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Employee Privacy vs. the Release of Medical Information

Privacy rights have been with us forover a century. They date back to a highly influential 1890 law review article(“The Right to Privacy,” 4 Harvard Law Review 193) by Professors Brandeisand Warren. They vary widely from state to state. Some states (such as New York)do not recognize any common law privacy rights. Other states (such asMassachusetts) have either enshrined the right to privacy in special legislation(Mass Gen. Law Ch. 214,1b) or in the state’s constitution. Moreover, nearlyeveryone believes there is an innate “right” of privacy regardless of whattheir state’s laws say. Employers must tread carefully when their employeesassert privacy rights because the jury that will decide their employment casewill likely be privacy devotees.

    The jury that heard Linda Fletcher’sprivacy case clearly believed in privacy rights. They awarded $5,000compensatory and $50,000 punitive damages against her former employer, PriceChopper Foods. Fletcher worked as a deli cook at a Price Chopper grocery storein Trumann, Arkansas. Her manager, Marlene Sawyer, took impermissible legal andinvestigatory short-cuts in an effort to document the reasons for Fletcher’stermination. Despite these employer mistakes and the adverse jury verdict, PriceChopper won this case before the Eighth Circuit, Fletcher v. Price ChopperFoods of Trumann, Inc., 2000 U.S. App. LEXIS 19072 (8th Cir., August 9,2000). Privacy rights may be ubiquitous but they are not unassailable.

Privacy expectations can be defeated by employer policies and by the employee’s own contrary actions.


    Perceptive readers should spot the twomistakes over-zealous Manager Sawyer made. Fletcher was diagnosed with diabetestwo years after she began work as a deli cook at this grocery store. Fifteenmonths later, her left leg had to be amputated below the knee. After sevenmonths’ rehabilitation and a prosthetic limb, Fletcher returned to work as adeli cook. Her medical troubles continued. She then developed a diabetic ulcerin her right foot which had to be treated and dressed at a local hospital threetimes a week. While at work, she spilled hot gravy on that same right foot. Acoworker helped her remove her sock and applied burn cream to the exposedportion of her foot.

    Fletcher filled out a Arkansasworkers’ compensation form for this hot gravy incident as Price Chopper policyrequired. That form contained an authorization that permitted the release ofFletcher’s medical information. However, Fletcher never followed through andfiled a workers’ compensation claim for this incident. A few weeks later,Fletcher learned her right foot had developed a staph infection. She immediatelytold this to two coworkers who promptly told Manager Sawyer. Arkansas healthregulations prohibited anyone with a communicable disease (such as staph) fromworking in food preparation. Sawyer then terminated Fletcher.

    The employer mistakes were about tohappen. Fletcher filed for unemployment, claiming she did not have a staphinfection at the time Price Chopper fired her. This claim upset Sawyer whodecided to become an amateur detective rather than relying on what Fletcher hadtold her two coworkers. Sawyer called Fletcher’s doctor and spoke to NurseFlemon. Flemon said she could not release any information without a medicalauthorization form. Sawyer replied she had one because all Price Chopperemployees sign medical information waivers when they begin work. Sawyer thenfaxed Flemon a copy of Fletcher’s unsubmitted workers’ compensation formwith its medical authorization. Sawyer also told Flemon Fletcher had removed thebandage from her foot during work. That information upset Flemon because thedoctor had warned Fletcher not to expose her infection to the air. Based onSawyer’s two statements, the doctor wrote Sawyer informing her Fletcher wasindeed infected with the staph virus. His letter also reiterated that she shouldnot remove the bandage.

    The good news was that Price Chopperwon the unemployment case hands down. The bad news was that Fletcher immediatelysued the company under the Americans with Disabilities Act. Ten months later,Fletcher amended her complaint to add a state law invasion of privacy claim.Both claims went to the jury. Price Chopper obtained dismissal of the ADA claimbut, as noted, was assessed $55,000 total damages on the privacy claim. Thedistrict court struck out the jury’s $50,000 punitive damages award. That leftonly the $5,000 compensatory damages for what the jury found was an unlawfulinvasion of Fletcher’s privacy. That, in turn, was struck down by the EighthCircuit because privacy rights are particularly fragile.

    Arkansas, like the majority of thestates, follows Restatement (Second) Torts, which lists four distinct tortsunder the general heading “invasion of privacy.” Fletcher might have chosenthe third privacy category (“unreasonable publicity given to a person’sprivate life”) but did not. Presumably, the disclosures by Sawyer to the nursewere not “public” enough and were also information the nurse already knew.Fletcher and her attorney chose to rely on the first privacy category,unreasonable intrusion upon the seclusion of another. There was a clearintrusion. Sawyer used a workers’ compensation form’s medical authorizationto gain information from Fletcher’s doctor about her staph infection. This wasemployer mistake number one. Fletcher applied only for unemployment. She did notfile for workers’ compensation. Sawyer’s representation to the nurse thatthe unsubmitted workers’ compensation medical authorization form was “goodfor all purposes” was false.

    The second mistake was that Sawyer toldthe nurse Fletcher had removed the bandage from her foot ulcer in violation ofthe doctor’s orders. The coworker’s report to Sawyer said only thatFletcher’s sock had been removed and burn cream had been applied tothe exposed portion of Fletcher’s right foot. The jury very likely foundSawyer had grossly misrepresented to Nurse Flemon what Fletcher had done at workespecially after hearing Fletcher herself testify without contradiction she didnot remove her bandage.

