What’s Up in the Workplace 02: No A-holes, Severance Policies, and Running a Business Like a Gym

What’s Up in the Workplace 02: No A-holes, Severance Policies, and Running a Business Like a Gym

In the second episode of What’s Up in the Workplace, Lacey Partipilo and Brandon Laws discuss why one CEO is keeping “assholes” out of the workplace, common severance policies amongst employers, and how one CEO is bringing athletics into the workplace to drive culture and results.

 

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Run Time: 27:39

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Brandon Laws: Hey, welcome back for another episode of the Human Resources for Small Business podcast and this is actually our second installment. We didn’t quite announce it on the first one, did we Lacey?

Lacey Partipilo: We did not.

Brandon: But we’re doing a monthly series where Lacey will come on the podcast and we’re going to call it “What’s Up in the Workplace?” and basically what we’re going to do is talk about trends in the workplace and HR and we will just basically talk about articles and ideas that we run across.

Lacey: Yeah.

Brandon: So I’m excited to have Lacey back.

Lacey: Thank you.

Brandon: Partipilo. I’m going to start with this first article and it’s called – brace yourself. We don’t cuss much on the podcast but it’s called – the title “No Assholes Allowed”. It’s by Andrea Ozias. I’m going to butcher that last name. Sorry, Andrea.

She’s at WorldatWork and this was in the Workspan Magazine, March 2018 edition. So a colleague of mine sent it to us and I thought this was pretty fascinating. So basically what this – this guy had taken over as CEO and – or maybe he built a business from the ground up. I’m not really quite sure.

But one thing that’s clear to him is that in his time, either in other businesses or in this current business, he didn’t want assholes, as he has called them, in this company. Because he felt like that’s what destroys the culture, the business and results will either be negative or positive to go along with that.

Lacey: Right.

Brandon: So how did this hit you?

Lacey: I think it’s so interesting because we spend a lot of time talking about culture and how important culture is and the impact of not hiring the right people.

So this touched on all of that and sometimes when I will do training for clients around harassment in the workplace, those have really clear definitions of what unlawful harassment is. And there’s also this like kind of nebulous group of folks that I will kind of joke and say they’re equal opportunity jerks, that they don’t pick and choose groups of people. They’re just kind of awful to everybody.

So this article kind of resonated with that, those folks that aren’t aligned with the organization’s values and really don’t treat people well.

Brandon: It’s funny – so the title “No Assholes Allowed”. I always thought that if I was to write a book, it would be called “How Not to Be an Asshole”. You know, kind of like a “How to Win Friends and Influence People” sort of book. But I always felt that, to me, it’s such a simple thing to be a good person and to be authentic and trustworthy and all those things. But you would be surprised how many people get that wrong.

Here’s a CEO who wants to basically create that sort of credo within his organization to say, “We’re only hiring people who are team players.” People are going to abide by – he has six core values.

The company is Baird’s, I believe, and they have six core values – they are ‘clients come first;’ ‘integrity is irreplaceable (this is where the “no asshole rule” fits so that integrity is irreplaceable);’ ‘quality is our measure of success;’ ‘the best financial advice is the result of expertise and teamwork;’ ‘how we succeed is as important as if we succeed;’ and ‘we seek personal balance in home, work and community involvement.’ So yeah, what do you think about those –?

Lacey: I think the values are great. I mean what I like – how he starts this article, he defines what the workplace asshole is and he talks about the definition of a jerk as being somebody who’s irritating or a contemptible person and articulates that everybody pretty much knows who these folks are. They’re the people that are disrespectful. They’re passive-aggressive. They don’t have direct conversations with other people.

They talk about people behind their back. They say unkind things and every organization or a lot of organizations have core values or principles that employees – and, you know – we kind of think of them as being things that we aspire to be. But this article, what I like is these are like foundational things.

Brandon: Absolutely.

