The Financial Conditions in Dataforce - Essay Example

Brain’s termination is a critical decision that can affect Dataforce in several ways: it can lead to legal and managerial implications for the company. Before arriving at a decision Dataforce should prepare for consequences. Laws prohibit termination of employment in certain circumstances. These include any kind of discrimination against age, race, sex, religion, nationality, gender, physical disabilities etc., Also, the reason for termination should be acceptable by the state laws. “A company may not terminate an employee if doing so violates a statute” (Goodkin,2006). A company cannot fire employee for exercising legal rights such as voting. In order to avoid future inconveniences, Sally should start with studying the background, checking the options available to Brain and finally taking necessary steps to foolproof the decision. Companies should be very careful while making termination decisions as employment laws are becoming stricter and, there is “a flood of employment litigation” (Greenwald, 1998).Law permits termination under valid causes. “If an employee violates the corporate rules of the employer, engages in misconduct resulting in serious losses to the employer, or commits a criminal offence, the employer may terminate the employee for cause” (Huawei, 2003). However, law mandates the employer to communicate its policies to employees well in advance through written manuals. The manuals should be clear and should avoid ambiguous statements. Oral statements are also considered as contracts in presence of a witness. Perry gives a list of seven mistakes that employers make while terminating an employee. These include” Failing to put honest, including dangerous wording, making informal oral contracts, firing for bogus reasons, terminating for refusal to take a polygraph test, forcing a resignation by making working conditions unreasonable, terminating an employee for refusing to commit an unlawful act or violate public policy or for additional improper reasons” (Perry, 1991). In Brain’s case the financial conditions in Dataforce can be used as a “just reason” for termination. But, Dataforce cannot advertize vacancy for the same post in near future if termination is made on the basis of cost cutting. Employee misconduct termination falls into two categories. The first is a serious offence where employee is caught tampering with important documents or stealing or fighting with colleagues. In such cases termination could be at once. The employee must not resume on his work after misconduct. Relevance of facts and evidences should be checked before arriving at any decision. The second case is less severe and termination is the result of consequent warnings about misconduct. David mack states that while dealing with second situation the offender should be dealt with through what is called progressive discipline. After the first incident, a verbal warning should be given and a memo placed in the employee's file indicating the date and reasons for the reprimand. Following a second offense - but not necessarily of the same type as the first - a written warning should be issued. In that warning, make it clear that further unacceptable conduct could subject the person to other discipline, including suspension and termination (Mack,1999).  Documentation forms an important part of any legal proceeding. “Whenever you have any adversarial dealings with employees--for example, disciplining or chiding them for undesirable behavior--make sure you keep notes. Also keep records of all counseling sessions that you hold with employees” (Zall, 2010). Proper documents should be maintained about employee conduct and performance. The documentation should be timely and should state relevant facts. Documents that are compiled at a later point in time are not considered relevant. Employee performance record is another backup document that can affect legal proceedings. Poor performance is taken as valid reason for disciplinary action. Law mandates at least three notices to employees for poor performance before termination. Efforts should be made to help employees in improving their performance. This can include job rotation and training. Managers occasionally inflate their employee’s performance to maintain their motivation level. This should be avoided as it can mislead the legal trial. “Line managers need to be trained to be able to give routine performance evaluations and to use these evaluations not only in establishing performance based compensation but as a tool for discipline” (Freedland, 1993). Sometimes employees themselves maintain their own performance record and can use the same in future. In Brain’s case this can become the weak link as his performance records state his past performance as satisfactory. Also, no clue has been given about past misconducts from Brain. It has not been given if Dataforce has laid formal company policies indicating employees about expected behavior from them. When using company manuals or employee handbooks, it is mandatory to communicate all policies and practices to employees well in advance. Usually companies also include these conditions as a part of employment contract. Gisztl makes a point that companies should emphasize the importance of fair feedbacks. Some supervisors fear they will come across as confrontational or negative if they provide feedback that is not positive. As a result, they fail to inform an employee accurately of needed performance or behavioral improvements. Not only does this create a false record of performance that might contradict a future termination decision, but it also doesn't give the employee needed constructive criticism and the opportunity to improve (Gisztl, 2005). Employee signatures confirm that employee was communicated about the policy. Manager should note the date and time of disclosure. If the employee refuses to sign, manager should note the reason given by the employee for not signing the document. Brain’s managerial profile is another concern for the company. Considering his position, the company should make arrangements for information and business security post termination. Dataforce can use non-disclosure and non-compete agreements to achieve the same. A non-disclosure agreement is a formal understanding between two parties for not disclosing intellectual property to outside agents other then the involved parties. Huawei illaborated in her article that “with respect to senior management or staff having access to any key technical or trade secrets of a company, the employer may want to bar such employees from engaging in the same business after leaving the company. In such cases, the employer may incorporate a non-competition provision in the employment contract, whereby the employee may not engage in the same business” for some months (Huawei, 2003). These days with rapid technological advancement, most companies choose to go with non-disclosure agreement for important profiles. The NDA agreement should not be too broad or too restrictive. In Brain’s case, the presence of any such agreement is not stated. Non-compete agreement serves different purposes in different industries. NCA“ refrains from competing against the former employer in certain ways specified in the agreement”(Fuller, 2009).  