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Atricle Dump - Use The Right Risk Management Framework For End Of Employment Decisions
Keyword Concepts: factors that influence advertisingAdvertising: Of all the promotional mix elements, advertising is the one with the greatest similarities worldwide. The reason is that most advertising everywhere is based on American practices. The trend towards global marketing and economies of scale have prompted many firms to stress the standardization of advertising procedures.The factors that influence advertising are: the type of product, availability of media and the foreign environmental forces.1) Type of product: buyers of industrial goods and luxury products act on the same way worldwide, thus the standardization approach may be applied in these cases. This enables manufacturers of capital goods to market these goods worldwide with very little modification in the various markets. Firms such as Coca-Cola, Avon, and Levi Strauss use this international approach successfully.2) Availability of media: Even when the campaign message is standardized, advertisers may find they cannot use the sa
• How much higher than zero is the probability of retaliation?
• Does it matter?
ARE COMPANIES EMPLOYING TOO NARROW A PERSPECTIVE ABOUT RISK MANAGEMENT WHEN MAKING TERMINATION DECISIONS?
With many of our client companies, termination discussions often involve representatives from Finance, HR, and Legal meeting to discuss risk management and cost factors. All three functional perspectives are important. They are also incomplete.
In examining risk factors, the voice of marketing and strategy need to be at the table.
We employ a framework like the one below to help structure the conversation.
TERMINATION THREAT ANALYSIS ONCE NON-COMPETITION AND NON-DISPARAGEMENT AGREEMENTS LAPSE.
Rate each factor on a 0-9 scale. A score of “0” means that the factor does not apply. “1” means “minor threat” whereas “9” means a “significant threat.”
SCORE FACTOR
Ability to harm M&A o
The most basic answer is the same answer as to the question, how does advertising work? Advertising works through repetition, and Holistic Hometown offers you that repetition.What all successful companies know is that advertising it a process. It’s been stated in marketing files for over 50 years that potential clients, unless they are in need of your services when they initially see your ad, take 5-7 repetitions to recall who you are. What does that mean? Well, if you are only advertising in one source, it could mean you are wasting your time and money.What’s the best way to begin an advertising campaign when the goal is visibility? Find sources that attract your target market AND that you can afford over the longer term (1-3 years) for ongoing products/services and find targets with high repetition for shorter term (1+ months) for events and shorter-term needs.For example, if I am marketing an event and have 2 months to market it, I will use the internet, e-mail marketing, and an ad in a monthly m
Despite low unemployment rates in the United States, there is a sense that corporate layoffs and employee layoffs will once again take place. One level of decisions facing leaders is “who stays/who goes.” A second level of decisions revolves around “how do we treat people who leave?” This second level of decisions puts leaders in a dilemma between being generous to people that you are harming versus being prudent with owners’ money during times of economic stress.
At one end of the termination continuum, many associates who enter partnership track at the international law firm of Bingham McCutchen may not be elected to that role. Whatever their reasons for leaving the firm, one of the things that make Bingham stand out is that it considers former associates to be future resources. End of employment is the start of membership as Bingham McCutchen Alumni. The firm goes out of its way to assist departing professionals and maintains an active alumni group.
At the other end of the employment termination continuum are companies that treat departing employees with the same corporate rationale as they treat office refuse: Remove it with as little cost as possible and do not involve us in litigation. We don’t care what happens to our refuse or our former employees after exiting the facility.
These two approaches represent extreme ends of attitude towards end of employment decisions. Where does your company fit? Where should it fit?
The purpose of this article is to provide leaders with a framework for helping them decide where on this continuum their company ought to be. And we want to provide a framework with a more business-like rationale than, “It’s nice to be nice.”
In planning for terminations, it might be useful to look at the threat analysis framework developed by the 2005 Nobel Prize for Economics winner, Thomas C. Schelling. Schelling is professor of Economics at the University of Maryland. He received his Award for applying game theory to conflict. His focus was on the weapons issues but we have applied his ideas to the design of executive termination packages.