    The intrusion on someone’s seclusionmust also be unreasonable. At this point, the Eighth Circuit judges partedcompany. Two panel members found Sawyer had not acted unreasonably because thedocumentation of Fletcher’s staph infection that Sawyer zealously sought“could otherwise have been obtained by other means.” Price Chopper couldhave easily obtained a subpoena for Fletcher’s doctor’s testimony during theunemployment benefits application process that Sawyer was so determined to win.Yet because an alternative legal means to obtain the exact same information wasavailable even though never used, Sawyer’s conduct in cutting a fewcorners was not “highly offensive” as this invasion of privacy categoryrequires.

    To support this conclusion, themajority cited an interesting Kansas case, Werner v. Kliewer, 238 Kan.289 (1985). There, a husband embroiled in a divorce and child custody battleurged his wife’s physician to write to the trial court disclosing his wife’sseveral suicide attempts. The physician wrote that letter and the wife promptlysued claiming invasion of privacy. The Kansas Supreme Court granted summaryjudgment to the physician holding that nothing in the letter “was not alreadyknown” by the husband and his failure to follow “standard court anddiscovery procedures” was not highly offensive.

    The Eighth Circuit did not have to goto this extreme to excuse Sawyer’s “morally reproachable” conduct. Privacyis an expectation, not a right. It can be defeated in many ways. Here, Fletcherimmediately told two coworkers that her right foot had developed a staphinfection. The information Sawyer was zealously trying to document by impropermeans was no longer “private” information. All three panel members readilyagreed that Fletcher’s “revelation of private information to coworkerseliminated Fletcher’s expectation of privacy by making what was formerlyprivate a topic of office conversation.” Thus, long before Sawyer, acting asan amateur detective to defeat Fletcher’s minor unemployment claim, contactedFletcher’s doctor, “the proverbial cat had escaped from the bag. . . .”Fletcher no longer had any expectation of privacy after she told her two on-sitecoworkers who, not being restricted by Fletcher, immediately passed on the newsabout Fletcher’s staph infection to Sawyer, who was located in anotherArkansas town.

    Even at this point, the majority againdeparted from the concurring Judge. Fletcher’s staph infection obviouslyprecluded her from working as a deli cook under Arkansas and ADA rules. Thatinfection also had the potential to infect her coworkers. The majority thereforeheld, alternatively, that “an employer’s need to know trumps an employee’sright of privacy.” This was a further reason why Fletcher did not have areasonable expectation of privacy with respect to knowledge of her staphinfection.

    This case shows the vast differencesbetween employees’ (and jurors’) privacy expectations and legal realities.Privacy expectations can be defeated by employer policies and by theemployee’s own contrary actions. At the same time, employers need to ride hardon over-zealous managers such as Marlene Sawyer. A short-cut that wins a minorunemployment battle and yet opens up a protracted and costly ADA-privacy legalwar is not worth taking.


Reprinted with permission from Employment Law Alert, a publication of Nixon Peabody LLP. Copyright© 2000 Nixon Peabody LLP. Allrights reserved. The information contained in this article is intended toprovide useful information on the topic covered, but should not be construed aslegal advice or a legal opinion.

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Internet and Electronic Mail Usage Policy

This sample policy limits personal use of the Internet to non-working hours. Many companies permit personal use during working hours, so long as it does not interfere with work.


The latter may be more appropriate to a professional environment where users may be less likely to abuse the privilege. However, the decision whether to choose a stricter or more liberal policy depends principally on the company’s culture. A word of caution: These are only sample poIicies, and each employer should tailor a policy to its own needs, making sure there is no inconsistency between the Internet/e-mail policy and other policies and procedures. The sample is not legal advice and any draft policy should be reviewed by the employer’s counsel.



The Internet is a powerful business tool that can provide a great deal of useful information. Unfortunately, it can also be a distraction from productive work time when browsing non-business related sites. In an effort to clarify our position on the use of the Internet while utilizing Company property, we have developed the following guidelines for all employees:


  • Exploring the Internet should be done before or after work hours or during the lunch break. Using appropriate sites for business purposes is unrestricted as long as it is reasonable.


  • Although we have very good virus prevention programs installed, downloading from the Internet should be done with caution. Space is also a potential problem; therefore, downloaded material should be kept under control.


  • The display or transmission of sexually-explicit images, messages or cartoons, or any transmission that contains ethnic slurs, racial epithets, or anything that may be construed as harassment or disparagement of others based on their race, national origin, sex, sexual orientation, age, disability, religious or political beliefs is not permitted before, during, or after business hours.


  • Use common sense with open Web sites, especially with visitors in the area.

The Company has the right and capability to monitor Internet browsing by each user on our system. However, our goal is that employees will make this unnecessary. At the Company, we have the privilege of Internet access and it is important that we utilize this valuable asset for our mutual benefit.


Electronic mail is to be used for business purposes. While personal electronic mail is permitted, it is to be kept to a minimum. Personal electronic mail should be sent or received as seldom, and be as brief as, possible. No one may solicit, promote or advertise any organization, product or service through the use of electronic mail or anywhere else on Company premises during work hours.


