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Other Added - Use The Right Risk Management Framework For End Of Employment Decisions
Planning tells you what is going to happen, post-mortem tells you what has happened Both planning and post-mortem are essential management tools needed to achieve corporate objectives, as well as to prevent the recurrence of the same mistakes. Planning for change must be the ever-present concern of every executive. At the same time, if events do not happen as planned, a post mortem is to be conducted so as not to repeat the same planning errors.General Dwight D Eisenhower’s famous quote, “Planning is nothing and planning is everything” was a response to his cynical colleagues, who believed that, because plans never survive first contact with the enemy, planning was a waste of time. In the corporate world, quite often, planning gets thrown out of the window because of mounting short –term pressures to perform and deliver the bottom line.Those who fail to plan are ultimately planning for a post-mortem. It is not that postmortem is unimportant but companies should always plan to succeed and min
Once their non-compete agreements end, they may join other firms in your industry. Will they be opponents of your M&A plans or attempts to foster industry-wide standards or strategic alliances?
As you seek to attract new talent to your company, are the people you terminated considered thought leaders in your physical or industry community? Will they caution new talent about joining?
Once their non-compete agreements end, they could work for customers or potential customers and encourage customers to go elsewhere.
Each of these scenarios assumes capability of retaliation plus degrees of uncertainty about that ret
New funding designed to move the transportation of heavy freight off the roads will improve driving conditions between England and Scotland. Travellers driving from Scotland to England will find the roads much less busy after measures were introduced recently to move the forwarding of freight off the road and onto the railways.The main reason why freight forwarding companies are being encouraged to use the railways instead of the roads is the issue of congestion.Road congestion is getting worse in Scotland every year and this has a damaging effect on both the environment and people’s quality of life. Congestion is one of the primary causes of increased journey times which leads to passenger frustration and stress.The Department for Transport and the FFG have contributed funds to help a number of major distributors forward freight between Coatbridge and Daventry by rail instead of by road. This is an attempt by the Scottish government to address the issue of congestion on the country’s roads.The De
Despite low unemployment rates in the United States, there is a sense that corporate layoffs and employee layoffs will once again take place. One level of decisions facing leaders is “who stays/who goes.” A second level of decisions revolves around “how do we treat people who leave?” This second level of decisions puts leaders in a dilemma between being generous to people that you are harming versus being prudent with owners’ money during times of economic stress.
At one end of the termination continuum, many associates who enter partnership track at the international law firm of Bingham McCutchen may not be elected to that role. Whatever their reasons for leaving the firm, one of the things that make Bingham stand out is that it considers former associates to be future resources. End of employment is the start of membership as Bingham McCutchen Alumni. The firm goes out of its way to assist departing professionals and maintains an active alumni group.
At the other end of the employment termination continuum are companies that treat departing employees with the same corporate rationale as they treat office refuse: Remove it with as little cost as possible and do not involve us in litigation. We don’t care what happens to our refuse or our former employees after exiting the facility.
These two approaches represent extreme ends of attitude towards end of employment decisions. Where does your company fit? Where should it fit?
The purpose of this article is to provide leaders with a framework for helping them decide where on this continuum their company ought to be. And we want to provide a framework with a more business-like rationale than, “It’s nice to be nice.”
In planning for terminations, it might be useful to look at the threat analysis framework developed by the 2005 Nobel Prize for Economics winner, Thomas C. Schelling. Schelling is professor of Economics at the University of Maryland. He received his Award for applying game theory to conflict. His focus was on the weapons issues but we have applied his ideas to the design of executive termination packages.
Schelling says “uncertain retaliation is more efficient than certain retaliation” when bargaining and “the capability to retaliate is more useful than the ability to defend.” Now let’s get practical.
GOODBYE SCENARIO
As a verb, “Goodbye” denotes parting. Saying “goodbye” assumes that once employees leave the building, they will never be a factor for the firm’s future. The relationship was transactional and the transaction is now over. If the firm defines termination as a goodbye scenario, the firm should be guided by a business model that says, “What’s the least expensive way of terminating this relationship consistent with reducing legal risks?”