Lacey: I mean we both have kids and these are things that we are teaching our little ones. You know, just to be kind to one another, treat people with respect, treat others how you want to be treated. And how he correlates that with a successful organization and how it impacts the bottom line and the growth of the company and how important that is. So it really, really resonated with me.

Brandon: Yeah. Towards the end of the article, there’s a point where you’ve seen the hardest part is when the shiny new person shows up who, on the surface seems amazing, but there’s something underlying there that’s just not right. Probably not a team player or is about themselves. And to think like, “Oh, it will be fine. It will work out,” and that’s just a miss I think a lot of leaders will say. Let’s just hire the person anyway because they’re going to be a rock star and they’re going to kill it. But that’s not the right move.

Lacey: No, not at all. I am constantly telling the companies that I work with, you know, you can train most any skill. You know, you can teach people how to do the job. This type of stuff is much more difficult to train.

So hiring for fit, people that can demonstrate those behaviors, is really important. He also talks about what happens if you’ve got those people that you’ve identified, that there’s like a miss there. There’s something that’s not aligned and you don’t do anything about it.

Brandon: Yeah.

Lacey: You don’t have a conversation with them. You don’t give them feedback. It’s an incredible failure on the organization.

Brandon: Yeah, absolutely. I’m going to end this article with this point. There’s a quote. It’s actually towards the middle of the article and Paul Purcell who’s that CEO we’re talking about, he says, “If you give me money and time, I can recreate any product or service. But I can’t recreate a culture and even though culture is a competitive advantage for many organizations, it’s on the back burner. But there’s a real dollar value to it.”

Lacey: Absolutely.

Brandon: I love it. That’s such an impactful quote because it’s so true. Anybody with a pile of cash can go start a company and probably recreate the product, the packaging and all that stuff, the marketing. But it’s the culture. It’s the people within it that actually make it much different.

Lacey: And grow and be sustainable.

Brandon: Yeah, absolutely.

Lacey: So I think it’s great. So –

Brandon: I love that. So the title of that, “No Assholes Allowed”. I just want to say that one more time and that was in Workspan Magazine.

Lacey: Yeah. All right. So an article that actually another colleague here shared with us is actually from the Society for Human Resource Management. So another one from SHRM. Recent article came out March 1st of this year by Stephen Miller and it’s titled “Severance Tied to Tenure and Position as Formal Policies Decline”.

So in the work that I’m doing with clients – and actually, it’s interesting. This last like few weeks, it seems like there has been a lot of transitions within the organizations that I’m working with and we kind of tend to see things kind of come in waves.

I’ve had the challenge and have been asked to support with – coming up with some transition packages or severance amount.

Brandon: Do they ever have anything in place like a policy ahead of time?

Lacey: No. So that’s what’s so interesting. So –

Brandon: It ties up well with this article.

Lacey: It does. So Lee Hecht Harrison in Compensation Resources, they’re a paid consultancy. They did a survey last year and they surveyed 350 senior HR leaders at companies here in the United States.

Brandon: Pretty small sample size.

Lacey: It is a small sample. But I think that it’s probably transferrable because it’s what I’m seeing even in my much smaller group. What he talks about or what this group talks about is that about 88 percent of the companies that pay severance when termination is due, they do it either for a reduction in force or there’s a restructure. Only 13 percent do so when termination is for cost and only six percent provide severance on retirement.

So there’s a ton of statistics in here that we can talk through. The point of the article is really just that most organizations don’t have a formal policy about it and the purpose of that – I agree with that too is that a severance or a transition package at the time of termination is meant to be dynamic and flexible.

Brandon: Yeah.

Lacey: What is important to one person might not be important to another.

Brandon: It’s so true.

Lacey: So having the ability to really provide this package, which is meant to help somebody land on their feet, be able to continue to support their own family after a separation, we want that to be flexible for those folks.