Employees are not permitted to send electronic mail that contains ethnic slurs, racial epithets, or anything that may be construed as harassment or disparagement of others based on their race, national origin, sex, sexual orientation, age, disability, religious or political beliefs. We reserve the right to determine when an employee is sending excessive or improper electronic mail.


The password feature of the Company s network and telecommunications systems is the foundation for maintaining the confidentiality of the Company s communication system. Passwords, system telephone numbers, and similar information may not be disseminated to the public and must be retained as confidential information by the user. For privacy reasons, employees may not attempt to gain access to another employee s personal file of e-mail messages without the latter s express permission.


The electronic mail is a Company asset and is subject to review or monitoring at any time without notice.


This policy may be revised from time to time as the Company gains more experience with the Internet and e-mail.

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Automated Assessment at a Small Company

City Garage, a 200-employee chain of 25auto-service and repair shops in Dallas-Fort Worth, has been growing likegangbusters since its founding in 1993. But there’s been a problem, says RustyReinoehl, director of operational training. “Because we grew so quickly,there were certain aspects we didn’t concentrate on as much as we did others.One was hiring.” The company figured that individual store managers, oroperations managers responsible for a handful of locations, would best know howto hire for specific needs at the local level. There’s a lot of hiring in afield with a 120 percent turnover rate among mechanics. “If they had beenshort-handed too long, we would hire pretty much anybody who hadexperience,” Reinoehl says. “If there was a great need to hiresomeone, we felt that a warm body was better than nobody at all.”


    Another problem wasinconsistent hiring. “We found that not everyone has the same level ofinterviewing skills,” Reinoehl says. With the price tag at $40,000 forreplacing a manager and $7,000 to $10,000 for a technician, and plans to expand50 or 60 shops throughout Texas in the next five years, City Garage moved tostop the hemorrhaging. In September, the company bought a DISC (Dominance,Influence, Steadiness, Compliance) Personality Profile Analysis online test fromDallas-based Thomas International USA. City Garage also liked the team-buildingpotential of the PPA. “At minimum, we feel like we’ll be able to put$500,000 on the bottom line each year, if it does what we expect it to in termsof retention and right hiring,” Reinoehl says.


    The system is already reapingbenefits in conjunction with a new hiring process that requires a prospectiveemployee to be interviewed by and get approval individually from the companypresident and five executives and managers. “We’ve reached a higherconsensus level quicker because everybody is looking at the same things, whereasbefore we were each looking at different aspects” of a potential employee,Reinoehl says. “It’s the first time I’ve seen the six primarymanagement group people agree on anything from a hiring aspect.”


The problem
    City Garage’s hiringquandary wasn’t finding talented people with toolboxes. It was meshingmechanics and managers in a fast-paced, high-pressure environment thatoffered, as a major draw, an open garage where customers interact directlywith technicians. Finding mechanics who won’t chafe at customer intrusionsis essential. “The more we connect that technician with the customer, themore satisfied and better they feel,” Reinoehl says.


    The other side ofthe coin is finding a manager who relates well to five mechanics in a closed,stressful environment. “You’ve really got to know the dynamics of theteam when you want to insert someone in there,” he says. “If you putsomeone highly volatile or real dynamic in as a manager when the rest aren’tthat way, they’ll just sit there banging their heads against the wall, notgetting anything accomplished.” Or they’ll quit.


    Adding to the problem is thetendency of most mechanics to leave when a new manager comes on board.”If we can just retain managers at a higher level, the other positionstend to be retained also,” Reinoehl says.

New approach
    City Garage’ previoushiring process consisted of a pencil-and-paper application and one interview,immediately followed by a hire/don’t hire decision. Now it’s a three-stepprocess. After completing the application and background check, promisingprospects return to take the 10-minute, 24 question Thomas International PPA.Answers are entered by City Garage staff into the PPA software system. On thebasis of the applicants’ responses, the system provides follow-up questionsabout areas that might cause problems. Applicants are asked about steps they’vetaken in the past to compensate for weaknesses such as a quick temper or lackof patience.


    If those issues areresolved, applicants are asked back a third time, for extensive, all-dayinterviews with the company president, the vice president of operations, twodirectors of operations in charge of 12 stores each, and the technicaldirector of training. To assess the PPA, City Garage profiled its 14 mostsuccessful managers, looking at variations of management styles. Questions onthe short, concise PPA ask applicants to select groups of words they thinkmost and least describe their thoughts and reactions in work situations. Anexample, Reinoehl says, is “What is most like you and least like you in awork environment: brave, mild, original, and aggressive?”


    Test results are availablein less than two minutes, providing a grid showing whether the applicant ishigh or low in the four DISC personality categories. The report displays threegraphs, depicting self-image, the “work-mask”, and how the personhandles pressure. “We’re able to tell how the person is wired, how thatperson sees himself and how he thinks others see him, and how he would dealwith pressure situations and the day-to-day work environment,” Reinoehlsays.


Team-building
    Since implementing the PPAin September, City Garage has hired 13 new managers, who currently are in anine-week training program. After the managers have been in their stores forthree months, the team-building begins, using the PPA to profile existingemployees in each location.