AUWIEDERSEHEN SCENARIO
“Auwiedersehen” is a German word that is often used when people depart. But Auwiedersehen is not “Goodbye.” It literally means, “Until we meet again.” Saying “Auwiedersehen” assumes that once employees physically leave the building, they have only physically left the building. They can continue to be factors for the company’s success or failure. For example:
Once their non-compete agreements end, they may join other firms in your industry. Will they be opponents of your M&A plans or attempts to foster industry-wide standards or strategic alliances?
As you seek to attract new talent to your company, are the people you terminated considered thought leaders in your physical or industry community? Will they caution new talent about joining?
Once their non-compete agreements end, they could work for customers or potential customers and encourage customers to go elsewhere.
Each of these scenarios assumes capability of retaliation plus degrees of uncertainty about that ret
People need to know why they are being asked to change, and the earlier they understand the reason, the more time they have to get prepared. In most organizations we “Braille the culture,” as one professional trend spotter, Faith Popcorn, put it. We run our fingertips along trend bumps as they speed by and try to “read” where we’re going. One of the most vital roles of leadership is to anticipate the corporation’s future and its place in the global arena, and then to formulate strategies for surmounting challenges that have not yet manifested.But leaders can’t succeed alone. Employees, too, should be scanning the business environment. Everyone in the organization should have a realistic appreciation of the precursors of organizational transformation – the impact of globalization, market fluctuations, technological innovations, societal and demographic changes in the customer base, new offerings by competitors, new government and regulatory decisions.Here are some ways that organizations ar
At the other end of the employment termination continuum are companies that treat departing employees with the same corporate rationale as they treat office refuse: Remove it with as little cost as possible and do not involve us in litigation. We don’t care what happens to our refuse or our former employees after exiting the facility.
These two approaches represent extreme ends of attitude towards end of employment decisions. Where does your company fit? Where should it fit?
The purpose of this article is to provide leaders with a framework for helping them decide where on this continuum their company ought to be. And we want to provide a framework with a more business-like rationale than, “It’s nice to be nice.”
In planning for terminations, it might be useful to look at the threat analysis framework developed by the 2005 Nobel Prize for Economics winner, Thomas C. Schelling. Schelling is professor of Economics at the University of Maryland. He received his Award for applying game theory to conflict. His focus was on the weapons issues but we have applied his ideas to the design of executive termination packages.
Schelling says “uncertain retaliation is more efficient than certain retaliation” when bargaining and “the capability to retaliate is more useful than the ability to defend.” Now let’s get practical.
GOODBYE SCENARIO
As a verb, “Goodbye” denotes parting. Saying “goodbye” assumes that once employees leave the building, they will never be a factor for the firm’s future. The relationship was transactional and the transaction is now over. If the firm defines termination as a goodbye scenario, the firm should be guided by a business model that says, “What’s the least expensive way of terminating this relationship consistent with reducing legal risks?”
AUWIEDERSEHEN SCENARIO
“Auwiedersehen” is a German word that is often used when people depart. But Auwiedersehen is not “Goodbye.” It literally means, “Until we meet again.” Saying “Auwiedersehen” assumes that once employees physically leave the building, they have only physically left the building. They can continue to be factors for the company’s success or failure. For example:
Once their non-compete agreements end, they may join other firms in your industry. Will they be opponents of your M&A plans or attempts to foster industry-wide standards or strategic alliances?
As you seek to attract new talent to your company, are the people you terminated considered thought leaders in your physical or industry community? Will they caution new talent about joining?
Once their non-compete agreements end, they could work for customers or potential customers and encourage customers to go elsewhere.
