Bottom Line Business Insights : Maryland Business Lawyer & Attorney : Wagonheim Law Firm : Mergers & Acquisitions & Contractual Negotiation

2012 will mark my 25^th year serving as general counsel to small-to-medium-sized businesses. During that time, I have handled innumerable employment-related inquiries. For the first part of my career, my advice concerning personnel files and the building of a defensive wall against potential employee lawsuits was conventional, parroted established wisdom, and was dead wrong.  

You see, it used to be that when a business owner called and asked me if she would be in the clear if she fired someone, I would inevitably ask about the existence and contents of performance reviews. The conventional wisdom being that a paper trail of performance reviews in the file would bolster the company’s defense against a discriminatory or retaliatory firing. 

But I began to notice something curious about these supposedly these company-saving performance reviews. 99% of the time, the performance reviews were entered into evidence, not by the company, but by the disgruntled former employee. 

The reason? The performance reviews, even those preceding the firing decision by just a few months, would inevitably rate the soon-to-be-fired employee as “meeting expectations” or “above average.” Not one item of the laundry list of the employee’s grievous deficiencies could be found anywhere on the company’s own evaluation forms. What’s worse, the presentation of these deficiencies in court by the company would invariably have to come from the person who signed an adequate, if not glowing, performance review immediately prior to termination. 

 The reason? The vast majority of supervisors will check any box necessary to avoid the unpleasantness of confronting an employee with a less-than-positive evaluation. 

Last week, I attended a seminar presented by Garold (Garry) Markle of Engergage echoing and building upon this theme. Markle compared the performance review process to one in which the supervisor tells the employee “you hit yourself in the head with a hammer; I’ll hit you in the head with a hammer, and then we’ll see if both blows felt about the same.”

Instead, Markle emphasized the need for establishing a frank coaching dialog with employees on the things that really matter -- both to the employee and the business. 

Now, I disagree with one of Markle’s apparent assertions that the coaching be conducted primarily on an annual basis. I would prefer to build a system in place for a continuing dialog. 

Where I wholeheartedly agree with Markle is that conventional performance reviews -- whether conducted because “you’ve always done them in the past,” “that’s the way everyone does it,” or “my lawyer insists that I paper the personnel file” should be tossed in the trash never to see the light of day again. 

In place of performance reviews, work to install something that’s rationale, true, and doesn’t come back to bite you in court.

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Every month, I ask our Empty Hourglass Clients to meet with me, free of charge, so that I can keep a better handle on their businesses and answer any questions they may have. You see, many business owners have questions that arise in the day-to-day operation of their companies which, while important, do not seem to rise to the level of immediacy required for the payment of legal fees. So the questions sit…unanswered. The issues remain unaddressed. And frequently, though not always, large problems grow out of what could have been minor inquiries.

I have noticed a trend in these meetings. In more than half of them, my clients ask me if I would review their Personnel Manual/Employee Handbook. 

In view of this trend, I thought it might be beneficial to list and comment on one of the most common issues I have found in company after company … industry after industry:

The Manual Should Reflect Policies, Not Aspirations

The purpose of the Manual is to describe the rules by which the company operates. Time and time again, after reading a company’s Manual, I find myself asking clients “is that really what happens in your company?” Often, the answer is “no.” Maybe there is no formal procedure such as that described in the Manual.  Many there are no written forms or step-by-step investigatory approach. 

That’s OK. Many companies have not formalized their processes. My recommendation, however, is that management take the time to figure out small, doable steps to put into place and describe them.  By spending page after page describing procedures which everyone in the company knows will never take place, the company has generated a Manual that is simply not worth the paper it’s printed on.  Other than double checking paid holidays and the amount of vacation, the rest of the Manual is just wasted words on useless paper.

If you’re wondering whether your Personnel Manual needs an overhaul…or even if you’re thinking of writing one for the first time, take a look at any sections which detail company procedures – from requesting Paid Time Off to describing disciplinary procedures – and ask whether the words on the page reflect what happens in reality.  If not, change one or the other.

Because when it comes to Personnel Manuals, Shakespeare was right: 

To thine own self be true.

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Many companies have personnel manuals they've worked hard to put together and have not looked at for 5 years or more. If you're one of those companies, or are simply looking to put together a personnel manual for the first time, here are some things to consider:

•  Do you have a section addressing social media and how entries reflecting badly on your company can result in disciplinary action?
•  Do you have a section on post-termination references that actually reflects what you do in real life?
•  Does the Manual address the last several problems or termination-level offenses your company experienced?
• Have you placed your employees on notice that the company reserves the right to monitor their online activities and even e-mail if company equipment is being used?

As with many things, it is better to have these policies in place and not need them, than to need them and not have them.

Want to further discuss this issue?Let's talk about it on Facebook, LinkedIn, or Twitter.

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Businesses are running scared. 

Twitter is driving the NFL to distraction.  According to the New York Times, the Green Bay Packers have announced that players using Twitter during games, practices, or to report on team activities will be assessed heavy  fines. The Miami Dolphins have all but outlawed Twitter.  Who knew a tweet could do what a 290 pound lineman couldn't?

And the NFL is not alone.  Consider...

• On January 21, 2009, the Associated Press reported that officials in Paramus, NJ  suspended without pay an employee for posting allegedly racist comments on his Facebook page.  He used his own computer and made the entry on his own time. 
   
• In March, a Philadelphia Eagles employee lost his job over Facebook postings critical of the teams trade decisions.
   
• July saw the requested and accepted resignation of a NY government employee for some strongly worded postings critical of both President Obama and Professor Henry Louis Gates

Lest you think that social networking sites inspire fear in only the weak of heart, consider this:  CNN reports that the United States Marine Corps have launched a full, frontal assault on social networking sites.  According to a Marine Corps spokesman:

"These internet sites in general are a proven haven for malicious actors and content and are particularly high risk due to information exposure, user generated content and targeting by adversaries."

Businesses throughout the country and around the world are struggling to harness the marketing power...and contain the potential HR fallout...of social networking sites.   As this plays out, and in view of the incredible and virtually untapped marketing potetion of these sites, I have a few recommendations:

• Develop written social networking site guidelines for your employees;
• Talk to your employees about your company's presentation to the outside world in the hope that you can make them part of the solution, rather than the problem;
• Review all employment contracts to ensure that your company can take proper disciplinary action against those who's postings cast you or your company in a negative light; and
• Make sure any Personnel Manuals or handbooks include both the Company's social networking site rules and a discussion of the possible ramifications of violating company guidelines.

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