Schelling says “uncertain retaliation is more efficient than certain retaliation” when bargaining and “the capability to retaliate is more useful than the ability to defend.” Now let’s get practical.
GOODBYE SCENARIO
As a verb, “Goodbye” denotes parting. Saying “goodbye” assumes that once employees leave the building, they will never be a factor for the firm’s future. The relationship was transactional and the transaction is now over. If the firm defines termination as a goodbye scenario, the firm should be guided by a business model that says, “What’s the least expensive way of terminating this relationship consistent with reducing legal risks?”
AUWIEDERSEHEN SCENARIO
“Auwiedersehen” is a German word that is often used when people depart. But Auwiedersehen is not “Goodbye.” It literally means, “Until we meet again.” Saying “Auwiedersehen” assumes that once employees physically leave the building, they have only physically left the building. They can continue to be factors for the company’s success or failure. For example:
Once their non-compete agreements end, they may join other firms in your industry. Will they be opponents of your M&A plans or attempts to foster industry-wide standards or strategic alliances?
As you seek to attract new talent to your company, are the people you terminated considered thought leaders in your physical or industry community? Will they caution new talent about joining?
Once their non-compete agreements end, they could work for customers or potential customers and encourage customers to go elsewhere.
Each of these scenarios assumes capability of retaliation plus degrees of uncertainty about that retaliation. This is the Schelling scenario. Signing a Waiver of Rights either does not reduce these risks or reduces it for a defined period of time. From a company perspective, the two questions are:
• How much higher than zero is the probability of retaliation?
• Does it matter?
ARE COMPANIES EMPLOYING TOO NARROW A PERSPECTIVE ABOUT RISK MANAGEMENT WHEN MAKING TERMINATION DECISIONS?
With many of our client companies, termination discussions often involve representatives from Finance, HR, and Legal meeting to discuss risk management and cost factors. All three functional perspectives are important. They are also incomplete.
In examining risk factors, the voice of marketing and strategy need to be at the table.
We employ a framework like the one below to help structure the conversation.
TERMINATION THREAT ANALYSIS ONCE NON-COMPETITION AND NON-DISPARAGEMENT AGREEMENTS LAPSE.
Rate each factor on a 0-9 scale. A score of “0” means that the factor does not apply. “1” means “minor threat” whereas “9” means a “significant threat.”
SCORE FACTOR
Ability to harm M&A ob
Do you get happy when outside? If so then a lawn Care franchise opportunity might be the one thing that is perfect for you and your family. Virtually all people that own homes need lawn Care and Landscaping services of one type or other each year, and this need has created numbers of chances for smart people that know when to take hold of an awarding opportunity. People in America think a lot of their yards and they rely on experienced yard keepers to keep their homes in tip top shape. If you just could be interested in purchasing a landscaping business then read on.Inside the landscaping industry are many different sub industries. The average lawn Care and Landscaping franchises like to keep the day to day operations simple and streamline the business only doing tasks like cutting grass, weeding, and trimming hedges. Then there are lawn care service providers that offer services dealing with pesticides and other important chemicals. With any type of yard, whatever it might be, there are people out there nee
At the other end of the employment termination continuum are companies that treat departing employees with the same corporate rationale as they treat office refuse: Remove it with as little cost as possible and do not involve us in litigation. We don’t care what happens to our refuse or our former employees after exiting the facility.
These two approaches represent extreme ends of attitude towards end of employment decisions. Where does your company fit? Where should it fit?
The purpose of this article is to provide leaders with a framework for helping them decide where on this continuum their company ought to be. And we want to provide a framework with a more business-like rationale than, “It’s nice to be nice.”
In planning for terminations, it might be useful to look at the threat analysis framework developed by the 2005 Nobel Prize for Economics winner, Thomas C. Schelling. Schelling is professor of Economics at the University of Maryland. He received his Award for applying game theory to conflict. His focus was on the weapons issues but we have applied his ideas to the design of executive termination packages.
