In this episode of All Things Work, host Tony Lee is joined by Adam Rosenthal, an attorney specializing in employment law and author of the new book Managing Employees Without Fear: How to Follow the Law, Build a Positive Work Culture and Avoid Getting Sued. They discuss how managers can ensure business continuity when employees leave—and how they can lead in ways that can keep good employees from departing at all.
Reports indicate that the world of work is heading for a “turnover tsunami,” with more than half of employees planning to look for a new job in 2021. This speaks to the importance of managers knowing what to do when employees announce they’ll be moving on. In this episode of All Things Work, host Tony Lee is joined by Adam Rosenthal, an attorney specializing in employment law and author of the new book Managing Employees Without Fear: How to Follow the Law, Build a Positive Work Culture and Avoid Getting Sued. They discuss how managers can ensure business continuity when employees leave—and how they can lead in ways that can keep good employees from departing at all.
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This episode of All Things Work is sponsored by UKG.
Speaker 1:
This episode of All Things Work is sponsored by UKG. UKG offers HR and workforce management solutions that support your employees and transform your workplace into a work of art.
Tony Lee:
Welcome to All Things Work, a podcast from the Society for Human Resource Management. I'm your host, Tony Lee head of content here at SHRM and thank you for joining us. All Things Work as an audio adventure, where we talk with thought leaders and taste makers to bring you an insider's perspective on all things work. Now, according to the summer issue of HR Magazine, the world of work is heading for a turnover tsunami. More than half of all employees say they plan to look for a new job this year and one quarter have definite plans to quit as the pandemic subsides. There are a lot of reasons behind this mass turnover, some pandemic related, some not, but an important next step is to focus on how managers will handle it. Employee departures create headaches for any organization, but the value of a good manager lies in their ability to ensure business continuity even when employees leave and take steps to keep more good employees from following them out the door.
Joining me today to discuss how companies should handle the end of the employee life cycle is Adam Rosenthal. Adam is an attorney and author specializing in labor and employment law with the international law firm Sheppard Mullin, and he's in San Diego. There, he represents employers on all matters of employment law and advises company's legal departments, HR teams and frontline managers on issues related to employment law. Last year, Adam co-authored the employer's guide to COVID 19 and emerging workplace issues the title that's been regularly updated throughout the pandemic. And just in May Adam's newest book, "Managing Employees Without Fear: How to Follow the Law, Build a Positive Work Culture and Avoid Getting Sued" was published by SHRM.
Adam, welcome to All Things Work.
Adam Rosenthal:
Thank you. It's a pleasure being here and a big fan of the pod.
Tony Lee:
Well, you're very kind and we're pleased to have you, so let's start with the front line, a manager is doing their job. It's a Tuesday afternoon or whenever, and a valued employee comes walking in and says, "Well, I have some news to share. I'm going to be leaving." How would you advise the manager to respond to that?
Adam Rosenthal:
Well, it's those dreaded conversations, particularly when they're valuable employees happen all the time. It's happened to me, plenty. That's just a part of the lifespan of being a manager. So in terms of preparing kind of what's the next step it's always, and I advise my clients and I write about it in the book to have the plan already in place and that is really it's three plans. It's a communication plan to the employee, it's a communication plan to the internal stakeholders and where that employee has is external facing, it's a plan to the folks that the employee outside of your organization interact with. And so having a structure around that can prepare the manager for that conversation when it's kind of thrust upon them out of the blue.
Tony Lee:
Yeah, no, that makes perfect sense. And developing that plan for basically every valued employee should be great preparation. But one of the things that I've heard lately being advised, and I'm curious to get your feedback is a lot of managers when they hear that immediately like, "Oh my gosh, you can't leave now. I need at least two months before you go," that kind of reaction and the advice I've been hearing is the reaction should be, "Well, that's great news. I'm really glad to hear that you found a career opportunity that you're excited about. Tell me about it," a much more positive reaction. What do you think?
Adam Rosenthal:
Yeah, well, I agree with the latter for two reasons, one, the vast majority of employees in the United States are at will employees and that cuts both ways, right? The employee can leave and move on to another job, another career, or go back to school, whatever. And likewise, the employer can let go of an employee, an underperforming employee. So it has to cut both ways and so legally I think there's validity in not trying to hold the employee and tell them that they have to stay longer.
But more to your point, I think sending the message and leaving in a positive way, pays dividends for the organization, for your other employees and really from a legal liability standpoint can also benefit the organization. And then on top of that, depending on why the employee's leaving and we could talk about exit interviews and the value of those in a moment you get from the employee, the possibility of a boomerang, and for whatever reason, the employee may be looking to a different position or a different career but if were a valuable employee, you may want them to come back and if you leave the door open and end in a positive way, it's much more likely that employee will return.
Tony Lee:
That's such a great point. In fact, there are companies out there that have a reputation that they're very slow to promote people until they leave and then they try and hire them back and that's how you get your promotion by leaving and coming back. So it's, this a terrible cycle at some of these companies. So you brought exit interviews. Why are they important? I mean, I know most companies do them, but they tend to be perfunctory. What should HR be doing in an exit interview to make it more meaningful?
