Work Matters

Of ethics and Enron

The Skilling opinion from SCOTUS last week prompted me to pull out my Enron Code of Ethics handbook (July 2000) and flip through it. It’s a reminder that words — as insightful or inspiring as they may be — are just words. Here is one nugget that seems topical: “If your securities transactions become the subject of scrutiny, they will be viewed after the fact with the benefit of hindsight. As a result, before engaging in any transaction you should carefully consider how regulators and others may view your transaction in hindsight.” There is also a vision-and-values statement listing the four corners of the company's ethical foundation: respect, integrity, communication, excellence. Here is the handbook’s definition of respect: “We treat others as we would like to be treated ourselves. We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness, and arrogance don't belong here.” I keep on my desk what I call the "Enron ethics cube," an Enron paperweight emblazoned with the four values. (Drop by for coffee, and I'll show it to you.) I do so to remind me that words are just words. Without the top brass living the words through their actions, the words morph into mushy slogans or, worse, a companywide joke. The late Ken Lay signed the introduction to the handbook. Here’s part of the last paragraph: “We want to be proud of Enron and to know that it enjoys a reputation for fairness and honesty and that it is respected. . . . Enron's reputation finally depends on its people, on you and me.” That's exactly right.

What millennials can teach about microfeedback

Do you have a "millennial" in your work life? They are the cohort born between 1977 and 1997, the ones 33 years and younger. An article in the May issue of the Harvard Business Review, "Mentoring Millennials" by Jeanne C. Meister and Karie Willyerd, is full of interesting advice on how to do so. Here is one: evaluations that are daily and done Twitter-like in 140 characters. According to the authors’ research, this cohort wants constant feedback and information on how their career is or is not progressing — no formalized, Kabuki-like annual review for them. When advice is brief and timely, it is useful. In practice, this is an on-demand assessment system, with the employee asking questions of the supervisors, such as: "Was my presentation relevant?" or "What can I do to be more successful at the company?" The answers from bosses are limited to 140 characters, so the bosses carefully must think through their responses for them to be useful. Since employees usually pose the questions in close proximity to an event (such as a presentation), the answers are timely, not dusty. It’s called microfeedback. I like it.

Why and how to choose caddies and local counsel

I was watching the U.S. Open this weekend. Dustin Johnson did very well. Commentators said he had one big advantage: a local caddy who knew the course and could advise him whether to hit the ball to the right, the left or straight down the middle. That caddy is at that course every day. All of that got me thinking about hiring local counsel and explaining to a corporate client in New York why it needs another lawyer in Harlingen, Marshall and places in between. First, the how of picking local counsel. Try a simple request for proposal, asking potential lawyers: How well do you know the judge? Did you or your firm support the judge in the election? How much did you contribute? What litigation experience do you have in that court? If we do not hire you, who should we hire? Second, the explanation to a far-away client. I like to use the story of the woman with a squeaky floor. She hired carpenter after carpenter, but no one could fix it. it was driving her crazy. One day, she hired a guy who came in, looked around carefully and pounded a nail into a section of the floor. It took 10 minutes. She asked how much, and he said, "$100." She retorted that he was only there 10 minutes and demanded a breakdown of the bill. He took out his pencil and wrote the following: Pounding in nail: $1; knowing where to pound nail: $99. It is all about knowing where to pound the nail.

The ADA, commuting employees and reasonable accommodation

Claim or no claim? Employee has an eye disease, making her blind in one eye. She can’t see at night, which makes it hard for her to drive to work. She therefore asks her manager to move her off the night shift and onto the day shift. He says no, and she sues for failure to reasonably accommodate a disability. Answer: She has a claim. These facts and the following were sketched out by the 3rd U.S. Circuit Court of Appeals in its opinion in Colwell v. Rite Aide Corp., et al. The 3rd Circuit reversed a summary judgment for the employer, which convinced the trial court that employers need not provide a reasonable accommodation in order for an employee to get to work. The 3rd Circuit said the plaintiff was not asking for help in the method or means of her actual commute. Rather, she was asking for an accommodation done not on the commute but in the workplace: namely, scheduling shifts. The 3rd Circuit wrote: "We hold as a matter of law that changing [her] working schedule to day shifts in order to alleviate her disability related difficulties in getting to work is a type of accommodation that the ADA contemplates." So, the court sent the employee's case back for a trial on the discrete Americans with Disabilities Act claim of discrimination for failing to reasonably accommodate.

Claim or no claim?

Let's play claim or no claim. The facts: A man gets an offer letter for the position of senior vice president. It states his vacation days will be consistent with standard company policies. He claims a separate, verbal promise was made to him regarding vacation benefits that is not embodied in the offer letter. He is later terminated and sues for $40,434.87 in payment for unused vacation time. The employer argues in its summary judgment that the handbook controls, the handbook contains standard company policies on vacation pay, the employee signed a document acknowledging he received the handbook, and the handbook provides for much less in vacation benefits than the employee claims he was verbally promised. Claim or no claim? According to the May 6 opinion in Robinson v. Old World Industries Inc., from which these facts are taken, there is a claim. Why? The court reasoned that the offer letter made no reference to the handbook, and the handbook receipt signed by the employee says only that he received the handbook, not that he agreed to be bound by its terms. Thus the employee is not cut off at the pass because of the offer letter or the handbook. Whether a verbal promise was made is a question of fact for the jury. Summary judgment denied. How to avoid this in the future? I guess the employer must cross-reference the offer letter to the handbook and include language in the handbook that the employee agrees to its terms.