Schelling says “uncertain retaliation is more efficient than certain retaliation” when bargaining and “the capability to retaliate is more useful than the ability to defend.” Now let’s get practical.
GOODBYE SCENARIO
As a verb, “Goodbye” denotes parting. Saying “goodbye” assumes that once employees leave the building, they will never be a factor for the firm’s future. The relationship was transactional and the transaction is now over. If the firm defines termination as a goodbye scenario, the firm should be guided by a business model that says, “What’s the least expensive way of terminating this relationship consistent with reducing legal risks?”
AUWIEDERSEHEN SCENARIO
“Auwiedersehen” is a German word that is often used when people depart. But Auwiedersehen is not “Goodbye.” It literally means, “Until we meet again.” Saying “Auwiedersehen” assumes that once employees physically leave the building, they have only physically left the building. They can continue to be factors for the company’s success or failure. For example:
Once their non-compete agreements end, they may join other firms in your industry. Will they be opponents of your M&A plans or attempts to foster industry-wide standards or strategic alliances?
As you seek to attract new talent to your company, are the people you terminated considered thought leaders in your physical or industry community? Will they caution new talent about joining?
Once their non-compete agreements end, they could work for customers or potential customers and encourage customers to go elsewhere.
Each of these scenarios assumes capability of retaliation plus degrees of uncertainty about that retaliation. This is the Schelling scenario. Signing a Waiver of Rights either does not reduce these risks or reduces it for a defined period of time. From a company perspective, the two questions are:
• How much higher than zero is the probability of retaliation?
• Does it matter?
ARE COMPANIES EMPLOYING TOO NARROW A PERSPECTIVE ABOUT RISK MANAGEMENT WHEN MAKING TERMINATION DECISIONS?
With many of our client companies, termination discussions often involve representatives from Finance, HR, and Legal meeting to discuss risk management and cost factors. All three functional perspectives are important. They are also incomplete.
In examining risk factors, the voice of marketing and strategy need to be at the table.
We employ a framework like the one below to help structure the conversation.
TERMINATION THREAT ANALYSIS ONCE NON-COMPETITION AND NON-DISPARAGEMENT AGREEMENTS LAPSE.
Rate each factor on a 0-9 scale. A score of “0” means that the factor does not apply. “1” means “minor threat” whereas “9” means a “significant threat.”
SCORE FACTOR
Ability to harm M&A o
It is rather difficult to read the ordinary signboards in the dark. For this very reason, many signboards incorporate neon, since it glows in the dark. The Neon signs are a big relief to night travelers specially, as they are easily able to identify and adhere to road signs and instruction. The first neon sign appeared in France in 1910. After its initial appearance, the neon signs went on to be very popular and advertising companies started competing with each other on regards to its creativity and presentation. Neon signs are considered an effective medium of advertisement, as they readily attract attention and have a great impact on the customers.Neon lights are colorful and vibrant in nature. This visual medium meets local marketing needs and consequently helps increase customers and business. In relation to retail and multinational businesses, wholesale neon light purchases prove to be favorable. Customers searching for neon signs may approach local and online stores or find neon sign manufacturing locations thro
Schelling says “uncertain retaliation is more efficient than certain retaliation” when bargaining and “the capability to retaliate is more useful than the ability to defend.” Now let’s get practical.
GOODBYE SCENARIO
As a verb, “Goodbye” denotes parting. Saying “goodbye” assumes that once employees leave the building, they will never be a factor for the firm’s future. The relationship was transactional and the transaction is now over. If the firm defines termination as a goodbye scenario, the firm should be guided by a business model that says, “What’s the least expensive way of terminating this relationship consistent with reducing legal risks?”
