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Choosing The Right Employees Will Make You A Success
By Steven Kesten, Esq.
Employee Selection or Building Your Team
As a child growing up in New York City, long before the organized team sports kids now play, most team sports began with the process of "choosing up sides". We all knew that the outcome of the game largely depended on the talents and abilities of one's teammates. As a lawyer practicing in the area of employment, I advise clients that their success or failure may be pre-determined by their selection of employees. Hiring and management of employees are significant factors in determining whether a business will succeed or fail. The following is a short overview of how to hire, manage and terminate employees.
Hiring the Best and the Brightest
The most important aspect of managing your business is hiring smart. The people with whom you work are either the cause of your success or the greatest impediment to success. After all, if you start with the right people, you'll have fewer problems to resolve, including problems related to termination. The prevailing wisdom among recruiters is that the larger the applicant pool, the better your chances of finding the appropriate employee. This said, advertising for employees should be your last option. It is almost always better to hire someone that is personally recommended by someone you know and trust. One business owner with whom I consult has always hired employees she observes while working for other businesses. When she sees a particularly able or talented employee working for another business, she isn't shy about passing the employee a business card and whispering that a job offer will follow their call. This business owner knows that experience in her particular field is far less important than the right attitude and an ability to problem solve. This business owner once told me that she prefers to hire the best employees she sees working for other businesses from the grocer to the local appliance dealer. She believes that advertising in the classifieds only accesses those applicants that weren't valued by their last employer or applicants and who aren't creative enough to solve their job search challenges in a creative or assertive manner. Another employer told me he will let a position remain vacant until he is able to target a very desirable applicant. A smart employer's goal is to avoid mediocrity at all costs.
When interviewing prospective employees, generally describe real life problems the company has faced and ask applicants how they would solve the problems. Whether you're hiring a new vice president or a shipping clerk, you want to attract employees that will solve problems on the fly, not employees that will be tripped up each time circumstances change.
Managing People for Best Results
If you hire appropriately, your management responsibilities will be few. If you hired the wrong person, there isn't much you'll be able to do to alter their performance but you will spend a disproportionate amount of time trying to correct that person's performance. Over managing a marginal or poorly performing employee will never change the quality of their performance but it will decrease your own productivity. I strongly advise that each employer have a 90 day probationary period and not be shy about terminating poor or marginal employees. It is far better to devote your time, effort and resources to supporting the efforts of your best and brightest employees. Don't make the mistake of trying to change poor and marginal performers. Think about all the disappointed wives who thought they'd change their husbands after marriage. The old adage that people don't change is true.
For employees that make the cut and are retained past probation, set clear standards that are high enough to encourage employees to do their best but not so high they create performance anxiety. Let your most able employees train new employees. This will provide your new employees with a model of what is expected. When a good employee does require assistance, provide encouragement rather than criticism and do it in private setting rather than in a meeting or other public forum. If you can't stop yourself from criticizing the employee, it is probably best to terminate that person.
Formal and Informal Meetings
There isn't much to say about meetings that most of you don't already know. When it comes to meetings, keep in mind the old adage that, "less is more". Meetings are, at best, inefficient and at worst, counter productive. Communicate goals, tasks, and new projects directly via brief face to face discussions, email or telephone discussions. If a meeting can't be avoided, decide in advance exactly what it is you have to say so that the message is clear and concisely communicated. You can assume that those in attendance will often be focused on things other than what you have to say. Follow the old Toast Master'' adage: tell them what you're going to say, say it and then tell them what you have said. Follow these simple rules and at least your audience will remember what the meeting was about fifteen minutes after it ends.
Evaluating Employee Performance
Formal evaluations are all well and good but the most important performance evaluations occurr everyday. First, if an employee is chronically under performing you should not hesitate to terminate the employee. Chronic under performance is a sure sign of an employment pathology that will never be cured, no matter what you do. If after reflecting on the merits of a particular employee, you believe the employee is being terminated for a business reason and not based on their membership in a class of persons protected by state or federal law from unlawful discrimination, don't hesitate to terminate. Most states have laws that hold that employees are "at will" unless there is an agreement to the contrary. In our view, all employees should be "at will" from the janitor to the CEO. If there is even a hint of discrimination based on race, ethnicity, disability, religion, or any of the other protected categories, contact your employment attorney before taking action. Some states such as California have laws that are far tougher on the employer than federal law.
