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Hub You - Use The Right Risk Management Framework For End Of Employment Decisions
Your organization is doing well if 85 percent of your donors renew their support each year, according to Stanley Weinstein in his book The Complete Guide to Fundraising Management. To put it another way, you are doing well if no more than 15 percent of your donors fall away each year. So do the math. If your organization has 10,000 active donors, and if 8,500 (85 percent) of them renew each year, then 1,500 (15 percent) of them will drop off every year. Ouch. This is the main reason that you need to create and manage a well-planned, annual donor acquisition program. You cannot afford to simply mail to your existing donors only. You need to replace the donors who never renew. Without a steady influx of new donors, you will be moving backwards each year, not forwards. Here are some tips for running a successful annual donor acquisition program. 1. Know your attrition rate Naturally, if you are to replace the donors who fall away each year, you need
AUWIEDERSEHEN SCENARIO
“Auwiedersehen” is a German word that is often used when people depart. But Auwiedersehen is not “Goodbye.” It literally means, “Until we mee
I remember way back around a year ago, about exactly a year ago, I was talking with my workers that pack envelopes. those times, I was making many checks per bi-month. There were checks that were SO high that was somewhat the peak of my business, that we worked every other day just packing envelopes about 6-7 hours a day.I think I told these to my workers one day when I was gonna give the paychecks.. I think I was giving bonuses that time, I cant really remember..But I explained to them during my speech about it..I told them that I see money differently than most people especially at that point of my life where my business was just unbelieveable. I told them that for me, money is just an award for my hardwork... I made an analogy to compare it with basketball... Say for example we because the champions in our high school basketball team, we then earn a big shiny gold trophy as a reward... But the trophy is really nothing, what really matters is the fame and pride of being champions.. it is the hard work
Despite low unemployment rates in the United States, there is a sense that corporate layoffs and employee layoffs will once again take place. One level of decisions facing leaders is “who stays/who goes.” A second level of decisions revolves around “how do we treat people who leave?” This second level of decisions puts leaders in a dilemma between being generous to people that you are harming versus being prudent with owners’ money during times of economic stress.
At one end of the termination continuum, many associates who enter partnership track at the international law firm of Bingham McCutchen may not be elected to that role. Whatever their reasons for leaving the firm, one of the things that make Bingham stand out is that it considers former associates to be future resources. End of employment is the start of membership as Bingham McCutchen Alumni. The firm goes out of its way to assist departing professionals and maintains an active alumni group.
At the other end of the employment termination continuum are companies that treat departing employees with the same corporate rationale as they treat office refuse: Remove it with as little cost as possible and do not involve us in litigation. We don’t care what happens to our refuse or our former employees after exiting the facility.
These two approaches represent extreme ends of attitude towards end of employment decisions. Where does your company fit? Where should it fit?
The purpose of this article is to provide leaders with a framework for helping them decide where on this continuum their company ought to be. And we want to provide a framework with a more business-like rationale than, “It’s nice to be nice.”
In planning for terminations, it might be useful to look at the threat analysis framework developed by the 2005 Nobel Prize for Economics winner, Thomas C. Schelling. Schelling is professor of Economics at the University of Maryland. He received his Award for applying game theory to conflict. His focus was on the weapons issues but we have applied his ideas to the design of executive termination packages.
Schelling says “uncertain retaliation is more efficient than certain retaliation” when bargaining and “the capability to retaliate is more useful than the ability to defend.” Now let’s get practical.
GOODBYE SCENARIO
As a verb, “Goodbye” denotes parting. Saying “goodbye” assumes that once employees leave the building, they will never be a factor for the firm’s future. The relationship was transactional and the transaction is now over. If the firm defines termination as a goodbye scenario, the firm should be guided by a business model that says, “What’s the least expensive way of terminating this relationship consistent with reducing legal risks?”