So I agree with the fact that many organizations are either moving this way. It’s sort of what I’ve seen for the last 10 years. I haven’t really seen a shift. Maybe prior, there had been really set policies about when you leave, this is the amount.

Another thing I will point out before we kind of jump into some of the stats here is that most of the time when organizations offer severance, they’re including a release of claims with it. So an employee, as they’re leaving, they’re going to sign what we call a separation agreement where they waive their rights to any claim against the organization.

A lot of times, there’s other things included in there, terms around disparagement and non-solicit, not disclosing trade secrets. Those types of things can be incorporated into those agreements as well.

Brandon: When I think of this article, when I read it, I was like, “Oh, this is totally exactly like George Clooney and Anna Kendrick in Up in the Air.

Lacey: Oh my gosh!

Brandon: A good movie.

Lacey: Yes!

Brandon: But it’s so funny because that was like the – I think the whole movie is – they’re going through a shift of like they don’t want to fly them over to do this, this standardized severance package or – I don’t know if he’s really outplacement or if he was like HR, whatever.

Lacey: They were just hired to come in and let people go.

Brandon: Which is weird, right? And I think what we’re talking about here is that we’re seeing this transition from the standardized policy because what this article said was 65 percent in 2011 of the sample size said that they had some sort of formal severance package policy in place.

Fifty-five percent at the time of this survey that we’re talking about here. So there’s a downward trend in actual formal policies. When I was talking about that movie, it’s like that’s the old school way of probably doing it. You send in somebody to deliver the severance package. You send them something in the message and you’re on your way versus nowadays, what seems to be the right approach is a very custom and personalized approach.

Lacey: Yes.

Brandon: So and so, you’ve been here 10 years. Maybe your benefits are important to you. Maybe it’s something else. Look on it on a case by case basis.

Lacey: Exactly.

Brandon: Would you think that –?

Lacey: I think so, yeah. I mean we always want to be mindful of what has been the past practice. What’s the precedent that we’ve set for employees when they’re leaving and for what types of reasons to ensure that there’s no adverse impact against certain groups of people and we’re paying attention to that.

But I think for the most part, remaining flexible and making sure that it’s a package that’s going to be appealing because most of the time, the intent behind it is it’s twofold. It’s to support the employee with the transition, right? That’s important. We want employees to leave the organization feeling whole. And also to protect the company from risk. That’s why we get that release of claims. So it’s both sides that are important.

Brandon: That’s an interesting distinction because you’re basically saying, “OK, severance.” On one hand, you’re kind of thinking, OK, well, you’re an at-will employee for the most part. So why can’t you just cut ties and why is there anything that has to be paid out? But I think what you just said is an important distinction. We say there’s risk associated with any termination, right?

Lacey: Absolutely.

Brandon: So by doing the severance package, you’re giving a benefit for release of that – essentially the risk.

Lacey: Right, and that’s required. We can’t request the release or ask for that without giving something back.

Brandon: Yeah.

Lacey: Right. OK. So let’s talk about some of the numbers that they look at. So they evaluated what formula is used when they determine severance. So typically what we see is it’s based on length of service, so tenure and that’s what this survey says.

So the number of weeks based on years of service for all employees, 37 percent of the folks that responded to the survey said that that’s how they determine the final severance payout. Then the next was 25 percent said it’s number of weeks by position level and years of service.

Brandon: I would have thought that would have been more popular.

Lacey: I think organizations really – the companies that I’m working with, they’re really looking at what has been this person’s contribution as an employee here? So you may have somebody who has recently been moved into a new position and not counting that time prior. I think that’s probably where that –

Brandon: Yeah, that makes sense.

Lacey: Smaller numbers. You know, we’re looking at a flat number of weeks for all employees or a number of weeks by position level. So the majority is looking at tenure in their position or current total years of experience.

The next data point that they looked at was how much time is given, right?

Brandon: For years of service.

Lacey: Based on years of service.

