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Management Buzz 9/01

Bad management advice, the latest on sexual harassment claims and what you can do to ease the pain of layoffs

Free advice is worth what you pay for it. But in some cases, it's worth far less than that. Here's some of the worst advice two entrepreneurs ever received:

Jim Pyle, 45, co-founder of business consulting firm Your Corner Office LLC in Houston, is quite happy with his 80 employees. In a past entrepreneurial venture, however, he wasn't so lucky. Six months after hiring a peer's suggestion for a sales manager, Pyle found out his new employee had a drug problem. Lesson: Be more thorough in searches and hire a recruiter.

Stacey Pecor, 36, founder of New York City clothes retailer Olive & Bette's Co., operates four stores, each with less than 600 square feet, so inventory control is critical. Her parents-both entrepreneurs-told her to handle everything herself. Thanks, Mom and Dad, but since hiring an inventory control consultant, Pecor has gained 5 points on her margins. Lesson: "Where you can afford to hire expertise is where your money is best spent," she says.

Who's Harassing Whom?

You can breathe easier about potential sexual harassment lawsuits. In April, the Supreme Court's Clark County School District v. Breeden decision reaffirmed that an isolated sexual comment does not create a threatening work environment.

The court further stated that employees have no right to compensation just because their jobs expose them to sexually explicit material. In this case, an employee reviewing job applications was offended when a fellow reviewer read aloud an applicant's crass remark.

Claims of your retaliating against employees who file sexual harassment lawsuits will also face greater scrutiny. You won't be penalized for reassigning an employee who claims harassment unless the job change occurs soon after the complaint, and if you had planned to reassign the employee anyway, you can safely proceed.

End on a High Note

This year's corporate layoffs have displayed a couple of noteworthy trends. Companies like Amazon.com and Inside.com are forcing departing employees to sign nondisparagement clauses to prevent ill will from appearing in the press.

Jim Morris, principal with the Portland, Oregon, human resources consulting firm MBL Group LLC, says the practice has grown in many industries over the past decade. While these clauses neutralize laid-off workers, beware that they also tend to alienate your remaining employees. "When you create a climate of fear, the retention challenges are enormous," notes Morris.

The desire to create a feel-good atmosphere may be why companies such as Cisco and Intel are sweetening the pot in pre-emptive layoffs. When these firms rescind job offers, they give their would-be employees, particularly recent college grads, "apology bonuses"-cash for not getting the positions promised.

"It's a way of saying 'We feel badly about this, too. We'd like to have a good relationship with you in the future, as an employee or as a customer,'" says Judy Weil, executive director for the Northeast Human Resources Association in Wellesley, Massachusetts.

As your company grows, you may want to familiarize yourself with the little-noticed 1988 Worker Adjustment and Retraining Notification (WARN) Act. WARN forces companies with more than 100 employees to give 60 days' notice of a layoff affecting more than one-third (or 50, whichever is less) of its employees.

Morris says many smaller companies ignore WARN-often out of ignorance. "Most of the last 10 years have been growth years," he says. "We're obviously dusting [the law] off again."


Chris Sandlund writes about business from Cold Spring, New York.

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This article was originally published in the September 2001 print edition of Entrepreneur with the headline: Management Buzz 9/01.

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