Adam Rosenthal:
Sure. I'd say most companies do them, I'd say most companies do them poorly. An exit interview really should be an opportunity for a reflection on the organization and on the leadership. We know, at least the data shows, that most employees leave and that is so they resign and for a new job, a lateral move, usually not because of compensation or benefits, but because they're not happy with their career at that organization, at that company and often not pleased with their manager.
And so first I would say the exit interview should not be conducted by the manager because you're not going to get as comprehensive or as candid responses. And it shouldn't be conducted by, in my view, by someone who's too close to the employee. So HR is perfectly situated for that to have that interview.
And then, so the question is, what should they talk about? And there, it shouldn't just be kind of the perfunctory, why are you leaving? What did you like about us? What did you not like about us, but really get into the work culture, their perspective, and then get to the, somewhat of the meaty issues to find out if they made complaints, if they have any concerns, ethical concerns, legal concerns, you want to find out about that on the exit interview and not find out about it from a lawyer sending a demand letter six months later.
Tony Lee:
Yeah. Well, always the case. Let me ask you this, the saying is that employees leave managers, not companies. So in your experience with exit interviews, is that the case typically that it's an interpersonal issue that's driving someone away?
Adam Rosenthal:
Typically it is, typically it is. I would say the pandemic has changed that calculus, it's had significant, seismic shift in a lot of areas of the employer employee relationship, where it's not necessarily just the manager. Now, coming out of the pandemic, it's the location, it's demands on the employee, whether or not the company has made a decision as to allowing and encouraging remote working that is or hybrid working, that's often a big point of contention I'm hearing lately. And so traditionally, yes, I think it's interpersonal issues. The pandemic has exposed, or at least highlighted other reasons why employee may decide to move on to a different organization.
Tony Lee:
And with a tsunami, so to speak, there's going to be a lot of exit interviews going on so I imagine that they can be combined in some way to really paint a picture of what's going on at the company from a managerial standpoint.
Adam Rosenthal:
Absolutely. But it goes with a lot of things in HR, and I know your listeners are the folks that I work with and deal and talk to on the daily. It's important that HR is heard. So if an exit interview just goes into the filing cabinet and isn't elevated to other leaders within the organization, then it's not advancing the role that HR has, really important role, in helping other leaders in the organization understand what is driving turnover.
And since turnover is expensive and has both morale issues within the organization and real, tangible business reasons and implications, it's important that the highest levels of the organization understand why folks are leaving. And then the other side of the equations, what to do to keep the employees that you want to keep and retain, and then also attract others that fit within your culture and your mission.
Tony Lee:
All right. So let me paint a scenario. What happens if it's an exit interview and the employee starts to fire some arrows as they exit. I think you call them constructive termination. What should the HR person do when they hear something troubling coming out of those exit interviews?
Adam Rosenthal:
Sure. Great question. So, we'll play that out in the manager or HR manager sitting with an employee leaving, and the question is posed, "Well, why are you leaving our organization?" And the employee or departing employee says, "Well, I'm being harassed," or, "I'm being discriminated," or, "I was retaliated against." So, those key words and you don't just have to look for those buzzwords, but often those are used.
I would say, first thing, you got to take every complaint seriously, need to have a conversation. It would be wise to get as much details as possible while you have the individual sitting in front of you and take copious notes to make sure you understand his or her story and what that employee's complaining about. Then I would encourage that HR professional to speak with, if they have an in-house lawyer to speak with in-house lawyer, employment counsel, or general counsel, and if they don't then call their outside employment law specialist, because there are opportunities there potentially to mitigate the risk in addition to the investigation. So the investigation has to be conducted. There's a duty to conduct investigations where claims of harassment, discrimination, retaliation have been made, but in mitigation front, there may be an opportunity to severance the employee and avoid expensive litigation down the road.
Tony Lee:
Yeah. Okay. And yet another good reason why the current manager shouldn't be sitting in the exit interview because that might inhibit the employee from being honest.
Adam Rosenthal:
A hundred percent.
Tony Lee:
Yeah. So what about the other side of this? An employee who says, "Well, I'm leaving to join our biggest competitor," or "I'm leaving to join a client because I know I could probably negotiate a better fee with you," or something like that. How would you recommend HR respond?
Adam Rosenthal:
So that happens all the time and particularly in this market. So whether it's an involuntary termination, a layoff or resignation, there needs to be a conversation on the exit about the employees obligations to their employer, vis-a-vis trade secrets and confidential information. Most employees, larger companies and we're, I'm even seeing this on smaller companies as well have signed confidentiality agreements. Some, in some states, they've also are parties to restrictive covenants, which is again very state specific here. I'm sitting California and they're frowned upon, although most states they're certainly legal and widespread.
