By Philip J. Kavesh, J.D., LL.M. (Taxation), CFP®, ChFC, California State Bar Certified Specialist in Estate Planning, Trust & Probate Law | Volume 2, Issue 5 (May 2014)
Dealing properly with employees is yet another key challenge to running a smooth-operating practice. And, once again, this is the kind of stuff we never learn in law school or any other continuing education course. Unfortunately, I have made all of the following mistakes and have had to learn the hard way. By reading this article, I hope that you will now be adequately warned and can hopefully avoid making the same mistakes!
Mistake #1: Quick to Hire, Slow to Fire
No one relishes the thought of firing someone (unless you’re Donald Trump, of course!). This “fear of firing” often leads to major practice breakdowns that could have been significantly reduced by “cutting your losses” earlier.
The good news is, if you have given an employee adequate, clear, periodic feedback along the way, the termination process does not have to be painful or confrontational (or may not even become necessary at all!).
Mistake #2: Neglecting the Right Employment Process that Begins with Hiring
Too many mistakes are made along the way – – during and employee’s hiring, training, supervision and accountability – – that cause discipline or termination to later occur. Hire the right personality fit for a job (attitude is more important than aptitude!). Have a clear duties list and a definite training schedule before the person arrives to work. Utilize checklists and procedures manuals during the training process. Have the proper person in your organizational chain of command (probably not you!) do the daily supervision. Give the employee constructive feedback weekly, monthly and semi-annually (at their formal Performance Review Meeting).
There’s lots more to establishing a system to help ensure employees work out rather than get kicked out (but that’s beyond this article).
Mistake #3: Ignoring Red Flags
Maybe, in the back of your mind, you know the person isn’t working out, but you just don’t want to deal with it. Or, as I have seen happen more often, you just miss or ignore the red flags that should tell you that discipline or termination is warranted.
The most common “red flags” to be on the lookout for include, but are not limited to: work falling through the cracks; work effectively “delegated” upward or downward by or around the employee; trying to fit the position to the employee or creating a different position; the employee repeatedly late on work assignments; late or absent in meetings; late or absent at work; or the employee is a gossip or drama-creator, generating a great deal of negative energy in the office.
I can tell you, these problems don’t get better over time!
Mistake #4: Failure to Have a Warning Policy and Follow It
It’s key to proceed with discipline and termination in more people-friendly stages, each increasing in seriousness, so the employee “gets it” and has a fair and reasonable opportunity to self-correct.
For example, the first step may be a verbal warning. Second step a written warning. Third step, termination.
This formalized process is also important in order to avoid labor law violations or a subsequent wrongful termination lawsuit. It’s important that you check with the labor laws in your area to make sure that you are compliant with the rules in your state when it comes to developing a disciplinary and termination policy.
Mistake #5: Not Having the Right Insurance
This mistake came as a big shocker to me. I had an ex-employee sue me for wrongful termination, upon grounds that had no merit at all. But, I still had to hire an attorney to defend the case, and even though I got the ex-employee to accept a small nuisance settlement, the total with legal fees exceeded $95,000!
Worse yet, only afterwards did I learn that I could have purchased a cheap “rider” to my office property and casualty insurance – – called Employment Practices Coverage – – that would have paid most of the cost of the settlement and legal fees! Yet, no insurance agent, business attorney or financial advisor had ever mentioned this to me!
Mistake #6: Not Keeping Good Records
It’s important for any business owner to keep records (a file) on each of his or her employees. This again starts with the time of hire and any paperwork that may be completed with that employee and any agreements or sign offs you may have. Should you ever start to see the red flags that may lead to discipline or termination of an employee, it’s good to document examples of any specific behavior (noting the days and times things may occur) and then keep detailed notes of any disciplinary actions that you may take, such as a verbal warning or any meetings you may have where you issue written warnings.
Keep a signed acknowledgement of any written warnings and be sure to have another person present in the meeting, such as an office manager, who can serve as a witness and as an additional note-taker. Any notes from you, the business owner, or the office manager, should be maintained in the employee’s file in case ever needed in the future.