    “We’ll take thesurvey and put it up on the overhead without the names and list their highsand lows, and see if they can guess who it is,” Reinoehl says. “Saythere’s someone who’s fairly aggressive. We’ll talk openly about it.Then later, when they get too aggressive in certain situations, someone cansay, ‘That’s your high D coming out, and you need to back off.’”


    “We want to build a dynamic workforce inour stores. That in itself would be able to hold retention as much as a salarydoes. If you have a good work environment, that’s worth something to anindividual.”


Workforce,December 2000, Volume 79, Number 12, pp. 105-107 SubscribeNow!

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To (Genetic) Test or Not

The mapping of the genetic code of human life: it sounds improbable, thestuff of science fiction. But it’s now possible to test people forpredisposition to diseases, and as the practice becomes more widespread andpractical, an array of issues — scientific, moral, and political — willemerge. And add to that employment-law complexities. Already, observers arewarning that legislation must be put in place to protect the privacy rights ofindividuals. Will employers deliberately screen out candidates who have a highlikelihood of contracting certain diseases? Can they? What are the pragmaticuses of genetic testing, if any? Frank Morris, an expert disability attorney inthe Washington, D.C., office of employment-law firm Epstein Becker & Green,offers a peek at the future.


How practical is testing right now?

We now have the possibility of meaningfully doing this. Up until now, youcould do genetic testing for a few very specific conditions. Now you have theprospect of doing it in a much more generalized fashion. So you could takeyour two-page list of everything that might go wrong with the genetic code anddetermine whether or not any individual has any problems. So the question ofall-out testing will arise.

What does the mapping of genetic codes mean to employers?

As we fully learn what the gene coding will mean in terms of susceptibilityto potential diseases, there are many within the employer community that wouldhave an interest, for better and for worse reasons. Among the worse would beto try to simply screen so as to have better insurance-risk profiles. I thinkthere’s a pretty good argument that the ADA might very well prevent that. Ifnot, there would be legislation quickly introduced to address the situation ifa widespread practice arose of employers trying to base employment on thegenetic testing of potential employees.

So there may be a complete ban on using genetic testing in employmentdecisions?

On one level, you’d ask what possible interest does an employerlegitimately have here, and in the larger number of cases that’s probablytrue. On a different side, consider an individual who’s flying a 747 jetwith 300 passengers on board who may be subject to catastrophic events of aphysical or mental nature. Wouldn’t society at one level say to an employer,”You should be using every tool in your possession to screen out thosewho would put at risk those 300 passengers”? So here’s where it getsinteresting.

So certain jobs may elicit testing more than others?

You can quickly posit certain jobs and situations. Any job where a medicalproblem would make it difficult or dangerous for the person to perform.Consider an employer that manufactures chemicals. Wouldn’t it be great toknow if a certain person ought not to be employed producing a particularchemical agent? Because of testing, we can know that that individual has agenetic structure that makes him susceptible to illness if exposed over longperiods to this chemical. I’m not saying there’s a violation of OSHA inthe manufacturing process, but that the lawful five-parts-per-billion standardthat protects 99.9 percent of the population might not protect Thomas Smith.
 
Should an employer be able to find that out and screen out Thomas Smith fromthat job? That has two implications. On a base money level, if the employerdoesn’t test, and Thomas Smith becomes disabled, for the next 30 years,disability benefits are going to be paid to him. At another level, if theemployer doesn’t test, the company gives Thomas Smith a job that leaves himunable to enjoy a full and happy life because the company didn’t use theknowledge available.

Is there concern that legitimate testing will lead to non-legitimatetesting?

Society is not going to allow you to have genetic testing just so you canhave less utilization of your health plan. It just won’t happen, andemployers shouldn’t be going there anyway. But there are issues, even inlegitimate testing. The whole notion of doing any testing opens up the wholeissue of what happens to that information and the potential for adverserelease. It happens. I had a case not long ago of an individual who was HIVpositive. The person’s medical claim forms came through the HR office, andthe individual who normally processed those was out. The paperwork sat in thetop of the in box for days, so individuals who came into the office and werevaguely snoopy saw that information, and pretty soon everyone in this facilityknew the employee was HIV positive.
 
So when you have this kind of situation,you open the possibilities that something inadvertent would happen and theinformation would be disclosed. The ADA requires employers to keep medicalinformation separate from other employee personnel files. But you could seethe mischief that could quickly arise if we have employers who have access togenetic testing of their employees, and then that information were improperlydisclosed.

What are the employer liabilities of not using genetic testing?

Let’s say we don’t test. And we have a medically triggered event that wemight have had pertinent information about had we tested. Now the airplane hascrashed and killed 300 people. We know there will be a lot of lawsuits filedthe next afternoon. Will one of the claims be that we were negligent in notusing every available screening device to make sure we had the most qualified– including physical and mental capacity — pilot corps available? And whilebefore the accident most people would be saying we shouldn’t be going there,after the accident there would certainly be a lot of people saying we mostabsolutely should have gone there.

So what’s the responsible approach for employers to take right now?

The employer community needs to become proactive and make it clear that itdoes not want to use genetic testing for improper purposes. Perhaps employersshould work with the EEOC, with Congress, to delineate certain situationswhere, because of health and safety concerns, testing should occur. Theyshould establish protocols to protect the privacy of individuals and protectagainst abuse in the use of information. But they need to establish aframework rather than having one employer be out there on the firing linetrying to do the right thing, and then having people after the fact saying,While we applaud your goal, the way you did it was wrong, and therefore — 10million bucks.
 
