The wrong employee can have you putting out a lot of fires. Read through our case studies so you can avoid some costly mistakes.
The theme of last year at James River Landscaping could have been something like “the year of opportunistic individuals,” says Cerise Estep, director of human resources for the Newport News, Va.-based firm.
In 2012, more staff had failed drug screenings during random drug testing. And as the company worked to hire only local crewmembers, shifting away from the H-2B program, Estep says some real doozies walked in the door for jobs. Most of the time, gut instinct prevented any major hiring mistakes. But not all of the time.
James River’s workers compensation insurance got a real workout last year, thanks to several employees who took advantage of claims, and one in particular that dragged a case out for over a year. Estep was preparing for a court hearing during this interview.
“If we don’t do a really good job making sure the people we hire align with our leadership behavior and core values, then we are setting ourselves up for disaster,” Estep says after the fact.
Estep remembers hiring this particular crewmember, who was a drain on time, morale and money. “I tend to be an individual and make hiring decisions based on my gut reaction,” she says. Her gut was telling her something wasn’t quite right. “I remember thinking, ‘Hmmm…’ and I should have kept digging. But every once in a while I let my optimism get the best of me and I talk myself into decisions.”
But no one could have predicted this scenario. The crewmember and others were in a Ford F-550 pick-up truck with a trailer attachment, stopped at a light, when a Jeep rolled into the back of the company vehicle. The James River driver got out, called a manager and no damage to the truck or crew was reported. Everyone returned to work, no problem.
Then, several days later, one of those workers presented an emergency room bill and said, “Here’s my workers’ comp bill for that accident I was in.” What? Estep was shocked. “There was such a delay from the time the accident occurred and when the worker came back with the bill,” she says. “And all of the individuals said they were fine, nothing’s hurt.”
It was as if a bell went off in this worker’s head and he thought: Wait a minute – there’s an opportunity here. From the beginning, there were paperwork problems. For one, the worker did not go to an approved physician, so James River sent him back to one of its approved doctors. The worker was released to light-duty work, and the company found jobs to keep him busy. “It’s hard to provide light-duty in landscaping, but we are all committed to getting people back to work, earning income, providing for their families,” Estep says.
The employee refused to return to work, so based on company policy, he was terminated. What Estep learned: “Just because we terminate someone doesn’t mean they go away.”
He expected to collect unemployment, he continued calling the company, calling their workers’ comp provider and sending letters. “It was a drain on everyone,” Estep says. And the insurance company paid all of the medical bills. As soon as he was released to full-time work, he sued James River for general liability. “As soon as our insurance company sent over a leeway waiver and his medical bills were covered, he withdrew his suit and refiled it through workers’ comp, so he is currently working with an attorney.”
James River completely retooled its employee handbook following this event. Now, employees must sign the handbook, and a signature sheet verifies that they understand its contents including the company’s workers’ comp policy. Estep says the company always required employees to sign a form saying they read the book, “but we were aloof when making sure those signature sheets came back.” Not anymore.
Aside from this case, Estep says other prospective employees have dodged panel physicians in hopes of avoiding drug screenings. “From a hiring perspective, trust your gut instinct,” she says. “Protect your standards.” As for this year’s theme, Estep is thinking: “If today is better than yesterday, then we are doing a great job.”
As a growth consultant working with companies of all sizes, in all industries, Jason Cupp has seen the good, bad and ugly. Usually, hiring mistakes can be avoided by following a couple of key tenants. First, be slow to hire and quick to fire. “Make sure you check references,” he says. “A shotgun hire will usually end up biting you in the behind.” Second, beware of friends and family – and run them through the same hiring process as you would a perfect stranger.
Here’s why. Cupp shares a sticky situation where the wife/bookkeeper was essentially stealing money from her husband’s business to maintain the family’s overabundant lifestyle. She didn’t’ want to reveal to her husband that they didn’t have the money to continue their lifestyle,” Cupp says. He discovered this dirty family secret when he was hired to analyze the company’s financials. The husband felt his margins should be higher.
Upon closer examination, Cupp figured out exactly why some expense categories were unusually high. The wife was running personal expenses through the business and then miscategorizing the expenses. For example, the children’s private school bills were flagged as “computer equipment.”
