Landscapes_Plus

Landscapes Plus Memo To: Joseph Smith, Owner From: Jane Doe CC: Newco Venture Capital Committee Date: 5/29/2011 Re: Reduction in Force Guidelines In the unfortunate event requiring the need to lay off employees at Landscapes Plus, consideration of the many different factors that could lead to costly litigation based on a discrimination theory must be employed. Organizations participating in a reduction in force (RIF) are typically reacting to an economic reason. Although the situation is a good opportunity to weed out unproductive, inefficient, or negative employees, distinguishing between legal discrimination and illegal discrimination is imperative. Length of Service Senior employees who have long-term experience tend to be paid higher salaries, so the financial benefits of terminating these employees seem high. In contrast, senior employees usually have a well-rounded knowledge of the day to day activities of the company, so are usually considered to be the company’s biggest assets. Although considering the length of service in respect to a RIF is recommended, it should not be the only factor used in the decision making process. Furthermore, terminating employees based solely on age is illegal. Any RIF is subject to potential lawsuits and the amount of potential damages can escalate dramatically. Therefore, RIF decisions must be consistent, uniformly applied, and based on objective measures. If management decides to terminate experienced, senior employees, offering severance can further help reduce litigation. Another simple test to address age bias is to calculate the average age of the workforce before and after the layoff (Light, 2007). If there is a dramatically lower age average after the proposed layoff, then management may need to reconsider their decisions, as the liability of discrimination will likely increase. Protected Class Designations Title VII of the Civil Rights Act of 1964 protects employees from discrimination based on race, color, religion, sex, or national origin. The consideration of these “protected class” designations should not be used as a basis for letting employees go during a RIF. In addition to discriminating in regard to discharge, employers also can not use the aforementioned reasons as means of refusal to hire, compensation, and other terms, conditions, or privileges of employment (Reed, 2005). The only exception in which employers can discriminate on the basis of religion, sex, or national origin are bona fide occupational qualifications necessary in the normal course of business (Reed, 2005). The discrimination of these factors is also permitted if it results unintentionally from a seniority or merit system. Although employers can not discriminate based on race, color, religion, sex, or national origin, Charles Palmer lists several legal factors to consider, such as: • Performance • Attendance • Annual reviews • Attitude • Training • Experience • Seniority • Cost to the company Without objective measurements to substantiate termination decisions, it is difficult to prove that legal means were used, and this can lead to legal entanglements from the terminated employees (Palmer, 2003). Performing a RIF analysis can help employers to provide evidence that legal, objective selection criteria were used in the layoff process. The RIF analysis should evaluate each employee against the above listed criteria and a common rating scale should be developed to compare results. Upon completion of this analysis, the scores should be calculated and an objective determination of whom to layoff is obtained (Palmer, 2003). Using this kind of standard rating for all employees should reduce the amount of subjective reasoning employed in making the layoff decisions, which should further prevent unwanted litigation. It will also ensure that the protected class designations are not used as a basis for any termination decisions. Ethics and Values Ethics and values should play a vital role in the management of Landscapes Plus. The integrity of the organization and the reputation of the company hinges on the leadership qualities that are exhibited during the course of business. Especially in times of duress, such as the imminent need to downsize, the process by which employees are terminated must be handled delicately, humanely, and legally. The situation surrounding the need to terminate employees is not easy for anyone and communication is a key aspect in the process. Not only are the terminated employees affected by the RIF, but the employees who were spared their jobs are also negatively affected. Employee morale will likely decline and uncertainty and anxiousness will increase. Management must effectively communicate to these employees, reassuring their importance to the organization and their continued support through the difficult situation and times. Mitigating potential liability related to discrimination claims is imperative to the business, as well. Litigation is costly, time consuming, and has the potential to negatively portray the organization. Operating with ethical values and actions will help alleviate the potential for such liability. Proper documentation and objective reasoning for the determination of the terminated employees must be enforced. Without a proper, thorough strategy for downsizing, the possibility of decreased quality in addition to decreased workforce will amplify the risk of the RIF. As the “Legal Issues in Reduction of Workforce” simulation states, “an industry study shows that the overall cost savings amount to just 1.5% of cost savings with a 10% reduction in workforce (2002).” Recommended Employment Policies Sound employment policies enable employers to take positive steps to circumvent the potential risk of discrimination claims. A few recommended employment policies and their content and intentions include, but should not be limited to: • Hiring – Identify legal qualities and characteristics the company considers when hiring individuals. • Disciplinary action – Outline unacceptable behavior, such as continued absenteeism, testing positive for drugs, abusing company equipment, violating email policies, and other foreseen issues. Identify the possible consequences of these actions, such as termination, suspension, etc. • Promotion – Provide guidance on the steps an employee needs to achieve before consideration for promotions and raises. • Sexual Harrassment – Provide guidance on the actions an employee should take regarding sexual harassment in the workplace. • Working hours and overtime - Explain guidelines for minimum working hours and overtime pay. • Pay, Rewards, and Benefits – Create pay grades and experience levels for applicable jobs. List qualifications needed to participate in benefit plans and list the specific plans available. • Health and Safety – List safety measurements that must be followed. Provide guidelines in the event of an accident. • Leave and absence – Identify acceptable absences, such as maternity leaves and family emergencies and the terms and conditions regarding these leaves. • Termination – Create RIF policy outlining potential factors that the company will consider for each employee. Employ legal counsel to assist in termination policy and procedures. Recommendations to Consider Downsizing the workforce during economic hardships is a painful process for both the employer and the employee. Enforcing a consistent and object RIF analysis will help mitigate potential discrimination claims. Strong, enforced and well-communicated employment policies will further reduce bias and potential legal liability risk. Management must always abide by the federal and state policies regarding discrimination factors, otherwise the company will surely find itself in a web of legal entanglements. Attachments: References