10 Ways Employers LOSE Unemployment Compensation Cases

by Di Ann Sanchez, SPHR

Participative management practices such as quality circles, self-directed work teams and clear, two-way communication might be seen as methods of recovering economic health, but in an atmosphere of uncertainty, those practices have been abandoned at many organizations.

“Employers are clamming up and not talking to their own employees,” says consultant Di Ann Sanchez, SPHR, of Fort Worth, Texas. “They’re not sharing the state of the union of their companies. They’re trying to fix it themselves.”

Sanchez’s firm, DAS HR Consulting, specializes in small- to medium-sized businesses. “I tell my clients, ‘This is the time you should be doing the most to be meeting with employees.’”

But the response all too often is a closed door concealing a frightened CEO. “They’re used to being take-charge individuals,” Sanchez says. “In crisis times, they start saying, ‘I know best. I’m going to handle it, hunker down, make all the decisions. I’m not going to show fear.’”

But the employees left in the dark feel fear, too, according to Brian Kropp of the Corporate Executive Board (CEB) in Arlington, Va. Kropp, senior practice manager of CEB’s Human Resources Corporate Leadership Council, says that employees who have survived a wave of layoffs might find themselves with increased responsibilities and no additional time or resources to meet them. “Employees are struggling to understand what their roles are and turning to managers to have that conversation. [But] managers don’t know.” With that uncertainty, Kropp says, getting employees “involved in decision-making becomes much tougher.”

Sanchez says employees are involved simply by virtue of their presence at a troubled company. Rather than projecting executive fear downward, she advises managers to draw employees’ ideas and talent upward. “Make them part of the solution,” she says. “Have weekly status meetings, [asking], ‘What contracts have you lost? Where can we go out and get business?’”

At one DAS client firm recently, workers who were consulted by their bosses proposed an incentive program where they would spend one day a week looking for business.

Volunteering for Cuts

Also, in an atmosphere of open communication, employees worried about the next round of layoffs might be more likely to suggest cost-cutting possibilities. Sanchez cites a client’s planned layoff of 10 positions that was reduced to five because several employees volunteered to work fewer than 20 hours a week. “Get them in a room and they come up with the solutions themselves,” Sanchez asserts. “They’ll decide, ‘In the month of July we’ll all take our vacation.’”

LaRhonda Edwards, PHR, DDI, sees it happen. Edwards, a member of the Society for Human Resource Management’s Employee Relations Special Expertise Panel, is the field HR manager for the OfficeMax distribution center in McCalla, Ala.

“I had a listening session [with employees] the other day,” she recalls. “We had an outside vendor, and our associates were saying, ‘Why don’t we get rid of that vendor?’ We had planned to do that, but it was nice to hear employees suggest it.”

“We’re changing a culture here,” Edwards proclaims, “changing a mindset from where [employees] weren’t as involved in a lot of things. Our aim is to get them more involved, and to engage them.”

Hard Numbers

A CEB survey finds that, at the senior leadership level, there’s a huge demand for innovation. “We find 97 percent of division presidents and [general managers] say they want their employees to come up with more new and innovative ideas in the current environment,” Brian Kropp reports. “One of the ways to go about that is through more participative management.”

But the CEB research has discovered that too many second- and third-tier supervisors aren’t following through on those executive directives. Referring to survey data from 2008 and 2009, Kropp says, “35 percent of middle managers say they are less willing to encourage innovation in their employees.” The reason, he adds, is that those managers are worried about their job security. “The danger of risk-taking is that it might not work,” he points out. “Managers have become incredibly risk averse.” The fear, put in sharp focus, is this: “They’re going to remember me as the guy who came up with the idea that didn’t work.”

So innovation, neither solicited nor appreciated, fails to rise.

The effect on employees shows up in CEB data. One continuing survey tracks how hard workers are working, and how many of them go beyond minimum requirements. “We’ve found that the percentage of employees who are putting forth the greatest discretionary effort has gone from 24 percent to 6 percent,” Kropp says.

In an economic environment in which many companies have cut merit pay increases, Kropp adds, “The employee perspective is, ‘If I do put out, I’m not going to be rewarded for it.’”

It is, he says, a “horribly” destructive cycle.

Structure and Innovation

John Gibbons, a senior researcher and practice leader for employee engagement at The Conference Board in New York is less pessimistic. “I think companies are focusing more, not less, on employee engagement, realizing that they need more.” However, Gibbons says the structure of the job and the ability to innovate are key. “Does my job have enough variety to keep me interested, enough challenge to keep me stimulated? Is it designed to give me a degree of autonomy?”

Gibbons acknowledges that in a tough economy and in the absence of participative management, a downward cycle is conceivable. “If I’m having greater responsibility and fewer resources, if I think I’m being set up to fail or burn out, morale and employee engagement will go into the dumpster.” But Gibbons maintains that if organizations downsize correctly, identifying the number of employees they need to function and making sure people have the resources to be effective, it “could have the opposite effect. Having responsibilities for a broader set of functions actually enriches the job design.”

At OfficeMax’s McCalla Distribution Center, Edwards described a quality circle that was formed as the recession was beginning. “The safety record at this particular facility was not the greatest,” she recalls. Employees volunteered to be on a committee conducting monthly warehouse safety reviews. The idea was to promote “ownership from one associate to another, saying, ‘Your behavior was unsafe.’” The result was 122 days without an accident.

The reward for members of the circle? “Being allowed to shave the head of the safety manager. They shaved him bald and made a poster out of it.” The key, Edwards says, was not financial reward but “ownership of the process.”

Di Ann Sanchez, SPHR, Founder of DAS HR Consulting, LLC, wife and mother of two children in the DFW area, has over 25 years of experience and has held executive Human Resources positions for both private and public companies