Each of these scenarios assumes capability of retaliation plus degrees of uncertainty about that ret
With all of the recent data theft in the financial sector, it is important to make sure that we don't go crazy trying to protect ourselves from risk. Risk management does have a value but this value lies mostly on the front end. Reactionary risk management almost always produces a point at where the value of protecting oneself or one's customers overshadows the product or service that you are offering. The majority of companies always go beyond this point, some thinking they can even sell it to the customer as a security measure and build their brand with it.This is a lazy and terribly detrimental course of action for any corporation to undertake.I recently called Citistreet, the company that manages the 401K plans for the corporation I will be leaving in a month. I was sent a PIN number about six months ago via snail mail but misplaced the paper and one of the security questions they ask is, "What was your start date with the company." Well, I worked for a subsidiary of the company that was eventually taken
In planning for terminations, it might be useful to look at the threat analysis framework developed by the 2005 Nobel Prize for Economics winner, Thomas C. Schelling. Schelling is professor of Economics at the University of Maryland. He received his Award for applying game theory to conflict. His focus was on the weapons issues but we have applied his ideas to the design of executive termination packages.
Schelling says “uncertain retaliation is more efficient than certain retaliation” when bargaining and “the capability to retaliate is more useful than the ability to defend.” Now let’s get practical.
GOODBYE SCENARIO
As a verb, “Goodbye” denotes parting. Saying “goodbye” assumes that once employees leave the building, they will never be a factor for the firm’s future. The relationship was transactional and the transaction is now over. If the firm defines termination as a goodbye scenario, the firm should be guided by a business model that says, “What’s the least expensive way of terminating this relationship consistent with reducing legal risks?”
AUWIEDERSEHEN SCENARIO
“Auwiedersehen” is a German word that is often used when people depart. But Auwiedersehen is not “Goodbye.” It literally means, “Until we meet again.” Saying “Auwiedersehen” assumes that once employees physically leave the building, they have only physically left the building. They can continue to be factors for the company’s success or failure. For example:
Once their non-compete agreements end, they may join other firms in your industry. Will they be opponents of your M&A plans or attempts to foster industry-wide standards or strategic alliances?
As you seek to attract new talent to your company, are the people you terminated considered thought leaders in your physical or industry community? Will they caution new talent about joining?
Once their non-compete agreements end, they could work for customers or potential customers and encourage customers to go elsewhere.
Each of these scenarios assumes capability of retaliation plus degrees of uncertainty about that ret
Motivating employees can be a challenging task. In order to drive your employees to be motivated it helps to understand what motivates people. This article discusses some of the key factors that motivates people. Understanding these motivating factors can help in finding the right solutions in motivating employees.One of the keys to being a successful manager is the ability to motivate employees to perform at their best. When employees aren’t interested in their work or they’re bored, employee motivation is low and productivity drops. Generally, employees are willing and able to work if they feel their job is important and they are appreciated. When motivating employees there are two main types of rewards, intrinsic reward and extrinsic reward.People are motivated in different ways, one of which is by intrinsic reward. Intrinsic rewards or intrinsic motivation primarily deals with the feelings an employee has when they have done a good job.They do it because they enjoy it. This can be seen more i
GOODBYE SCENARIO
As a verb, “Goodbye” denotes parting. Saying “goodbye” assumes that once employees leave the building, they will never be a factor for the firm’s future. The relationship was transactional and the transaction is now over. If the firm defines termination as a goodbye scenario, the firm should be guided by a business model that says, “What’s the least expensive way of terminating this relationship consistent with reducing legal risks?”
AUWIEDERSEHEN SCENARIO
“Auwiedersehen” is a German word that is often used when people depart. But Auwiedersehen is not “Goodbye.” It literally means, “Until we meet again.” Saying “Auwiedersehen” assumes that once employees physically leave the building, they have only physically left the building. They can continue to be factors for the company’s success or failure. For example:
Once their non-compete agreements end, they may join other firms in your industry. Will they be opponents of your M&A plans or attempts to foster industry-wide standards or strategic alliances?
