Blog Post

Why You Should Rarely Fight an Unemployment Claim

Suzanne Lucas

Founder, Evil HR Lady

Business owners, especially small business owners, are constantly concerned about keeping costs down—and rightfully so. But there are some scenarios in which culture and costs clash—and employee departures is one such area.

If you have too many unemployment claims, your cost as a business goes up. As a result, many businesses go to great lengths to ensure that employees do not win their unemployment claims. For instance, instead of firing employees, companies place heavy pressure on employees to resign, making them ineligible for unemployment.

Is this an effective strategy as a small business? Should you try to save money by forcing resignations, instead of terminating an employee? Should you challenge every unemployment claim in order to keep your costs down?

No, no and no. After years of experience in the HR industry, I feel confident saying you should rarely oppose an unemployment claim.

This advice seems to run contrary to popular wisdom. Your goal is to keep costs down, right? So not getting dinged for unemployment seems like the right thing to do, but let's break it down. Here are a few things to think about.

Lawsuits Are Expensive

When you terminate someone, what's your real goal? To get that person to go away and not bother you again. And by bother, I mean sue you.

When you fire an employee, for whatever reason, they are likely to be angry. Most likely they think you were unfair. While you followed procedures and made decisions by the book, all it takes is this employee convincing an attorney that he was treated differently than other employees who were a different race, gender, religion, or other protected class, and you're on the hook for thousands of dollars—not because you're guilty of illegal discrimination. But, even responding to the attorney will cost you money, and it could cost you your reputation if the employee can garner public support. Cutting someone off from employment and unemployment makes people angry—and angry people will be far more likely to retaliate in court.

It's Your Fault If Someone Is Fired

Anytime you have to fire someone, you should look back on what you did wrong. Rarely is the answer "nothing." Did you ignore red flags in the interview? Did you let bad behavior slide for a long time until you couldn't stand it any more? Are your managers not compassionate? Do you focus on rules, rather than employees? If you answered yes to any of these questions, you're partly to blame for the termination. Don't punish the person because your managers can't manage.

You Want to Build Goodwill

You may have fired John for insubordination, but chances are he has friends at the office. These friends already think you were unfair, and when you fight back against unemployment, their shaky trust in you shatters. You don't want that. You want your employees to know they'll be treated well should something happen.

Another important thing to remember is that unemployment payments aren't exactly a reward. You're not giving former employees unemployment payments; you're just not opposing that they receive them. Employment attorney Robin Shea advises:

If an employee (let's call him "Jimmy") is being terminated for "misconduct," I'd fill out the unemployment paperwork giving the true reason for the termination. If you want Jimmy to be able to collect, you may want to be gentle with the details. But by all means be honest. And then add, "Employer does not intend to contest Claimant's claim for unemployment." Depending on the (truthful) reason you gave for the termination, Jimmy may be initially disqualified from receiving benefits.

If Jimmy is denied and appeals, you can just not show up to the hearing. You aren't rewarding bad behavior. You're not lying. You're just being kind. And we all know the world needs a bit more kindness.

Photo: Creative Commons

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A New Poseidon Adventure: Flipping Succession Planning Upside Down

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A New Poseidon Adventure: Flipping Succession Planning Upside Down

Organizations make significant investments in efforts to hire the right candidates – the people who have the right experience and cultural fit. By carefully managing the performance and potential of these people over time, the organization can grow its leadership pipeline, keep a steady inventory of needed skills and competencies and remain nimble in the face of change (which we have plenty of all around us these day) – all of which can have serious impact on the bottom line. However, much of this pie-in-the-sky stuff relies on being able to locate and cultivate high-potential and high-performing talent across the board. Without an integrated succession management solution, recognizing and developing talent can be an ever-elusive process. The questions we are seeing asked today include: does the traditional top-down approach to succession management still make enough of a difference? Does managing succession for a slim strata of senior executives take full advantage of the kinds of talent data we now have at our fingertips? It doesn’t have to be so. Succession management can be an interactive process between senior leadership, managers and employees at all levels of the organization. And, if we trust them, we can actually let employees become active participants in their own career development. (Shudder.) Career Management (Succession Planning Flipped Upside Down) This "bottom-up" approach is gaining momentum because who better to tell us about employee career path preferences than employees themselves. Organizations actually have talent management and other HR systems in place that allow for collecting and analyzing a whole slew of data around: Career history Career preferences Mobility preferences Professional and special skills Education achieved Competency ratings Performance scores Goal achievement Training and certifications Etc. In short, pretty much everything we’d want to know to make well-informed succession planning and talent pooling decisions. For some, the leap is simply putting some power into the employee’s hands. The talent management system of 2011 is capable of displaying a clear internal career path for employees and then, on the basis of all that data bulleted out above, showing a "Readiness Gap" – what do you need to do to make the step to the next level? And if your talent management environment comes armed with a real Learning Management System, you can take it to the next level with a dynamically generated development plan that gets the employee on the right path to actually closing those gaps. Faster development, faster mobility. Organizations that seriously favor internal mobility don’t just make employees stick on pre-defined career paths – they can search for ANY job in the company and check their Readiness levels. I might be in accounting today, but what I really want to do is move to marketing. Giving employees the chance to explore various career avenues within the organization helps assure that "water finds its level" – that is, that the right people with the right skills and the right levels of motivation and engagement find the right job roles internally. Employee participation is key, but make no mistake – managers play an important role in this interactive process. They must be prepared to provide career coaching, identify development opportunities and recommend employees for job openings. The candid discussions require that employees have open access to information so they can best understand the criteria necessary to move to the next level. A Two-Way Street Employee-driven career management is just one tool. The more traditional top-down approach to succession management remains indispensable. But organizations that value talent mobility and the ability to be able to shift and mobilize talent resources quickly will find that attention to career pathing can be vital. For employees, of course, the impacts are immediate and include boosted levels of engagement, higher retention, increased productivity and more.

