August 5, 2009

Early-Bird Deadline Extended to August 10

Recent announcements about the 2009 Risk Management & Finance Summit for Nonprofits have led to an unprecedented number of inquiries about the Center’s annual conference. It seems that risk management, exposure to liability, financial management, and human resources are “top of mind” issues for nonprofit leaders from coast to coast. Perhaps as proof that too much of a good thing might not always be a good thing, the Center’s online registration processing function crashed just two days before our Early-Bird Deadline was set to expire. As a result of this unexpected development (which, on a positive note, enabled us to practice OUR risk management skills!), we have extended the deadline by 10 days to Monday, August 10th. Save $100 by registering this week for the 2009 Risk Management and Finance Summit for Nonprofits. The Summit will be held September 20-22 at the AT&T Executive Education and Conference Center at the University of Texas in Austin, TX. When you register this week you’ll pay the low full conference registration rate of $395 or one-day rate of $225. The registration fee includes resource materials for all conference workshops, breakfast and lunch on both days of programming, and generous doses of inspiration and practical information. The full conference program, including details on our dynamic plenary speakers, can be found at the following link. To register for the Summit, click here.

Questions about the Summit? Call the Nonprofit Risk Management Center at (202) 785-3891 or write to: info@nonprofitrisk.org.

Employee Separations: Learn to Say Goodbye

By Melanie Lockwood Herman

The Jackson Five version of the Davis Clifton song “Never Can Say Goodbye” has enjoyed a lot of airtime lately. Although the song has nothing to do with employer-employee separations, hearing it reminds me of the heartache that many nonprofit executives face with they realize that it IS time to say goodbye to an employee. It is also a soulful reminder of the difficulty some leaders find making the decision to remove even poor performing staff. In his lighthearted take on this truth, author Robert Hall reminds us that “Good staff will eventually find other jobs. Marginal staff will stay with you forever.” (Source: Chaos for Breakfast, by Robert A. Hall.)

Handling employee departures is the subject of countless technical assistance calls to the Nonprofit Risk Management Center. I am always gratified to learn that even in cases of outrageous conduct, nonprofit executives are generally very concerned about the people they are preparing to separate from their organizations. It is difficult, if not impossible, for most leaders to avoid feelings of guilt about terminating an employee—feelings that seem to be exacerbated in difficult economic times.

As we explain in Taking the High Road, there are subtle but important differences in the labels used to describe the process of separating an employee from employment at your nonprofit. While the label isn’t determinative for your exposure to claims, exercising care in the choice of terminology is one part of minimizing the risks associated with this inherently risky process. The bottom line message of the book is that it is shrewd risk management to conduct any separation with great care and true compassion.

Each of the names or terms used to describe separation from employment carries emotional baggage, because of semantic implications, which in turn can sabotage the termination from a legal perspective. It’s important to know, and to label properly, what’s really happening. For example, the following are terms that are used to describe separation from employment:

• Termination also referred to as being fired or let go, with no particular implication as to the reason for the termination.
• Dismissal implies that the employee’s performance or conduct was unsatisfactory.
• Retirement implies that the employee has voluntarily decided to cease being gainfully employed.
• Lay-off implies that employees are being put on unpaid leave status, but as soon as work is available they may be rehired: Random House dictionary definition: “…an interval of enforced unemployment.”
• Reduction in force implies that more than one staff member is being terminated, but no particular implication as to the reason for the terminations; generally, not appropriate to use when an employee’s performance was unsatisfactory.
• Reorganizing implies that positions are being eliminated and that reporting relationships are being restructured.
• Elimination of a position describes a situation where a particular position is being eliminated; no implication as to the reason, although generally not appropriate when the reason is poor performance.
• Right-sizing implies that the organization was overstaffed to begin with, although this is really just a buzzword invented to put a positive spin on the concept of downsizing.
• Delayering implies that managers are being fired.

Terminating an employee is the single most risky action a nonprofit executive can take. The vast majority of lawsuits covered by nonprofit directors’ and officers’ (D&O) liability policies allege wrongful employment practices—often wrongful termination. Consequently, it’s imperative to have a well-documented file prior to terminating the employment of any employee, regardless of the reason. The safe approach is to assume that every termination may result in a legal challenge and to proceed accordingly.

Nevertheless, terminating an employee who isn’t pulling his or her weight, or one who is unaware of basic job requirements or simply acting inappropriately, can be the best risk management step the nonprofit takes. Firing an employee is never easy, but sometimes it makes sense both legally and from a business standpoint.

Do Not Pass GO; Do Not Collect $200

There are situations when putting an employee on notice and giving him or her an opportunity to improve isn’t advisable. Some conduct justifies termination or suspension without an opportunity to improve. When an employee acts recklessly or dangerously, violates safety policies or exhibits aberrant behavior, it’s advisable to take immediate action rather than to give the employee a second chance. In such cases, the recommendation to suspend the employee pending a termination decision should be put in writing as soon after the event as possible, explaining why suspension and termination thereafter was appropriate. The reason may seem clear today, but it probably won’t six months from today.

Tell Me Why

Whether driven by poor performance, economics or some other reason, the decision to terminate a staff member is never easy. Discharging someone is an emotional challenge. Managers often cause greater exposure to liability than necessary by avoiding any confrontation in the process of discharging an employee. However, employees who aren’t given a reason for their termination are much more likely to conclude that there was an illegal reason why they were terminated. By not communicating the reason or not appearing confident and in control, the nonprofit can expose itself to even greater risk.

Resources for Nonprofits

The Center offers a number of helpful resources in this area:

• This month’s Webinar—scheduled for 2 pm Eastern TODAY—will address the topic of “Trends in Employment Termination Claims.” It’s not too late to register. If you’re unable to attend today’s program you can purchase the Webinar and watch the program at your convenience. For details, see the sidebar for this enews. Note: the September 2nd program will cover another “hot” HR topic: “Exempt or Non-Exempt? Managing Misclassification Risks in the Nonprofit Workplace.”
• Our popular book, Taking the High Road: A Guide to Effective and Legal Employment Practices for Nonprofits, is a widely used resource by leaders who want a practical resource close at hand. Now available as a second edition, buyers receive a free companion online edition with content updated as recently as spring 2009. The second edition of the book has been so popular that we expect to be “sold out” of the current printing by the end of September. If you’re interested you might want to reserve a copy before that happens. Details are available here: http://nonprofitrisk.org/store/high-road.shtml
• To visit the EMPLOYMENT PRACTICES “corner” of our website, where we’ve organized all of our resources in this important area, visit: http://nonprofitrisk.org/search/employment.shtml?cx=016947194574783241609%3At-cnjypalai&cof=FORID%3A11&q=employment#801
• To pose your thorny termination question via the free ADVICE feature of our website, visit: http://nonprofitrisk.org/contact/question.html
• To learn more about the employment-related offerings at this year’s Risk Management and Finance Summit for Nonprofits, visit: http://nonprofitrisk.org/training/conference/program.shtml

© 2009 Nonprofit Risk Management Center