t fool yourself into thinking that paternalism (or maternalism) is dead. It’s not. It simply has changed forms-and in many companies is alive and well. Bluster all you want about the New Contract. Boast about how employees embrace their independence. Strike the pose that HR is a bottom-line strategic partner, not the glorified “parent” figure of days gone by. Then finish making those employee take-home dinners, pick up everyone’s laundry, and drop off tuition money for the employee who wants to enroll in tapestry weaving.

It all comes down to this: Companies are trying to evolve into workplaces of the future, but HR is not always working on the same wavelength. HR is not always partnering with companies in this evolution. Far too many employees receive a mixed message. They’re being told that their job is not an entitlement, that they’re on their own. Then they go to work at a company that basically serves as a snug, surrogate community.

A Towers Perrin survey of 100-plus employers reveals that companies are indeed looking more and more like caretakers: 88% have EAPs; 65% have company-supported fitness centers or offer fitness center memberships; 43% offer tuition reimbursement for non-business-related courses; 37% provide subsidized lunches; 24% have a company convenience store; 15% offer take-home meals; 14% provide onsite dry cleaning; and 10% have an onsite barber or salon. And many more are planning to institute such goodies in the future.

Levering, who also is founder of the San Francisco-based Great Place to Work Institute, says this rush to help and help some more has been a fairly recent occurrence. “When we were doing the ‘100 Best’ revision, we saw lots of [new benefits], particularly of classes being offered, like how to be better parents. We visited all the companies that were on our list, and about 50 more that weren’t. And we did the same exercise 10 years ago. Things like onsite day care were virtually non-existent a decade ago. Fitness centers were extremely uncommon 10 to 15 years ago.”

Pat Brown, vice president and manager of family matters for Memphis-based First Tennessee Bank, is a bit wary of the trend. She believes that in an era of supposed employee empowerment, most companies are actually doing more “caretaking” than two years ago. “I know that one of the motivations is that [HR] is recognizing employee stress levels and is trying to help them find a balance. But some of it may be because it’s the fad to do, and HR professionals may not be really recognizing why they’re doing it.”

So is this movement an example of assisting employees or a case of killing them with kindness? Corbin will tell you that she believes the trend will cause some serious fallout. And you might want to listen to her. In 1986, Corbin authored “Strategies 2000,” a book predicting future work trends-trends proven to be 95% correct 10 years later. “The danger in all this is that people are looking at companies today to meet the needs that the community, church and family used to meet. This is not healthy,” she says. “Many corporations have set themselves up to be [all those things] to employees. And when that relationship is severed, that can be extremely paralyzing and traumatic to the person. It can even be the basis of violence. The corporation is not dealing well with how these benefits are enabling employees to be co-dependent.”

Jay Hotchkiss, of Portland, Maine-based HR consulting firm John Jay & Co., agrees that companies can go overboard in offering too many HR services. “If the company takes a very maternalistic stance as opposed to just empowering employees and giving them some resources to go out and do it themselves, I think they’re sending a mixed message.”

It’s a good point in this age of no-such-thing-as-a-permanent-job. Consider these scenarios:

• An alcoholic employee receiving ongoing counseling through your company EAP is downsized. He loses his support line right at one of the most trying times of his life. Did the firm really do him a service?
• A woman working toward her master’s is reengineered out of a job. She’s forced to quit school because she can’t afford it without tuition assistance, and looks upon the whole experience as three years wasted away from her family. Did the company really help her improve her personal life?
• An employee and his teenage daughter have been working through serious interpersonal problems with the company’s parenting support group. Just as they’re close to a breakthrough, the man is terminated. Because the other members of the support group are employees who meet on company time, the man and his daughter are basically exiled. What do they do now?

The other side of the coin is whether companies themselves really gain much from acting as de facto caretakers. In a Personnel Journal reader survey, 52% of respondents said that companies had taken on the caretaking role; 55% believed the trend was on the upswing; and 74% reported that they’d introduced initiatives in 1994 that could be perceived as caretaking (see February 1995 Dialogue). Most respondents (58%) considered their actions advantageous.

Many others disagree. “I think they just get dependent employees,” says Paul Bates, vice president of HR for Knoxville, Tennessee-based East Tennessee Children’s Hospital. “Then, when employees are let go, they’ve lost not only their employment-they’ve lost a way of living.”

So there’s the second part of the problem inherent in these service programs. In the age of empowerment, we’re throwing benefits at employees, tying them closer to us-which is exactly what we’ve said we don’t want in the workplace of the future. And then there’s the money issue.

The Third Mistake: Unjustified spending in the age of bottom-line viability.
Aside from employee empowerment, if there’s a mission that HR has been trumpeting over the past few years, it’s keeping an eye on the bottom line, becoming a strategic function. Yet while it’s been shouting the message from the rooftops, HR has been spending money hand over fist on employees. In 1989, U.S. corporate investment in benefits and training programs was estimated-conservatively-to be $60 billion by economist Richard H. Beinecke for Boston University’s Institute for the Study of Economic Culture. And a recent Hewitt Associates survey reveals that employee benefits now exceed 40% of payroll in some industries.

This is, of course, all well and good if HR can prove the investment pays off. Unfortunately, most HR professionals put very little time and effort in ensuring a return on investment. In a recent survey of more than 1,500 HR professionals by Philadelphia-based The Hay Group, only 28% considered controlling benefits costs to be among their top four priorities. A 1994 Work/Family Directions profile of 75 clients-among them four Malcolm Baldrige Award winners and 31 Fortune “Most Admired Companies of 1995”-revealed that even among this business-savvy group “relatively few of the respondents formally evaluate the impact of their programs-about one in five.”

“HR people are the last people to feel this pressure to cost-justify-pressure that’s been around since the late ’80s. But I think the idea of somehow cost-justifying just about anything we do is going to become important,” says Hotchkiss. “The days of nice to do’s are gone. You can’t justify programs by saying, ‘Oh, gee, people would really like this.'”

This sounds like common sense, yet most HR departments remain guilty of it to some degree. Think about it. Do those parenting programs you offer really make your employees more productive? Wait: Don’t just give the standard line, “If they’re not worrying about things at home, they can focus on the jobÉ” It’s not enough. The fact is, HR continues to offer a variety of nurturing, thoughtful programs-that can’t be even indirectly traced to keeping the business healthy.

Now, it’s easy to predict how most HR professionals will react to the challenge. But our programs do pay off, they’ll say. Morale, recruitment, retention all get a boost when you offer employees a hand through extra benefits or services. OK, this sounds like bottom-line talk. Now write down on a piece of paper your exact return on investment. Do you have the figures to prove your work-family programs really haul candidates in? How many employees really have been straightened out by your EAP to return to top performance? How many people refused to leave your company because they were so dazzled by your tuition-reimbursement plan?

Don’t assume these things work-make sure they do. Because sooner or later, budgets will tighten up again-it’s inevitable with competition growing both domestically and globally. And when companies are looking for ways to cut back, they’re going to turn their eyes on HR. “Corporations have been buying into this endless stream of programs without really thinking it through,” says Nash. “Then, when there’s a dollar crunch, guess what’s going to be axed?”

Tracking the dollars and dimes is no easy task, to be sure. It’s not as if such things as morale or commitment, time saved or retention can be absolutely quantified like assembly-line widgets. “We’re still applying the old industrial-age measures to a knowledge-based work force,” says Bob McDowell, national director of HR for New York City-based Coopers & Lybrand L.L.P. “I think the difficulty is that with HR issues it’s more complex. But we have to find [some way], because there’s a point at which you make an investment that you don’t get a return on any more.”

The amorphous nature of HR issues does present a bit of a stumbling block in cost-justification matters: “Lack of measurement may be an indication that the potential business outcomes from work-life programs aren’t widely understood, or that resources for measurement simply aren’t available,” says the Work/Family Directions client survey. Yet there are ways of pinning down some cost savings. For instance, it’s fairly simple to track absenteeism and stress-related claims before and after instituting certain programs. However, these two components were the least-often evaluated by the responding client companies. So, as nettlesome as the project may seem, you really can show a return on investment for your programs. You’re going to have to. Start gathering company-specific proof now. Because for every piece of data that shows employee benefits do help the bottom line, there’s a second piece that shows they don’t.

Take, for instance, the argument that generous employee benefits boost recruitment efforts. Not necessarily so. In a phone poll of 1,000 people conducted by the Employee Benefit Research Institute and The Gallup Organization, of those who’ve turned down a job offer in the last five years, the primary reason was because the salary was inadequate (31%). This was followed by the fact that they didn’t think they’d like the job as much as their current job (30%), followed by the fact that they’d have to relocate (18%). Only 7% even mentioned benefits as a reason for turning down a job, and that was specifically for inadequate health benefits. Work-family initiatives, wellness centers, et al don’t even make an appearance.

The point: Lose the mindset that extensive benefits are something to brag about. They shouldn’t be automatically equated with a gold star. Instead, employ some of that famous HR strategy to prove the numbers add up to profit.

The first step on the road to recovery: Get out your calculator.
If HR is guilty of thwarting company evolution to Workplace 2000, there are several things it can do to get back on track. To begin with, cost-justify all your programs, because if they’re not making a solid contribution to the bottom line, they’ll have to go.

Where do you begin? The Towers Perrin employer survey suggests that successful work-life initiatives evolve from a needs assessment. Those who can best justify their programs are those who gather hard data on the issues. Among the techniques that employers reported using most frequently are employee attitude surveys (used by 49%) and employee focus groups (32%).

So start by finding out what will keep your best employees with the company and what will help make them more productive. New York City-based Time Warner Inc. knows. It conducts regular anecdotal analysis and focus groups across all business divisions on all work-life initiatives. In 1992, the company opened the doors of its child-care center at the Time & Life Building. The center is friendly and fun, colorful and open-and free to employees who sign up. It sounds suspiciously like a “caretaking” benefit. It actually is a competitive advantage. Caring for as many as 30 kids when employees’ regular child care falls through or schools are closed, the center has provided more than 47,000 hours of back-up child care. The center, which costs $375,000 a year to run, pays for itself in saving otherwise lost work days. It’s the perfect example of a way to assist employees for the benefit of the company. “We have [comment] after [comment] saying, ‘I can’t imagine going to a company that didn’t have this benefit,'” says Nancy Platt, assistant director of training and work-life initiatives.

As for retention and productivity, First Tennessee Bank provides an excellent example of a company that uses work-life initiatives and other employee extras to support the bottom line while helping employees. A great deal of credit goes to the fact that it simply starts out with the right attitude. “I haven’t found anybody who’d argue against doing something because it’s a good thing to do for our people. But still we have to make business decisions,” says Brown. “As HR personnel, we need to be more tuned-in and aligned with that overall business strategy, and we need to view our programs the same as any other product or offering of the company.”