The statute of frauds pops up in a case, not just a law school exam

Remember studying the statute of frauds in law school? It was pretty esoteric, but it pops up every once in a while, as evidenced by the 5th U.S. Circuit Court of Appeals’ March 15 decision in Sullivan v. Leor Energy LLC, et al.The 5th Circuit sketched out the facts: Sullivan goes to work for Leor. A written employment agreement is drafted with a fixed term of employment of two and a half years, albeit at will, with or without cause, but it is never signed. Sullivan is later terminated; he sues for breach of contract. Recall that the statute of frauds bars enforcement of a contract that cannot be performed within one year of its making unless the contract is in writing and signed by the party who makes the promise. The trial court said that, given these facts, the statute of frauds barred the contract claim. From what I gather from the court's opinion, Sullivan essentially argued: Not so fast! The contract was at will, and I could be terminated without cause — even in year one of the contract — and thus it is a contract for an indefinite term and falls outside the statute of frauds. The 5th Circuit disagreed: "Under Texas law, a contract for a stated term longer than one year is not taken out of the statute of frauds due to contingent events set forth in the contract, including termination by a party.” So, Sullivan loses because the agreement was for more than a term of one year and the company did not sign it. I guess law school does come in handy.

Why it's hard to hire great employees

The business section of Sunday's The New York Times features Nvidia president and CEO Jen-Hsun Huang in its Corner Office Q & A. He has an interesting take on hiring. He says hiring great people is hard because there is really no way in the hiring process to know how people will handle adversity. Yes, he notes, you can ask about situations they have handled where they were tested, but he correctly observes that "you never really know the intensity of that adversity." How did he learn to handle business curve balls? It was his experience in the hospitality industry as a waiter. The lesson: The world is often chaotic, and you must learn that you can't exercise 100% control over the environment. (Here are my lessons learned from working in the hospitality industry.) Another piece of advice I liked: Always be intellectually honest. His take: "Without intellectual honesty, you can't have a culture that's willing to tolerate failure because people cling too much to an idea that likely will be bad or isn't working and they feel their reputation is tied up in it. They can't admit failure. You end up putting too much into a bad idea and then you risk the entire enterprise."

Proximate cause and the FMLA

Consider a new FMLA case, Breeden v. Novartis Pharmaceuticals Corp. Does the plaintiff win or lose? Here are the facts from the U.S. District Court for the District of Columbia's opinion. The plaintiff works for Big Pharma as a sales rep. She takes FMLA leave in 2005. She comes back to work but gets a smaller territory. In 2008, her territory is merged with another salesperson's territory, and she gets fired because her territory is the smaller of the two. Summary judgment denied, case goes to trial, and jury finds for her. Does the judge take it all away? Yes. Why? Causation. Under the FMLA, an employer is on the hook for compensation and benefits lost "by reason of" an FMLA violation. So the question is whether the sales rep was terminated and thus lost compensation by reason of the 2005 decision to provide her a smaller territory. The court says that "by reason of" involves a proximate-cause analysis. The courts zeros out the jury verdict and holds, "There is no evidence that the 2008 realignment was foreseeable from 2005 (ex ante), and because the 2008 realignment was a substantial intervening cause, Breeden's termination cannot be said to have been the direct result (ex post) of the 2005 realignment." What's the phrase from Cornelius Ryan’s book about the battle of Arnhem — "a bridge too far"? That about sums it up.

Want to change behavior? Change what you measure.

I am a big fan of Dan Ariely. He writes cutting-edge work on issues of cognitive theory and applying them to real-time, real-life issues. (I will be swinging by the bookstore to get his new book, "The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home." Can't wait to read it.) Anyway, he has a column in the Harvard Business Review; for June it's titled "You Are What You Measure."In it he talks about a simple yet profound truth: Human beings adjust their behavior based on the metrics by which they are evaluated. He illustrates his point by looking at CEOs of large companies who have lots of do re mi. Their wealth means any number of factors could motivate them, yet only one seems to do so: stock price. Why? Here is Ariely: "The answer is almost uncomfortably simple: CEOs care about stock value because that is how we measure them." He argues for imposing other metrics that focus on the long term:

• How many new jobs has the company created?
• How strong is the company's pipeline of new patents?
• How satisfied are the company's customers and employees?
• What's the level of trust in the company's brand?

Are these harder to measure than stock price? Ariely says yes, but he nails the really important point: "[I]f we measure just what's easy, we will maximize just what's easy." Firms, are you clued in?