As you seek to attract new talent to your company, are the people you terminated considered thought leaders in your physical or industry community? Will they caution new talent about joining?
Once their non-compete agreements end, they could work for customers or potential customers and encourage customers to go elsewhere.
Each of these scenarios assumes capability of retaliation plus degrees of uncertainty about that ret
In the Fall of 1987, I found myself dead broke, in-debt and unemployed. At that point in my life I had been through a series of menial jobs and had never been to college. Not knowing what else to do, I began going door-to-door, a borrowed ladder strapped to the roof of my car, offering to clean the leaves from people’s gutters. Little did I know, I had stumbled into an experience that would change my life forever.I had always dreamt of owning my own business, yet like most people, I thought I’d need lots of money, a patented new technology or an Ivy League MBA, things I certainly didn’t have. To me, it seemed, owning a successful business was a distant dream, a privilege set aside for a fortunate few.Again, not knowing what else to do, I began to forge ahead.Soon customers began to ask me to take on other small repairs and, by doing what I said I would do, my business began to grow. I went to seminars and read books to learn all I could about construction, remodeling and repair. I began to take on larger
Once their non-compete agreements end, they may join other firms in your industry. Will they be opponents of your M&A plans or attempts to foster industry-wide standards or strategic alliances?
As you seek to attract new talent to your company, are the people you terminated considered thought leaders in your physical or industry community? Will they caution new talent about joining?
Once their non-compete agreements end, they could work for customers or potential customers and encourage customers to go elsewhere.
Each of these scenarios assumes capability of retaliation plus degrees of uncertainty about that retaliation. This is the Schelling scenario. Signing a Waiver of Rights either does not reduce these risks or reduces it for a defined period of time. From a company perspective, the two questions are:
• How much higher than zero is the probability of retaliation?
• Does it matter?
ARE COMPANIES EMPLOYING TOO NARROW A PERSPECTIVE ABOUT RISK MANAGEMENT WHEN MAKING TERMINATION DECISIONS?
With many of our client companies, termination discussions often involve representatives from Finance, HR, and Legal meeting to discuss risk management and cost factors. All three functional perspectives are important. They are also incomplete.
In examining risk factors, the voice of marketing and strategy need to be at the table.
We employ a framework like the one below to help structure the conversation.
TERMINATION THREAT ANALYSIS ONCE NON-COMPETITION AND NON-DISPARAGEMENT AGREEMENTS LAPSE.
Rate each factor on a 0-9 scale. A score of “0” means that the factor does not apply. “1” means “minor threat” whereas “9” means a “significant threat.”
SCORE FACTOR
Ability to harm M&A objectives over the next 36 months.
Ability to harm strategic alliances over the next 36 months.
Ability to negatively influence sales over the next 36 months.
Ability to negatively influence talent we seek to hire over the next 36 months.
**
We used 36 months as a framework because many critical business decisions in building product lines, acquiring companies, or being acquired require that type of time perspective.
The above is a framework for discussion during the termination planning stage and can apply to group as well as individual termination decisions.
The people around the table have different areas of competency to evaluate these marketing/strategic issues. HR and sales can best discuss the impact on attracting and retaining talent. But strategy people can best discuss M&A plans.
In applying these and other risk factors, the objective of the meeting is for the group to determine if the end of employment decision approaches the Goodbye end of the continuum or the Aufwiedersehen end of the continuum.
In moving towards the Goodbye end of the termination continuum, a company should pay departing employees severance fees no greater than median relative to other companies its size in the industry and should keep outplacement costs to a minimum. There would be no follow-up with employees once they leave the building other than what is legally required. The company message is: “Good bye. We want to give you a running start on your job search.”
In moving towards the Auwiedersehen end of the termination continuum, a company should pay departing employees severance fees and outplacement programs using the median as a starting point. At the extreme end of Auwiedersehen, former employees would be called Alumni and there might be a section on the company website for Alumni to learn about what is going on with the company and to communicate with other Alumni. At the same time, those who frequent
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