Brown certainly can’t be criticized for having a do-as-I-say-not-as-I-do attitude: The Institute of Management & Administration recently used the Memphis-based bank in its Report on Reducing Benefits Costs as an example that proves work-life programs “can lead to increased productivity and profitability at little or no cost to the employer.” How did they do it? For one thing, Brown didn’t start with a work-life wish list of programs and then try to find business reasons to justify them. She started with what her business wanted to accomplish. “My whole focus was on strategy,” she says. “For instance, we’re very focused on how we can improve customer retention. At a bank that’s critical-the only way we can differentiate ourselves in the marketplace is through our people. A checking account is a checking account.”

Improving customer assistance, of course, means finding out what prevents employees from top-notch service. One problem was absenteeism, so First Tennessee Bank circulated an anonymous questionnaire among its 8,000 employees to find out exactly why they were taking absences. The survey revealed that many employees at all levels were staying home to care for sick children. It was then that Brown began considering sick-child care: The benefit became a business strategy. (For more on choosing the most profitable child-care option, see “Deciding How To Provide Dependent Care Isn’t Child’s Play”.)

Similarly, when the bank wanted to improve service in the account reconcilement area, it again rooted out the problem. In a discussion with employees in that unit, the bank discovered that the group had its busiest time at the beginning of each month. Companies who were waiting to have their accounts reconciled obviously wanted them done soon-two days ago if possible. But the overwhelmed group was taking about eight working days to do so. The solution? The group approved a no-cost flexible schedule: They’d be willing to work longer hours and in return take time off later in the month.

Now the group works 12-hour days at the beginning of each month, and reconciles all the books in four days-half the time it took before. The bank pays them overtime, but then to balance the budget, as well as employees’ personal time, the group takes off a day or two later in the month. “It worked because it allowed the employees to come up with the solution, and in turn customers profit as well as the employees,” says Brown. The work-life solution cost the company nothing and achieved a business goal-First Bank has seen service-quality responses from customers jump 50% since instituting the new flextime.

The bank also used work-life programs to aid its retention. When a group of full-time employees were feeling overwhelmed and on the verge of leaving due to family responsibilities, the company offered to let them reduce their hours while keeping their full-time benefits. Estimating from the people who took the company up on its offer, Brown says the organization saved an 85% turnover from that group-a great savings for the company, which pays approximately 50% annual salary to replace a non-exempt staffer and 150% for an exempt professional.

The result of all these programs? Yes, employees are happier and morale is up. But-most importantly-Brown can quote true bottom-line savings the next time a company official says “Why do it?”

The second step to success: Give your benefits a check-up.
It’s no coincidence that, like First Tennessee Bank, most companies lauded for their business-minded benefits offer a generous helping of flexible work arrangements. Why? They are an answer to assisting employees without yielding any of the three main problems of other benefits. For instance, flexible work arrangements help employees help themselves, which is, after all, what we want. They maintain business objectives while giving employees back some of their time, which is, after all, what they want. “Time is the most precious commodity for lots and lots of people,” says Levering. “Some of the best benefits are those that give employees back their time. Variations in flextime and vacations and sabbaticals-those I think are the best.”

Don’t believe it? Check out these statistics: In a 1994 survey of 1,000 employees by Cambridge Reports/Research International, 72% rated as “very or extremely important” that their job does not interfere with their personal life.

Brown believes her company’s flex schedule addresses the need for employees to “take a little time.” According to her, the initiative is a little- to no-cost way to help out the bank’s 8,000 employees while still keeping an eye on the bottom line. “Our employees told us that it was impossible to feel empowered to support their customers if they felt powerless over how they structured their own jobs. Our flexibility allowed managers and employees to work through the empowerment model. Flexibility in the workplace is the greatest thing a company can do-and it’s probably also the cheapest.”

At White Plains, New York-based NYNEX Corp., Don Sacco, vice president of HR, also mentions flexible work arrangements as one of the most popular and least expensive programs offered to his company’s 70,000 employees. “If it’s compatible with the job, and you treat everyone like an adult, then 99.9% of employees really enjoy that and are more productive, and we gain from it. Most employees want to do a good job and if you give them freedom, they’ll use it in a way that makes sense. Same with casual dress days. There’s no cost to us. Yet the reaction to it from employees is very positive.”

Of course in some cases, flexible work arrangements aren’t an option, and HR is forced to deal with employee overwork as an unfortunate fact. HR still, however, should check over its benefits to ensure they don’t encourage company dependence. Most HR professionals will be happy to know that it’s still OK to lend a hand-as long as it’s a means to the end of empowerment.

“I think that teaching people how to quite literally ‘get a life’ is the responsibility of the corporation in this transition period,” says Corbin, author of “Conquering Corporate Codependence.” “People aren’t making their own life decisions. They’re very fearful. They’ve never really grown up. Even animals wean their young, but we never have. People go from family to school to work, and don’t know how to make a life for themselves. I believe that the corporation has the responsibility of telling people this, and offering training. Now if after all that, people don’t get it, that’s their problem.”

So how does a company know how far to go? What do these empowering programs look like? Where’s the line between helping employees to, as Corbin put it “get a life” and actually becoming employees’ lifelines?

Many companies are doing a good job in such areas as financial planning. They’re turning more responsibility over to employees while providing a steadying hand and a source of information. Hartford, Connecticut-based Aetna Life and Casualty is one example. The company offers its employees assistance in financial planning, but lets them follow through on their own. “That fits right in line with our entire strategic plan to move employees from spenders to savers to investors to financial planners,” says Ann Ewers, vice president of corporate benefits. “We’re looking for employees to assume more responsibility for their choices. We educate them, put the tools in their hands and teach them to use those tools. But then we expect them to take it from there.”

Burlington, Vermont-based Rhino Foods Inc. also seems to be striking a good balance between assistance and empowerment with its “wants” program. Initiated about five years ago, the program is designed to help employees achieve their life goals-be it to buy a house, get a promotion, write a book-whatever.

It works like this: Eight employees currently act as “wants coordinators,” and all 75 employees of the frozen-dessert company are encouraged to meet with coordinators once every three months. At these hour-long meetings, held on company time, employees identify their “wants.”.

Marlene Dailey, director of HR, stresses the importance of the wants coordinators not just handing solutions to employees. They should act as facilitators, not “doers.” They should ask questions, not provide answers. “Let’s say someone told their wants coordinator they really wanted to buy a house. The coordinator would ask questions about how that person would go about it versus saying ‘Oh, I’ve bought three houses, let me tell you how it’s done.'”

The wants program helps employees cultivate skills they can use both on and off the job. For instance, one employee wanted to improve his communications. By working with his coordinator, the man decided to find a coach. Apparently, the plan is working; he’s received higher performance marks from his supervisor and reports smoother personal relations.

Dailey says the program is extremely popular-about 80% of employees are currently working on a “want.” The cost to the company is very little: Four hours of meetings per year for each participating employee; fewer than 10 hours of training for each new batch of wants coordinators, plus follow-up meetings for the coordinators-probably less than 500 hours of employee time each year.

In return, the company has watched its work force become truly empowered. Dailey says employees are more confident and innovative on the job. “This program is not about somebody saying, ‘This is what I want, now give it to me.’ The whole program is set up on the idea that this is a life skill that we’re trying to teach people. It’s not an altruistic thing. We very clearly say to people that this will be great for work.”

That’s the spirit that seems most likely to help employees: company-provided assistance with a do-it-yourself follow-through. It’s a spirit that many experts recognize in resource-and-referral services, which are gaining momentum. According to a Hewitt Associates study, 84% of 1,035 surveyed employers offered some kind of child-care assistance-40% of these offered resource-and-referral services. Of the 24% of employers who offered elder-care benefits, 78% had a resource-and-referral service.

“Employers that offer these services have chosen to support their employees. They offer a data bank of information and allow employees to pursue such things as child care on their own,” says Hotchkiss. “It follows some of the empowerment trends in Corporate America by giving employees the tools and then saying ‘You go do it yourself. You make it happen.'”

Once you’re on track, get ahead of the game by prepping for the future.
Don’t sit on your laurels once you’ve rehauled your employee programs. Take a look at what’s on the horizon-and don’t be afraid to experiment to find what works for your company.

Here’s what you can expect to see coming your way-in a general chronological order:

• Flexible benefits
• Benefits vouchers
• Voluntary benefits
• Portable benefits
• No benefits.

We know flexible benefits plans work, and will continue to play a role in the transition to more empowering employee services. Companies all over are using them to varying degrees to begin opening up the list of options for employees: Of 489 employers surveyed by Hewitt Associates, for instance, 90% permit employees to waive medical coverage. Vacation buying and selling is provided for flexibility at 15% of the companies. Three out of four benefits programs include at least one flexible spending account, with two-thirds of employers sponsoring both health-care and dependent-care accounts.

NYNEX, a company long-known for its comprehensive benefits strategy, has recently introduced new options in its savings plan. “It used to be that the choices in which employees could invest savings were very limited,” explains Sacco. “We’ve created eight or nine new mutual funds so they can have different investment flavors. We’re offering greater employee choice and control, which frankly doesn’t have any cost to us.”

In addition, the company is about to roll out for management employees an opt-out feature on health-care services if they can show proof they’re getting health care elsewhere, such as through a spouse. East Tennessee Children’s Hospital is offering a similar program-allowing employees to waive out of its health plan and receive credit on other benefits if they can show they’re insured elsewhere. “This way we can keep them within the corporate structure. It gives them more choice, but makes sure they won’t become uncovered,” says Bates.

Benefits vouchers basically take the sentiment behind flexible benefits one step further. The nice thing about vouchers is that they can assist employees without tying them too closely to the company. That way, for instance, the earlier-mentioned case of the downsized alcoholic who lost access to counseling wouldn’t be a concern. That’s because benefits vouchers basically earmark a certain amount of money and let employees invest it outside the organization as they please. So if the man was laid off, he’s already been funded through a certain amount of counseling sessions; and he can continue to keep up that relationship without company involvement.

Morgan of Work/Family Directions sees this trend as heading in the right direction: “Choice can be a very valuable thing to offer employees. Vouchers [say to employees] ‘You’ve got $40 in your benefits package. You have a choice between this and this, but you can’t have both.'”

Vouchers simply make sense. They mesh much more effectively with the workplace of the future. Says Hotchkiss: “If you’re going to give your employees more power and control in the workplace, why not extend that to their benefits package? I think benefits vouchers to buy outside services will be a major trend because of the whole empowerment rationale.”

Requiring even less company involvement are voluntary benefits, which enable employees to purchase insurance and financial products at the worksite to meet their individual needs. Currently, most employers use them as a means of providing employees access to added benefits the company won’t provide. But they just might be the Next Big Thing in employee services. In a survey of more than 3,000 employees, the Life Insurance Marketing and Research Association found that 51% of employees said they’re open to buying products through their work on an employee-pay-all basis.