Brandon: Yeah. I thought that was an interesting stat too.

Lacey: And this is totally in line with what I’m seeing too here in this marketplace. So 51 percent said that they give one week for every year of service. Forty-three percent said that they give two weeks for every year of service and usually when I’m advising clients, I say one to two weeks for every year of service.

Brandon: It was interesting though. It’s a huge range because later on in the article, they had a table that showed like the range for years of service. I thought it was a huge range. So if we’re taking it on a year-to-year basis, they’re saying for every year, it’s basically a range of one to four weeks per year.

I mean obviously the percentage of organizations doing it for the three to four weeks is not very much. It’s one to two. But that’s the range that we’re dealing with. So for some companies that may offer a lot of benefits or maybe that – releasing that risk is really important to them.

Lacey: Yes.

Brandon: They would offer four weeks for every year that they’ve been with the company.

Lacey: Right. And the things that I’m looking at when I’m making a recommendation is what’s the level of position, right? And the data shows here obviously for a C-suite individual, it looks like the average minimum number of weeks is just shy of 23 weeks. So almost six months of pay.

Brandon: I wanted to debate that a little bit because on one hand, I get that because it’s the seniority level. But my guess is that their severance should be pegged to what they make anyways, right?

So why would the number of weeks matter? If it’s – you’ve been with the company 10 years and you’re C-level versus just a regular employee. You’re going to get 10 weeks. So and so is going to get 10 weeks. The wages are going to be completely different because so and so is making 30 bucks an hour whereas the C-level person was making 200 grand a year or something.

Lacey: Right.

Brandon: Why would it matter? Why more weeks?

Lacey: I think it could be a couple of things. I think one, more difficult for a C-suite individual to find a new job, right? There’s less of those jobs available and the purpose is to get them through until that next position.

Brandon: Makes sense.

Lacey: That’s part of it. I think it could also be that that’s just what the trends are. So an organization wanting to be able to remain competitive, so I think that could be part of it. I also think the risk of a claim from a C-suite or higher level executive, oftentimes those employment claims are tied to annual salaries and things like that.

So higher dollar value on the claim. If we really want to move that lever so that we’re mitigating that risk for our organization, we’re going to bump those numbers up. Plus I think those folks in those high level positions are more likely, in my experience, to negotiate.

So if I’m offering a severance to somebody and let’s say they’re a non-exempt individual contributor, don’t have any direct reports, probably have never seen a separation agreement before, they might not know that it is on the table for negotiation versus some of these exec folks who have their own general counsel, right? They’ve got attorneys they work with personally.

They may know that they can move that lever. So an organization might want to err on the side of offering more to avoid some of that back and forth.

Brandon: Two other observations in this article I thought were kind of interesting is that with the severance packages that – of people or organizations that do offer it, they’re not paying benefits essentially. They’re not paying for health premiums. They’re not doing any COBRA, anything like that. But they tend to offer outplacement support.

Lacey: Yeah. We’ve seen that shift and there are organizations here in town and probably all over that can offer different types of packages to folks in terms of what outplacement services are needed, whether it’s just general like resume support or even sort of that full suite of services where they’re helping you be out there in the market. But yeah, offering COBRA. Especially because, with the Affordable Care Act and waiting periods have just significantly gone down, folks are able to hop on to their new employer’s health plan pretty quickly.

Brandon: Yeah. The other thing I noticed was that in terms of communicating severance policies, the handbook and then maybe some online resources. But otherwise, it’s not really communicated whatsoever.

Lacey: Right. Yeah, and I think a lot of that is because many organizations don’t have a policy –

Brandon: Either that or it’s just – it’s so negative that you don’t really want to talk about it in advance.

Lacey: Yes.

Brandon: You can talk about it when the time comes.

Lacey: Yeah, right. Out of sight, out of mind.

Brandon: Anything else that you want to talk about on this?

