How To Avoid Costly Hiring, Firing Mistakes in a Down Economy

With layoffs, downsizing and stressed-out employees, it is more important than ever for employers to fully grasp the legal aspects of hiring, managing and terminating workers. Hiring new employees is an important step for any company, but the work does not stop there. Employers need to consider their hiring practices, tracking employee performance, employee handbooks and areas of litigation, among other issues.

Too many employers today live in fear that they may not be in compliance and may become targets of litigation. They forget it’s their business. That should be the No. 1 priority. Instead of developing a process to safeguard their company from lawsuits, owners often end up relinquishing control of their companies by focusing more on potential pitfalls than on making sure they have hired the right employees. After that, it’s often too late to prevent problems.

There are several reasons this happens. First, is the high litigation potential— it seems everyone is looking to sue someone. Second, the government wants to tell owners how to run their businesses, or at least that’s how it seems. The government tells owners, “This is how it’s going to be.” But the government doesn’t tell them how to do it. At some point, owners have to say, “It’s my business, and I am in the best position to know what’s best for it.”

That control, particularly when hiring, is all about communication. Communication creates a healthy and safe working environment, while at the same time decreasing terminations and workers’ compensation claims.

For instance, an employer can make a mistake when hiring a forklift driver by automatically assuming that because his résumé says that he drives a forklift, he knows everything about the job. What he doesn’t know is the company; he doesn’t know the product; he doesn’t know the facility; he doesn’t know the company’s clients, and he doesn’t know what is expected of him– because nobody took the time to explain.

That’s not all. The forklift driver doesn’t know (and the employer may not either) that he has been set up to fail because of poor communication. With most workplace injuries occurring within three months on a new job, the company has laid some dangerous groundwork for workers’ compensation claims.

As another example, consider the owner of the company with 400 employees who spends 30 minutes with new hires to make certain they understand their new job, and what’s expected. As a result, there is a drop-off in terminations and job injuries.

Communication is also a key when evaluating employees. Unfortunately, performance evaluations too often take on a bureaucratic quality in which they are formally structured and done once a year. Evaluations should be conducted regularly. Managers should sit with employees whenever possible to say, “This is how you do the job correctly.” It should be constructive criticism, and it should be verbal, not just written.

However, managers too often lack the resolve to confront employees about their performance, to let them know if they are doing a good job or need to show improvement. Then, a year later, the unsuspecting employee is handed a negative review that he or she never saw coming, and then fired. Suddenly, the company is missing a worker and has to start training a new one. Now the owner fears that the fired worker may seek legal options, which could have been avoided with proper communication.

Proper communication does not exist solely in an employee handbook. An employee handbook is not as important as many think it is. Good management is all about open communication, not pages in a book that sits in a drawer. In fact, handbooks can get employers in trouble. For instance, some states are employment-at-will states, which means an employer can fire anyone and never give a reason. Yet, companies will put things like the following in a handbook: “If you’re late one day you get a verbal warning, two days a written warning, and three days a termination notice.”

By putting such criteria in a handbook, the employer has taken the “employment-at-will” out of the mix. Such written terminology becomes “reasons” for termination. The employee now thinks there has to be a reason to be terminated. A handbook may set expectations that are not really necessary.

What is necessary when looking to avoid costly employment mistakes in a down economy, when workforces are leaner and each worker is valuable, is very simple — just good communication.