Mistake #7: Not Holding a Firm Meeting
Almost immediately after any termination, you should hold a quick meeting with all of the remaining employees. This will avoid a lot of speculative gossip or rumors and work flow chaos that will often immediately ensue if you don’t head it off. Let the employees know the person was let go “because he/she wasn’t working out” (saying any more could become evidence to be twisted against you in a wrongful termination lawsuit). Let the employees know how the person’s work tasks and pending matters will be reallocated (so they understand the real impact on them). Also, be sure to let employees know if and when you intend to find a replacement to fill the fired employee’s position. This helps them know that there’s a “light at the end of the tunnel”.
This firm meeting helps maintain good firm efficiency and helps keep office morale up, especially at a time when it could otherwise be broken or shattered.
Whether you’re a lawyer, financial advisor or CPA, disciplining and terminating employees is never the “fun” part of running a business, but it is a necessary process needed in order to maintain a profitable and successful business. There are certainly more mistakes that practitioners make than I’ve listed here, but these are certainly among the most common mistakes. Unfortunately, I cannot go over all of them as that’s far beyond the scope of this article.
My hope with this article is that you are able to get something out of it so you can develop the perfect team of people to support you and your firm in its daily operations, and you can focus more on the things you love and enjoy doing!
WANT MORE HELP?
Lawyers went to law school to learn how to practice law, but so many estate planning lawyers are sole practitioners and are now responsible for running their own business. This includes managing the budget and finances, hiring and management of staff and associate attorneys, setting up various business systems and procedures, and also driving in new business with a clear marketing plan. All of the things necessary to successfully run a business and, ironically, all of the things that are not taught to lawyers in law school (and aren’t offered through many continuing education programs).
Now, you can get all of this and more each month with nationally renowned estate planning attorney, Philip Kavesh, for you and your entire office for one low price of just $149 per month (with a 12-month subscription) to Phil’s Monthly Practice-Building Program. >>MORE INFO
ABOUT THE AUTHOR
Philip J. Kavesh is the principal of one of the largest estate planning firms in California – – Kavesh, Minor and Otis – – now in its 33rd year of business. He is also the President of The Ultimate Estate Planner, Inc., which provides a variety of technical training, marketing and practice-building products and services for estate planning professionals. If you would like more information or have a question for him, he can be reached at email@example.com or by phone at 1-866-754-6477.
OTHER ARTICLES IN THIS ISSUE:
- TAX PLANNING:Frank Aragona Trust: What Now Constitutes Trustee “Material Participation”? by Robert S. Keebler, CPA, MST, AEP (Distinguished), CGMA
- FINANCIAL PLANNING: Stock Market Forecast by E. Dryden Pence III, CPM®, AIF®, LPL Registered Principal, CIO Pence Wealth Management Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
- ADVANCED-LEVEL PLANNING: Another Private Letter Ruling Approves NING Trust by William D. Lipkind, J.D., LL.M. (Taxation) & Steven J. Oshins, J.D., AEP (Distinguished)
- STAFF:The Three “D’s” of Being a Better Assistant (and More Efficient Assistant) by Kristina Schneider, Executive Assistant
- BASIC ESTATE PLANNING: Estate Planning for the Middle Class: Overcoming Myths with Reality by Matthew D. Blattmachr, CFP®, Trust Officer, Alaska Trust Company
ATTENTION COLLEAGUES: A CALL FOR ARTICLES
We are looking for estate planning professionals of all designations – – attorneys, financial advisors, life insurance agents, CPAs and any other kind of professional advisor that is servicing the estate planning needs and concerns of consumers – – to contribute articles to our newsletter. Our newsletter offer a variety of timely, practical and helpful advice to fellow estate planning professionals all across the country and across the board. If you are interested in writing an article for us, please e-mail your bio/CV and suggested topic to Kristina Schneider at firstname.lastname@example.org.
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