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5.20.99  
Firings: When You Wield the Ax, Don't Make It a Hatchet Job
Kicking people when they're down might well result in a lawsuit

Sacking someone is a miserable duty. Why make it worse? Many managers do -- avoiding the person till the last moment, sending boilerplate dismissal memos or worse, emptying his or her desk. Now research from a pair of business professors shows that treating your employees with respect at such a difficult time is in your interest, too. That's because curtly treated employees are more likely to make their former managers pay -- through lawsuits.

Professors E. Allan Lind of Duke University's Fuqua School of Business and Jerald Greenberg of Ohio State University's Fisher College of Business canvassed 996 people at Ohio unemployment offices in a study published last year about how they were treated when they lost their jobs. The goal: to see what inclined them to sue.

Lind and Greenberg's findings: Dismiss someone brusquely or humiliate them publicly, and you stand a greater shot of being slapped with a suit. Ex-employees filed actions 19% of the time against companies they felt had lied to them or dismissed them in an undignified way -- and 71% considered filing a claim. In contrast, less than 1% filed suits against companies that they felt were honest and decent about the process, and less than 3% considered legal action against such companies, even if they were upset about the dismissal.

It's only natural that employees who feel they've been misled will want to sue, says Dennis Fleischmann, employment lawyer at New York firm Bryan, Cave. "It makes them suspicious of the real reasons," says Fleischmann.

Cynics, take note: Treatment at termination was a bigger motivator of legal action than any other factor, including expectation of a big payoff. It was even more important than treatment during employment. And it's no idle matter: The odds of being sued are larger than one might expect. Seven percent of all those surveyed, both well and poorly treated at dismissal, had already filed a claim. A huge 23% had spoken to a lawyer. Thirty-six percent of those surveyed felt badly treated at the end, 12% felt they'd retained minimal dignity, 26% said they were somewhat well treated, and 26% responded that they had been very well treated.

Says Lind, many employers miss a basic psychological insight: Workers file wrongful termination suits for self-esteem -- not money. "When you lose your job, you're not feeling real good about yourself," he points out. "If people then treat you like you have no value at all, you're likely to sue. You want to make them recognize you are somebody."

There's no way to make giving someone the ax pleasant -- especially near the end, when relations between a worker and boss are at their lowest ebb. Yet, the researchers suggest, four strategies can make the process more civilized. Lind argues that self-interest, if nothing else, should keep managers from venting their anger freely: "Lower-level managers think it's their job to punish, so in addition to firing, they humiliate," adds Lind. "That humiliation comes at enormous cost to the company."

1. Start out on the right foot: The best way to avoid friction at the end of a person's sojourn at your company is by communicating from the start. That means frequent, candid updates from the business owner about the status of the company and employee's performance.

2. Dismiss with dignity: Fire an employee in person and in private, with an honest explanation and documentation to back the rationale for dismissal. Employees should never find out from an outside source, be it a colleague or the morning newspaper. Never publicly humiliate an employee by, say, cleaning out a desk or making rude announcements at a meeting.

3. Bridge the gap: One way to help stave off bad vibes is to help the fired or laid-off employee make a smooth transition to another job. That's why it's important to give as much warning as possible. Help finding a new job (which can be as little as a phone in an office) may assuage bitter feelings.

4. Help ease financial hardship and identity loss: To bolster the employee's self-esteem, consider paying for catastrophic or "bridge" health coverage until the person finds another job. Follow-up phone calls or letters offering assistance may also soften the blow.

Lind and Greenberg cite Winston Churchill, who was berated for declaring war on Japan too politely. Churchill's response: "If you have to kill a man, it costs you nothing to be polite." That advice is just as sound for managers and business owners as prime ministers.

By Dennis Berman in New York
Dennis_berman@businessweek.com


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