Employee Handbooks: Are They Really for All Employees?

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Your organization most likely has an employee handbook, a reference manual containing policies and procedures which communicates the rules of the workplace.  Employee handbooks document what is expected from your staff (and what they can expect from you), while at the same time providing valuable legal protection to an organization.  In addition, employee handbooks include rules of ethics and acceptable behavior that are expected to be followed.   

Unfortunately, not everyone follows the rules.  Recent headlines reveal that many high-ranking executives, at times even presidents and CEOs, are not abiding by the same rules that are set for employees.  Case in point, on September 19^th, former Tyco International Ltd. CEO, L. Dennis Kozlowski, received a jail sentence of up to 25 years for stealing hundreds of millions of dollars from the manufacturing giant. “The story fueled sensational headlines about the expensive items Kozlowski had purchased at the expense of shareholders: the $2,200 wastebasket, the $6,000 shower curtain, the $15,000 umbrella stand.  Tyco’s former CEO had become the poster boy for corporate excess and bad behavior,” said author, Euna Kwon Brossman in the article, “At Tyco, a New Bottom Line.” The result was an avalanche of bad press, lost revenues, and damaged employee morale at Tyco.

Disciplinary action is typically not the most enjoyable aspect of an HR professional’s job, but when the disciplinary action centers on a top-level executive, the task can be especially difficult.      

“Companies often have a double standard for top-level executives--sometimes trying to quietly sweep their misconduct under the rug, other times trying to make an example of them. As a result, you likely will need to walk a fine and very flexible line that allows you to respond as needed to a variety of conditions and factors,” explained Robert J. Grossman in the HR Magazine article, “Executive Discipline.”  According to Grossman, the most common types of misbehavior are harassment or other types of gender-related misconduct, financial impropriety or financial statement fraud, lies about expenses, the use of company funds for personal activities, and “grey area” conduct that may be considered embarrassing to the organization, such as marital infidelity or off-color remarks.

Just how common is it for high-level executives to behave badly?  “I could get specific and remind you about Adelphia, Barings Bank, Drexel-Burnham Lambert, Enron, Global Crossing, and WorldCom. In the past two decades, U.S. businesses have been involved in numerous scandals and high-level wrongdoings. And those are only the most recent examples,” said the anonymous writer of the CSO Online article, “Broken Windows in the Boardroom.”  “Companies are selective in deciding what is right or wrong. If a top executive pads his expenses once in a while, it might be overlooked, but if a temporary employee or some hourly worker did it, I bet she'd be gonzo in a heartbeat.  Yet, it shouldn't be about big shots and blue collars, plaques on the wall and speeches about values. It's about a culture where accountability for doing the right thing is the way things are done, period.”

The first step in creating this “culture of accountability” is updating the aforementioned employee handbook and distributing the information to every individual in the organization to ensure that they are aware of all policies and procedures.  As stated in the SHRM Legal Report, “Is it Time to Revise Your Employee Handbook?”,  “Any handbook more than five years old has also failed to address literally hundreds of state and federal court cases dealing with handbook-related issues. State and federal government agencies have also issued numerous regulations and interpretive decisions in recent years which affect handbook policies. As should be obvious by now, any employer who has distributed an employee handbook should be constantly monitoring the manual, with the assistance of counsel, to determine whether revisions are needed.”

Of course, nurturing and enforcing ethical behavior at all levels should be a top priority for HR professionals.  Eric Pillmore, Tyco’s new Senior Vice President of Corporate Governance knows all too well what happens when there’s a lack of ethics among high-ranking executives.  As he explained in the previously mentioned article, “At Tyco a New Bottom Line,” “Companies get into trouble when leaders have a fundamental lack of understanding about the function of their top managers and the breadth and importance of their roles in setting rules for ethical behavior and enforcing them. In my opinion these leaders have placed too much emphasis on getting the deal done and not enough on practicing ethically. They did not create avenues where people felt safe to speak up. Companies have to have values that are easily understood and communicated broadly. There is no room for compromise and zero tolerance for bad behavior.”

Luckily, there is a plethora of advice available for HR professionals faced with executive disciplinary dilemmas.  Through his interviews with various experts on the topic, Robert J. Grossman offers the following suggestions:

·        Establish a protocol.  Make disciplinary actions part of a set procedure.

·        Respect privacy of all parties involved during the investigation.

·        Take notes.  Document everything.

·        Consider enlisting the help of counsel, ethics officers, or trusted board members.

·        Investigate thoroughly.

·        Move quickly, but don’t rush to judgment.

·        Expect the unexpected.  Be prepared for highly-negative reactions and / or disruptive behavior from the parties involved.

·        Prepare to take a stand.  Remember that your obligation to an organization comes before responsibility to an individual.  

It’s a long fall from the top for some executives.  The enforcement of ethical behavior and adherence to organizational policies and procedures will help ensure that your organization doesn’t take the fall as well.