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How to keep people from becoming a corporate liability.

This statement is not foreign to the first chapter of human resources textbooks. What no text explains, however, is how easy it is for an organization to discover that people can also be a major corporate liability. Growing a mushroom takes a unique combination of moisture, temperature and atmospheric pressure. People can mushroom into a corporate liability under a similar set of uncontrollable conditions. Two atmospheric tions contribute to the ease with which an employee can become a corporate liability. One organizational structure and people-handling perspective helps control the unplanned growth of people-based liabilities.

Everyone Is a Lawyer

Almost all U.S. citizens today are lawyers. A lawyer is one who is "authorized to practice law." No child has been raised in the United States in the past 50 years and not been taught to utter the words "not fair." We are a society concerned with fairness. Most Americans are taught that the law exists to "protect the innocent," "defend the rights of the underdog" "see that justice is preserved."

Do not confuse the term "lawyer" with the term "attorney." An attorney is one who is "qualified to act as an agent for another in legal proceedings." To stand before the bar requires a degree from an approved law school, passing scores on an examination and admission to the bar through a specific procedure. Companies today are learning that an employee does not have to be an attorney to practice law. That requires merely standing in the tradition of John Locke and the original social contract that eventually appeared in the U.S. Constitution.

In the beginning, natural rights were applicable against the king or the government through elected representatives. Universal natural rights are now applied by individuals and directed not only to government but also to employers. The courts are cementing the bricks of this evolutionary process into place every day with employee-oriented decisions upholding "breach of contract" and "unjust termination" claims. Erosion of the "employment-at-will" doctrine and the extension of natural rights to employment are two sides of the same coin.

These same descendants of John Locke are also employees. Over the past several decades non-attomey law practices have appeared, first in prisons and now in companies. We should have predicted this when law libraries sprang up in prisons. Wardens learned quickly that inmates must be treated as lawyers, just as chief executive officers have been arriving at the same conclusion about employees for the past two decades. In the private sector, human resources managers were assigned the task of providing a defense against the efforts of litigious employees. Preventive medicine in most organizations consisted of detailed, written policies and procedures. Every human resources manager deserving of the title wrote lengthy manuals designed to provide a legal defense against a legalistic work force.

Needless to say, paper can be a lawyer's best friend, and the manuals provided rope with which to hang many defendants. The obvious problem of implementing policies and procedures as written gave rise to a new form of managerial training: training managers and supervisors to make the policies and procedures work as written. Of course, the training did not go unnoticed. Lawyers within every organization became better trained and, thus, better lawyers.

A recent and extreme example points out how lawyers are found in unusual places. An inmate in a state prison filed a bodily injury suit against the company that delivers food supplies to the prison. The inmate had access to the library, which is a right in every state. The plaintiff named himself as his own attorney, but later the company appealed to him to name someone else. He did - he named another inmate. The inmate filed the suit with enough accuracy to receive a docket date. Everyone in the United States is a lawyer, and companies must operate as if every employee is his or her own solicitor and every dockworker is an ambulance chaser.

How does an employee litigate? An employee does not need to go to court to litigate. Pointing at the employee manual and saying, "It says right here ..." is equivalent to filing an action. A call to the Department of Labor, the Equal Employment Opportunity Commission, or the Occupational Safety and Health wing of the kabor Department amounts to a summons. Depositions are taken in lunchrooms, hallways and during coffee breaks. A company should not expect a jury of its peers, because a company has no peers.

Employment as a Primary Political Experience

Phyllis Rose wrote a book in 1983 describing the marriages of several Victorian personalities, examples being John Stuart Mill and Charles Dickens. She examined their marriages and concluded that the institution of marriage was a primary political experience - that is, one in which power is exchanged.

Marriage is a primary political experience for most people because it is the site of political activity. There are underdogs, top dogs and partners carrying the load while others do not keep their share of the agreement. Most marriages that fail do so because one partner has more power than the other. Each partner starts to build a set of feelings: the more powerful feels dragged down, the less powerful feels exploited. The divorce courts are filled with unequals.

Today marriage is not the only "primary" political experience of the modern person. The employment relationship shares the stage as a primary scene for political expression in the workplace rather than at the polls. Few people will conduct senatorial campaigns or lobby in Washington, D.C., for consumer or environmental legislation. However, almost everyone will work and be married. These two experiences will top the political agenda for Mr. or Ms. American.

Relationships between supervisors and workers, departments and department managers, and union and management are also primary political experiences. These relationships are concerned with the balance of power - who is top dog and who is obedient, who has input and who listens. Companies must operate as if every employee, supervisor, clerk and security guard has a political identity.

