THE FORMULA FOR MAKING GOOD HR DECISIONS

Employment lawyers routinely field calls from business clients asking for help assessing whether they are “safe” terminating particular employees. No two fact scenarios are identical. Thus, there is no precise methodology to guide such decisions.

There is, however, a solid and time tested general formula I have developed for helping businesses make good workplace decisions. It derives from a 1944 case that is required reading for all first year law students. In Carroll Towing, a flour filled barge in New York Harbor broke loose and crashed into a number of other ships, causing lots of mayhem – and damages.

What does a 1944 runaway barge case have to do making workplace decisions in 2014? Plenty. The judge’s reasoning in Carrol Towing applies to workplace decisions as well:

Since there are occasions when every vessel will break from her moorings, and since, if she does, she becomes, a menace to those about her; the owner’s duty, as in other similar situations, to provide against resulting injuries is a function of three variables: (1) The probability that she will break away; (2) the gravity of the resulting injury, if she does; (3) the burden of adequate precautions. Possibly it serves to bring this notion into relief to state it in algebraic terms: if the probability be called P; the injury, L; and the burden, B; liability depends upon whether B is less than L multiplied by P: i.e., whether B < PL.

Substitute “employee” for “vessel” and let’s walk through dealing with a problem employee. In deciding whether to discipline the employee you should consider (1) the possibility of further infractions, (2) the gravity of harm if the employee continues to misbehave, and (3) the burden of disciplining the employee or of other preventive action.

Prudent employers recognize that in most cases the “burden” of disciplining employees is slight when compared to downside of doing nothing. Two separate risks arise when employers do nothing in the face of workplace infractions or nonperformance. First, the risk of further infractions and ongoing nonperformance rises. These problems in turn hurt the company’s productivity and can cause safety and  morale problems, among others.

Second — and arguably far worse — failing to timely discipline an employee causes increases the risk of a successful wrongful discharge lawsuit. This occurs because the employer has either (a) allowed a misbehaving employee to continue unabated or (b) terminated an employee with a seemingly clean work record.

Let’s apply Carroll Towing to two hypothetical situations and watch it work against imprudent employers:

Hypothetical I: Company A has a high revenue producing male employee who enjoys harassing female employees. This creates a high probability that there will be a claim of sexual harrassment.   It is also likely that the company will be in a lawsuit and exposed to damages and bad publicity. The gravity of the resulting injury is high – like that of a runaway barge.

Company A, however, does nothing because it (1) is willfully ignorant of the probability and gravity of a discrimination lawsuit and (2) perceives the burden of disciplining the large revenue producer to be too great. Company A may likely get what it deserves: protracted legal proceedings, lots of wasted time, and multiple checks written to attorneys and plaintiffs.

Hypothetical II: Company B has a poorly performing employee that is over 40, in a minority group, and has a physical disability. The employee is not performing well and is frequently late to work (unrelated to the disability). The employer fails to understand the risk and gravity of ongoing nonperformance and fails to take the simple act of disciplining the employee.

Company B “wakes up” at some point and realizes it must terminate the nonperforming employee, who is crushing morale and productivity and can be replaced by a newfound superstar candidate. But it is too late.  The company should long ago have realized the possibility and the gravity of a Title VII charge of discrimination if it terminated the employee before there was any written record of the employee doing anything wrong.

By failing to take the simple step of disciplining the employee, Company B is now stuck on the horns of a dilemma: either fire the employee and risk a discrimination lawsuit because there is no record of nonperformance, or retain a lousy employee.

Understanding the probability and gravity of workplace problems allows businesses to take reasonable precautions to avoid them. It’s a simple formula to understand and apply.  The next time your business confronts a problem employee, evaluate:  what can the company do to reduce or eliminate the potential and magnitude of future problems.

SIDE STORY:  Back in the day — the Big 80s — I was an ocean lifeguard on Hollywood Beach, Florida.  The potential for drownings was high when weighed against the precaution of carefully watching my section of the beach/surf.

Ironically, the best lifeguards on our beach had the fewest saves.  Why?  Because a good guard quickly sees and understands a problem swimmer or bad surf or wind conditions.  This enables the guard to takes measures — moving a swimmer away from a rip current — before a rescue becomes necessary.  When company managers have the training and smarts to identify “rip currents” among employees, they too will prevent crises before they occur.

Carroll Towing applies to any number of situations in life. This week’s video pays tribute to the 29 men who died on November 10, 1975, aboard the Edmund Fitzgerald in Lake Superior. You’ve likely heard the great ballad by Gordon Lightfoot which chronicles the disaster. If you like the song, you will love this touching video (turn up the volume):

 

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