One key voluntary benefit is long-term care insurance, increasingly important as baby boomers head into their more mature years. According to a Hewitt Associates survey of almost 500 organizations, 27% are planning to offer long-term care insurance within the next three years; 10% currently do.

NYNEX is among these 10%. “A long-term care package is one thing we offer that employees pay for,” says Sacco. “These are becoming a more popular item considering the aging of America and people’s concerns about taking care of the costs that are outside of most medical plans.”

But voluntary benefits can comprise any number of benefits: The point is to help your employees help themselves. “In the face of rising benefits costs and increased bottom-line pressure, we’re seeing a shift in employer paternalism and employee entitlement toward shared responsibility and costs,” says Rick Storms, assistant vice president, worksite voluntary benefits for Minneapolis-based Northwestern National Life Insurance Co. (NWNL). “Voluntary benefits help companies offer some additional benefits to employees while still supporting the message of employee responsibility.”

As the work force becomes more transitory, portable benefits will probably be the next step. They’ll play a major role in untethering employees from specific organizations because they’ll move along with employees from company to company.

Storms believes that many employers will be looking into this in the future. “It’s just a recognition of the changing nature of the working relationship, that it’s not a lifetime thing, and there are no hard feelings when you leave a company. Employees and employers want to make sure employees are in OK shape when they move on.”

Coopers & Lybrand’s McDowell is a proponent of portable benefits. He believes that just like career-training services, they’ll be a means of emphasizing to employees that they’ll likely leave the company at some point. “The key is finding effective ways of transitioning people from one place of employment to another. When separation time occurs, what mechanisms do you have in place for employee transition? Human resources has just not been creative enough yet in helping people transition in terms of different life events-one being when they leave an employer.”

But there may be one more step to take beyond portable benefits-one that’s currently causing quite a bit of controversy. Corbin sees portable benefits as moving in the right direction-one that will eventually render employee benefits non-existent in lieu of compensation. “Let employees go out and do their thing. I firmly believe that, because I think benefits detract from work. Right now, people are working places not because they’re core competent, not because they’re good at their job or like their job even, but because the benefits are good. When benefits are no longer [part of a company package], then real work will take place.”

On the surface, it seems like a simple concept, and one that many employers would jump at: Forget all those pesky benefits programs and just give employees the money. Let them deal with it. But the issue is one that flares quite a few tempers. Many human resources professionals view it as simply hanging employees out to dry. They believe it’s the company’s responsibility to handle these things.

“I’ve never even heard our employees whisper that they ought to have the money so they can go out and do their own thing,” says Hilmar Hagen, human resources director for Lancaster, Pennsylvania-based Safe Harbor Water Power Corp. “I’ve seen that happen in union organizations, and I’ve seen them become uncovered. Personally, I think it would be horrible to do that because you’d have people spend that money on a new car or whatever and never buy insurance.”

Hotchkiss of John Jay & Co. believes the idea is also uneconomical: “I don’t think the answer is to just hand over money to employees. There are certain things that employers can research and design better than the individual can. There are a lot of things that are cheaper and easier to do in a group setting.”

Mostly, however, the dissent comes from those who are unsure employees can effectively handle the responsibility. Says McDowell: “I know one of our competitors tried something like that, and found that employees just aren’t very knowledgeable consumers. People get themselves in trouble.”

That’s OK, says Corbin. Let them run aground a bit. “I think employees will blow it at first. But when one or two of them stumble and fall and reach retirement and aren’t prepared, then other people will learn from that.”

Corbin acknowledges that it will take some extra training in this transition period to ready employees for the responsibility. “Probably 90% of workers are corporate co-dependent in one way or another, so [you can’t just] turn them loose, and say ‘All benefits are gone, pick your own,’ because nobody’s really been taught.”

Despite the fact that this approach is relatively uncharted territory, Corbin says there’s a real danger in the tendency of companies to underestimate employees’ maturity. Employees need to be encouraged to grow up and handle more themselves. “It’s about empowerment. Trust them to make a decision, and give them responsibility for that decision. It’s continued enablement if we just say ‘They can’t do it. I know they can’t do it.’ That’s crippling for an employee. That’s paralyzing.”

Corbin practices what she preaches. At the Center for the 21st Century, employees, who act as independent contractors, are provided no benefits. Instead, Corbin kicks in a little extra compensation. She believes it’s important to have employees in charge of their own destiny-both for their own good as well as the company’s. “It’s called the workplace, so what should take place there is work. Benefits are a distraction. People stay at a company because of its health care instead of the work done there.”

McDowell agrees that the idea might bear looking into: “I do subscribe to the theory that there’s a shared responsibility in the employment relationship, and that extends to the individual taking on some things on their own. It’s a tough [call]. It would certainly be something I’d try in some areas.”

McDowell’s sentiment really embodies the spirit of what HR needs to be for the future. The attitude is analytical, maybe even a little bit skeptical, of the variety of programs and policies coming down the pike-yet at the same time open-minded enough to give it a spin and see what works.

As we head toward the skill-based, independent-minded company of Workplace 2000, employers are going to need all the support they can get. It’s up to HR to help empower employees while assisting, and to invest with an eye on the return. It’s up to HR to help today’s company-and all its employees-make the transition to the future successfully.

Downsizing. Rightsizing. Restructuring. Reengineering. These seem to be defining words for business in the ’90s. Yet these terms are inherently vague; their interpretation depends on whom you query. Ask many employees today, and they’ll give you their gut reaction: Hearing these words announced by the company means that they may soon be out of work. Scores of job functions have been cut over the past few years. That doesn’t mean companies are just cutting back on people—companies are eliminating entire occupations.

Enter the severance package—a phrase that, surprisingly, has come up very little, despite all the changes and cutbacks. Yet it is very much alive and well. In a benchmark study of 2,893 HR professionals across the United States, 82% reported that their companies have a severance policy or practice. Yet the study (conducted by New York City-based Lee Hecht Harrison in conjunction with Personnel Journal and New York City-based law firm Jackson, Lewis, Schnitzler and Krupman) showed wide variances of policy particulars.

Apparently, the definition of an effective severance policy also depends on whom you ask. For some, a severance package is an extension of goodwill, and so should be sweeping in its inclusion of employees—no matter their reason for separation or their length of service. For others, it’s a reward for a job well done, provided on a case-by-case basis for those deemed worthy. Still others view it as a way of warding off lawsuits, and so packages are carefully doled out by the book in exchange for releases.

Which approach is right? All of them. An effective severance package is one that meets its goals—and these goals can be as varied as the companies that choose them. As long as they are carefully thought out and executed, any type of severance package can be a success—but you must ask yourself some questions first.

What should our severance package look like?
You can check out your neighbors’ policies all you want, but in the long run each individual company must decide what its policy should reflect. Two basic issues must be addressed before a policy can begin to take shape:

• You must know why your company is providing a severance package in the first place.
• You must decide whether your policy should be formal or informal.

Why spend company money on a severance package? It’s not required by law. In fact, for many companies, it’s one of the first benefits to be trimmed away in a belt-tightening strategy. So why is your company choosing to offer a severance package?

For many organizations, the reason is primarily altruistic. “We feel that to provide a package that can assist employees financially during the period of transition following termination from the company is just the right thing to do,” says Marilyn Wilfong, manager of employee benefits for Tacoma, Washington-based Weyerhaeuser Co. “I really can’t imagine why we would ever do away with it. We feel it’s the right thing to do when our employees are losing their jobs.” The sentiment is certainly echoed by other companies. In the survey by Lee Hecht Harrison, participating companies reported that the No. 1 reason for offering severance was “to provide an adequate bridge to new employment” (stated by 80% of companies). This was followed by “to maintain a positive reputation as an employer” (68%) and “it’s the right thing to do” (62%).

Golden, Colorado-based Coors Brewing Co., in the midst of a substantial restructuring, has several reasons for providing a severance package—some grounded in altruism, and some anchored in business strategy. “First of all, we want to make sure our employees are treated fairly,” says Jennifer Thomas, director of HR. “Because the transition between employment and re-employment is often difficult and emotional, we want to reduce the financial concerns so they can focus 100% on their job search.” But Coors also wants to protect itself, so its new severance guidelines, now in the final stages, will also include a mandatory release of claims.

Such use of a release is not uncommon; only 20% of companies in the survey reported that they never require a release in exchange for severance payments. That doesn’t mean, however, that most companies feel they need releases. Fifty-five percent of respondents felt that simply offering a severance package reduced the likelihood of lawsuits.

Reduced complaints are one benefit that Merrill Wall, first vice president and director of HR for Irwindale, California-based Home Savings of America, sees in severance. The company publishes the policy in the employee handbook so everyone knows ahead of time what to expect. Wall believes this clear delineation of benefits helps cut down on disappointment when a severance package is issued; and that by cutting down on disappointment, the company has fewer disgruntled employees leaving the fold. “Employees have a sense of just what the severance is. I think they also have a sense that the company is being both fair with them, and reasonable as it relates to severance,” he says.

Massachusetts-based Cambridge Savings Bank takes a similar stance. Mary Livingston, first vice president of HR, uses a generous severance package as a final form of wishing a terminated employee well—and as a means of making the exit as uneventful as possible. “We get a lot more mileage out of being generous in these situations,” she says. “As long as we can afford financially to do that, we feel it’s in our best interest. We don’t want disgruntled employees talking badly about the bank. And we certainly don’t want an angry employee filing a lawsuit, which they’d be more likely to do if we were tight on our severance package.”

Whether it be to avoid lawsuits or help an employee transition, once a company has ascertained that it does indeed have specific reasons for offering a severance package, HR must decide whether to make the package formal or informal. For many companies, this can be quite a dilemma: An informal package will give HR much more room to maneuver, with the ability to act on a case-by-case basis. But if a package is ever challenged, the formal, corporatewide severance policy has a much better chance of standing up.

Those companies that choose to maintain informal packages generally are smaller organizations. In the Lee Hecht Harrison survey, only 68% of companies with fewer than 5,000 employees had policies in writing. Compare this to 91% of companies with more than 5,000 employees who had written policies, and the difference becomes fairly profound.

Northlake, Illinois-based The Custom Companies is a small organization with no formal package. Tom Boyle, assistant vice president of administration, says that the 240-employee transportation company always decides severance packages on a case-by-case basis. “We’re a very young company—only nine years old—so a lot of our policies are being developed as we move along. [An informal package] gives us more flexibility. It has worked quite well up to this point.”