The Hidden Costs of Ignoring Your Talent Management Strategy

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The Hidden Costs of Ignoring Your Talent Management Strategy

Building and maintaining a successful company hinges on having the right people to execute projects and drive results. People, we hear time and again, are your company's most valuable asset. But their success — and HR's ability to recruit, engage and retain them — depends on HR pros who are strategic decision-makers, armed with the proper tools to let them excel at their jobs. Modern HR professionals manage much more than payroll and benefits. But their technology tools, in many cases, haven't evolved past basic productivity software like email or Microsoft Word. HR simply can't be strategic with old-school tools that reduce people to statistics and give little insight into what the numbers mean. Emails and spreadsheets were not designed to deliver meaningful insights into people's performance, suggest when employees should be promoted or highlight skills gaps in a company. For that, HR needs a broader, more strategic set of talent management tools, which lets professionals manage every aspect of the workforce, from training and performance reviews to collaboration and succession planning. Yet, research shows that less than 25% of companies use a unified, holistic approach to their talent management. The Real Costs of "Doing Nothing" As a Talent Management Strategy The critical relationship between business strategy and HR strategy too often gets overlooked by senior leadership. While it may seem like the company is saving money by managing recruiting, training, performance and succession via manual and paper-based processes, in reality it’s costing your business more than you know. For example: Without a talent management strategy, a company with 2,000 employees is losing almost $2 million every year in preventable turnover alone. Businesses that don’t invest in learning suffer from decreased employee performance and engagement to such a degree that they can expect to realize less than half the median revenue per employee. That’s a direct impact on the business. In employee performance management, organizations without a focused strategy waste up to 34 days each year managing underperformers and realize lower net income. To learn more about the business impact of talent management and how to start building out your strategy, check out the eBook Why Your Nonexistent Talent Management Strategy is Costing You Money (And How to Fix It) and register for the March 19th webinar, Building the Business Case for Talent Management.

The Return of the Moderate Merit Budget – Wreaking Havoc on Pay for Performance

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The Return of the Moderate Merit Budget – Wreaking Havoc on Pay for Performance

With the economy now on steadier ground, most organizations have returned to administering a merit budget to the pre-recession levels of 3 to 3.5%. In the years immediately following the economic downturn, many merit budgets were eliminated entirely or were reduced significantly and reserved for a select segment of the employee population. Pay for performance has become a necessity for many organizations that are expected to accomplish more with fewer resources. I often get asked: "How can I truly award my top performers with such a limited budget? Should I do so at the expense of my ’Meets Expectations’ performers? What if I need to retain my ’Meets Expectations’ performers and giving them 0% to 2% increase puts me at great risk for turnover? But if I don’t recognize my top performers, don’t I risk losing them...?" These are difficult questions to answer, however you can determine the best solution for your organization by considering the following: Are your employees paid at market pay levels? Is your organization’s performance management process mature? Does your organization have other compensation programs in place to reward top performers (e.g. variable pay)? Market Pay If turnover is a concern, and your organization needs to maintain ’bench strength’ in order to achieve its strategic objectives, your biggest priority should be to ensure that you are paying your employees at market pay levels. Why? Historically, as the labor market strengthens, organizations become vulnerable in terms of losing people. Hiring and onboarding replacement talent is not only costly to the organization, but can also cause dissension among existing employees since new hires may be getting paid more. Be sure to stay abreast of market pay levels and trends, and use the merit budget to correct disparities. Performance Management Process Organizations vary significantly in terms of the maturity of their performance management process. Closely examine your organization’s process and look for ways to improve it. If there is a perception that one management team is an ’easier grader’ than the others, the process is inherently flawed and any pay for performance program will not be viewed as credible and fair by employees. A good place to start is to get a calibration process in place and communicate broad guidelines on expected distribution ratings. Variable Pay Programs Variable pay programs (e.g. bonuses) have become increasingly more popular across all industries and career levels. These programs provide the opportunity for employees to share in the organization’s success while not adding to fixed payroll costs. Some plans have an individual performance component which can be a very effective means to recognize top performers. However, in order for this type of program to be successful, individual goals and targets must be well documented and communicated. Again, this is largely based on the maturity of the organization’s performance management process which takes time to evolve. What are the best steps to avoid wreaking havoc on your pay for performance process? First ensure your pay levels are keeping pace with the market Continue to evolve your performance programs with calibration among managers and a rigorous goal setting process Promote variable pay plans to reward high performers without adding to fixed pay roll costs It’s not always an easy journey but, in the end, it’s best to use a measured approach that is based on business needs and a realistic assessment of your current programs and processes.

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