Gruntled Employees

Issues raised by "lift outs"

Robert Weisman of The Boston Globe had a nice piece called "The business of lift outs," describing some of the problems companies face when they "lift out" a team of workers intact from another company. Rob describes lift outs thus:

The practice of scooping up talented groups of workers, once relatively rare and frowned upon as poaching, has become far more common and respectable. Headhunters have given it a more upscale name — "lift outs" — and companies in a range of sectors, from finance and technology, to healthcare and professional services, have embraced it as the quickest way to gain a foothold in a new market or region.

Although the term hasn't really gone mainstream yet, the phenomenon is quite common. At our firm, we deal with lift outs (or, if we're representing the former employer, "employee raiding") all the time. Rob called me to talk about some of the problems the company doing the lifting might face, and we chatted about litigation and corporate-culture problems:

But lift outs don't always go smoothly. Litigation is a popular option for jilted employers, especially at technology and life sciences companies where noncompete and nonsolicitation contracts are commonplace. Whether such contracts can be enforced hinges on many factors, including the type of new jobs the team is assuming, how employees were approached by the team leader, whether they seek to capitalize on customer relationships developed on the payroll of their former companies, and the judge or jurisdiction handling a lawsuit.

Even in the absence of legal challenges, lift outs can backfire. "People at a law firm can resent it if they're getting ready to become partner and new people are brought in above them," said Jay Shepherd, a Boston employment lawyer. "And while the team might work well together, they may not fit in well with the culture of the new firm."

The noncompete lawsuits that often result from lift outs are the more obvious and overtly expensive side effect. But the lifting company should not underestimate the integration problems that often arise when a clique of people — often receiving some special treatment — are suddenly thrust together with employees who've been around a lot longer. It might seem junior high schoolish, but the costs of the new kids not getting along with the old ones could end up being more severe than the expense of noncompete litigation.

Think hard before you lift out.

Abandoning jargon "at a high rate of speed"

Great piece in The Washington Post by Mary Beth Sheridan about how the Virgina State Police is dropping the copspeak "10 codes" (like 10-4 for "message understood") in favor of Plain English. The article, "Va. State Police Swap '10-4' For 'Message Understood,'" discusses the problems emergency services have had stemming from the confusing codes.

Everyone who has ever watched television knows what 10-4 means, or that 10-20 (or more often, "What's your -20?" refers to your location. But some of the more obscure codes mean different things to different police forces. Mary Beth reports:

To Arlington police, "10-13" means "officer in trouble." To Montgomery County police, the same code means "request wrecker." Even everyday police commands can get lost in translation: In Alexandria, "10-54" refers to an alcohol sensor. For Virginia State Police, it's livestock on the highway.

And that's the problem with jargon: its users like to think it makes their communications more precise. Instead, it tends to do the opposite. In response to this problem, the Virginia government decided to replace the 10 codes with Plain English. (Of course, they called it "common language protocol." Old habits die hard.)

This met with some resistance:

But getting rid of 10 codes has met considerable resistance from some officers. At stake are efficiency, safety and professionalism. Not to mention cool.

"The jargon is one of the things that sets the cops apart," said Tim Dees, a former police officer who is editor of Officer.com, a Web site run out of Beltsville. Not that police officers are alone, he noted: As shown by numerous TV shows, doctors and lawyers also love to snap out their jargon.

"It adds," he said, "a certain mystique."

It's not just the men and women in blue. Lawyers are among the worst offenders when it comes to hiding behind jargon — the ponderous, blubbery pseudolanguage known as "legalese". As with cops, lawyers think their jargon is cool and clubby, setting us apart from so-called "nonlawyers." In fact it does set us apart — but not in a good way.

Corporate and HR people are just as guilty as police and lawyers when it comes to jargon. When people start talking about "desiloing" and "knowledge acquisition," they're doing the same thing — hiding behind trendy jargon that makes their message harder to understand.

For a couple of good articles on corporatespeak run amok, check out Carol Hymowitz's "A Guide to the Latest Batch Of Corporate Buzzwords" and Jared Sandberg's "The Jargon Jumble: Kids Have 'Skeds,' Colleagues, 'Needs'" — both from The Wall Street Journal (subscription apparently not required). (Full disclosure: I went to high school with Jared, although I haven't talked to him since. He writes the always-excellent "Cubicle Culture" column in the Journal.)

Jargon is not more precise. When naval personnel say that an incoming aircraft is "CBDR" — meaning "Constant Bearing Decreasing Range" — that is no more precise than saying, "That freakin' plane's gonna hit us!" And the latter statement probably takes a few less milliseconds for our brains to process. Plain English gets your message across faster, and makes it more easily understood.

Now if only cops would stop talking about pursuing vehicles at a high rate of speed ...

Job references by MySpace

How many of you managers, HR pros, and others responsible for hiring are using MySpace as part of your hiring process? And if you aren't, why not?