Cambridge Savings’ Livingston echoes the desire for flexibility. Similar in size to The Custom Companies, with 250 employees, the bank also opted to go the informal route. Livingston says HR tries to be as consistent as possible in issuing packages, but isn’t interested in formalizing a procedure. “We just don’t want to be locked into anything,” she says. For Cambridge Savings, the flexibility of an informal plan outweighs the risk of potential lawsuits—and Livingston isn’t too worried that one will come her way. “In each situation, we’ve been able to justify or defend our approach. Whether that would hold up in a court of law I don’t know. But we feel more comfortable with that risk to keep the flexibility.”

With 100 active employees, Enfield, Connecticut-based Bloom’s Inc. also has an informal severance package—for much the same reason. Says Robert Clark, personnel manager: “We feel that an informal policy like this allows us the advantage to tailor the severance package to suit each situation. We’ve never been sued; we don’t give our employees any reason to initiate action against us.”

Larger companies, however, tend to need more formal policies. Penny Shaw, executive vice president with Lee Hecht Harrison, says that the sheer number of employees these large companies deal with necessitates an objective policy. “These big organizations could literally have hundreds of people being terminated from the organization in the course of a year. It could even be thousands if they’re going through lots of downsizing. So at that point it becomes incumbent to have something that is fair and consistent—a policy that can be relied on because of the volume of people being handled.”

Home Savings of America is one such company. With 10,000 employees, the organization simply requires an objective policy. “Part of the reason for having a formal policy is so that you don’t have to administer it on an individual basis,” says Wall. “Also, I think from the standpoint of fairness, if different employees with the same years of service, perhaps the same performance level, receive different packages, you have to justify why. Favoritism could get involved.” With 6,300 and 15,000 (salaried) employees respectively, Coors and Weyerhaeuser also have strict formal policies in writing.

But small companies be warned. Neal Schelberg, a partner at New York City-based Proskauer Rose Goetz and Mendelsohn LLP, recommends that any severance policy be set down in writing in a separate legal document—no matter what size the organization. This could provide a legal advantage if the company is ever challenged on its package. “If you have an informal policy that is not set forth in any kind of clear, concise statement, you have not reserved the right to interpret your plan. Then, should you have to defend a denial of severance benefits in court, you’re going to have a much tougher case.” Schelberg advises companies to be as explicit as they can in the document, identifying exactly what the triggering event is for severance as well as exactly who is eligible. But to set this information down, you must first decide the scope of your severance package.

Who, how much, and under what circumstances?
A well-defined severance package details which employees qualify (part-timers? non-exempt?), how much they qualify for (a week for every year of service? is there a cap?) and under what circumstances they receive severance (termination for performance? only for downsizing?).

“The first question you need to ask is who among your employees do you wish to provide with severance,” says Schelberg, whose specialty is employee benefits law. “Are all employees eligible, or is it perhaps only some particular group or job classification? Is it for hourly employees, or just for salaried employees? Clearly reflect the company’s intentions when you say ’employee severance.'”

Sometimes union issues prevent companies from issuing an all-encompassing severance policy. For instance, Weyerhaeuser’s corporate-wide severance package affects only the salaried work force. The package for the hourly work force is handled locally. “We’re trying to blend the line between the salaried and hourly work force, but it’s hard because a lot of the hourly work force is union, so they negotiate their benefits,” says Wilfong. The company does, however, make it very clear that a single plan governs the severance of their salaried work force. “Regardless of whether you work in Columbus, Mississippi, or Tacoma, Washington, if you’re a salaried employee, you’re part of one plan.”

As Coors revamps its severance guidelines, it’s focusing on which workers it wants to cover with severance. The new plan may, for instance, cover certain part-time employees. This addition reflects Coors’ change in work structure—many former full-time employees have accepted part-time positions, and Coors wants to recognize them. “As we go forward with the plan, we look at what makes sense,” says Thomas. “We look at how we can meet the needs of our long-service, part-time employees, because we don’t think it’s fair to just let them go.”

As far as determining how much a terminated employee qualifies for, length of service and salary level play two very important roles. In the Lee Hecht Harrison survey, companies were asked to name all the factors they used in deciding the severance amount. Years of service was the biggest factor: 89% of organizations based severance for their exempt employees on their length of time with the company (83% for non-exempt). Salary or grade level was another important determiner: 32% of companies used this as a deciding factor for exempt employees (25% for non-exempt).

Weyerhaeuser’s package is a fairly typical one, reflecting an employee’s years of service at the company. It kicks in at one year, and employees with up to five years of service at the time of termination receive one week for each year of service. For those with six to 15 years with the company, an additional two weeks’ pay plus one week for each year of service is granted. The scale graduates to 26 or more years of service: These employees receive eight weeks’ pay plus one week per year of service.

Home Savings of America also bases payment amount on length of service: An employee at the company two years at the time of termination receives two weeks’ pay; three years earns three weeks’ pay and so on, capped off at 12 weeks’ for a non-officer employee. The plan works a bit differently for officer-level employees, with the minimum amount of severance being four weeks’—on up to a maximum of 26 weeks’ pay.

Companies with informal packages, such as Bloom’s, obviously have no set pay system. Yet they generally look at similar issues when gauging severance. “There are no minimum or maximum package amounts, but they are within a range we feel comfortable with,” says Clark. “Generally we give a number of weeks of salary based on issues such as tenure, the contributions that the employee has given the company, and any other mitigating circumstances that caused the termination.”

The circumstances surrounding the termination do exert a major influence on most severance packages. Some companies, for instance, provide packages for any kind of involuntary termination, while others assist only those who were separated from the company due to downsizing.

One major dividing line is whether to provide severance for an employee terminated for poor performance. Home Savings of America, for instance, firmly believes that termination for performance prohibits an employee from receiving severance. “In the case of performance, the individual employee always has the opportunity to improve,” explains Wall. “With the counseling process we have, employees are always given a time frame in which to improve performance. So if an employee has 30 days to improve, that in essence is a notification to the employee that something is wrong. But in the case of layoffs or downsizing, these may come as a surprise to the employee. So we felt that we needed to give them some security or notification, and that’s what the severance plan really provides them.”

Conversely, Weyerhaeuser does provide severance for employees separated due to performance issues. Part of the reason, explains Wilfong, is Weyerhaeuser’s corporate culture. The company remains fairly paternalistic, and so assumes a fair share of the blame when an employee doesn’t work out. “Unless it’s for some gross negligence or a really out-and-out violation, we offer severance. The bottom line is we hired them. For some reason they aren’t performing satisfactorily. Maybe they just weren’t a good hiring selection. So we’re not going to penalize them because we hired them.”

Cambridge Savings Bank takes a similar approach to employees terminated for performance. However, Livingston reports that the company—which determines severance on a case- by-case basis—would be more likely to give the low-performing employee a smaller payment than the severance awarded a downsized employee. “We might give them less than [usual] if it was strictly a job-performance situation, but maybe for longevity reasons or political reasons we don’t want to not do anything.”

Weyerhaeuser and Cambridge Savings Bank are actually in the minority in offering severance for poor performance; only 33% of respondents said their company recognized low performance as a triggering event for severance. The most common qualifying conditions companies gave for severance were downsizing (95%) and job elimination (94%).

Will our severance package be good forever?
Probably not, is the short answer. Like any other benefits package, a good severance policy must be continually revisited to ensure it reflects the changing times—both internally and externally.

Coors’ extensive organizational re-alignment, for example, is an internal change that forced the company to review its severance package. “The old guidelines we had in place were designed to take care of people who didn’t have a lot of service with the company,” says Thomas. “Now we’re getting into situations where we potentially will be outplacing people who do have a lot of service with the company.” Thomas didn’t feel the former guidelines would adequately cover the long-term employees. “The new guidelines are going to address situations of reorganization and restructuring or an actual change in job function or job requirements. For instance, you may occupy a particular job, and now we’re saying that we need this job to perform different functions. Our old guidelines didn’t cover [employees displaced this way]. Our new guidelines will.”

The new guidelines will also focus on providing more equitable severance for senior-level people. For instance, the basic industry formula is that for every $10,000 in salary an employee earns, it will take one month to find a new position. So an employee who makes $100,000 will likely be out of work for 10 months. The old guidelines didn’t really address that issue: At one year of service an employee received one month severance, with one weeks’ pay for each additional year of service after that. The package didn’t have a cap, but for the $100,000-employee, 20 years of service would still only cover that person for half his or her expected period of unemployment. A recently hired employee—one with only a few years’ service—would likely run out of severance months before finding new work. “One month’s salary isn’t going to do it for them,” explains Thomas. “Not that we’re necessarily going to give them 10 months’, but we do need to have special considerations.”

In addition to caring for its downsized employees financially, Coors also added a mandate to its new guidelines to ensure that more personal issues are addressed. The company now requires mandatory outplacement assistance in order to receive severance. “Every employee being outplaced goes through at least career counseling and resume writing,” says Thomas. “For professional employees, there will also be additional one-on-one counseling or group sessions. We’re no longer allowing them to cash in the dollars instead of taking the services.”

Like Coors, Weyerhaeuser has also recently revisited its policy—but did so in light of external rather than internal changes. “Based on some competitive data we received, we felt our severance plan was too rich on the low end and not rich enough on the high end—that is, for long-term service employees,” says Wilfong. “So we made some changes this year.” To maintain its competitiveness, Weyerhaeuser has a planning and consulting group within the company that is responsible for reviewing all benefits packages annually. “We’re always looking at competitive data,” says Wilfong. “We take a look at how we stack up. When we look at benefits comparisons, we want to be sure that we’re right in the middle of the pack. That’s where we want to be competitively.”

Home Savings of America keeps an eye on external and internal conditions, and reshapes its package accordingly. “We’re constantly trying to assess our needs and our employees’ needs as well as how competitive we are in the marketplace,” says Wall. For instance, when downsizing in harsh times, the company has initiated an enhanced severance plan to help employees weather the tough job market. “We were going through a time when we were downsizing a significant number of people, and we knew that it was going to be especially difficult, because of the economic conditions, for them to find other employment.” So the company enhanced the package by adding an additional week for each year of service, graduated by seniority. “We just wanted to give people a greater sense of security during that window period. Of course, that window opens and closes depending on the economic circumstances. We’ve only offered enhanced severance once or twice during the last seven or eight years.”

So, what do employees generally think of their severance packages? Those companies that have appeals systems report that very few employees bring forth complaints. Weyerhaeuser says its only appeals on severance have been when an employee lost a job due to a sale. But because the company has made it clear that employees picked up in a sale receive no severance, the issue was quickly resolved. “In our policy decisions we’ve always tried to bend over backward in favor of the employee,” says Wilfong. “We get very few appeals on severance. I don’t think you could even calculate the percent.”

Bloom’s and Cambridge Savings Bank, which both offer informal appeals procedures, each report that they have never had an employee present a complaint. “When it comes right down to it, employees may be unhappy concerning being terminated. But once things settle down [the employees I’ve talked to] were very appreciative and very happy they were given severance,” says Livingston. Most employees do indeed appreciate their severance. In a Lee Hecht Harrison client survey of 577 respondents, 66% reported that they felt they’d been treated fairly.