But there needs to have a Frank conversation with employees, as they're leaving, saying, "Look, you are privy to a lot of confidential information. You are expected to keep that confidential and we take our trade secrets very seriously." It's not a threat. It's laying it down, making very clear that if employee's going to go out and compete with the organization illegally, whether that's through, because they're violating a illegal non-compete agreement, or because they're what's called misappropriating trade secrets that the company will respond accordingly. I litigate in this area all the time and I find when organizations, when my clients have had those conversations on the exit interview, they have a much better chance of prevailing down the road because there was no dispute as to the expectations of the employee leaving with respect to confidential information.
Tony Lee:
Okay. Now there are any particular industries or functions that should be really attuned to this, where you see it happening more often? I would imagine sales is probably one where someone will take their book of sales with them and start competing.
Adam Rosenthal:
Yeah, absolutely. So sales and customer lists are the most hotly contested area of trade secrets law and kind of, if you look throughout the country, that's the biggest ticket item. But you also, if you take the technology space, for example, or pharmaceuticals or high tech, or, really any knowledge driven and IP heavy organization, you're not looking at customer list as much as you're looking at processes and procedures that are confidential and highly technical.
And so one of the things that I encourage companies to do at the exit is have that Frank conversation with the employee and make sure that they've returned everything that they have, including things that have been put in the cloud. Now sometimes, and we see this, unfortunately, all too often, an employee who's planning his or her departure will upload copious amounts of confidential information to the cloud or send to their personal email address, hoping that somehow they will not be caught. They're usually always caught, but sometimes they have done that throughout their career for entirely innocent reasons. And it's important at the exit for the company to say, "Look, if you've ever said anything to yourself, that's confidential or trade secrets or proprietary whether, or put it on a thumb drive, we need that now and we need it immediately," making very clear that the company protects their own trade secrets.
Tony Lee:
Yep. Certainly makes sense there. What's your feeling about counter offers? We're seeing companies that are getting a little desperate, trying to come up with counter offer packages. Do you think they make sense?
Adam Rosenthal:
Yeah. Highly individualized, it can be a slippery slope. So it's under federal law and many state law, you can't restrict employees from talking about the terms and conditions of their employment. So they're really, while you can tell employees, we want to keep this confidential and make sure that if we're going to negotiate with you a better deal, that your coworkers don't come to us, it always comes out eventually. Number one, and number two, you really can't prevent it from coming out, even if you want to. So you have to be prepared if you're going to engage in discussions about counter offers and negotiating with a current employee to keep them on your side of the fence, you need to be prepared that you're going to get a onslaught of other employees coming to you, that's number one.
Number two, you also have to be very cognizant of the potential for pay inequity. We know sociologically that men in the workplace are more likely and more effective, generally speaking, of course, we're looking at big statistics at negotiating pay increases. We also know that men are paid more than women, and that's a problem with our workforce and we have a lot of laws that are looking, trying to have an equal playing field. We're not there yet, far from it. If an organization does one off negotiations and it tends to favor certain folks, whether it's men or certain classes of employees and disadvantages others, then they may have another problem. So there's always room, potential for negotiations, for a superstar, you got to be very careful that you're not getting yourself, you the organization, is not getting itself into hot water and potentially setting themselves up for unequal pay and pay inequity issues.
Tony Lee:
Yeah. And you hit a key issue right in the head and, but in terms of folks leaving and then replacing them, pay equity is such a huge issue. What's your recommendation to clients who perhaps haven't reviewed their compensation structure in a while as they go to try and replace, perhaps long-term employees who had been getting raised after raise year after year? Is it time for a full reevaluation when you have that kind of turnover?
Adam Rosenthal:
Absolutely and it's a great point. So the laws on the books federally and in many states require and expect that employers are monitoring this for pay equity. And so as you bring in new employees to replace, often, you're bringing them at a higher compensation. And in order to make sure it's fair and equitable, you need to constantly be reassessing and have legitimate reasons if you're going to pay a new employee that you're onboarding more than his or her replacement or prior, the person who sat in that position earlier. You need to have legitimate reasons and we can spend another two hours talking about how you do that and deal with pay equity audits and kind of the factors and the data that employers should be looking at. Suffice it to say, I would strongly recommend engaging with an experienced employment law expert in this area to really tackle what is a very important issue that every employer should have top of mind.
Tony Lee:
Well, Adam, that just means we're going to have to have you back again on other topics.
Adam Rosenthal:
My pleasure.
Tony Lee:
This was terrific. Thank you. An enormous thank you to Adam Rosenthal for discussing how managers can effectively handle employee turnover. Before we get out of here, I just want to encourage everyone to follow and subscribe to All Things Work wherever you listen to your podcast. And also listener reviews have a real impact on a podcast visibility so if you enjoy today's episode, please take a moment to leave a review and help others find the show. And finally, you can learn more about All Things Work and find all of our episodes on our website@shrm.org/atwpodcast. Thanks for listening and we'll catch you next time on All Things Work.
Speaker 1:
All Things Work is sponsored by UKG. Your business is important to you, and the best way to improve your business is to improve the lives of your people. UKG develops HR and workforce management solutions designed to take care of your employees because when they feel supported, connected and appreciated, your business will transform from a workplace into our work of art. UKG, our purpose is people.