The way employers are going to have to approach this verydifficult issue, which cuts across lots of interest groups and lots ofinterests, is to try to get a consensus, get the issue broadly considered, andcome up with safe-harbor circumstances where testing would be permissible, andsafe-harbor procedures for doing so.

How do you see that fleshing out?

It should be approached much the way we handle substance-abuse screening.There are protocols for screening and certain labs that have been certified togive accurate results. And if you follow the appropriate protocols and use acertified lab, then generally speaking, there will be no adverse consequencesfrom having a substance-abuse testing program. While this may be certainlymore difficult than coming up with the protocol for a substance-abuse testingprogram, the goal nonetheless would be to establish a carefully considered,broadly accepted protocol within those limited circumstances where it’sappropriate.

Workforce, December 2000, Volume 79, Number 12, pp.108-109 SubscribeNow!

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The Ethical Company

Six months ago, it would have been difficult to find more than a handful ofAmericans who could tell you the brand name of the tires mounted on the familycar. Today, it would be equally difficult to find an American who couldn’t.Especially if that name happened to be Firestone.


    The lawyers, politicians, and federal regulators have yet to fix blame forthe Ford/Firestone tire debacle, but whoever ultimately bears theresponsibility, one thing is painfully clear: the once proud Firestone name hasbeen forever tarnished in the minds of American consumers. The company has takena public relations hit from which it may never recover.


    Compare this to the situation that Johnson & Johnson faced in 1982, whencyanide-laced Tylenol capsules were determined to be the cause of several deathsin the Chicago area.


Although the standard procedure in cases like this was torecall only the bottles in the contaminated lot, and although the source of thecontamination had yet to be determined, Johnson & Johnson vice chairmanDavid Collins decided to recall the entire product line. It was, he thought,simply the right thing to do.


    Johnson & Johnson ultimately was absolved of any blame. The company’sreputation was preserved.


    And to this day, Collins’s response is cited as the textbook example of howdecisive action, grounded in sound ethical values, can avert a crisis, and evenbolster a company’s reputation over the long run.


    In the wake of the Ford/Firestone tire recall, a lot of managers arebeginning to wonder what they would do if faced with a crisis of similarproportions. And according to Tracy Carter Dougherty, director of ethics,communications, and training for the Lockheed Martin Corporation, it’s a goodthing they are.


“If the CEO doesn’t seem to care, it’s all just a sham.”

    It’s bound to happen, she says. All it takes is one person using badjudgment, not even maliciously, but just using bad judgment. When you’redealing with as many different products and services and people as companies dotoday, it’s just a matter of time until something happens.


    When it happened to Johnson & Johnson, the company was, in a sense,prepared. David Collins looked to the company’s famous Credo, a shortstatement of values written by company founder Robert Wood Johnson in 1943. Asimple one-page document, the Credo begins, We believe our first responsibilityis to the doctors, nurses, and patients, to mothers and fathers, and all otherswho use our products and services, and continues, We are responsible to thecommunities in which we live and work and to the world community as well.


    The Credo says nothing specific about corporate policy in a case of producttampering, but it sets up a framework in which the responsible course of actionbecame obvious to Collins.


    Such guides to ethical behavior are now common in American business. TheRaytheon Company has an Ethics Quick Test that asks employees to consider thefollowing questions when faced with ethical dilemmas:

  • Is the action legal?
  • Is it right?
  • Who will be affected?
  • Does it fit Raytheon’s values?
  • How will I feel afterwards?
  • How would it look in the newspaper?
  • Will it reflect poorly on the company?

    Texas Instruments (TI) has a similar test that covers much of the same groundbut ultimately exhorts the employee: If you know it’s wrong, don’t do it!


    Although TI’s ethics handbook dates back to 1961, widespread interest insetting company values down on paper and creating offices to administer them canbe traced in large part to the rash of defense industry scandals that surfacedin the mid-1980s. At the time, the emphasis was on compliance with governmentrules and regulations. This has evolved in recent years to a more fundamentalinterest in core values and ethical behavior. When TI sold its defense business,for example, it simply changed the emphasis of its ethics program.


    We felt that when we sold the defense business, the types of things that wewere concerned about changed, says TI ethics director Jack Swindle. We were moreinterested in establishing a values-based program with the rationale that youcan’t ever write down all the rules. Eventually you get so many rules thatthey’re almost meaningless. We start now by telling people what the values ofour company are and we work from that.


    Texas Instruments and Raytheon both back up their ethics codes with formaltraining programs and official channels through which employees can posequestions and voice their concerns.


    At Texas Instruments, the ethics course — Decision Making at the New TI –is voluntary. Swindle notes, however, that it is one of the company’s mostpopular courses, and he believes that eventually, most of TI’s employees willpass through it. The course generally brings together groups of 25 coworkers,and shows them ways in which the company’s values and principles can be usedas the basis for making day-to-day decisions.


    For Raytheon’s employees, the training is mandatory, an annual one-hourevent that uses case studies to sensitize employees to problems they may face inthe workplace. Like TI, Raytheon involves coworkers in these sessions, which aregenerally conducted in groups of 30 or so and use a variety of instructionaltools, including videos, board games, and discussions facilitated by theemployees’ managers.