Satisfaction with severance pay is possible—for those on both sides of the termination. When a company asks itself the right questions and creates a package that works for the business and its employees, it seems that severance need no longer be a taboo word.

Let’s put it in writing. It’s a phrase being uttered not just by executive candidates anymore—now it’s heard from the mouths of employers eager to wrap themselves in another layer of legal cushioning.

Employment contracts, when done right, can ward off all sorts of nasties—from wrongful termination suits to trade-secret swapping. When done wrong, they can lead to scores of ex-employees living the good life—at the company’s expense. Brian Clemow, partner at the Hartford, Connecticut-based law firm of Shipman & Goodwin, offers advice on what you should include in the fine print of an employment contract.

To begin with, what’s the benefit to an employer of offering a contract?
Employers often want to make sure they spell out how the employee will be treated if the situation doesn’t work out. Also, there are more likely to be concerns at higher levels about trade secrets or other confidential business information. The employer will want to protect itself against employees taking that kind of information with them or using it after they leave the company—no matter how long they stay.

In addition to protecting a company against trade secret leaks, can an employment contract have a non-compete agreement?
There may be similar concerns about competition. More and more employers are asking key employees to enter into non-competition agreements so after they leave the company, they won’t go to work for a primary competitor. Issues like that lead people to consider employment agreements at the higher level.

Would you say offering an employment agreement would help in recruitment—that high-level employees would feel more comfortable signing on with a company that offers one?
The higher the level of employee, the more appropriate it may be to consider a contract of employment. The higher-level employees are often brought in from other locations (relocating) or they’re making other kinds of commitments which involve substantial financial risk. So these folks [will be more cautious] than a lower-level employee who can find another job easily if his or her secretarial position or word-processing job doesn’t work out. If you’ve been brought in to be the vice president of a utilities company, and things don’t work out, the chances of you being able to find another, similar job in the same geographic area are not terribly great.

[On the other hand], most employment agreements I know of contain a clause in them which gives the employer the right to terminate the employee without having to show just cause. Consequently, while it may be comforting to the employee to have his or her benefits spelled out in a contract, it may be uncomfortable for the employee to read the clause that says, “We can terminate you on two weeks’ notice if we wish to.”

If you offer a contract to an employee at one level, do you have to offer it to others, or should you determine this on a case-by-case basis?
Most employers that I’m aware of will either offer it to all employees at a certain level or to certain types of employees. For example, some employers may use employment contracts at the officer level, but then may also use contracts that have non-compete and non-disclosure agreements for people who are in positions that are either creative or that have to do with product development or things like that, even if they may not be highly placed employees.

If a company does decide to offer an employment agreement, is there anything that should definitely be covered in it?
Certainly the nuts and bolts would be to include when employment is to begin and how long the contract is to last. Also, is it to have an expiration date—not all contracts do. You should also cover what the employee’s salary and benefits will be, and the rights of the employee—and more importantly the employer—concerning separation from employment.

What would the terms of separation cover?
For instance, is this a situation in which the employer can terminate the employee at any time just by giving two weeks’ severance pay? Or can the employer only terminate the employee for certain stated reasons, such as elimination of the position or certain kinds of misconduct or demonstrated incompetence? Or something in between? Some employment contracts say employers can terminate the employee for misconduct or other similar causes at any time, but otherwise will give him or her x weeks’ or months’ or sometimes years’ advance notice of separation, or provide pay in lieu of notice. The terms of separation are an important element in the agreement.

What else should a contract specify?
Some of the other things that are common (or at least considered, although they may not be appropriate for all levels of employment) are: nondisclosure of confidential company information and non-competition, at least during the duration of employment, but often for some reasonable period of time afterwards. Some contracts also spell out what the duties and responsibilities of the position are, although, surprisingly, in my experience that’s relatively unusual. Instead, it just says, “We hire you in the position of x.” Other things which might be included in an employment agreement, depending upon the type of job it is, would be allowances like a car allowance or moving allowance to relocate. Employers often cover issues such as travel and entertainment expenses if it’s a job of that type—especially if it’s a sales job. Many address issues such as education programs, speaking engagements executive employees might have—do they get time off to do that? There may also be a blanket reference to the employer’s policies and procedures—something like “anything not spelled out in this contract will be governed by our standard employment policies and practices applicable to our other employees at your level.”

Is there any danger in providing an employment contract—things that may come back to haunt a company?
The standard drawback is that, at least in many jurisdictions, a contract of employment may well be considered enforceable, even though the circumstances or conditions of the company have changed. People, being human, tend not to anticipate every possible problem that may come along. You may enter into a contract that says you’re going to employ a particular individual for an initial period of five years. In the contract, you may spell out certain grounds for which you can terminate the employee, but you forget to state what happens if the company runs into financial problems and the position has to be eliminated, or if the whole outfit has to shut down. The employee can then possibly turn around and sue the employer and say, “That’s your problem—I’ve got a contract that says you’re going to employ me for five years, so I want you to pay me for five years.”

What other specifications may get a company in trouble?
Another kind of issue is that once you’ve spelled out a particular set of working conditions, you can’t change them without the agreement of the employee. So, for example, you may spell out what your current health benefits are. Then next year you want to change the program from a standard indemnity plan to an HMO, and you find you’ve got some executives with employment contracts that guarantee them you’re going to continue with the existing plan. That can be a big problem, obviously. Same if you made reference to a pension plan and later wanted to go from a defined benefit to a defined contribution plan.

What should a company keep in mind in drafting a contract to make it as beneficial as possible?
Two things: When drafting a contract you want to make sure you don’t get locked into something that ends up being applicable only to the fortunate few who have these contracts, and everybody else is subject to whatever changes the employer wants to make.

I guess the other problem is that in many cases, when you offer someone an employment contract, the individual will come back and say, “Well that looks fine as far as it goes, but I’d like to see this change or that addition,” and you end up negotiating individual by individual what their terms and conditions are. Pretty soon, you find that instead of having a fairly standard set of policies and practices that apply to all employees, you’ve got each individual having cut his or her own deal, which can be a nightmare to administrate.

Any other ways a company can benefit from having an employment contract?
Yes. More and more jurisdictions are coming down with court decisions that say even though there may not be a written contract between a particular employee and a particular company, there is an implied contract of employment. This [implied contract] may arise from some policy or practice of the employer. It may arise from something the interviewer told the applicant in order to induce him or her to come to the company—or it may arise when an employee who’s been terminated wants to claim that the termination violates some kind of implied contract of employment. Many states right now are recognizing this principle. [So that creates] a back-handed benefit to having an employment agreement.

How does an employment contract help protect against this?
If you have a written contract of employment, you can at least say there is no implied contract. Many employers include a provision at the end of the contract that says, “This is the entire agreement between us, and it supersedes anything else that may have been discussed with you or offered to you. This is the whole deal.” Another such clause might be the employment-at-will provision, which says the employer reserves the right to terminate the agreement at any time for any reason. If you have a contract that has provisions like that then you’re really better off than having no contract at all, because then the employee can’t come back and claim, “When I was hired, the interviewer told me that people at executive levels get five weeks’ vacation,” or said “As long as I do my job I’ll never be laid off.” Trying to disprove that those statements were made is real tough unless you have an employment contract that says, “Here’s what we’re giving you and this is all we’re giving you.” That’s another benefit of having an employment contract.

We all have handy little quizzes to help us make decisions. Some are leftover from childhood-but still effective: Would we do this if Grandma were watching? Others have a more philosophical basis: Can we will this action to be a universal rule for everyone?

Texas Instruments teaches its employees seven steps they can use to determine whether a decision is ethical. The result forms a “quick test” and helps the employee see a decision more objectively-and ethically.

1. Is the action legal?
   “If it’s not legal then that’s the end of the test,” says Glenn Coleman, manager of ethics communication and education. “You just stop right there because we’re not going to break the law here.”
2. Does it comply with our values?
   “We have a very clearly stated set of company values. Sometimes an action just won’t fit with them.
3. “If you do it, will you feel bad?
   “Sometimes you make that decision that kind of hurts in the stomach. It wakes you up in the middle of the night, or it just gnaws on you. That’s a warning flag that you may need to go back and revisit that decision.”
4. How will it look in the newspaper?
   “If what you were thinking about doing this afternoon were going to appear in the newspaper tomorrow, would you still do it?”
5. If you know it’s wrong, don’t do it.
6. If you’re not sure, ask.
7. Keep asking until you get an answer.
   “If you think something’s wrong, and you don’t want to do it, go ask some questions. Ask your co-workers. Ask TI legal. Ask human resources. Call up the ethics office. Ask, ask, ask. Don’t stand out there and feel like you have to carry all that pressure by yourself.”

Contingent work has continually evolved since its inception. The 1950s temp who filled in for emergencies and maternity leave has given way to the 1990s contingent who heads several projects and serves on work teams. And contingent work will continue to change in the future.

Temp work will become a training ground.
The recent spate of downsizings brought several things to light. First, there’s no such thing as cradle-to-grave paternalism in companies anymore. Second, to be economically viable, employees must continually learn new skills. In this past economic down cycle, 86% of the unemployment was due to structural changes, according to the Department of Labor. “People’s jobs just went away,” says Bruce Steinberg, spokesman for the National Association of Temporary and Staffing Services. “They didn’t suddenly become stupid; it’s just that they ended up with obsolete jobs because they’d been working at the same company for years.”

Many of these displaced employees found work at temporary jobs, where they honed old skills and learned new ones. In an NATSS survey of 2,189 temporary employees, 66% reported that they gained new skills during their tenure as a temporary. As the job market continues to tighten, and people continue to be phased out of jobs, it will be the temporary agencies that they turn to for help in developing the necessary job skills. “Thirty years ago if you were a typist, you could get a job, work at that job, and you’d have the same skills you had when you started. You wouldn’t need new skills,” says Steinberg. Not so anymore.

Terry Petra, a consultant to the staffing services industry and president of Professional Services Consultants, sees temp agencies in the future complementing school curriculums. “People need to learn how to adjust to environments much more quickly than they have traditionally,” he says. “Part of that responsibility will flow from the educational institutions. But a subset of specialized educational opportunities will be made increasingly available, some through the staffing-services industry.”

The number of professional-level contingents will continue to grow.
Professional-level temps are no longer an anomaly, and their ranks will continue to swell. “There’s a movement away from people using these types of services for the lower level,” says Olsten Staffing Services’ senior vice president of marketing, Gordon Bingham. “You’re seeing a lot of interest in professionals to be used on a project basis.”