Crib sheet for those of us over 30: The MySpace phenomenon has changed the way many people under 30 interact and express themselves. Membership is free and it takes just a few minutes to set up a homepage. Members then adorn their pages with photos, music, artwork, really bad poetry, and solicitations for new "friendships." It seems to be an innovative launchpad for musicians to generate some buzz for their garage bands, and it's an easy way for twentysomethings to meet other twentysomethings who share their interests.

More and more, employers are checking out the MySpace pages of prospective employees as part of their selection process. (See here for a Boston Globe article last March by the always-excellent Diane Lewis on the subject, and here for another great one in the Wall Street Journal by Vauhini Vara.) And why wouldn't you? The pages are public — at least within the MySpace community, to which entry is free and easy. This is not the same as a background or credit or criminal-records check; the only information on a person's MySpace page is whatever he or she chose to put there for the world to see.

And what will you find?

• Many references to bands.
• Many references to drinking.
• Really dumb one-liners.
• More references to drinking.
• Friends of members telling those members how hot they look.
• And — sometimes — members complaining about their past or current jobs.

If I'm thinking of hiring someone, I'd like to know what they (publicly) think of their current job. It may be my company they're complaining about next.

Is it an invasion of their privacy, particularly if they don't expect us to look at their pages? No. If they put the information out in the public domain, they expect it to be read. And they can't control who's going to read it, unless they "privatize" their pages. At best, it shows poor judgment.

One word of caution: you might find information on their page that causes you to learn something about them that might be appropriate for them to share socially but not professionally. Examples include their sexual orientation, their religious beliefs, or their eating disorders or other mental issues. Do not use this information in your hiring decision, or you could be facing a discrimination lawsuit.

And a lot of bad publicity on the prospect's MySpace page.

How to Save HR — Step 3 — Avoid the knucklehead stuff

Quick recap: The introduction to the problem is here. The first step in saving HR— establishing a Talent Department run by the Chief Talent Officer — is here. The second step is to get rid of the nickel-and-dime stuff — the traditional, unimportant, uninspiring personnel administrivia.

Step Three is just as important: getting rid of the knucklehead stuff — the often-well-intentioned but inadvertently small-minded rules that accomplish nothing except giving HR a bad name.

An example, straight from the I-swear-I'm-not-making-this-up department:

A friend of mine just started a new job. With the holiday season around the corner, she was delighted to learn that the employer had an annual holiday party that was always a fun affair. Spouses were welcome. Even boyfriends and girlfriends. That is, if you had been dating for eight weeks. Otherwise, sorry. HR rules.

It's nice that the company wants to reward its employees with a little Festivus action at the end of the year. And it's even nicer to spend the extra dough to include the missus or mister at the fancy dinner. And it's further even nicer to extend that holiday cheer to the unmarried but reasonably committed. But you can just imagine the brow-furrowing that went on to decide where to draw the line. It might have gone something like this:

HR rulemaker: "We can't limit it to married couples. That could be discriminatory. What if the couple isn't married because they're gay? Or commitophobic?"

Other HR rulemaker (looking anguished): "But we can't just open the doors to a couple that just met yesterday! That wouldn't do."

"Good point. How about one months?"

"Too short. Could go either way. How about six months?"

"Two. They've probably met the parents by then."

"Sold!"

OK: we kid because we love. But there had to be some thought that went into this, and it led to the ridiculous eight-week rule at my friend's company. And this is part of the reason why HR often lacks the respect they otherwise deserve. Well-intentioned rules that end up being silly.

Have the party — great! Let the employees bring dates — fine. But stay out of the business of qualifying those dates. That's just knucklehead stuff.

The cost of employee turnover

The Sunday New York Times had an interesting article about how some companies are trying to get typically quiet employees to speak up and share their ideas. The article, "The Silent May Have Something to Say," is by Kelley Holland in the "Under New Management" column. (Subscription might be required, although I think they're doing a free promotion this week.) Kelley points out that employees who feel they aren't free to speak up become disengaged from the company, and eventually leave. But the paragraph that really caught my eye was this:

Turnover is no joke: about 18 percent of all employees change jobs every year, according to a 2005 study by the Society for Human Resource Management, and companies spend about 1.5 times an employee's salary to replace them, according to Spherion, a recruiting and staffing company in Fort Lauderdale, Fla.

These numbers show why human resources — or the  Talent Department — is so important to a company's bottom line. It's a lot more cost effective to find and keep good talent than to constantly replace disengaged and disgruntled employees.

Amtrak blows whistle on lawyer bills

The Saturday edition of the Wall Street Journal had this fine article by Nathan Koppel and Ashby Jones: "Amtrak's Lesson: Check Legal Bills Closely" (subscription probably required). They report that the federally funded railroad company had audited its legal bills, finding that it had allowed outside law firms to ignore the company's billing guidelines. After spending over $100 million in outside-lawyer fees from 2002 to 2005, it realized it could have spent "substantially" less.