    Open lines of communication are an essential ingredient of any successfulethics program, and both of these companies make it easy for their employees toask questions and report on observed violations of ethical standards. TI has ananonymous e-mail system, a post office box, and a direct telephone line toSwindle’s office.


Raytheon has a toll-free ethics line and full-time ethicsofficers in all of its major business units. Employees can also communicate withthe company’s office of business ethics and compliance through letters ande-mail.


Employees who feel that their companies conduct business with honesty and integrity show markedly higher levels of commitment.


    Is this all it takes to create an ethical business culture? No, says LindaKlebe Treviño, chair of the department ofmanagement and organization at Pennsylvania State University. You can have theseethics offices and officers and training programs and reporting systems, but ifthe CEO doesn’t seem to care, it’s all just a sham.


    Hence, it is not surprising to find that the companies that really do careabout ethics make a point of including senior management in all of their ethicsand compliance programs. Patricia Ellis, vice president, office of businessethics and compliance at Raytheon notes that ethics training is a requirementfor everyone employed at Raytheon and no one is excluded, not even the CEO. DanBurnham says we will have annual ethics training. His leadership team knowsthat, and they take the training themselves, Ellis says.


    But the management team’s involvement can’t stop at one hour of ethicstraining a year. If managers don’t walk the walk, as it were, employees willsimply assume that all of the high-minded words are little more than windowdressing, or something perhaps even worse.


    If employees perceive that these programs come from a CYA orientation, thatthey are in place simply to protect management, just in case they get caughtdoing something wrong, then the employees become very cynical, and that has allkinds of negative consequences, says Treviño.


    It is easy to write a credo and ask employees to take it to heart. But aneffective ethics program, one that includes training, confidential lines ofcommunication, and ethics officers who are truly empowered to investigate andresolve issues that are brought to their attention by employees, can consume asubstantial amount of company resources. As noted, Raytheon employs a full-timeethics officer in each of its major business units. And Ellis has 10 peopleworking directly under her, including five full-time investigators, a directorof ethics program development, and two people who are responsible for takingcalls on the company’s ethics hotline.


    Calculating the ROI on an investment of this nature may well be impossible,but Bruce N. Pfau, national practice leader for organization measurements atWatson Wyatt Worldwide, believes it is indeed money well spent. Employees whofeel that their companies conduct business with honesty and integrity showmarkedly higher levels of commitment — 68 percent — than those who rate theircompanies low on these values. The latter came in at a 12 percent commitmentlevel, according to Watson Wyatt’s surveys. High levels of employee commitmentare crucial to success in today’s economy.


Pfau effectively demonstrates thisrelationship by noting that companies whose employees rated them high on thehonesty and integrity scale had a total return to shareholders of 101 percentaveraged over three years. Companies rated low on the honesty and integrityscale averaged only 69 percent.


    This is really a key driver of employee commitment, says Pfau. If a companyturns an obvious blind eye to an ethics problem, most employees are not going tobe loyal for long.


    Ethics and integrity do matter. And if the Ford/Firestone incident has taughtus anything, it’s that this is one lesson that business can ill afford toforget.


Image © Marc Tyler Nobleman

Workforce, December 2000, Volume 79, Number 12, pp.74-77 SubscribeNow!

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Fun and Feel-good ROI

The returns that you achieve from an engaging training effort will depend onwhat your objectives are. Here are the stories of three different companies thathave reaped the benefits:

  • Awareness building: After an aggressive period of expansion, Payless Shoe Source, Inc., based in Topeka, Kansas, is now the largest footwear retailer in the world. That is the good news. The bad news is that its competition now includes the indomitable retailing trio of Kmart, Wal-Mart, and Target. Before, we were competing against smaller, disorganized businesses that didn’t have the margins we did, explains Peter Nielsen, director of management development. Now we’re up against retailers who, if they focused on shoes, could put us out of business.


        To compete in this new environment, the company began to change its culturein order to become more aggressive, creative, and willing to take risks. Lastyear, at the company’s annual sales meeting, Nielsen and his team conducted ahalf-day scavenger hunt as a way of communicating to district managers that thecompany was serious about moving away from its conservative roots and becomingmore creative.


        The hunt required teams of employees to go out into the community and bringback various treasures, with points being assigned to the more difficult finds.The items included such things as a hook-and-ladder fire truck (which one teamdid retrieve), hospital scrubs, and a Federal Express truck. Teams also had tophotograph themselves next to certain items while carrying rubber chickens. Allthis had to be accomplished within two hours. Sounds absurd, right?


        According to Nielsen, the hunt was a success because employees had atremendous amount of fun. But more important, it also proved to managers, in avery visceral way, that Payless was serious about changing the way it didbusiness. It was the perfect way to start a weeklong sales meeting that was allabout change, Nielsen says.

  • Employee retention: Like most other health-care organizations, LaPorte Regional Health Systems, based in LaPorte, Indiana, is struggling to find and retain employees, especially nurses. A year ago, in an effort to trim turnover, improve recruitment, and boost employee and customer satisfaction, the company turned to a training video from ChartHouse Learning called FISH! Sticks. Filmed at Seattle’s Pike Place Market, the video shows the passionate fishmongers of Pike Place Fish throwing fish to each other, making one-handed catches, and inviting customers to join in. It is designed to teach employees at other companies how they too can create more enjoyable workplaces.