Temp services specializing in such areas as management, accounting-even physicians-are springing up all over. Many companies are taking advantage of this highly trained group of contingents. For instance, KLA Instruments keeps a cadre of contract recruiters on hand-professionals who remain contingent by choice. “They don’t really want to be associated with any company,” says DeMars. “They like coming in and saving the world and then heading off and doing it again somewhere else.”

Robert Stover, CEO and founder of Western Temporary Services, gives an example of this temporary superhero: he knows a man who worked for several years as a temporary department store president for-hire. “The concept of what he was doing is the future. He’d work for one major store for a year or so, bring it back into a profitable situation, and then he’d leave.”

Steinberg thinks the trend will continue to grow, partly as a result of battlescarred victims of downsizing not wanting to jump back into the fray. “Temporary help is a way of empowering yourself. In many ways those people may have greater job security because their employment does not hinge on the fortunes or misfortunes of a single boss, a single company or industry.”

Temps are going to request-and receive-more benefits.
It’s the old law of supply and demand. With companies snatching up more and more contingent workers, the number of good temps decreases. In a survey conducted by Snelling Personnel Services, 86% of responding recruiters report that it’s more difficult than a year ago to find temporaries for assignments of any length. “There are some people who prefer being a ‘permanent temporary,’ but there are many temporary workers who’ve opted for full-time employment once the number of job openings grew,” says Snelling Personnel Services President and CEO, Timothy J. Loncharich.

The situation gives temps extra clout. “We’re going to have more demands placed on us,” says Steinberg. “With the competitive nature of our industry, temporary-help companies are going to offer people more incentives to work for their company.”

The most common of these incentives will be benefits. A report titled New Policies for the Part-time and Contingent Work Force by the Washington, D.C.-based Economic Policy Institute suggests several reform measures for the contingent work force, one of which is that employers should have to offer prorated health benefits to part-time workers. Right now, it’s none too common: In the NATSS survey, only 8% of respondents received health-care coverage from their temporary agencies.

But most think these numbers will shoot up over the next few years, either as a result of government mandate or temporary agencies’ heightened competition for the best workers. “I think it’s inevitable,” says Stover. “As temporary becomes a more stable part of American industry, I think all the benefit programs will gradually come.”

MacTemps is one agency taking a big step in that direction, with the addition of a dependent-care reimbursement plan. The first temporary placement firm to do so, the program will provide a special account for its employees to assign a portion of their weekly paychecks before federal income or social security taxes are withheld, to be paid exclusively for dependent care. In addition, employees who work 300 hours in a 10-week period will be eligible for long-term health coverage, full disability insurance and complete dental coverage for preventive care. MacTemps pays 60% of the cost for long-term health care, and 100% of disability insurance and preventive dental care. “We are doing this because we feel that it’s the right thing to do,” says MacTemps’ president John Chuang. “It’s part of our program to attract and retain the very best people.”

Investigation. The very phrase oozes intrigue, recalling images from detective novels: Anonymous letters. Secret corridors. Butlers with guilty faces.

Well, don’t invest in a trenchcoat just yet. Conducting an internal investigation doesn’t demand magnifying glasses or superhuman powers of deduction. It does, however, require asking the right questions of the right people in the right manner. It does necessitate a critical mind that stops this side of being judgmental. And it does demand that HR use a variety of tactics, as the law requires different actions for different situations. For instance, investigating a complaint of sexual harassment requires a different approach than dealing with employee theft, because harassment brings with it a host of employer liability issues.

Here, Richard J. Simmons, attorney with the Los Angeles-based law firm of Musick, Peeler & Garrett, offers help in conducting a thorough—and legal—internal investigation.

First of all, who generally is the best person or department to conduct an internal investigation?
It’s going to depend on the resources the employer has—and the nature of the investigation. If it’s suspected wrongdoing by an employee, then it would typically involve either human resources people or security. If it’s misconduct, like one employee having treated someone else in an abrasive, offensive or inappropriate manner, then human resources would typically do it. If it’s something about theft, then maybe security would do it.

Let’s focus for a second on sexual harassment. When an employee initially files a complaint, is there a first step that a company should take?
If the individual who was allegedly harassed brings it to your attention, the first step is to say “thank you. Thank you for bringing this matter to our attention.”

Why is this so important?
Because the way you react can ultimately affect your liability and even the degree of your liability. If someone comes to you and says they’ve been sexually harassed and you say “Don’t tell me that, because now I have to investigate, your personal life is going to be exposed, this could be brutal for you as well as us”—it looks as though you were discouraging the person from coming forward and candidly disclosing a problem that you have a responsibility to address. But I see that all the time. So the first thing I would say in a sexual harassment case is thank you. It shows your good faith and that you are certainly willing to accept the claim.

What else should you cover in this initial meeting?
The second point you’d want to emphasize is to tell the employee that you have a strict policy against harassment and would not tolerate it by anyone. The third point you should absolutely make is to assure the employee that there will be no retaliation against them for having brought this matter to your attention.

And what should you say to the person being investigated?
When you investigate the alleged culprit, you’ve got to make the same points. Which is: No. 1, we have a strict policy against harassment and would not tolerate it by anyone. And No. 2, we won’t tolerate retaliation. You’ve got to anticipate the possibility that retaliation will occur. It’s just instinctive, even if the accused is innocent, for him or her to retaliate. Let the alleged offender know that you won’t tolerate it. That’s a critical point, you can’t overstate the significance of that.

What if an employee comes to you accusing another employee of stealing? Would you handle the meeting in a similar manner?
In this case what I’d do is get as much of a factual background as I could. I’d find out all the circumstances that led this person to believe that another person committed theft. [Ask questions such as] “Why do you believe that? What was the first hint you had that it occurred? Did you observe it? What evidence do you have?” You’ll want to ask if there are any witnesses, if the accused admitted it, if the accused was confronted. Basically, you’re going to do this fact-intensive analysis as to what forms the basis of the employee’s accusation. And sometimes people say, “Because [my property] is missing, and I know this guy wanted my stuff.” It may be that general. In other cases you’ll have much stronger evidence.

Once an employer embarks on an internal investigation, what are the primary legal concerns?
Well, it really is going to vary. There are some general guidelines for any type of investigation, but others that are really going to be specific [to the type of investigation]. One general consideration is whether you’re creating documents that will be discoverable. You don’t want to do that, particularly if the documents disclose weaknesses to your case or actual violations of the law. As an example, I had a case once where a client did an internal investigation and wrote, “This issue presents potentially staggering liability” in the first line of the memo.

What other information might be made available to a plaintiff if an internal investigation ends up in court?
Also discoverable by the other side is [information] not under the attorney/client privilege. You need to decide whether you’re going to have an investigation done under the direction of lawyers so that you can assert an attorney/client privilege. For example, if the president of the company sends you to investigate something and you write a memo—even if you do not write a memo, if you have notes—they’re completely discoverable. If it’s done under the direction of a lawyer then they probably are not discoverable.

Once you’re fully into the investigation, in cases like sexual harassment, are there questions that you should ask and questions that you shouldn’t ask?
You have to start off with sort of a broad slate in your mind. Do not prejudge any case. You don’t know at the beginning whether someone is absolutely guilty or absolutely innocent, or if the truth is somewhere in between. [On one hand] you want to be sympathetic to the person who comes to you. On the other hand, you don’t want to say “Gee, this is terrible!” and start making judgments early on.

So what approach do you take?
You’ve got to look at your role. You’re a fact finder, and you will evaluate, but you need to hear all the evidence before you can make a judgment. So the key is to have a good ear and to listen to all the facts. There’s often a fear to get into specifics, but as I say the devil lies in the details. If this person is credible, they’re going to have some specifics for you. They don’t have to recount the exact date and the exact hour, but you need to ask when this first occurred; were there any witnesses; did anyone overhear it; if so, who; did anybody else react; did you tell anybody about it at the time? These are all corroborating facts that are really important in harassment cases. Because often all you end up with is she said it happened, he said it didn’t. So you want to look for as much corroborating evidence as you can.

How should you probe for this corroborating evidence?
It’s basically a matter of asking questions that would surface as a matter of logic. Get facts: who, when, what, and where, with as much specificity as you can get. Sometimes recollections are going to be very vague, other times they’ll be very precise. You want to get as much information as you can, and don’t try to resolve it in 15 minutes if it’s going to take a lot longer. Do a good job with it.

What next?
Your objective is to take immediate corrective action. So you’re going to do an immediate investigation. Now one of the things that you have to be prepared for in a harassment case is when an employee says they’re coming to you in confidence. A lot of employers have policies that say they’ll maintain strict confidentiality. Well, that’s a poor policy because, in point of fact, the law says you must maintain as much [of an employee’s] confidence as possible, but that’s not pure confidentiality. Because you’re going to have to investigate, which will require that information be disclosed. So if somebody comes to you in confidence and says “This is between you and me, right?” you can’t say yes because then you end up violating your commitment. What you should say is that while you’ll keep it as confidential as you can, you can’t assure total confidentiality, because this is a legal matter. It’s like somebody coming to you in confidence, saying “Gee, John killed Suzie, don’t tell anyone.”

Would the same approach apply to other internal investigations—just try to get as much information as you can?
Yes, apart from the heightened sensitivity that you’d have in a harassment case, you’d definitely want to do the same thorough job in any investigation. Again, your job is to be a fact finder, so you’re going to find as much information as you can. And don’t be surprised if you have to go back after you’ve talked to some other people to pose additional follow-up questions.

As you’re conducting the investigation, how much information should you give to the person who first came to you with the complaint?
[Using a sexual harassment complaint as an example] I would not start off interviewing a third party. Let’s say Judy comes to me and complains and says that Jeff was a witness. I wouldn’t start off with Jeff by saying “this is what I’ve been told, is it true or false?” I don’t ever tell people what I have, because it’s too easy for them to just say yes, without giving me the type of testimony that would come out in court. So I’m going to start off with a general [questioning], and I may end up with a specific [question].

So how would you begin this general questioning?
I’m going to start off by saying “We have information indicating that Joe engaged in some questionable conduct with women, do you have any information about this?” If he says yes, you probe further. So I start up with a general question, let him come up with his own answers. Maybe he says, “No, sounds preposterous to me, I’ve never heard or seen anything involving Joe that was inappropriate.” Well, at that point I’m going to go further. I’m not just going to let that answer stand—I’m going to say, “Let me give you more specific situations. Do you know of any instance when he has actually made advances towards women, or do you know of a situation where he made inappropriate comments?” I’m going to start off with a general question. I will also insist that people cooperate fully; they must.

How do you express the message that employees must cooperate?
The employer has to be aware of losing control, because employees will sometimes say they don’t want to get involved, or they don’t want to say anything about Joe, or they don’t want to point fingers. Don’t accept that as an answer. Tell employees they need to cooperate fully, and if they don’t you’ll be forced to address it as insubordination, a refusal to cooperate. The employer is in control, and employees must realize that.

