Q. I inherited a very small department, which includes two managers. They were given their titles by my predecessor, do not supervise anyone, are now overpaid, and could easily be replaced. What are the pitfalls of restructuring their positions and returning their roles to appropriate line staff?
A. This is a complicated dilemma you face, and somewhat difficult to answer without additional information. I’ll assume the following based on what is not said – this is not a companywide initiative driven by cost cutting, and the two individuals in question are at least “steady Eddies” (no less than average performers). I’ve never been a fan of downgrading titles unless there are internal equity issues, or something of significance driving the need. (e.g. overall Company restructuring). Remember, titles are free, and downgrading someone’s title will result in a level of disengagement, and most likely, resentment towards you. You don’t mention if you’re also thinking of restructuring their pay. If so, I would offer similar advice – if it is part of a Companywide initiative, (common during these times), employees are increasingly accepting of the need for Companies to stay competitive, especially if this is an initiative to avoid layoffs. However, if these two individuals feel they’re being “signaled out” by you, then you risk a level of disengagement leading to a loss of their “discretionary effort”. Often this loss will not equal the potential salary savings. Alternatively, an approach I’ve used very successfully is to “red tag” their total compensation (no salary increases, bonuses, etc.) until the market catches up to their salaries. Of course, Company financial conditions will dictate whether you can afford this approach.
Your “could easily be replaced” comment does concerns me somewhat. In these troubling economic times, many employees can easily be replaced by lower cost employees (those currently unemployed for starters). However, keep in mind – your employees are watching you, and will remember how they were treated during these times. When the economy improves (and it will), and employees have options again, they will remember how they were treated during these times.
Q. What is the best practice to follow when a high ranking employee (for example, a Vice President) needs to be fired within an organization? Should there be a committee set up to handle this? Or can the CEO unilaterally terminate such a person?
A. First and foremost, I’ll assume you have an internal policy, and will follow said policy, specifically your “corrective action” procedures? And although I’m also assuming the individual in question is being “fired” for cause and not a layoff (for lack of work), he / she might still be eligible for severance. If not explicitly eligible, offering severance in exchange for a signed release (releasing the Company against any discriminatory claims, protection of intellectual property, etc.) might be money well spent.
Also, I don’t believe any one individual should ever be responsible for terminating an employee, including the CEO. If your firm is big enough to have an HR Director and / or internal legal counsel, seeking their counsel and participation is critical. If you don’t have internal counsel, consider consulting with an external employment lawyer.
Lastly, unless there are fraud, trust, and / or theft issues, I suggest allowing the individual to leave with dignity. Allowing a few days for the individual to transition goes a long way with creating and fostering a trusting environment, while also ensuring proper continuity of the business. The days of walking someone immediately out the door with security should be avoided unless there are issues noted above, or one feels the individual might be disruptive.
Q. We have a new secretary who has been on the job for two weeks now and has been performing poorly. We are considering firing her and wonder if there is a timeline regarding unemployment benefits. We were told by a friend that if we fire her after 30 days she would be able to file an unemployment claim and our company would incur cost. However – if she left before 30 days, we would not incur cost. Can you advise?
A. Even two weeks of wage payments could make you liable for up to a 36% benefit charge. There are a number of factors that determine whether the employer incurs a cost. When it comes to the employee collecting unemployment benefits and the employer being charged, timing is everything. From the secretary’s perspective earnings eligibility is based on wages paid during the last four completed calendar quarters preceding the effective date of a claim. This is what is known as the primary base period. In order to be monetarily eligible the employee needs to have earned $3,500 during the base period (the 4 completed quarters before applying or their most recent earnings and the 3 prior quarters). Additionally the total earnings in the base period need to exceed 30 times the weekly unemployment insurance benefit amount, roughly stated 15 weeks of work.
The secretary’s work for all employers in the base period, not just the recent employer, counts. As long as the total earnings exceeded 30 X the weekly benefit amount – so even if this secretary worked for only 2 weeks at your company AND at least 13 weeks in a prior company than you would incur a cost. Employers are charged in reverse order of the claim up to 36% of base period earnings paid. The Division of Unemployment Assistance (DUA) first charges the account of the most recent base period employer, and when that employer's 36 percent limit is reached, begins charging the next-most-recent employer's account, and so on throughout the base period. DUA uses a system of credits and debits to determine the balance in your account. When you pay your quarterly contribution, that amount is entered as a credit to your account on the actual date paid, with the exception of the final quarter, when a payment made by October 31 is credited as of September 30. Your beginning account balance is established on October 1 each year. When DUA provides benefits to a worker you employed during the past year, these benefit charges become debits to your account.
— Jamie Resker, with assistance from Pamela A. Smith - Attorney at Law
& Mass.gov Division of Labor and Workforce Development
Q. We have an employee who disappears and says he’s making sales calls. I was brought in to evaluate the company and report on how they can save money. I learned that this employee is using a company car, time, gas and was doing a job for his former company – a company he says he networks for and accepts finder fees from. When I called him to ask “where are you right now” he would not tell me – however we did know where to look for him. How do we approach this and what do we do next?
A. I once had this type of scenario referred to as the employee who should have his picture on the side of a milk carton. It sounds like you have evidence that this employee is working for his former employer while on company time. Making an assumption that he is a full time employee he should not be using a company car, time or other resources to work for another employer. I would advise taking a look at whether he is meeting his current job responsibilities and goals and wonder whether he could be, given the fact that he seems to be focusing his energies elsewhere during work hours. Is he expected to be reachable, visible and accountable for his whereabouts?
Based on the call you made asking where he was and his refusal to communicate his whereabouts I would question his integrity and commitment to his employer. If this employee is to be given a chance at redeeming himself he needs to agree to be open and forthcoming about his whereabouts during company time and must be fully engaged in his current role which means other employment obligations must be handled outside of regular work hours and without the use of company resources.