“This was life-changing for the couple because the husband couldn’t believe his wife was stealing from his own business,” says Cupp, who was immediately fired from that consulting job after he uncovered the sad reality.
At another company, Cupp evaluated the administrative efficiency of the business. The administrator was logging too many hours for that size of a company. And, Cupp realized that there were lots of accounting mistakes, such as loan payments being miscategorized.
Turns out, the owners had hired a family friend who they trusted. “The truth is, the person was incompetent for the job,” Cupp says. Because of this, the worker spent more time trying to complete tasks. Plus, this person really needed the job from a financial standpoint and was generously logging hours. The end product was a messy balance sheet and incorrect profit and loss statements. “There were a lot of adjustments we needed to make because this team member just didn’t know how to do (the accounting),” Cupp says.
The business owners were so busy they didn’t realize what was happening in the office. Besides, they trusted this person. “It was a hard decision to make to ask this team member to leave because they were a close friend and their families spent time with each other,” Cupp says. “Even their kids played together, so it was difficult to say, ‘You know what, as a friend, we have to end this agreement, and we have to find someone else to do this position,’ while trying to save the friendship and grow the business.”
The situation has a positive outcome. The company hired an office administrator who has ramped up efficiency in the office.
“They got that key person in there who isn’t a friend, who has the credentials and has a background in the landscape industry and has been a great leader in this business and took over the books,” Cupp says.
Think twice before hiring family, Cupp warns. Are the people you know and love really qualified for the job? “Stick with your hiring process no matter who the candidate is,” he says.
Family and friend affairs
Chris Maroun doesn’t subscribe to the theory that you should avoid hiring family or friends. But by bringing on relatives and recruiting buddies, he has learned that the business relationship will thrive only if expectations are set and company standards are upheld. In other words, no turning a blind eye to sub-par performance, and no excuses if the work just isn’t getting done like it should.
“It takes a very understanding relationship to bounce from employer/employee from 9 a.m. to 5 p.m. and best buds on nights and weekends,” Maroun says. “And, the truth is, no matter how close a relative or how good a friend, (no one) will care about your business the way you do.”
Early on in business, Maroun hired a cousin who wanted to move with his family from South Africa – Maroun’s native country. He knew his cousin was a solid mechanic, and in fact, he turned out to be a real small engine whiz. His wife was a CPA and Maroun brought her into the administrative fold at the business.
“Because they were new to the country, they shared meals with us, weekends and every family event we had together,” Maroun says. “In short time, this started to take a toll on the other employees, who felt that their seniority had been usurped by unqualified family members. That was always an underlying tone.”
And this cousin grew comfortable and began taking advantage of the family relationship. “He got lazier,” Maroun says. “And the more time passed, the more they felt they were entitled to, and this went on for years until they decided to start their own business.”
The problem was, Maroun never laid out expectations with this cousin and his wife, and the two actually were treated differently because they were family and new to the country. So, years later when a close family friend from South Africa wanted to move his family to the United States, Maroun took a different approach.
Maroun had worked with this family when he graduated from college. “These guys were hard workers, and to this day, I attribute a lot of things (hard work and ethics) to what I learned while working with them,” he says.
Maroun hired his friend, but they had an honest discussion about what the job entailed and how the relationship would work. “We kept it professional and we sat down and spoke about any issues rather than leaving it on the table,” Maroun says.
The friend worked for Maroun for about 10 years, put his kids through college, and eventually moved on to start his own business. The two remain friends and agree that it was a great professional relationship.
“These are two contrasting scenarios – one worked out horribly and the other worked out absolutely perfectly,” Maroun says. Open communication made all the difference.
“Be honest with yourself from the get-go,” Maroun says. “Don’t hire a relative or friend that you would have trouble holding accountable for their performance, reprimanding or letting go if it came down to that.”
Maroun suggests testing yourself before hiring a friend. Consider whether you’d be able to terminate this person if he or she was not meeting employment expectations. “You must be confident that you can hold that person accountable for their performance, and that you can fire them if you have to,” he says. “A lot of people would say, ‘I could never do that to a friend.’ If that’s your answer, you should not hire the person.”