In the Trenches: A career-wrecking tornado

Oct. 31, 2006
A high-performing, well-liked employee is fired after a turnaround firm is brought in to Acme. A lawsuit follows. What could the firm have done to avoid this situation? Only the names are changed to protect the innocent.

The graying of America hasn’t left Acme in a particularly youthful mood. Even while its production equipment gets ever more sophisticated, digital and interconnected, Acme’s ability to keep things humming along is shrinking. Every month, at least three long-term employees opt for retirement. And the company’s maintenance department isn’t immune to having its skill and experience prefer to spend time maintaining a low-stress, peaceful, balanced lifestyle in lieu of maintaining impersonal, demanding production machinery in a never-ending thankless struggle.

Trying to hire qualified help using the traditional techniques - job ads, personal referrals, online – merely coaxed the lower-tier candidates out of the woodwork. Few, if any, were qualified or even sufficiently trainable to take up the slack. Something radical was needed to stem the tide Acme saw coming over the horizon. So, the company began actively scouting for competent employees.

A year ago January, Acme hired Bensen Bierner to be a part-time, commission-based recruiter. He came up from New Orleans and had been idle for more than a year while living in a beat-up trailer. But, Acme thought he was most persuasive during his interviews, projected a positive image, was eager to succeed and was motivated to get his life back on track. The best part was that he was willing to work for whatever Acme thought he was worth, no questions asked.

Bensen’s role was to travel the country attending job fairs on Acme’s behalf in search of qualified staff to plug holes in the HR lineup. He proved to be a highly organized, diligent and successful salesman/ambassador gifted with a discerning eye regarding potential. He found quite a few good candidates and convinced many of his best prospects to visit Acme’s plant for an interview. About one-third of these joined the payroll.

He was truly a hot number. After Bensen filled most of the holes in the ranks, Acme brought him in from the cold. On the strength of his performance as a recruiter, he was promoted to be the full-time office manager when that position went vacant through still another retirement. Bensen’s organizational skills served him well in this role, too. The fact that he had developed into a reasonably adept operative in the world of office politics didn’t hurt.

Bensen planted his organizational skills in every quarter of the realm under his control. A variety of performance indicators showcased the productivity of his staff and their support functions. The staff labor hours he freed up were then refocused on helping the sales department capture market share.

One year and another retirement was all it took for Bensen to be named program director over Acme’s industrial marketing efforts. He viewed this promotion as a major coup because the formal job description for program directors required the candidate to have an appropriate college degree and experience in the field. Acme knew he didn’t have these qualifications, but approved the move anyway on the basis of all the good work he had done so far. Management wanted to give him a chance to do even more and expected great things. After all, headquarters had hush-hush plans to sell this division, and it was in the best interest of the local management team to make everything appear as attractive as possible.

When Flipper Associates bought the Acme plant eight months later, the staff was caught unawares. Most of the upper management team was transferred to other Acme facilities just before the sale was finalized and most of the other employees were left to their own devices.

Flipper’s turnaround team settled in to put things in order, starting at the top. Bensen now reported to this transition committee. The group made decisions that affected Bensen’s team without conferring with him. When Bensen was present at meetings, the committee ignored him. If any question concerning Bensen’s projects arose, the committee resolved the issue themselves.

Through a series of meetings, Acme’s mid-level executives had to justify their presence and their staffs’ presence on the payroll. If they couldn’t, they were replaced by a Flipper employee brought in from one of its other plants. When it was Bensen’s turn in the barrel, he was terminated for poor performance and lack of qualifications. Flipper didn’t believe he demonstrated sufficient leadership skills, productivity or efficiency. According to the termination letter from his new boss, Bensen was being let go because he cancelled a meeting at the last minute when some of the exhibits and props he needed for the justification presentation weren’t completed, and because he dressed inappropriately for the Saturday-morning meeting.

Acme’s employee handbook indicated that a supervisor must make an attempt to get an employee back on track and provide appropriate documentation to the employee before exercising the termination option. But, Bensen received no such notification before being fired. Nor did he ever receive a negative performance evaluation during his tenure at Acme.

To add insult to injury, Bensen’s replacement came into the job at a significantly higher pay rate than Bensen was earning.

How could this situation have been avoided? Should formal job descriptions be rigidly enforced? Does political gamesmanship have a place in the hiring decision? Should raw ambition be rewarded? What options are available when one’s company is sold? Is Acme obligated to follow its own notification policies? Did Bensen’s acceptance without questioning each change in his employment situation contribute to his problem? If you were Benson, what would you have done differently? What can he do now?

A corporate consultant says:

There are a number of ways in which this case might have been avoided.

First, employers should think twice before using the word "required" in a job description. Often it's better to use the word "preferred," allowing hiring managers greater flexibility. If you indeed require a certain competence or experience, and the job description so states, don’t ignore that requirement. Doing so could have legal ramifications. In this case, Acme's failure either to adhere to or revise the job description resulted in increased vulnerability for Bensen.

Second, Acme should have told employees about the coming change in ownership. Openly communicating about the sale (absent a bona fide business need for secrecy) is, in my view, Acme's fiduciary responsibility to its employees.