If you've terminated the chronic underperformers, now you're faced with the task of how to improve the performance of the generally satisfactory employees that remain. Decades of research have proven time and again that positive feedback is more effective than any other approach to behavior modification. Encourage the behavior you want to elicit through reward, promotion, elevation by title, bonus and verbal praise. Even small inexpensive rewards work well. A package of M&M's placed on an employee's desk with a thank you note expressing appreciation for a job well done will not only have the effect of creating a more civilized work place, you can be sure that employee's performance will continue to improve. That small package of M&M's will encourage the repetition of the desired behavior, you don't have to spend a fortune on positive reinforcement. Unwanted behaviors will slowly disappear as desired behaviors are reinforced and repeated.
Keep the Best and Get Rid of the Rest
Employees are the number one asset of every business. Under-performing employees can also be the number one impediment to the success of businesses, large and small. Before terminating an under-performing employee, consider the following: First, how much time, money and resources have gone into training the employee and can the employee's short comings be corrected. The flip side of his question asks what will be required to find, hire and train a replacement. Just a few years ago market conditions made it almost impossible to find talented motivated employees, but times have changed. Presently, the market place is overcrowded with talented people in search of even modest employment opportunities but availability varies greatly from industry to industry.
If your analysis demonstrates the employee's performance can not be improved even after sufficient coaching and encouragement, determine whether or not the termination can be characterized as anything other than a sound business decision. State and federal laws prohibit discrimination in the workplace. From experience, I've learned that most businesses care very little whether or not an employee is a minority or member of another class of persons protected from discrimination in the workplace. However, many lawyers have made a lucrative business out of suing well intentioned businesses because they may have terminated a chronically under performing employee who also happens to be a member of a protected class.
You can decrease the chance of being sued for wrongful termination or discrimination by counseling the employee prior to termination. Provide the employee with an opportunity to improve their performance. Set definite but realistic goals and have the employee sign off on the improvement plan. If the employee manages to improve performance, it will be time well spent and you'll be rewarded for your patience. If the employee fails to improve per the terms of the plan, both the employer and employee will have a clear understanding of the reasons for termination and you may have successfully dodged the lawsuit bullet.
Generate Excitement Because Your Competitors Will
The success of every business will be, in large part, determined by the business owner's or manager's ability to motivate and manage employees. If you have a vision of the business helping society, make every effort to communicate that spirit to your employees. If your employees understand and buy into your vision, the business will prosper. Have you seen George Forman selling his grill on television? The enormous success he has enjoyed as televisions number one pitchman is largely attributable to his ability to communicate his vision and sense of excitement about a grill. George's grill may not change the world but you'd never know that from the amount of enthusiasm he displays and the excitement he generates. Now go out there and generate some excitement among your employees.
San Francisco Institutes New Employment Laws
Effective February 5, 2007
By Steven Kesten
February 5, 2007 marks a new chapter in employment regulation by a municipality. San Francisco breaks new ground with its new ordinance that requires employers to provide sick leave to all employees, including temporary employees who work 30 hours or more. The new law mandates accrual of sick benefits based on every hour worked in San Francisco. This requirement demands that virtually all organizations that employ hourly workers in San Francisco revise their handbooks and sick leave policies. Employers are responsible for ensuring application of this law to their direct hire temporary employees. Further, employers using temporary agency employees are responsible for confirming that the agencies are in compliance with the law.
Complex New Accrual Requirement. The ordinance, passed in November 2006, requires employers to grant all employees, including part time (and temporary employees), with one hour (in hour increments only) of paid sick leave for every 30 hours worked. Beginning on February 5th, any employee already with the organization must begin accrual of sick time and individuals hired after February 5th must begin their accrual following 90 days. Accruals must be maintained for exempt employees as well.