What about the case of an employee accused of stealing some of the company’s product. How do you handle the target of that kind of investigation?
You’ve got to be careful about what you accuse someone of. My approach to investigations is to give them an opportunity to explain. So I won’t accuse you, I’ll say, “Listen we’ve got some information that’s disturbing, and we want to provide you an opportunity to explain your role in this before we reach any conclusions.” The guy may say that you’re accusing him of theft. Tell him you’re not accusing him of anything right now—your objective is to give him a chance to respond.

What rights do employees have in this situation?
Employees do not have a right to an attorney to be present in one of these meetings. If the person is a union employee and asks for a union steward or a union representative to be present, the employee does have that right. If there’s no union they don’t have the right to have an attorney or anyone else present. And typically I won’t allow them to have an attorney present, because then it becomes a legal proceeding and the attorneys will typically block the investigation.

The employer seems to have a big say in how the questioning is conducted. Any lines to not cross?
What an employer cannot do is force employees to stay if they want to leave. In the Fermino vs. Fedco case, which went to the California Supreme Court, the employer had security and personnel and management people present. When the employee got up and wanted to leave, a company official slid in front of the door and gestured in a manner that allegedly prevented the employee from leaving. And the Supreme Court said that was false imprisonment. So if you’re investigating something and the employee wants to leave, they have the right to go. You can tell them you need their cooperation, that this is their chance to cooperate, and if they fail to do so you can take action based on your own investigation. But you can’t force them to stay in a room with you.

As you are conducting the investigation, what kind of interim action should be taken? Do you suggest suspending the accused employee?
Everything is based on the facts and circumstances of a particular case. If you have overwhelming evidence, then you might want to suspend right away. Or if you think that the person is in a sensitive position, or a position where he or she can do further damage, then you might suspend. Sometimes you suspend solely to investigate, sometimes you suspend in order to protect the work environment so that this person will not disrupt it or do anything that involves further detriment to the employer. So you have to look at the facts and circumstances. It also depends on how long you think the investigation is going to last. If you think it’s going to be a two-month investigation, suspending for two months is rather harsh; you better have really strong evidence, I think. Also suspensions can trigger wage and hour obligations, so you have to be sure that that’s the way you want to go. Oftentimes it is the appropriate way to go, but not always.

At an investigation’s end, when you’re deciding whether to terminate an employee, what steps should you take to ensure the action is legally defensible?
It’s going to depend in large part on whether the employer has an at-will standard, or a for-cause standard. [Most employers are moving to] at-will standards now. The difference is if you have a for-cause standard in your handbook, then as a matter of contract you have to prove that you had cause to fire. And I have to prove that in the form of admissible evidence that a jury will agree with years later. So the idea is if I can fire only for-cause under my policies or contract, I have to be able to prove cause. If you have an at-will standard, you’ll be better off. In many cases, you simply need to show that you had a good faith belief that the employee was guilty, and you can win your case. So there’s a real big difference there as to what type of latitude you have as an employer, depending on which standard you have.

Are there any other important points an employer should know?
You always want to be professional—no matter what you think the person is guilty of when an investigation starts. I can tell you from experience representing hundreds of employers for a lot of years, that oftentimes clients come to me with cases where they are absolutely convinced the person is guilty, absolutely convinced that he’s dirty, and I say, “Well, just amuse me for a moment and tell me what you have.” And I go through the facts and I find out that there are many i’s here that have not been dotted, t’s that have not been crossed. And we find out that the person is completely innocent. And you’ve got to be prepared for that, so be professional about it. Because as convinced as you may be at the outset, you may be wrong. And just as important, juries can get angry, offended by employers, even though they had the right to discipline someone, but they were ruthless in the way they investigated, so you want to avoid that. You want to be professional, that’s really important. And although there’s an exception to every rule in this area, my general rule is that you want to give the person a chance to explain. First of all you pin them down with their explanation, and that’s good because they can’t concoct some other theory later; and secondly, if they come up with a good explanation you can investigate it. It’s a good safety net—it can protect you against mistakes that could otherwise be harmful to the employee and to you. The other general point is: A good investigation is a prompt investigation. The longer it takes you to investigate, the more likely that memories fade, and evidence is lost.

Everyone gets a little touchy about the privacy issue. What’s business as usual to one employee may be a serious personal invasion to another. Employers need to look to the law for guidance on this highly subjective subject—one that spans from hiring practices to surveillance operations. And differentiating between private and public information will only get more complicated as we expand into E-mail and voicemail arenas.

Gerald Skoning, partner at Chicago-based employment law firm Seyfarth, Shaw, Fairweather & Geraldson and editor of the firm’s newsletter, Labor & Legislative Report, offers some advice on gauging the line between what employees have a right to keep private and what employers have a right to know.

Is employee privacy really becoming a serious issue?
With the technological explosion we’re experiencing, we’ve got quite a number of risks in terms of personal privacy and confidentiality. I think a lot of people are much more sensitive to privacy concerns in this day and age than perhaps ever before because of the types of technology that by their very nature carry with them risks to confidentiality. We all feel a little more vulnerable. It’s a “Big Brother Is Watching” sort of an Orwellian society we’re headed toward. At the same time I think that the courts and juries are going to be pretty vigilant in protecting unnecessary intrusions into individual rights to privacy. So I think as a trend, if a plaintiff employee can point to a federal statute that says these materials are supposed to be confidential, and an employer negligently or intentionally breaches that confidentiality, it’s a pretty sensitive case to be presenting to a jury.

You mention new technology as a potential trouble spot. What areas of technology do you see as problems?
In terms of areas where we’ve advised our clients: The surveillance cameras companies use to guard against security breaches or theft, the Email systems that many large companies use for intra-office or inter-office communication, the use of PCs and what goes into a PC data bank. Some of our clients use phone banks for sales, and they want to monitor them to make sure that they aren’t being abused. These are kind of the new cutting-edge areas of privacy and confidentiality.

So is there any basic guideline to know when you’re crossing the line?
The fundamental issues in all of these cases, particularly dealing with PCs and E-mail and so on—and I’m generalizing in terms of the state of the law of privacy—is whether the employee has a reasonable expectation of privacy. Whether its his E-mail bank or her PC input—Is there a reasonable expectation of privacy? That’s basically the standard that’s applied under the law. So the way an employer protects itself against claims by an employee that there is this expectation of privacy is to defeat the expectation of privacy up front by various types of disclaimers.

Can you give an example of what this disclaimer would look like?
For instance with a PC, before you access the system, a disclaimer comes up on the screen, and says as an example: “This computer network, including all data files and applications, is the property of XYZ corporation. All materials and information created, transmitted or stored on this system are the property of XYZ corporation and may be accessed by authorized personnel.” In other words, anyone can access that data. The final statement is “Users should not have any expectation of privacy with respect to the materials and information stored on the system.” That legally removes any expectation of privacy.

Would a similar notice work for such things as security cameras?
Exactly: “Employees are advised that we maintain security cameras that routinely scan the work area. These cameras will be monitored to ascertain that security is maintained, and people should understand that there’s no expectation of privacy with respect to activities in the workplace.”

What’s the best way to communicate this notice?
There are a lot of ways to do it. You can circulate a memo to all personnel. The problem there is proving that everyone got it. If you’re really concerned about the potential for someone getting upset about a breach of privacy rights, when they sign on with the company, you could have them sign a declaration of understanding that they’ve been advised of the policies, and that they understand that they have no right to privacy as to activities in the workplace. The same story with phone banks. Let employees know that phones will be monitored as necessary to protect legitimate business interests involved in sales activity.

How else may companies overstep the privacy boundaries?
One area is psychological testing for job applicants, which a lot of companies use. That’s a very problematic area because the courts have generally recognized that psychological testing can have proper business objectives, but with the ADA and other privacy interests, there is some concern that these psychological tests occasionally stray into statutorily or constitutionally protected privacy areas of applicants or employees. In fact, recently a major U.S. company settled a class action by job applicants who were required to answer pretty intimate personal questions in pre-employment psychological examinations. The case was settled—but settled for big dollars.

What kinds of questions would generally get an employer in trouble?
The questions in this case dealt with whether or not the applicant engaged in any unusual sex practices, questioned whether the male applicant ever wished he was a girl, whether they’re strongly attracted by members of their own sex, whether they believe sins are unpardonable, whether they feel sure that there is only one true religion, whether a minister can cure a disease by praying and putting his hands on your head… pretty intimate stuff.

You mention privacy protection surrounding the ADA. What are the issues that employers should be aware of?
The Americans with Disabilities Act provides that an employer must keep confidential any information on any employee’s medical condition or history and must maintain this information in a separate file. Historically what employers have done is put it in the personnel file. You can’t do that anymore. It must be in a separate, locked cabinet away from normal personnel records.

Then who should be allowed to see these records?
There’s very limited access allowed to those records. Supervisors and managers may have access on a need-to-know basis—first aid and safety personnel may be informed if the employee’s disability might require emergency treatment. Government officials have access to this information or folks who deal with workers’ comp matters or insurance claims, but otherwise access is out of bounds. And it’s a real trap for the unwary employer because the information that goes into these files can be pretty damned interesting stuff. Just take a hypothetical case. An employee is being treated for HIV. The horror-story thought is that someone—a clerk in the insurance claims department—reads about Joe Smith who’s being treated for HIV and goes down to the cafeteria for lunch and says “You wouldn’t believe what I’ve found in the file.” And suddenly by communicating that information to another person, they’ve breached a federally protected right of confidentiality.

What can a company do to prevent this type of problem?
Our counsel to clients is you have to regularly warn anyone who has access to these materials that they’re absolutely confidential as a matter of federal law and that any breach of that confidentiality is a serious disciplinary offense which could result in discharge. I recommend that an employer—to be doubly certain to protect themselves—issue a memo to anyone who has access to that info, documenting the fact that they’ve been advised that it’s confidential. Then if there is a breach down the road, you can argue to the jury that you did everything possible and shouldn’t be blamed for any slip up.

What about privacy issues concerning employee evaluations?
Early on, there were a number of cases involving the issue of performance evaluations that said really negative things about an employee. So the courts have developed what’s known as a qualified privilege that attaches to any communications internally in the HR field that are ordinary and necessary parts of running a personnel operation. In other words, if the plaintiff can show that it’s a malicious effort to willfully destroy someone’s career, and it’s done maliciously and it isn’t true, then they can bring a suit. But if it’s simply part of the ordinary HR process, there’s a qualified privilege.

