Article courtesy of SBAM Approved Partner ASE
By Anthony Kaylin
How many times has this happened? HR is approached by a manager who wants to discipline or terminate an employee because the employee is a poor performer. HR investigates and finds that the performance reviews are not just good, but excellent. Yes, it happens often.
Employment-at-Will is the general proposition in Michigan, but employee handbooks always lay out a process for dealing with poor performance, because management consistency and transparency will almost always reduce turnover and headaches. If you are a typical HR employee relations specialist in this situation, after asking “Why the good performance reviews?” and “Why didn’t you discuss this situation with us before?” your next question should be, “Are you willing to pay severance?”
The recent case of Rachells v. Cingular Wireless Employee Servs., LLC, No. 12-4137 (6th Circuit Court of Appeals, October 17, 2013) illustrates why documentation and consistency is a key for any termination. Rachells, an African-American account executive in the Cleveland region since 2001, received numerous sales awards, consistently exceeded company sales goals by the greatest margin among his co-workers, and, in 2003, earned the top performance review among his Cingular peers. In 2004, Cingular acquired AT&T and eliminated five of nine existing Cingular and AT&T account executive positions. Although Rachells exceeded his 2004 sales goals by a greater margin than in 2003, he received the lowest 2004 performance review score of any candidate for retention and was ranked seventh out of nine in the overall selection process.
After Cingular acquired AT&T Wireless, Cingular instituted a review of its workforce to lead to a reduction in force (RIF) in order to align its new workforce with its current needs. There were overlapping positions, and the RIF was needed to reduce redundancy in the workforce.
To identify who was redundant, Rachells’ manager followed the Staffing Integration Guidelines for Human Resources and Managers to evaluate and rate each candidate for termination. The formal process included two components. The first component was the employee’s 2004 performance evaluation score. The second was a rating of each candidate derived from scores the manager assigned to answers the candidate gave to questions asked in a one-on-one interview in mid-January 2005 (the “RIF interview score”).
With respect to the first component, Rachell was given the lowest performance rating based on his manager’s view that Rachells showed up late for meetings, worked on fantasy football during a “boot camp” training session in August 2004, and failed to contribute in staff meetings.
With respect to the second component, Rachells was supposed to prepare a presentation for the RIF interviews. He alleged he did not know the process and did not do one. However, none of the AT&T employees under review did it either. Rachells was lowly rated in the second component.
On the basis of the two scores, Rachells was RIFed. He sued.
The trial court dismissed Rachells’ suit at the Summary Judgment stage. However on appeal, the 6th Circuit noted the evidence of Rachells’ many accolades and awards, as well as the fact that he had the best 2003 performance review and the highest 2002, 2003, and 2004 attainment percentages of any of his Cingular peers. This, the court said, could lead a reasonable jury to conclude that Rachells was consistently Cingular’s highest-performing employee in 2003 and remained so in 2004.
The 6th Circuit then reinstated the case and remanded to the trial court for further proceedings.
The takeaway for employers is that even if doing termination by RIF, and even if the statistical analysis does not red-flag an issue, there still may be problem with in your selection process. If documentation in the candidate’s file does not support the selection of that candidate for termination, there can be a heavy risk for the organization. If Rachells was really a problem for Cingular, there should have been written warnings and other documentation in his file. There were none.
Experienced HR hands everywhere have encountered this problem at one time or other because it is so common. It is budget preparation season right now, and it may be worthwhile to put leadership training on the docket for 2014. The cost of prevention is de minimis compared to the cost of even one large lawsuit.