Lacey: No, no. I just thought it was interesting and it was nice to kind of see that what we’re seeing here in the market and with our clients at Xenium is in line with what SHRM is reporting.

Brandon: Yeah, cool. So I’m going to wrap up our discussion with one more article and the title of this is “The Swedish CEO Who Runs His Company like a Cross Fit Gym” and this is by Carl Cederström and Torkild Thanem. Sorry for the butchering of the names.

Lacey: I don’t think I could work at this company.

Brandon: Yeah.

Lacey: I’m just going to preface with that.

Brandon: This is in the Harvard Business Review. So I found this last night when I was kind of looking for some interesting topics. So basically this article follows Henrik Bunge. He is the CEO of Björn Borg. They’re a Swedish sports fashion company and basically the gist of this is he created what’s called “Sports Hour” and it’s a mandatory fitness class for all employees every Friday between 11:00 and noon.

So he took over as CEO in 2014, is what it sounds like. And in that time, the business – as he took it over, it wasn’t doing well, whatsoever. So he was like, “OK, business isn’t in great shape. Well, maybe we should get in great shape.”

Lacey: Yeah.

Brandon: So they had goals to double in sales and have 90 percent employee engagement within five years’ time of him being CEO. So the goal was – with this Sports Hour thing, to train harder, to measure their goals better and become a better team. So everybody had to do Sports Hour and everybody had to participate, which is probably on the surface for a lot of people who are non-athletic is pretty intimidating.

Lacey: Yeah.

Brandon: But he’s making the assumption that there’s a causation – a cause-effect relationship maybe or a correlation between sports, being athletic and moving and engagement and business results. So I think the other thing, it was a culture-based thing. It was like having fun and working together as a team.

Lacey: Teamwork.

Brandon: All those things that would foster a kind of a strong bond between people and it would – ultimately a lot of people to reach their goals. So you read this article. It’s a pretty short article. What did you think about this on the surface? You just said that you couldn’t work there.

Lacey: Oh, I don’t know. I mean I was an athlete growing up and I go to the gym. I work out. But I know so many people that would have a hard time with this and then I – also then my HR side of me is like, “Well, what about somebody who physically can’t do it? What if they have a disability? How can we accommodate that?”

If it’s mandatory – usually you think about programs that aren’t mandatory. But employees are encouraged to get involved and get engaged, that that creates a more genuine and authentic engagement, versus – I don’t know. For me, I don’t know. Maybe it was the mandatory piece that felt a little – like there was a rub.

Brandon: Yeah.

Lacey: I do like – he makes a point in there about athletes always knowing what their stats are. They always know where they’re at and if you go up and ask an employee, “How are you doing?” you get sort of this like gray, wishy-washy response. Even employees who get regular performance reviews and I think that’s because supervisors aren’t skilled in giving in-the-moment feedback. That’s the challenge.

So if that is shifting the way that his organization and employees can articulate how they’re doing and they know what they need to be working on, I could see a benefit there.

Brandon: I could too. I mean I love sports for that very reason. I was a baseball player back in the day and that’s very stat-friendly. You know, as a pitcher, you know your ERA, how many strike-outs you have. You have all these metrics that tell you if you’re doing good or not.

Lacey: Right.

Brandon: I think that if you’re so consumed with the sports world, maybe that will rub off on the business side. I have a hard time believing that because – I mean I do fantasy football all the time. I pay attention to sports and I’m doing all that stuff. But yet, there are still times where I’m like, “How do I get a metric out of what I’m doing sometimes to focus on the results-oriented thing?”

So I find this a little farfetched. I think it could drive engagement maybe, or it could drive a certain type of person that maybe fits their culture. I think it’s more of a culture play than anything else.

Lacey: Well, he talks about – they had like 25 percent turnover in the very beginning and they were – it seemed like they were OK with it. I think it would be – I don’t know if it’s fair to say that that’s the result of this program that he has implemented. It’s more likely tied to new leadership comes in – that shakes things up. We’ve got new expectations and some folks self-select out and some folks are exited out. But 25 percent turnover in any industry is significant.

