You have accepted that you made a hiring mistake when you hired Jason two years ago. He is a smart inside salesperson but he complains about everything from the brand of his laptop to the location of the water bottles in the break room. It is impossible to discuss problems with him because he is hypersensitive to criticism and becomes defensive. He puts you off whenever you ask for progress reports, blames co-workers when customers complain about an order, and always calls in sick on inventory day. You decided to use your at-will privilege. No problem. You had his check prepared and called him to the conference room. You were ready.

You recited exactly what you were coached to say, “Jason, we have decided to make a change. We are ending your employment with our company today. I have your check here, which includes two weeks of pay in lieu of a notice. Sandra will help you with your personal things.”

When Jason pressured you to explain why he was being fired, your only word was, “Performance.” At the end of the day, you were feeling good about ending that bad relationship, but in a few days, phase two of this termination appeared.

Managing the people process is neither simple nor easy. There is much to know, plan, and execute to avoid time-consuming, worrisome, and expensive post-employment problems. After such good planning, what could cause more problems with Jason? How is it possible that Jason qualified for unemployment? He has also demanded a year’s pay because his offer letter said he was paid an annual salary. He filed a complaint with the Wage & Hour Division of the Department of Labor for failing to be paid overtime. Finally, he sued the company for wrongful termination because he did not have a performance review. What?!

Ten Common Mistakes Explained

When you look at 10 common mistakes distributors make when managing employees, it will be clear what you should have done differently.

1. Guarantee a new employee a year’s pay

When you sent Jason his offer letter, it clearly stated you would pay him x-amount of dollars per year. You did not say your payroll is bi-weekly based on hours worked. You did not say he would receive a weekly salary. You promised to pay him by the year and now he wants his year of pay. Can he make that stick since he has only worked three weeks into his third year? Repeatedly, employers have been told that we must pay what we promise. The offer letter is a commitment, and it is very important to craft the language to avoid promising any pay past termination.

2. Pay salary and no overtime to wrong employees

Whether or not an inside salesperson is exempt from overtime is contentious. The Department of Labor will pick that job apart to make certain it qualifies to be exempt. Some inside salespeople are exempt and some are not. A large, respected salary survey company lists 53 percent exempt and 47 percent nonexempt. If Jason makes his case that he was just a sales clerk with a fancy title, he can be paid back pay for all of the extra hours he has worked while he was with you.

3. Skip the required annual review

When Jason pressed you for the reason you terminated him, you said it was for performance. In your employee handbook, you state that employees will have an annual review. But, the branch manager did not give Jason a review last year. Given that Jason was terminated for performance, he is contending that you had no right to terminate him because no one reviewed his work and told him his performance was unsatisfactory. If you say you will give a review at a specific date, then you are vulnerable when you try to terminate people for poor performance and who have had no review.

4. Charge employees for mistakes

You remember getting a nice little check from the fast food restaurant where you worked as a student because your manager forced you to pay for cash register shortages. Never would you make the same mistake with your employees because you know it is unlawful to force employees to pay for shortages and breakage.

5. Ask for a non-compete for nothing

Jason signed his non-compete before he started to work and cannot claim he was required to sign after he was already employed. Since a non-compete agreement is a contract, requiring the employee to sign it after starting to work requires an incentive. Otherwise, it may be viewed as invalid.

6. Talk too much at termination interview

You used your at-will and told Jason he was being replaced. That should have been the end of the conversation. Adding that the termination was the result of performance opened the door for Jason to claim he was discharged for cause and he had not been given a timely review to address his performance issues. If you wanted to replace him without cause, then it was inappropriate to change the reason in the middle of the termination interview. When using the at-will privilege that is allowed in your state, it is unnecessary to give a reason. It leads to more problems.

In addition to these common mistakes, a few more deserve some space here.

7. Fail to inspect what you expect

It is a common problem to let jobs manage themselves. Failing to provide supervision and feedback sends a message to the employees that no one cares and there will be no consequences for lack of productivity and poor performance. This is an especially serious problem when the employees are in a branch and the manager is located at a different site. In addition to performance issues, inventory losses from theft, improper discounts, and giving merchandise away, will play havoc with profits.

8. Do one thing and say something else

Employees expect their owners and managers to exercise managerial control. They lose respect for management that distributes work rules they do not enforce, use situational ethics to protect their favorite employees, and set a poor example of leadership.

9. Fire people who quit

When an employee fails to report for work for three days and does not call to report the absence, many distributors terminate the employee. There is no need to fire employees who quit and it creates more problems. Just list the employee as a voluntary quit — abandoned the job. There is a generally accepted standard in business that an employee has an obligation to protect his/her employment. Failing to show up or notify the employer of absence shows a willful disrespect for the employer and the business. If the employee files for unemployment benefits, the unemployment hearing officer is very likely to agree with you that the employee forfeited the job.

10. Asked the wrong questions at the interview

As you ruminate over the hiring mistake you made with Jason, you think about the initial employment interview and ask yourself what cues you missed. You spent an hour with Jason but most of the time was spent talking about your college football team because both of you went to the same school. You are sure you asked enough questions to make an informed decision, although in retrospect you accept you should have used a more structured employment procedure, including interview questions that were designed to help you make the most informed decision. Asking clearly defined, job-specific, interview questions increases the probability the interview will not become a social event and ensures key questions will not be missed.

 Many of these ten management mistakes end in expensive legal problems, loss of goodwill, morale problems, and damage to the company reputation.   

This advisory was written by Nancye Combs, HR and Organizational Management consultant for HARDI. She is also a human resources consultant with HR Enterprises Inc. The article is not designed to substitute for the services of a competent legal advisor. Visit www.hrenterprise.com.