AUWIEDERSEHEN SCENARIO
“Auwiedersehen” is a German word that is often used when people depart. But Auwiedersehen is not “Goodbye.” It literally means, “Until we meet again.” Saying “Auwiedersehen” assumes that once employees physically leave the building, they have only physically left the building. They can continue to be factors for the company’s success or failure. For example:
Once their non-compete agreements end, they may join other firms in your industry. Will they be opponents of your M&A plans or attempts to foster industry-wide standards or strategic alliances?
As you seek to attract new talent to your company, are the people you terminated considered thought leaders in your physical or industry community? Will they caution new talent about joining?
Once their non-compete agreements end, they could work for customers or potential customers and encourage customers to go elsewhere.
Each of these scenarios assumes capability of retaliation plus degrees of uncertainty about that retaliation. This is the Schelling scenario. Signing a Waiver of Rights either does not reduce these risks or reduces it for a defined period of time. From a company perspective, the two questions are:
• How much higher than zero is the probability of retaliation?
• Does it matter?
ARE COMPANIES EMPLOYING TOO NARROW A PERSPECTIVE ABOUT RISK MANAGEMENT WHEN MAKING TERMINATION DECISIONS?
With many of our client companies, termination discussions often involve representatives from Finance, HR, and Legal meeting to discuss risk management and cost factors. All three functional perspectives are important. They are also incomplete.
In examining risk factors, the voice of marketing and strategy need to be at the table.
We employ a framework like the one below to help structure the conversation.
TERMINATION THREAT ANALYSIS ONCE NON-COMPETITION AND NON-DISPARAGEMENT AGREEMENTS LAPSE.
Rate each factor on a 0-9 scale. A score of “0” means that the factor does not apply. “1” means “minor threat” whereas “9” means a “significant threat.”
SCORE FACTOR
Ability to harm M&A o
One of the most important parts of a job search is assessing your Transferable skills. These are skills which you can use in other jobs such as: Communication, Information Management, Human Services, Managerial, Manual/Physical Labour, Personal Attributes, Organization.Often when people have been working in the same job for a long time, they become so accustomed to performing their duties that they fail to recognize the skills they have. It is beneficial to sit down and write out a list of all the things you do in a work day and all the things you do at home as well. It is easy to forget that skills such as problem-solving, decision-making, and organization which you use at home and in volunteering are skills that you can transfer and use on a new job. A benefit to this recognition of your skills is that you can come up with a variety of Ideas for jobs or places that these skills may be used. If you are c
Once their non-compete agreements end, they may join other firms in your industry. Will they be opponents of your M&A plans or attempts to foster industry-wide standards or strategic alliances?
As you seek to attract new talent to your company, are the people you terminated considered thought leaders in your physical or industry community? Will they caution new talent about joining?
Once their non-compete agreements end, they could work for customers or potential customers and encourage customers to go elsewhere.
Each of these scenarios assumes capability of retaliation plus degrees of uncertainty about that retaliation. This is the Schelling scenario. Signing a Waiver of Rights either does not reduce these risks or reduces it for a defined period of time. From a company perspective, the two questions are:
• How much higher than zero is the probability of retaliation?
• Does it matter?
ARE COMPANIES EMPLOYING TOO NARROW A PERSPECTIVE ABOUT RISK MANAGEMENT WHEN MAKING TERMINATION DECISIONS?
With many of our client companies, termination discussions often involve representatives from Finance, HR, and Legal meeting to discuss risk management and cost factors. All three functional perspectives are important. They are also incomplete.
In examining risk factors, the voice of marketing and strategy need to be at the table.
We employ a framework like the one below to help structure the conversation.
TERMINATION THREAT ANALYSIS ONCE NON-COMPETITION AND NON-DISPARAGEMENT AGREEMENTS LAPSE.
Rate each factor on a 0-9 scale. A score of “0” means that the factor does not apply. “1” means “minor threat” whereas “9” means a “significant threat.”
