Sooner or later it happens to even the most conscientious employers. No matter how carefully they hire workers, how many incentives they give for strong performance, or how diligently they try to create positive and productive work environments, all businesses—large and small—may one day have to deal with problem employees.
You might have picked up this book because that day has already come for you. Perhaps an employee has demonstrated attitude or performance problems that won’t go away, sexually harassed other employees, stolen from the company, or threatened violence. Or, you may have picked up this book because you’re concerned about the bigger picture. You’re frustrated with the number of employee problems that crop up year after year. Instead of simply reacting to each problem as it arises, you want to be more proactive.
Whether you’re currently facing a specific employee problem or just want guidance about employee problems in general, this book can help. Employee problems are not inevitable, nor must they fill you with fear or anxiety. In the chapters that follow, we provide you with the practical and legal information you need to handle employee problems confidently and to create policies and procedures that will reduce the number and degree of problems you face in the future. As an added bonus, the strategies described in this book will make your workplace more collaborative and will increase employee morale. Everyone in your company will benefit from the healthier workplace these strategies will create.
The High Cost of Problem Employees
For many employers, figuring out whether and how to discipline or fire a worker is one of the most stressful parts of the job. And these concerns are well-founded: Ignoring or mishandling worker problems can be very costly, indeed. Here are some reasons why.
Lawsuits
Lawsuits brought by current and former employees are increasingly common and costly. According to a 2006 survey conducted by the law firm Jackson Lewis, almost half of the corporate attorneys and managers polled reported that their organizations had been sued by an employee in the past year. If your company loses one of these lawsuits, it could easily have to pay tens or hundreds of thousands of dollars, even millions, to a successful plaintiff. And that doesn’t even include the cost of paying a lawyer to defend you, win or lose. According to a 2013 survey by Norton Rose Fulbright, the average cost to defend an employment lawsuit brought by one plaintiff (in other words, not a class action case) was more than $100,000. Consider these examples:
An Ohio jury awarded more than $46 million to a former manager at Republic Services, Inc., who claimed he was fired in retaliation for refusing to fire three older employees, which he believed would have been age discrimination. Jurors were particularly upset by evidence that the company tried to prevent the manager from getting another job after he was fired and that the company manufactured evidence of the manager’s poor performance only after the manager sued.
A California jury awarded $61 million to two drivers for Federal Express, who claimed that they had been harassed and called derogatory names because of their Lebanese heritage. The case later settled (to avoid an appeal by FedEx).
UBS was ordered to pay more than $29 million to an employee who alleged that she was belittled and denied important accounts because of her sex. UBS also had to pay sanctions for destroying important documents after the plaintiff filed a complaint with the Equal Employment Opportunity Commission (EEOC), and the jury was told to assume that those documents would have hurt the company’s case.
A jury ordered Metris Companies to pay its former CEO $30 million for wrongful termination. The CEO claimed he was fired because he wanted to tell shareholders that the company was for sale and under investigation by the federal government.
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Discrimination Charges Remain High
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The EEOC collects statistics on how many discrimination charges are filed with the agency each year and what those charges allege. (An employee who wants to sue for discrimination must first file a charge with the EEOC or a similar state agency.) Nearly 90,000 charges were filed in 2014. As has been true for the last decade, there were more charges alleging race discrimination than any other type, followed by sex discrimination. For the sixth year in a row, however, the most frequently filed charge was not for any type of discrimination, but for retaliation.
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Employee Turnover
If you ignore problem employees, handle workplace problems ineffectively, or operate in a Draconian manner, you will soon have an employee retention problem. The problem employee will receive neither the guidance nor the opportunity necessary to improve, and will, in all likelihood, be fired or quit. In the meantime, your other employees—who have picked up the slack for that problem worker or, even worse, put up with that worker’s abuse and mistreatment—will soon look for greener pastures.
