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Rethinking Employee Discipline in a Tight Labor Market

Today’s post comes to us from Workforce Institute advisory board member Dennis Miller, AVP of human resources and benefits administration at The Claremont Colleges.

While reading the July 8 Los Angeles Times edition, an article authored by Don Lee captured my attention regarding the looming recession, using potential layoffs as a cost-cutting strategy, and how that model seems counter-intuitive to longer-term retention initiatives to some business leaders, especially knowing the challenges in the labor market.

Among others, the article described an interview with a business owner with about 180 employees located in four different restaurants. The owner stated to Lee that, although he is considering many solutions to mitigate the impacts of the looming recession, he states boldly that employee layoffs are not currently on his list of options to reduce expenses.

In fact, the business owner is considering enhancing employee benefits to help retain his existing workforce, citing the challenges he experienced trying to recruit employees during the last two years. His strategy is on retaining employees to help avoid a bigger problem of trying to recruit replacement employees, should any of his folks decide to leave.

Many employers responded to the pandemic by reducing labor expenses with layoffs, which may have previously been an effective short-term expense-reduction strategy (arguably) — and we know now that it was obviously very difficult to rehire people once the budgetary pressures began to subside, for a variety of conditions that are expected to last for the foreseeable future.

Therefore, it is imperative that employers rethink their retention strategy by retaining their employees especially during a market downturn, or run the risk of solving a much more challenging set of problems in both recruitment and retention after the downturn subsides.

One key retention strategy employers should consider is how they approach disciplining employees for minor policy infractions. The rest of this blog post will discuss one sample employment policy along with two simple and yet critical questions to ask when developing policies and administering discipline.

Sample policy: “Employee must arrive at work on or before the scheduled shift start time and be prepared to clock in and commence work immediately upon arrival. If employee fails to arrive on time or is not prepared to work upon arrival, and when the infraction is not excused by the supervisor, the following corrective action and/or discipline will apply:

First instance = verbal warning; second instance in a 30-day period = written warning; third instance within a 60-day period = final written warning; subsequent instance within 90 days of third infraction = involuntary separation.”

When rethinking policies, organizations must define “essential” behaviors vs. all other behaviors related to employee policies. This could be accomplished on a role basis, or a job family or occupation, and might or might not need to apply to 100% of the roles. Having the same policy for all employees in all departments might make sense for some policies, and for other policies it might not make sense. The exact model will depend on the core purpose of the company, along with the types of roles required for the company needed to support its mission.

For example, being punctual might be critically important for some roles, such as opening a store on time or filling a key receptionist role, while it might be less important for someone filling an Accounts Payable role, a custodial role, or perhaps a carpenter role. Having a single policy for all roles in a company is certainly administratively convenient and allows for the appearance of being equal and fair.  Unfortunately, a one-size-fits-all model is unnecessarily restrictive for some roles, and if your organization has a retention goal, it will become important to provide flexibility whenever appropriate, especially in a tight labor market.

Two core questions must be asked whenever examining policies. First, ask “What is the business reason for this policy and its performance standards?” and second, “What is the business impact if the performance standard is not met?”

When it comes to employee policies and discipline, try to “focus on the critical few vs. the trivial many.” Although this quote is from the quality management guru Joseph M. Juran discussing process-improvement principles, it clearly applies to policies and discipline, especially when considering improving your retention outcomes.

As an HR professional, I know many employment policies have been created in response toward resolving minor behavioral issues for a very small number of employees. Now is the time to consider separating the important policies, ones that have a direct relationship to business strategy — such as significant risk mitigation — from those policies that might be outdated or restrictive in nature without offering any material business advantage. When you find a policy no longer has a clear genesis to either of the two questions above, perhaps you should consider sunsetting any such policy.

For another perspective on employee discipline, download the white paper from employment attorney Heather Bussing, “Problem People: What U.S. Employers Should Know About Employee Discipline.”

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