SCORE FACTOR
Ability to harm M&A o
Many individuals wish to make a career in the field of law as lawyers and attorneys. The legal profession is one of the most challenging and satisfying jobs, which also pays well in terms of money. Many job openings are specifically available for the post of tax attorneys in various fields such as business, income, estate, property and international taxes.Law aspirants usually look at obtaining a law degree from good law schools and gain valuable hands-on experience in the appropriate field. After the completion of their law course, these attorneys have the option to work in government or private organizations or start private practice on their own. If they choose to work for the government, they can find job openings as advisors and prosecutors behalf of the government.By specializing in a field, attorneys gain specific background knowledge and experience in that particular field which comes very handy while representing clients with related issues. Many big law firms employ tax attorneys having experience of
• How much higher than zero is the probability of retaliation?
• Does it matter?
ARE COMPANIES EMPLOYING TOO NARROW A PERSPECTIVE ABOUT RISK MANAGEMENT WHEN MAKING TERMINATION DECISIONS?
With many of our client companies, termination discussions often involve representatives from Finance, HR, and Legal meeting to discuss risk management and cost factors. All three functional perspectives are important. They are also incomplete.
In examining risk factors, the voice of marketing and strategy need to be at the table.
We employ a framework like the one below to help structure the conversation.
TERMINATION THREAT ANALYSIS ONCE NON-COMPETITION AND NON-DISPARAGEMENT AGREEMENTS LAPSE.
Rate each factor on a 0-9 scale. A score of “0” means that the factor does not apply. “1” means “minor threat” whereas “9” means a “significant threat.”
SCORE FACTOR
Ability to harm M&A objectives over the next 36 months.
Ability to harm strategic alliances over the next 36 months.
Ability to negatively influence sales over the next 36 months.
Ability to negatively influence talent we seek to hire over the next 36 months.
**
We used 36 months as a framework because many critical business decisions in building product lines, acquiring companies, or being acquired require that type of time perspective.
The above is a framework for discussion during the termination planning stage and can apply to group as well as individual termination decisions.
The people around the table have different areas of competency to evaluate these marketing/strategic issues. HR and sales can best discuss the impact on attracting and retaining talent. But strategy people can best discuss M&A plans.
In applying these and other risk factors, the objective of the meeting is for the group to determine if the end of employment decision approaches the Goodbye end of the continuum or the Aufwiedersehen end of the continuum.
In moving towards the Goodbye end of the termination continuum, a company should pay departing employees severance fees no greater than median relative to other companies its size in the industry and should keep outplacement costs to a minimum. There would be no follow-up with employees once they leave the building other than what is legally required. The company message is: “Good bye. We want to give you a running start on your job search.”
In moving towards the Auwiedersehen end of the termination continuum, a company should pay departing employees severance fees and outplacement programs using the median as a starting point. At the extreme end of Auwiedersehen, former employees would be called Alumni and there might be a section on the company website for Alumni to learn about what is going on with the company and to communicate with other Alumni. At the same time, those who frequent the Alumni section are useful targets for the company’s sales staff. Alumni would be invited to reapply for job openings the company would have in the future. The company message is: “We would like to see you land on your feet in the wake of this termination decision and we want you to know that you are still a member of our business ‘family.’ We are sure that our paths will cross again.”
COMPANY CULTURE
As someone who works with leaders in their departure from organizations, we love working for client companies that treat departing employees with dignity because it is integral to their culture. Our perspective in this article, however, is a contingency-based approach to managing end of employment decisions. Our framework suggests that representatives from marketing and strategy be present when termination decisions are made and some specific questions be raised to examine threat from a broader perspective than a strict legal perspective.
End of employment decisions can be oriented towards the Goodbye scenario or oriented towards the Auwiedersehen scenario. Where your company is on that continuum should be a carefully thought out business decision.
REFERENCE: Thomas C. Schelling. THE STRATEGY OF CONFLICT. Boston: Harvard Press, 1980
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