So, you’ll hire new employees, right? Well, keep in mind that the cost of replacing a worker is much higher than you might imagine. In fact, many experts estimate that it can cost one-and-a-half times a new hire’s salary to replace an employee. And the cost of replacing management can run even higher. Wouldn’t it be easier—and less expensive—to hang on to the good employees you already have and help your problem employees turn their performance around?
Poor Morale
Problem employees can really drag down the spirit of a workplace. As coworkers watch the difficult employee get away with breaking the rules, mistreating others, failing to perform or produce at required levels, or being insubordinate, they will feel resentful and unappreciated. They might even feel frightened if the troublemaker poses a threat to their safety or well-being.
If you don’t take action to stop the down-ward spiral, you may face any number of associated problems. You will have trouble recruiting new workers and getting the most out of your remaining employees. You might even find yourself with an epidemic of workers with poor attitudes on your hands. Workers who feel that they are being treated unfairly or taken advantage of are more likely to resort to small acts of revenge, including theft and fraud (which, according to the American Management Association, costs businesses somewhere between $40 billion and $65 billion a year).
The Bottom Line
When it comes down to it, problem employees hurt your company’s bottom line. Lawsuits, employee turnover, and low morale cost money and reduce the productivity of your business. All that time problem employees spend harassing coworkers, arguing with you, or updating their Facebook statuses is time spent not working. And all the time other employees spend complaining about a problem worker, taking on his or her work, and laying bets on when you’ll finally get up the nerve to fire him or her is likewise lost to the company.
How This Book Can Help
So what can you do about your problem employees? With the help of this book, plenty. Here, we offer you: proven strategies for dealing with the most common employment problems, legal information on your rights and responsibilities as an employer, and practical tips that will help you get the job done.
The information we provide will help you:
avoid hiring problem employees in the first place
effectively deal with specific problems that arise in your workplace
turn problem employees into productive, valuable workers
safely and legally terminate those employees who can’t or won’t improve
tap into the potential of every employee
promote productivity, loyalty, and camaraderie in your workforce, and
stay out of legal trouble.
We start in Chapter 1 by examining the most common types of employee problems and explaining strategies for handling them. In Chapter 2, we explain the law of the workplace: the basic legal rules that you must keep in mind when making employment decisions. In Chapters 3 through 6, we take an in-depth look at several management practices—performance evaluations, progressive discipline, investigations, and alternative dispute resolution programs—that will prevent many problems from cropping up. When problems do arise, these same practices will enable you to deal with them effectively and legally.
For those situations in which nothing else works, we devote four full chapters to how to fire problem employees. These chapters include information on:
how to decide whether you should fire the employee, including whether you’ve done all you can to protect against lawsuits (Chapter 7)
how to handle post-termination issues, such as references, unemployment compensation, and continuing insurance (Chapter 8)
how to decide whether to offer a severance package (including what to include in the package and whether to ask the employee to sign a release agreeing not to sue you) (Chapter 9), and
how to legally and safely terminate an employee, step by step (Chapter 10).
Chapter 11 will help you develop sound hiring and personnel policies to weed out the problem employees of the future. In Chapter 12, we explain how to find and select an employment lawyer.
Who Should Use This Book
This book is for anyone who oversees employees, including private business owners, human resource professionals, supervisors, and managers. If you want to learn about the law; pick up practical advice, tips, strategies, and policies that will help you manage more effectively; and treat your employees fairly, this book is for you. We wrote this book with the conscientious, well-intentioned employer in mind.
Who Should Not Use This Book
This book is not for people who work in the state or federal government. Although many of the strategies that we discuss in this book could be applied to government workers, most employment laws operate slightly differently—or not at all—in the public setting. If you are a manager or supervisor of government employees, this book probably isn’t for you.
This book is also not for people who are looking for ways to “get around” workplace laws. If you are looking for a guide that will show you how to skirt the boundaries of the law, this book won’t help. Our goal is to help well-meaning employers deal with their employment problems legally and effectively, not to help shady operators evade their legal responsibilities.