Brandon: That’s high. So I read that too and I think what they were saying is almost like a healthy turnover. According to them, I think they lost the people that probably didn’t fit their culture, that they wanted to do the CrossFit type thing and then work hard.

So then they’re saying, “OK. Well then, we got to pick new staff.” That was during like two years. So 2014 to 2016

Lacey: Yeah, the first two years.

Brandon: I’m curious where they’re at now. But they’ve said that net sales and employee engagement have increased, but the only problem is that there’s no peer-reviewed evidence that suggests that this is making them happy

Lacey: Yeah, yeah.

Brandon: Or it’s driving all this. So the problem I always think with these one-off metrics and these stories is that you often confuse cause with effect and you will say, “Oh, well, things are moving up in the same direction. So they must be cause-effect.” But they’re just randomly correlated with one another.

Lacey: They could be randomly correlated, yeah, and we talked I think in our last podcast where we were talking about articles about engagement too. I think it can’t be a one-size-fits-all. It can’t be – HR can’t – and employee programs can’t be, “It worked at this company, so it’s going to work here.

So maybe depending on the kind of organization you have, this type of thing would work. I have a lot of clients where I could see actually employees become disengaged if we implemented a program like this.

Brandon: Hey, look at me. I like exercising. I like team sports. I like a lot of stuff. But I couldn’t imagine, OK, I’m in a tie right now and long-sleeved shirt and dress pants. I wouldn’t want to in the middle of my day get sweaty and then like – unless you have beautiful locker rooms and stuff, it’s just inconvenient.

Lacey: I think what you would have to have is really the facility that encouraged that, you would have to have schedules where people didn’t feel like doing something like that was going to be a challenge. I mean I think about – so then do employees also take a lunch if they’re non-exempt? If we’ve got this person that’s doing the workout, that’s paid time. I mean there are a lot of nuances to a program like this that I think would need to be pretty thought-out before it got rolled out.

Brandon: The interesting thing this article said was that there’s a growing trend in these CEOs that are very fitness-oriented. So I mean – especially probably in the Silicon Valley area.

Lacey: Yeah, or in industries where they’re tied to sports or athletics. I could see it maybe being a thing.

Brandon: And this is like a – they do sports apparel I think in Sweden. So –

Lacey: And maybe they don’t have the same employment loss there, right? Like, I’m not a specialist in employment law over in that area. So maybe they don’t have as many rules that we would have to deal with like we do over here.

Brandon: I do think it’s interesting and I commend people, especially leaders, who are trying something new.

Lacey: Yeah.

Brandon: It may not work. I mean I have a hard time believing it would work or at least drive the engagement or culture that you’re looking for. But hey, why not try it? I mean you might attract a certain kind of person and you might rally a bunch of people around it. So it could work.

Lacey: Yeah. I think trying new things is important to keep the organization sustainable.

Brandon: Absolutely. Well, cool, Lacey. This has been a fun second episode of “What’s Up in the Workplace?” and we will catch you in another month, right?

Lacey: Yeah, that sounds good.

Brandon: Where can people find you?

Lacey: On LinkedIn and we’ve said – people have sent us these articles. So other articles that folks have, please send them our way. We would love to chat about them on the podcast.

Brandon: Absolutely. All right. Talk to you next time.

Brandon Laws

As Director of Marketing, Brandon Laws leads all marketing efforts for Xenium, providing oversight on all marketing campaigns, digital marketing strategy, events, sponsorships and public relations. Brandon brings a positive energy to every aspect of his role at Xenium—from internal initiatives around culture and wellness to industry thought leadership through the Xenium podcast and other social efforts. Active within the HR community, he currently volunteers on the board of the Portland Human Resource Management Association as the Director of Marketing & PR.

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