AUWIEDERSEHEN SCENARIO
“Auwiedersehen” is a German word that is often used when people depart. But Auwiedersehen is not “Goodbye.” It literally means, “Until we meet
We take so much for granted in this world. We expect everything we buy to work perfectly and when it doesn't, we throw a tantrum. Well, can you imagine what the programmer who creates your medical billing software feels like when he fixes one bug and then another one pops up? What follows is a true story, which just goes to prove that the truth can sometimes be stranger than fiction.A medical billing software company was creating a new software package to bill UB-92 claims. Up until this point in time, they had only done NSF 3.01 specifications. So the first thing they had to do was get the specifications from the carrier and send them off to programming so that the programmer could begin work on them.A few weeks passed and the programmer had the specifications completed and was ready to test the module. So they set up some test claims and transmitted them to the carrier. When the test results came back, they showed that there were several fields that were transmitted in error. No problem. The programm
At the other end of the employment termination continuum are companies that treat departing employees with the same corporate rationale as they treat office refuse: Remove it with as little cost as possible and do not involve us in litigation. We don’t care what happens to our refuse or our former employees after exiting the facility.
These two approaches represent extreme ends of attitude towards end of employment decisions. Where does your company fit? Where should it fit?
The purpose of this article is to provide leaders with a framework for helping them decide where on this continuum their company ought to be. And we want to provide a framework with a more business-like rationale than, “It’s nice to be nice.”
In planning for terminations, it might be useful to look at the threat analysis framework developed by the 2005 Nobel Prize for Economics winner, Thomas C. Schelling. Schelling is professor of Economics at the University of Maryland. He received his Award for applying game theory to conflict. His focus was on the weapons issues but we have applied his ideas to the design of executive termination packages.
Schelling says “uncertain retaliation is more efficient than certain retaliation” when bargaining and “the capability to retaliate is more useful than the ability to defend.” Now let’s get practical.
GOODBYE SCENARIO
As a verb, “Goodbye” denotes parting. Saying “goodbye” assumes that once employees leave the building, they will never be a factor for the firm’s future. The relationship was transactional and the transaction is now over. If the firm defines termination as a goodbye scenario, the firm should be guided by a business model that says, “What’s the least expensive way of terminating this relationship consistent with reducing legal risks?”
AUWIEDERSEHEN SCENARIO
“Auwiedersehen” is a German word that is often used when people depart. But Auwiedersehen is not “Goodbye.” It literally means, “Until we mee
Within the corporate world, there are the ‘living dead’, which are the sick companies that go on a wretched existence, without any hope of turnaround. These companies need a miracle such as a resurrection from the dead. Many of these companies need a change of DNA or business models. They are technically commercially insolvent and the owners will face the fate of bankruptcy if they close down the operations. Therefore, these ‘living dead’ just hang around, waiting for the death sentence. For some, the death sentence may take years before the owners decided not to throw in good money anymore to chase after bad money. For others, the bubble keeps getting bigger such as the construction companies in Singapore that continue to clinch loss-making projects to cover up for the earlier losses.Some of these ‘living dead’ are large companies with huge amounts of bank debts. However, the banks are unwilling to wind up these companies, as some one said: When you owe the bank lots of money, you owe the bank.”
These two approaches represent extreme ends of attitude towards end of employment decisions. Where does your company fit? Where should it fit?
The purpose of this article is to provide leaders with a framework for helping them decide where on this continuum their company ought to be. And we want to provide a framework with a more business-like rationale than, “It’s nice to be nice.”
In planning for terminations, it might be useful to look at the threat analysis framework developed by the 2005 Nobel Prize for Economics winner, Thomas C. Schelling. Schelling is professor of Economics at the University of Maryland. He received his Award for applying game theory to conflict. His focus was on the weapons issues but we have applied his ideas to the design of executive termination packages.
Schelling says “uncertain retaliation is more efficient than certain retaliation” when bargaining and “the capability to retaliate is more useful than the ability to defend.” Now let’s get practical.
GOODBYE SCENARIO
As a verb, “Goodbye” denotes parting. Saying “goodbye” assumes that once employees leave the building, they will never be a factor for the firm’s future. The relationship was transactional and the transaction is now over. If the firm defines termination as a goodbye scenario, the firm should be guided by a business model that says, “What’s the least expensive way of terminating this relationship consistent with reducing legal risks?”