Next, Bensen should have ensured that presentation materials were indeed ready on time.

It was already clear that Flipper was making stay/go decisions based on such presentations, so canceling at the last minute was a bad move on Bensen's part.
Fourth, Flipper should have taken more care in articulating its reasons for terminating Bensen. I saw nothing in the case review that held anyone to a standard of dress, so to terminate Bensen for inappropriate dress seems unjustifiable. Further, with a history of excellent performance reviews, Flipper would have a tough time justifying terminating Bensen for poor performance. The other two reasons Flipper cited for terminating Bensen (canceling an important meeting at the last minute, and not meeting the requirements of the job description) seem unassailable. However, unless and until Flipper has published its own employee handbook, it should have adhered to the one Acme published.

In my opinion, it's not realistic to expect to have a lot of influence over who stays and who goes if you're among the employees of the purchased entity. When changes in ownership occur, one should expect that the chips will fall exactly where the new owner wants them to fall. Certainly, there are steps individuals can take to increase their attractiveness, and canceling a meeting at the last minute isn't one of them.

Bensen could have done a few things, which may or may not have made a difference. Instead of waiting for Flipper to discover the disparity between his qualifications and the job description, Bensen could have pointed it out, and provided a letter from his previous boss explaining why he was thought to be the best candidate.

Rather than waiting passively to find out the criteria the Flipper committee was using to make its stay/go decisions, Bensen could have sought advice from selected committee members, expressing an interest in “the Flipper way.”

Bensen could have authored a “recommended improvements/changes” document for review by the Flipper Committee in advance of his scheduled meeting with them. This document could have been based on Bensen’s research about operations at other Flipper locations, and his own opinions on how the current operation could be made more efficient.

Francie Dalton
Dalton Alliances Inc.
(410) 715-0484
[email protected]

An academician says:

Oops! Acme seems to be exceptionally creative in inventing ways to shoot itself in the foot. This one has to be an indoor record.

I’ve been through several acquisitions as an observer, fortunately, rather than as an employee. The drill is pretty standard – the acquiring firm forms a transition group to identify sources of duplication of resources and other areas of cost savings, and to formulate both a reorganization and transition plan. That group reports their results to an executive group, who makes the final decision as to who and what needs to go. Part of the logic of acquisitions is that a company can achieve “economies of scale” by using a reduced resource base to produce an increased output, thus increasing company profits.

Unfortunately, the research data suggests that, in the majority of cases, the acquisition doesn’t achieve the overly optimistic goals that were anticipated.

The easier part of a reorganization is the reduction of duplicate services, that is, one doesn’t need two legal departments, or two HR units, or two purchasing units, or pairs of other units. So, once the reorganization is approved, many of the “duplicated” personnel are let go. Usually, no reason is given, except that the company no longer needs their services given the acquisition. Occasionally, the outgoing employees may be offered an opportunity to bid on, or transfer to, jobs in other locations, although that is fairly infrequent.

Flipper/Acme obviously didn’t follow this procedure and seems to be looking for a “cause” to get rid of Benson. They screwed up. Just tell Benson that he’s no longer needed. They don’t need a cause. And the employee handbook is probably irrelevant here as it’s doubtful that it would cover mergers and acquisitions. What should Benson do? Sue. He might be able to capitalize on Acme’s stupidity.

Professor Homer H. Johnson, Ph.D.
Loyola University Chicago
(312) 915-6682
[email protected]

An attorney says:

One of the early lessons a first year law student learns is that not every wrong has a legal remedy. This pretty much sums up Bensen’s unfortunate situation.

While Acme’s employee handbook may have provided that a supervisor must provide a warning to an errant employee prior to termination, there’s no indication that Flipper Associates adopted that employee handbook. Bensen appears to have been an employee at will, that is, one whom the company could terminate at any time and for any reason, provided it was not an illegal reason. While most might consider termination due to a cancelled meeting and inappropriate dress at a Saturday meeting flimsy reasons at best, these aren’t illegal reasons for termination.

Even if Flipper Associates did adopt the Acme employee handbook, most handbooks today contain what is called a “contract disclaimer.” This disclaimer, often found on the first page of the handbook, states that the contents of the handbook don’t form an enforceable contract between employer and employee. When such a disclaimer is present in a handbook, most courts won’t permit an employee to maintain a suit when the employer doesn’t adhere to some handbook provision.

Realistically, when a company is sold, an employee doesn’t have many options. Some employees will be surplus because the acquiring company will already have administrative and executive personnel. In weeding out the duplicates, a company is far more likely to retain an employee it knows than one it doesn’t. While Bensen’s luck, or perhaps pluck, carried him quite far at Acme, his charm didn’t win over Flipper. He might have fared a better chance by paying closer attention to Flipper’s culture, and thus avoided the Saturday attire mishap, and speaking directly with his new superiors to determine what the company expected from an employee in his position.

Julie Badel, partner
Epstein Becker & Green, P.C.
(312) 499-1418
[email protected]

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