        Taking its message to heart — that when work is fun, employees and customersbenefit — LaPorte’s HR professionals embarked on a comprehensive culturalchange effort that included a new mission, vision, and list of behavioralstandards. To help employees adopt these new standards, training was providedand the performance-measurement system was revised.


        According to Kay Clark-Cox, director of customer relations, the FISH! Sticksvideo didn’t create the cultural change, but it did help employees understandthat management was serious about encouraging employees to have fun at work.


        The results? In an industry where employee turnover averages between 22 and25 percent, LaPorte’s turnover rate has dropped to 16 percent in a year’stime. Customer satisfaction ratings in the emergency room, which, as you mightexpect, is the place where it’s hardest to please patients, have gone from anoverall dissatisfaction rate of 28 percent down to 11 percent. Best of all, thenursing turnover rate is just 2 percent. We have 5 openings for nurses rightnow, Clark-Cox says, whereas surrounding hospitals have 25 to 30 open nursingpositions.

  • Customer satisfaction: Quebecor World North America, based in Greenwich, Connecticut, is the world’s largest commercial printing company. In this fast-paced production environment, deadlines are crucial and job turnaround has gone from months and weeks down to days and hours. To meet these deadlines, and improve customer service, which is the only differentiator in the printing industry, employee collaboration is imperative.


        In order to achieve the level of teamwork needed to boost customersatisfaction, Quebecor hired consultants from the Lake Forest Graduate School ofManagement in Chicago to conduct a team-building activity for its employees.Called Team Banquet, the training exercise challenges employees to design,prepare, and serve a banquet meal within two hours without any instruction. Theactivity, which is part of a nine-day employee development effort, helpsemployees realize that by working together, they can generate creative solutionsto meet tight, seemingly impossible, deadlines.


        Wanda Breeden, president of Innovative Organizational Concepts, inBrooksville, Florida, is the consultant who created Quebecor’s employeedevelopment program. She says that Team Banquet is an important part of thecompany’s overall training effort, because it vividly mirrors the real worldof work. There is nothing theoretical about Team Banquet, she says. The exercisegives employees tangible evidence of their ability to work together.Furthermore, the activity includes an extensive debriefing in which employeesdiscuss how the lessons learned apply to the workplace.


        How successful has it been? Breeden says that on its own, Team Banquet is agreat team-building exercise, and as part of a much larger effort, it helps toreinforce the importance of collaboration in providing good customer service.Some of the results to date are a 10 percent increase in customer satisfactionat one plant; a 30 percent decrease in the cost of errors at another; and a 25percent decrease in turnaround time at yet another plant. Furthermore, we havelots of anecdotal data about quicker response time and fewer complaints fromcustomers.

Workforce, December 2000,Volume 79, Number 12, p. 38 SubscribeNow!

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Group Move Activity

Companies that relocated a facility or a groupof employees during 1998:

1998 1996 1994 1992
1 3% 16% 25% 24%
2 10% 12% 14% 23%
3 8% 14% 19% 27%
4 7% 13% 12% 11%
5 18% 22% 16% 11%
6 3% 25% 23% 17%
7 8% 0% 33% 0%
8 20% 17% 19% 11%
9 5% 24% 11% 0%
10 5% 7% 10% 32%
11 8% 13% 18% 13%
12 7% 16% 21% 12%
  1. Aeronautics, Aerospace, Electronics,Business Machines, Computers, Computer Software, Computer Service
  2. Automobiles, Automotive Products,Industrial Machinery & Equipment, Metals & Alloys, Transportation
  3. Chemicals, Plastics, Rubber &Rubber Products, Cement Products, Wood & Paper Products, Glass &Glass Products
  4. Communications, Telecommunications,Publishing, Printing
  5. Consumer Products, Pharmaceuticals,Cosmetics, Food & Beverage, Hardware & Appliances, Textiles, MedicalEquipment, Health Care
  6. Government, Non-Profits, PublicUtilities
  7. Professional Services: Advertising,Consulting, Law, Auditing, Accounting
  8. Financial Services: Insurance,Banking, Finance
  9. Petroleum, Gas, Refining &Distribution, Pipeline, Construction, Engineering, Mining, Forestry
  10. Retail, Wholesale, Distributing,Food Service, Entertainment, Hospitality
  11. Diversified Industries
  12. Other

Copyright 1999 by RunzheimerInternational


Workforce,December 2000, Volume 79, Number 12, p. 56 SubscribeNow!

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Tips for Hiring an Effective Trainer

In today’s flush economy, people have realized that there is money to bemade in corporate training and are pursuing HR budgets like hungry lions in aNational Geographic video. To avoid wasting money on gimmicky training efforts,HR people must thoroughly evaluate vendors.