AUWIEDERSEHEN SCENARIO
“Auwiedersehen” is a German word that is often used when people depart. But Auwiedersehen is not “Goodbye.” It literally means, “Until we mee
As an entrepreneur, information is the base of all profits. Knowing how to get the right information about your projects and doing it quietly is like money in the bank.1) Networking is number one on the list. A good working relationship with a selection of peers can really help in finding and assessing projects. It takes time to develop a good network of hand picked people that you commonly keep contact with. Trust is a big issue but more importantly quality of positioning is more of an issue. By positioning I mean how that person fits within the relationship of the type of project you do and where they fit within that scheme. For example a rich source of contacts is the humble sales person or broker. They are easy to meet and very willing to do business with you even if you aren't buying anything from them initially. Real estate agents, Car dealer principles and Marine brokers all fit in this group. It depends on your market, your niche of course.Experts and valuers are also excellent quality positioning candi
Schelling says “uncertain retaliation is more efficient than certain retaliation” when bargaining and “the capability to retaliate is more useful than the ability to defend.” Now let’s get practical.
GOODBYE SCENARIO
As a verb, “Goodbye” denotes parting. Saying “goodbye” assumes that once employees leave the building, they will never be a factor for the firm’s future. The relationship was transactional and the transaction is now over. If the firm defines termination as a goodbye scenario, the firm should be guided by a business model that says, “What’s the least expensive way of terminating this relationship consistent with reducing legal risks?”
AUWIEDERSEHEN SCENARIO
“Auwiedersehen” is a German word that is often used when people depart. But Auwiedersehen is not “Goodbye.” It literally means, “Until we mee
Customer service -- especially when it delivered both professionally and consistently -- will beat price both as a customer retention and as a customer attraction tool just about every time.But customer service is not always what its name would imply.Like you, I observe many so-called service providers performing their day-to-day activities: store clerks, automobile service writers, airline ticket agents, airline gate agents, rental car agents, hotel desk clerks, all kinds of home service personnel such as plumbers and electricians, plus quite a few salespeople who claim to offer their customers outstanding customer service.Even when I observe customer service being delivered, it’s frequently not delivered cheerfully.“Well, yeah, we can get out there and pick it up, but we’re pretty busy right now. It’s Monday morning, you know. How big of a hurry are you in?”“Sure, we can make the change, but it’s going to cost you an extra $100.”After purchasing some new garage doors yesterday,
AUWIEDERSEHEN SCENARIO
“Auwiedersehen” is a German word that is often used when people depart. But Auwiedersehen is not “Goodbye.” It literally means, “Until we meet again.” Saying “Auwiedersehen” assumes that once employees physically leave the building, they have only physically left the building. They can continue to be factors for the company’s success or failure. For example:
Once their non-compete agreements end, they may join other firms in your industry. Will they be opponents of your M&A plans or attempts to foster industry-wide standards or strategic alliances?
As you seek to attract new talent to your company, are the people you terminated considered thought leaders in your physical or industry community? Will they caution new talent about joining?
Once their non-compete agreements end, they could work for customers or potential customers and encourage customers to go elsewhere.
Each of these scenarios assumes capability of retaliation plus degrees of uncertainty about that retaliation. This is the Schelling scenario. Signing a Waiver of Rights either does not reduce these risks or reduces it for a defined period of time. From a company perspective, the two questions are:
• How much higher than zero is the probability of retaliation?
• Does it matter?
ARE COMPANIES EMPLOYING TOO NARROW A PERSPECTIVE ABOUT RISK MANAGEMENT WHEN MAKING TERMINATION DECISIONS?
With many of our client companies, termination discussions often involve representatives from Finance, HR, and Legal meeting to discuss risk management and cost factors. All three functional perspectives are important. They are also incomplete.
In examining risk factors, the voice of marketing and strategy need to be at the table.
We employ a framework like the one below to help structure the conversation.
TERMINATION THREAT ANALYSIS ONCE NON-COMPETITION AND NON-DISPARAGEMENT AGREEMENTS LAPSE.
Rate each factor on a 0-9 scale. A score of “0” means that the factor does not apply. “1” means “minor threat” whereas “9” means a “significant threat.”
SCORE FACTOR
Ability to harm M&A objectives over the next 36 months.
Ability to harm strategic alliances over the next 36 months.
Ability to negatively influence sales over the next 36 months.
Ability to negatively influence talent we seek to hire over the next 36 months.
**
We used 36 months as a framework because many critical business decisions in building product lines, acquiring companies, or being acquired require that type
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