The article has plenty of ammunition for opponents of hourly billing, such as:

• 41% of the fees one firm submitted had "cryptic" descriptions for tasks, such as "Review Amtrak documents." William Ross, a law professor and consultant, noted that while these phrases were common in law-firm bills, they didn't help clients evaluate whether the work was necessary.
• Another firm billed exactly nine hours of a paralegal's time on 10 different occasions in a single month. The auditor thought it unusual that there were no entries for 8.9 or 9.1 hours. Ross suggested that this practice could mean that the times were estimates: "Attorneys often bill exactly the same amount of time, day to day. It's like they are trying to fill a quota."

[I'll pause while you let that last phrase reverberate in your head.]

• Some of the law firms used "block billing," despite the Amtrak billing guidelines' barring the practice. Block billing is when "law firms lump together tasks without itemizing how much time each one took.... [It] can make it tough to gauge whether lawyers spent an appropriate amount of time on each task." Another lawyer, apparently unconnected with Amtrak, defended block billing, saying that it was not necessarily "evidence that you are not providing good legal service."

[That may be true. But it's certainly not evidence that you are providing good legal service.]

• The article also cites the problem of close relationships between the in-house lawyers and the outside law firms, where some of them previously worked. The Amtrak auditor said, "The attitude of the law department was that they shouldn't manage the [outside] law firms, because they were their buddies."

So Amtrak has learned to watch their law-firm bills more carefully. But that is just a stopgap measure for a much bigger problem. Hourly billing does nothing to help a client determine the value of the work that was performed. Just because something took longer doesn't mean it was more valuable to the client. Without hourly billing, in-house counsel won't have to worry about whether their outside counsel "are trying to fill a quota."

Peter Lattman's WSJ Law Blog treatment of this issue is here. Earlier coverage on this topic is here and here.

Workplace romance: love affairs and lawsuits

The Boston Globe's Jason Touhey has a nice article on the pitfalls of office romance, both for employees and employers. Jason reports that anywhere from 40 to 60 percent of workers admit to having had a romantic relationship in the workplace at some point in their careers. Since many people frown on that behavior (and people often lie to survey takers), you can assume that the number is somewhat higher.

Jason also reports that a quarter of all employers ban or discourage office relationships, with penalties including counseling, reprimands, or even termination. But employers should not assume that having a policy is going to automatically protect them from problems:

Most employers realize, however, their seldom-read manuals cannot top one of the most elemental powers in nature.

"Employers can't pretend that people are going to completely separate their [love] lives and their workplace lives," said Jay Shepherd, principal at Shepherd Law Group, a Boston firm serving businesses with employee disputes. "You just need to be smart about it and keep your eyes open for problems."

Companies also don't like it when couples split up. Failed workplace relationships can lead to productivity problems, lawsuits, and harassment claims, Shepherd said.

(I couldn't have said it any better myself. By the way, I said "sex lives," not "[love] lives.")

Jason also notes that 80 percent of respondents agree that relationships between supervisors and subordinates cannot be tolerated. (Implicit in that statistic is that 20 percent of respondents either didn't understand the question or enjoy lawsuits.)

Policies are fine, but they are no substitute for good management. And good management is the best protection from the potential sexual-harassment lawsuits that can be part of the ugly aftermath of a failed workplace romance. (See the recent post on why sexual-harassment cases are so hard to defend.)

Outside counsel ignoring GCs on hourly billing

The Association of Corporate Counsel has just released its 2006 Managing Outside Counsel Survey. Martin Daks of the New Jersey Law Journal summarizes some of the key findings. Much will be made of GCs' concerns about compliance issues. But what I find most interesting is in-house lawyers' feelings on hourly billing. Daks writes:

Despite criticisms of the hourly billing format, its use continues to grow. In 2005, 87.1 percent of companies said they used standard or discount hourly rates, compared with 81.2 percent in 2004 and 81 percent in 2003.

While 62 percent of respondents are open to alternative fee arrangements — including fixed, blended hourly rate, contingency and retainer — they say that 90 percent of outside counsel resist the suggestion.

(My emphasis.) Ninety percent? Outside lawyers will tell you that they listen to their clients' concerns, but apparently that doesn't apply to the almighty billable hour. Now tell me if this sounds like a coincidence:

And companies are quicker to fire outside counsel. In 2005, 55.6 percent reported they terminated the relationship with at least some of their firms, up from 50.7 percent in 2004. The most-cited reasons were poor quality of work and results, lack of responsiveness, high fees and personality issues.

I wonder how much of the "lack of responsiveness" had to do with resisting clients' requests for alternative billing.

You can get the ACC's press release here, and you can order the survey here. Compare all this with Ed Poll's post on the popularity of alternative billing in his excellent Law Biz Blog, and the discussion in Carolyn Elefant's always-insightful My Shingle.