Small businesses (defined as those with 10 employees or fewer) are allowed a 40-hour accrual cap, while larger companies may not limit sick leave accrual until 72 hours are banked. Accrued paid sick leave may carry over year to year but will not exceed the capped hours. This system is not a typical annual accrual limit, rather it is a limit on hours used in a year. For example, employees that use accrued hours rolled over from the previous year, are still able to accrue up to 72 hours within that year, making it possible to use well over 72 hours in the 12 month period from the date of eligibility. This law will require a new system of accrual tracking for virtually all employers (for example – the ability to track hours for temporary employees who work intermittently such that sick accrues for each 30 hours worked in a 12 month period).
Verification of Sick Leave. While employers may require a reasonable notice for an absence, as well as taking reasonable measures to verify the lawful use of sick leave, they may not require the employee to provide a doctor’s note for absences due to a cold or other minor illness that does not require medical care or treatment. The law requires a case-by-case analysis similar to the type required under the Family and Medical Leave Act (FMLA).
Sick Leave Utilization. The ordinance also broadens the ability of employees to use paid sick leave for some employers. Not only may sick leave be used for personal “illness” of the employee (preventative care, recovery, or any other medical needs), it includes the care of family members or a “designated individual”. The law states that an individual without a spouse or domestic partner may select a “designated individual” for whom he/she may use sick leave to provide care. Employers must establish a procedure for extending the offer to designate and the “designated individual” must be named within 10 days of the employee’s first hourly accrual of sick leave; thereafter, the “designated individual” may only be changed annually. Also, employees covered by this ordinance must be allowed to use 100% of their sick leave for kin care (as opposed to the previous 50%).
Small Business Impacted. Small business will be hit hardest with compliance. While businesses with 10 or fewer employees are cut some slack with the less onerous 40-hour accrual cap, the new, unplanned cost of paying employees for time not worked could be significant. Another issue buried in the ordinance is that it is unlawful to require an employee to find substitute to cover his/her shift when using sick leave. This will mean that small businesses, especially those requiring a person to be present, may need to increase the number of employees in order to be able to cover all shifts.
While these changes may not require alteration of all sick leave policies, especially for those who use PTO (Paid Time Off) and already provide a more favorable accrual system to all employees, however it does require employers to review language in their handbooks to ensure compliance.
Open Questions. Earlier this month two meetings were held in San Francisco for interested members of the public regarding the new law. The speaker was Donna Levitt, Division Manager of the state Office of Labor Standards Enforcement (OLSE), the administrative agency in charge of enforcing the Ordinance. Many questions were left unanswered such as the extent to which a temporary agency is responsible for tracking hours when there is a break in service (intermittent temporary assignments); and the methodology required for calculating sick leave pay when variable pay is involved.
Recommendations:
1. If you employ persons who work 30 hours or more in the City of San Francisco, immediately review current sick leave policy as well as PTO. If your organization offers PTO that looks similar to the sick leave requirements it might be easiest to blend the two. Pay particular attention to coverage issues such as the “designated individual”, and the expansion of absences that paid time can be used for – these new elements have likely not been covered in previous policies.
2. Since the mandated accrual system will not be easily compatible with payroll and time tracking, it might benefit the employer to adopt an accrual formula that will meet the minimum rate.
3. If your organization works with any temporary agency, make sure they are compliant with the new regulations to reduce risk. This might be a good time to ensure that the temporary agency is compliant with other issues as well.
4. As PTO must be paid out at an employee separation from the company it is not recommended that PTO policies be extended to all individuals in order to comply with this ordinance. If PTO for your full time employees covers the new sick leave requirement, it might be beneficial to create a separate paid sick leave policy for temporary and part time employees (this may drive the need for multiple employee handbooks).
Significance
Despite the effective date of the San Francisco ordinance, there are many open questions – not the least of which will be how the City will enforce this new law. Like many employment laws, one sure method to face enforcement is to do nothing. If your employee handbook fails to comply on its face, it will be difficult to argue that your practice is compliant. In a recent meeting with employers, the City has promised to issue warnings rather than citations for the first few months, however given the significant penalties proactive action on this issue is the best defense.