What’s the bottom line in knowing how courts would review a claimed invasion of privacy?
Essentially what the courts do in evaluating claims based on privacy is a balancing test. Balancing the business justifications—the legitimate business interests of the employer—against the employee’s expectation of privacy or confidentiality. That’s why the disclaimers are important. Congress was considering a statute introduced last year called the Privacy for Consumers and Workers Bill, which would require employers to notify employees in advance when they’re being monitored or recorded electronically at work. But the law has not passed, and I think it’s unlikely that it will in the current political environment. Nevertheless, what this law would have provided—forcing employers to notify employees in advance—is something employers should do anyway so to avoid common law privacy implications.

In many instances when the monitoring is regular and frequent, it makes sense to have employees sign some sort of an acknowledgement that they understand that it’s part of their job, that there may be monitoring, there may be surveillance, so then you have a signed acknowledgement that they understand what’s going to be done, and therefore they’ve effectively waived any privacy rights.

There’s no such thing as a quick, clean-cut termination any more. The very act of firing has become embroiled in legal complications so sticky that many employers find it difficult to even make a move toward firing an employee. One of the lawsuits most likely to hit an employer is wrongful termination.

And likely is the key word. The Dunlap Commission, which was created by Labor Secretary Robert Reich to study labor laws, issued a preliminary report of its findings in May, and it’s not optimistic for employers. The Commission stated that about 10,000 wrongful termination complaints are filed every year in state court. Employers need to protect themselves if they don’t want to be among those 10,000.

Michael J. Lotito is the West Coast coordinating partner for the New York City-based law firm of Jackson Lewis Schnitzler & Krupman, a practice limited to representation of management in labor, employment and benefits law. Here, Lotito offers advice on warding off and dealing with wrongful termination suits.

To begin with, could you explain the types of complaints that could fall under a wrongful termination suit?
It could be contractual claims: violations of so-called expressed contracts of employment, based upon either formal written contracts or employee handbooks; or it could be implied contracts based upon a pattern of conduct or verbal representations that might have been made. It could be [termination after] promises of long-term employment or guaranteed employment. It could be violations of so-called public-policy complaints, such as individuals being terminated for attempting to exercise a right that was guaranteed them, such as making a complaint to the labor commissioner or fulfilling their duty to do jury duty. It could be [termination for] the refusal to do something that the law says is wrong, such as refusing to lie in connection with a financing statement that a company files with the Security and Exchange Commission when trying to go public, or when an employee refuses to engage in behavior that would pollute a stream and violate an environmental law.

In its broadest definition, are those all the cases that could fall under a wrongful termination suit?
If you want to broadly define wrongful termination, that could include anything from sex discrimination to race discrimination and all those sorts of [actions dealing with] protected classes as well. So it really depends upon how broadly you want to define wrongful termination. It could be a wide variety of issues. I think that wrongful termination today is usually defined in the broadest sense, although there is customarily a distinction made between a claim based upon the public policy complaints as opposed to the statutory violations, which are the complaints that [involve] race, color, creed, sex, etc.

What is the time frame in which a former employee may legally file suit against a company?
It varies depending on the [type of claim]. I’d say as a general rule the individual has around a year. [The opportunity to file suit] doesn’t go on forever. Ordinarily if you haven’t heard from the employee within a year, it’s very unlikely that you’re going to hear anything at all. And it usually happens faster than that.

How common are wrongful termination lawsuits?
We know, based on a study that was concluded about a year ago, that over the last 20 to 25 years, we’ve seen an increase of about 2,000% in the number of these types of complaints being filed. Some predictors suggest that any major company is going to at least get threatened with one of these actions—if not hit with an actual lawsuit—about once every seven years.

Will the likelihood of a company being involved in this type of suit increase?
Wrongful termination is widely perceived as one of the most rapidly expanding areas of any legal practice, and it is literally spawning the development of law firms for the defense of these types of cases. It’s a major complaint of businesses today. So this is a big, big deal, and when it’s combined with the type of money awards that can be issued, it’s a significant concern to management.

Is the number of complaints increasing because a lot of employers are in the wrong, or are there other factors?
I’ve maintained for a long time that employment law has less to do with law than it does with money and emotion. These cases tend to be extremely emotional, and the amount of money involved is huge. The damage awards are very, very significant, and that’s one of the things fueling the onslaught of litigation in this arena.

Of the complaints filed, how many would you say actually get to court and receive these huge awards?
I’d say 98% of these cases are never tried, and maybe 90% are never even heard about. But there’s a tremendous onslaught of threatened litigation. And because they’re so expensive to try, and management tends to lose about 70% of them in front of juries that really don’t understand the employment relationship, many companies find it’s easier to settle than it is to defend their principles. As a result, we have many, many confidential settlement agreements with companies paying out very large sums of money in order to rid themselves of the time, the aggravation and the bad publicity that can come as the result of a negative verdict.

Conduct such as racial discrimination and harassment is clearly wrong. But what types of activities could a company engage in quite innocently that may get it into trouble down the road?
The overwhelming majority of these complaints come not from discrimination, but rather improper personnel actions. For instance, in order to persuade a tryer of fact—a jury, a judge or an administrative agency—that what they did was correct, a company has to have supporting documentation for its decision. When the supervisor [in explaining a termination] says, “The individual did something wrong, and that’s why I [terminated the employee],” and the employee says “I did it right, and the supervisor is wrong in saying I didn’t, and the real reason was because of my race” or whatever, the tryer of fact, looking at these two stories, has to find some other way to determine who’s telling the truth. And they usually look to documentation.

What is usually wrong with the documentation that could hurt an employer’s case?
Oftentimes the documentation that employers have to back up the decision is either non-existent, incomplete or downright inconsistent with the stated reason. Often that comes about because supervisors don’t know how to conduct a performance appraisal—they haven’t been trained. As a result, the supervisor, in sitting down with somebody, will conduct a performance appraisal, and to avoid conflict says that the individual is fully satisfactory when that really is code for “I wish that I’d never hired him or her in the first place.” And then when the documentation is inconsistent with the stated reason, the company is put in the unconscionable position of being asked the question: “Were you lying then or now?” And as a result the company loses.

What are the steps that a company should take to protect itself before terminating an employee?
I think that what companies have to do is what I summarize as my ABCs. They always must: be consistent, document everything, treat people equally and to the extent that they can, be fair. Those are my ABCs. I think that before you make a decision to terminate, the company should first suspend, in order to be able to conduct an investigation.

What should companies cover in the investigation?
Have someone who’s skilled in these issues take a look at the decision before it’s made. Make sure it stacks up to those ABCs, that there is indeed consistency and that the supporting documentation is going to be consistent with the personnel decision. Then after that check has been done it’s OK to go ahead and make that decision. But it’s very frustrating as a practitioner to be called in after the decision has been made and to try to justify something that you wish could have been much more properly documented or defended.

So an employee’s winning a wrongful termination suit is often a result of employers not thinking a termination through?
It’s because employers don’t go back to the basics, to have well-schooled, well-trained, educated supervisors who from a preventive standpoint can make a decision with the anticipation that it is someday going to be reviewed by a jury. If so, how will the jury look at it? Until you pass that test, I suggest you not terminate anyone.

So should companies train supervisors more on these issues?
I don’t believe that the supervisors, however well-trained, can do it themselves. I believe that in any organization, the most authority that any one person should have is the right to suspend an employee pending termination. I believe that there should be a designated central source within every organization that is responsible for reviewing these terminations. Who that central source is will depend on the organization’s complexity. But there should be somebody designated within the organization—because there’s so much at risk here—to review the decision before it becomes irretrievable and somebody says two years down the road, “If I only knew then what I know now.”

You mentioned the importance of documentation. How much should you document to protect your company?
In the best of all worlds, having an essential-function job description that’s also utilized as a basis for the interviewing of candidates, and then is matched to the performance appraisal form where employees and other end-users of the product give input [as to how] the employee is producing so that you have uniform feedback from everybody involved and it’s very clear and consistent from one person to another—that’s what’s best.

What other forms of documentation does a company need?
An employee handbook that clearly states what the rules are, what the progressive discipline is, what the results of inappropriate behavior can be—that should certainly be in place. The employee should sign a receipt for that booklet that says “I agree to read the regulations and abide by them, and if I breach them then I agree to be subject to the penalties provided.” All of that should be there. If your work force is 95% non-English speaking, it’s a good idea to have a handbook in a language that they speak. These things may sound like just common sense and the answer is, well sure it is. The only problem is that common sense is very uncommon.

You say many of these suits are fueled by emotional issues. When you terminate someone, how can you ensure the employee doesn’t feel wronged?
All companies should consider what’s known as ADR or alternate dispute resolution—sometimes known as avoiding disastrous results, also sometimes known as achieving desirable resolutions. In essence it’s an alternative to filing a governmental complaint or going to a plaintiff’s lawyer and filing a lawsuit. It can include such things as arbitration clauses, mediation, peer reviews. The central theme is that employees are entitled to due process. They’re entitled to have some tribunal make a judgment as to whether or not the employee was treated properly and consistently. You don’t necessarily have to go outside the organization in order to have that sort of a review. The organization can provide it. Organizations that have their employees represented by unions have done that for years with grievance and arbitration procedures, and you don’t need a union necessarily to have those type of procedures in place. That, it seems to me, is the No. 1 thing companies ought to do to avoid these types of complaints.

What else can you do for an employee to ease the transition?
Make sure that the emotion has dissipated. One way is to ensure that you do have this ultimate form of due process. Another way of dissipating the emotion is to call upon professionals who know how to do it. Those are the outplacement agencies, the individuals who can work with the person in structuring their resumŽ, in figuring out how to go on with their life. [It’s important to] do these things in a very humane way because there’s hardly anything more frightening than not having an income to provide for you and your family.

Anything else a company should consider to protect itself?
There’s insurance that can be purchased today against these types of complaints where counsel is provided and different damages are covered. That’s certainly something that from a preventive standpoint companies should consider doing.

Let’s say the worst happens and an employer is taken to court. How can the company prepare?
If you have not worked with counsel, now would be a good time to consult with one. There needs to be an independent assessment of the facts which involves an independent investigation. Then there needs to be what I call a risk-assessment meeting—what’s the likelihood that something [illegal] happened? What’s the likelihood that the individual is going to succeed? How much is it going to cost to defend? What are the implications of negative publicity? And other practical issues become involved, such as, is your primary witness a supervisor who himself is about to be subjected to discipline and discharge? That does not make for a good lawsuit when your primary witness has been fired three months after he or she has fired the plaintiff. Those practical types of concerns are very, very important.

Anything else that’s important for employers to know?
Just to summarize, this is an area of the law that still doesn’t get a proper degree of respect in most organizations. Until 10 years ago, employment decisions were not viewed as a high-risk ventures. Today they’re extraordinarily high-risk ventures. They need the attention of the organization’s top executives, not necessarily in making every single decision, but in making sure systems are in place so that when these decisions get made, they’re made in the most intelligent, defensible way that they can possibly be made.