Political expression in America is frustrating because the national problems are so big that no one thinks he or she makes any difference anymore. Ah, but the company problems - they are another matter. Every employee knows what could have been done to solve the problems. The company environment is small enough that everyone knows the players, sees them operate, hears them talk and has an answer. The U.S. Senate may not care what Joe Blow thinks about the national debt and may not listen, but the supervisors are right there-close, accessible, within shouting distance. They must listen, and with good reason.

The workplace will continue to grow as a place where citizens express their primary political activity. It is common for an employee to feel unequal and less powerful at work. How the employer handles discipline, work assignments, wages and job instructions will moderate the feelings of resentment of the less powerful employee.

Where to Go From Here

To prevent the human resource from increasingly becoming a major corporate liability, one can add a simple modification of operating procedures to the already existing prevention measures. Existing measures in most companies are: proper interviewing and hiring procedures, progressive discipline programs, equal employment opportunity and affirmative action plans, compliance with Occupational Safety and Health Administration regulations, the Employee Retirement Income Security Act and Environmental Protection Agency regulations-to mention only a few. The additional measure is to adapt risk management decision-making procedures to the human resources functions of hiring, transferring, promoting, disciplining, job restructuring, communicating and terminating.

The risk management procedure is most effective because it forces the operations people and the human resources people out of their respective molds and brings about a kind of interchange and interaction that merges the respective concerns and bureaucratic procedures of each function into an interdisciplinary effort.

The risk manager asks several basic questions about any exposure to loss:

Can the risk be eliminated? Can the risk be reduced? Can the risk be absorbed? Can the risk be transferred? These same questions are as applicable to an employment decision as they are to a decision of how to handle an abandoned warehouse.

Risk management questions are effective because they are simple, practical, and do not belong to either operations or human resources. They are foreign to the turf of either entity and therefore place operations and human resources on an equal footing. Operations and human resources cannot solve an organization's employment politics problems until they resolve their own political differences; the risk management format is one solution.

When operations and human resources talk about a people problem, it usually goes like this: Operations tells why they must do something to operate efficiently and cost-effectively. Human resources lists reasons why people cannot be handled that way. If both groups work through each of the risk management questions together, operations can be very effective in identifying solutions to the perceived risks. There are probably many ways to eliminate, reduce or transfer the hazards that concern the organization's defensive strategist-the human resources manager.

A Simple Application

A people problem is usually characterized by a common state of affairs. Operations wants the organization to absorb the risk that results from the most obvious solution to the problem. At the same time, human resources wants to completely eliminate the risk because its job is to defend the organization from peoplerelated corporate liability. When both parties work together to reduce the risk involved, everyone wins - operations, human resources and the organization.

An example of an absorbed risk is: "Joe should not really be lifting 75-1b. boxes yet, but his doctor said he was released for full duty and we (operations) need him because Ted is on vacation." Since Joe has a history of medical problems, human resources prefers eliminating a risk of reinjury by using him on light duty one more week, even though there is no sufficient light-duty work available. Reducing the risk might involve shuffling the duties of some other workers for another week to create light-duty work, rescheduling a job that has some lighter duties Joe might be able to perform or borrowing a piece of equipment from another department.

Insurance is the traditional tool for transferring risk. A joint solution might be to keep Joe on temporary disability through workers' compensation one more week and let the operations unit retain an absentee-replacement for that length of time. Since an absentee replacement costs money, and temporary disability is not free, the two groups are performing a true risk management function, that is, weighing the potential for loss against the cost of buying protection.

If Joe is a goldbricker and human resources is being manipulated, operations should set the record straight. If operations is being shortsighted and concerned only with getting through the week, having to deal with human resources is healthy. Finally the use of risk management questions to solve people problems is most effective because it forces human resources to be practical and operations to deal seriously with people risk.

Using risk management questions on people may allow grounds for accusations that humans are being treated like machines, but treating someone like an expensive machine is not always bad. Many supervisors and managers are accomplished in how to avoid breaking down a machine. They look for alternatives, they do routine maintenance and troubleshooting, and are expert in predicting future mechanical problems. They may be less skilled at doing the same thing with people.

Employees can use the law against the organization and will do so. By offering more and better alternatives, risk management decision procedures can assist a company in the reduction of people-based losses.
COPYRIGHT 1993 Risk Management Society Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Author:Ritzky, Garry M.
Publication:Risk Management
Date:Jul 1, 1993
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