Betsy Allen, master consultant with the Bob Pike Group, a custom trainingcompany based in Minneapolis, suggests that HR professionals ask themselves thefollowing questions before hiring any new training vendor:

  1. Will the vendor complete a needs analysis and customize content?
  2. Will the vendor’s efforts include creating a partnership between HR, theline manager, and the trainee to ensure results?
  3. Does the vendor use an instructor-led/participant-centered approach thatresults in knowledge retention and, ultimately, application?
  4. Does the vendor have a track record and the testimonials to prove it?
  5. Is the vendor’s experience in your industry or a similar one?
  6. Does the vendor have a process for helping you determine whether trainingis the answer?
  7. Has the vendor explored your needs thoroughly with your best interests inmind so as not to simply sell you something off the shelf?
  8. Will the vendor promise performance solutions or agree to recommendanother provider if your needs do not match their expertise?
  9. Is the vendor relationship-focused? In other words, interested less inshort-term transaction dollars and more in long-term results and earnedloyalty?
  10. Is the vendor willing to train your trainers so that the performancesolution can be cost-effectively rolled out to the entire organization?

Workforce, December 2000,Volume 79, Number 12, p. 36 SubscribeNow!

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Achieving the Best Outcome

If you are in charge of a whole-company relocation, here are some steps youcan take to ensure success:

  • Contact the local economic development organizationearly, advises BarbaraHayes, executive director of the Sacramento Area Commerce and TradeOrganization, or SACTO. At no charge, SACTO brings the Sacramento RelocationCouncil to the relocating company’s place of business, offering anoverview of issues like real estate, temporary housing, and schools. Theyhelp to plan a “no-surprises” move.
  • Customize the move as much as possible for each employee. Fox FamilyWorldwide put Judy Morgan in charge of her fellow Virginia Beach employees’moves, then structured her own move to give her the greatest freedom to keepher colleagues productive and happy. A single mother, Morgan, who now servesas director of program operations, had to sell a home and manage two teenagedaughters who were on their own in Virginia for three months. Fox flew Morganand her associates to Southern California to meet with real estate people tohelp them make decisions about a move, then arranged corporate housing in L.A.for those who did move.

        “They did everything they could to make arrangements for us –corporate housing, rental cars, per diem for eating out. I flew back a fewtimes, which was also appreciated. And they even helped move my dog.” Asthe point person for the Virginia employees, Morgan communicated with themovers and knew where every van was every day, so she could reduce employees’anxiety. “We were launching a new television network, so it was importantto focus on the launch. There was no time or energy to worry about theday-to-day.” Morgan emphasizes how important customizing would be for afamily with greater challenges, such as a disabled child.

  • Prepare employees for culture shock. Morgan had never lived outsideVirginia, and she relied on her faith and sense of humor to help her throughthe difficulties. Still, she could have used a contact person who could orienther to local customs, such as the way public utilities connect (or disconnect)service in L.A. She now laughs about some of the differences, includingfashion trends: “I’ve never worn so much black in my life. Had to getrid of my beige and my cream and my olive.”
  • Address the cultural-diversity issues. Goodman recalls, “Some folksmay have been comfortable about being gay, Latino, African American, orAsian in L.A., but they had real concerns about life in other locations.Transamerica arranged for meetings with political leaders in Charlotte andKansas City such as the mayor and the governor to show that there would be areceptive environment. The Charlotte move succeeded largely because thefirst division to move there was headed by a charismatic African-Americanmanager. He set the tone for the others.”
  • Honor emotions with concrete help. Some employees may benefit enormouslyfrom classes in stress management or career planning, Goodman suggests.”You need to help people face the endings,” he explains. Somelong-term Transamerica employees “were very angry. They thought the dealwas security and retirement.” Transamerica’s classes for managers intransition management helped, as did a course in coping with change foremployees.
  • Stay in touch through the process. Glennon, of Lucas Digital, believesthat employees should be kept up-to-date on what’s happening with themove. His company has made sure that messages to employees coincided withthe company’s becoming a finalist for the space, its final selection, andits signing of the lease. Mitchell sends weekly e-mail updates and holdstown hall chat sessions.
  • Involve the stakeholders. Expecting employees to maintain productivity meanskeeping them involved and informed. Glennon’s observation of other companiestells him that too often, the stakeholders are not adequately involved, andtheir insights are lost. At Volvo, frequent communication is the road map, andMitchell isn’t afraid to ask directions. “If we don’t know something,we admit it, and tell the person when we’ll know it.”
  • Overestimate the time the move will take. What would Craig Heide change ifhe were making a whole-company move again? He’d allow himself a moregenerous time line than 11 weeks. Glennon advises that if directing thecorporate move is a job add-on for you, budgeting your time in line with thetimetable for the move is your major challenge.

Workforce,December 2000, Volume 79, Number 12, pp. 60-61 SubscribeNow!

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Automated Assessments for Better Hires

Automated pre-employment screening tests provide a variety of efficiencies,saving time and money in comparison to the traditional pencil-and-paper route.They can also reduce the expense of high turnover by helping to determine whowill do well in a particular job on the front end of the interviewing process.The assessment capabilities can be used as well to size up the existingworkforce for the purposes of team-building.


The large company in our case study, Capital One (more than 17,000employees), moved to online testing mostly in response to the logistical demandsof staffing its 8,000 call-center operator positions.


For the small company, City Garage (under 500), and the medium one, NewHorizons Computer Learning Centers, the main benefit is analyzing applicants tomake smarter hires. (Typically, a medium-sized company is categorized as 500 to5,000 employees.


We fudged a little with New Horizons: it has 7,000 employees worldwide, with1,109 in the United States.)


Workforce, December 2000, Volume 79, Number 12,p. 102 SubscribeNow!