If an employee signs a non-compete agreement, stating the intended clause, with the employer, he cannot approach the same clients he worked with within the company. Non-compete agreements become very important in marketing profiles, such as that of Brain, to avoid losing business to competitors. Several factors make the decision difficult in Sally’s part. First, reason for Brain’s termination is not apparent and it has not been conducted in the office premises. Second, Brain has been working in the company for long and in an important profile. No previous misconduct has been reported against him. Third, the company’s documentation is insufficient and incomplete. Fourth, Brain is above forty years of age that comes under age discrimination act. In the absence of confirmable reason, Dataforce can choose to terminate Brain’s employment under organization restructuring and cost cutting initiative. However, any such decision affects employee morale and company reputation in long term.  “It takes years to build a solid reputation in business, and that reputation can be destroyed in minutes by a poorly managed crisis” (Quinley, 1998). When any employee is terminated as a part of company’s cost cutting policy, it should be honestly and modestly communicated to everyone. The employee is entitled to severance package in this case. Lastly, communication of termination plays an important part. Employees often opt for legal assistance referring the way in which termination was communicated. It is natural for the laid off employee to feel anger and hostility; therefore extreme care should be taken while communicating company’s decision. “People require steady income in order to maintain their lifestyles, removing that income cuts at the very stability of their lives and frightens them” (Flynn,1995).No false assurances and promises should be made and the conversation should be brief and clear. Communicating party should not enter into any kind of argument with the employee. It is always recommended to keep a witness while communicating the termination. Sack recommends that an employer meet with the employee personally in a formal setting; be compassionate, yet firm; let the employee know the decision is final and nonnegotiable; give a specific date and time when the individual is no longer an employee, and pay accrued wages and benefits immediately(Donohue,1994). Communication should not result in closing the dialogue lines completely. It should be kept as open as possible. An exit interview is recommended where the views from employees for future reference can be taken and company’s policies are put forth. The Non disclosure and non-compete agreement should be reviewed while conducting an exit interview. Further it is advisable not to communicate termination decision on the later half of weeks especially Friday afternoons. Mangers and other persons responsible for terminations should be well educated about the conduct while letting an employee go. Irresponsible and negligent statements could prove harmful in litigation. Brain could mislead his colleagues and spoil company’s reputation by misusing and misinterpreting such statements. Considering all options available, it is not advisable for Dataforce to go with Brain’s termination at present. The company should warn Brain and document all the facts available. It should streamline its documentation and employee records to avoid future issues. And, also take into practice necessary policies. While doing this Dataforce should thoroughly consider applicable laws. Wrongful termination covers a major proportion of litigation these days. The costs associated with such termination do not stop at the procedural costs only; they have a greater impact on the reputation of the company and morale of the employees. “the indirect economic effects of wrongful termination lawsuits are approximately 100 times more costly than the direct legal cost of jury awards, settlements and attorney fees”(Gomes & Morgan,1991). Therefore company should take every possible method to avoid such litigations. References Donohue, Gerry 1994,’Aim before you fire: firing employees properly’, Builder, viewed online on 29th March 2010, http://www.highbeam.com/doc/1G1-14759558.html Freedland, M. 1993, ‘Performance appraisal and disciplinary action: The case for’, International Labour Review, Vol. 132,No.4, p. 491 Flynn, G. 1995, ‘Take the Fear out of Termination’, Personnel Journal, Vol.74, p.123-6. Fuller, Lyle J 2009,’Keep your edge: non-compete agreements protect business assets’, Utah business, viewed online on 29th March 2010, http://www.highbeam.com/doc/1G1-207463062.html Gisztl, Katy 2010,’Documentation essential in employee performance issues’, Crain Communications, viewed online on 28th March 29, 2010, http://www.highbeam.com/doc/1G1-135466934.html Gomes, G. M., & Morgan, J. F. 1991,’Managing the future employment relationship: The legislative alternative’, SAM Advanced Management Journal, Vol 56, No.3, pp-41-46. Goodkin, Olivia 2006,’Do it right: terminating employees means paying careful attention to employment law’, California Society of Certified Public Accountants, Vol 74, No.7, page 21 Greenwald, J.1998,’ Lawyers differ on effect of whistle blower ruling’, Business Insurance, Vol. 32,No.37, pp- 2-4. Huawei, Lin 2003,’ Terminating an employee in the PRC: are you prepared’, CCH Hongkong Ltd. Viewed online on 29th March 2010, http://www.highbeam.com/doc/1P3-431632741.html Mack, David 1999,’Documentation is important while disciplining employees’, Chicago sun times, viewed online on 28th March 2010, http://www.highbeam.com/doc/1P2-4490372.html Perry, Phillip 1991,’Seven most common mistakes when terminating an employee’, Reed Business Information Inc. viewed online on 29th March 2010, http://www.highbeam.com/doc/1G1-11305086.html Zall, Milton 2010,’Good records can protect you from bias charges (advice for documentation when firing employees’, Reed Business Information Inc., viewed online on 29th March 29, 2010, http://www.highbeam.com/doc/1G1-15159815.html Read More