Procedural Justice and Ethics

Wayne F. Cascio Executive MBA Class of 2008 January 19, 2008

Some Definitions  Procedural Justice  The fairness of the procedures used to make decisions  What makes procedures fair?

 Consistent across persons and over time  Free from bias  Based on accurate information  Correctable

More Definitions  Ethical decisions about behavior  Take account not only of one’s own interests, but also those affected by a decision  Just cause - An employer must do 3 things  Produce persuasive evidence of an employee’s negligence  Provide the employee a fair hearing  Impose a penalty appropriate for the offense

Due Process - Rights  Prior notice of prohibited conduct  Timely procedures adhered to at each step of the procedure  Notice of the charges or issues prior to a hearing  Impartial judges or hearing officers  Representation by counsel

Due Process - Rights  Opportunity to confront and cross-examine adverse witnesses and evidence  Opportunity to present proof in one’s own defense  Notice of decision  Protection from retaliation for using a complaint procedure

Employee Rights to Due Process  Based on one of the following:  Collective bargaining agreement  Legislative protections  Procedures provided unilaterally by an employer  Constitutional due process rights protect individual rights when dealing with governments – city, state, federal

Workplace Due Process  Make sure HR Dept. has expertise in dispute resolution  Train all managers and supervisors to use the company’s due process approach  Do you want a panel system or a single adjudicator?

 Panel = 3 peers + 2 managers  Adjudicator = fact-finder + arbitrator

Basic Rules of Performance Counseling  Be prepared  Be factual  Support the employee’s good performance  Decide to help the employee improve performance  Plan for the future

How to Document Incidents  Describe what led up to it – problem and setting  Describe what actually happened that was so effective or ineffective  Be specific! Include names, dates, times, and other facts  Describe the consequences of the effective/ineffective behavior

The Red Hot Stove Rule  Discipline should be:  Immediate  With warning  Consistent  Impersonal

Termination – Legally and Humanely   Review all relevant facts Get employee’s version  How were similar cases handled in the past?

 Prior to interview, answer 3 basic questions:  Who – immediate manager   When – not on Friday; any personal concerns?

Where – neutral territory

The Termination Interview  Present the situation in a clear, concise, and final manner  Avoid debates or a rehash of the past  Be empathetic, but not compromising  What’s the next step?

 Be prepared for a variety of reactions

Typical Severance Agreements  Lower-level employees  1 week’s pay for each year of service  Executives earning $50 - $150,000  8 months  Executives earning $150 - $200,000  11 months  CEOs with contracts – 2-3 years

Employment Contracts  Governed by state law  Most firms include choice-of-law prov.

 State that the contract is the entire agreement   It can be amended only in writing, and when signed by both parties Limit “no-competes” by geography, length of time

When Should You Ask for An Employment Contract?

 Competition for talent is intense  Ideas are at a premium    Non-standard conditions of employment Duration – 2-3 years, during which you agree not to quit Components – title, pay, benefits, stock options, vacation, terms of firing, severance

Employment Contracts  No-solicitation clause  Payback clause  Company-match clause  No-disclosure clause  No-compete clause  Fiduciary duty of loyalty applies with or without a contract

Employment Contracts  Suggestions for Negotiating  Decide beforehand 4 5 “make-or-break” issues   Clarify 2ndary issues, such as length of vacation or company car, but don’t let them become a source of contention Present the entire package at once. Don’t nit pick, 2 nd guess, or keep coming back for one more concession

Employment Contracts   Let the company win on some issues Don’t pressure to the point where you come in “looking greedy”

Privacy  The interest employees have in controlling the use of their personal information and in being able to engage in behavior free from regulation or surveillance  3 main issues:  Kind of information collected and retained  How that information is used  Extent to which it can be disclosed to others

Fair Information Practice Policies  Limit collection of information to that which is relevant  Inform employees about the types of information being maintained and how it is used  Adopt procedures to ensure accuracy, timeliness, and completeness of information  Permit employees to see, copy, correct, or amend their own records

Whistle-Blowing  Disclosure of illegal, immoral, or unethical practices under control of the employer to persons or organizations that might be able to do something about them

Research on Unethical Behavior  People can be conditioned to behave unethically (if rewarded for it), especially under increased competition  But the threat of punishment has a counter-balancing influence  When policies favoring ethical behavior are present, ethical behavior increases

Protections and Incentives  40 states + federal government protect the jobs of workers who report wrongdoing by their companies  False Claims Act of 1863 (as recently amended):  Citizens may sue a federal contractor for fraud on the government’s behalf  Share up to 30% of $ recovered

Whistle Blowing Do’s and Don’ts  Do ensure your allegations are correct  Keep careful records, learn if your state provides protection for whistle-blowers  Talk to your family; prepare for worst  Legal protection for non-federal Es varies  Don’t run to media, don’t expect a windfall