Don't Have A Failure To Communicate With Employees

One of Martin’s lines as the captain, "What we've got here is (a) failure to communicate," has become so much a part of the culture that it's #11 on the American Film Institute's list of the top 100 movie quotations in American cinema.

So now let’s put that line in the context of not a chain gang but rather today’s business environment, in which the reality of layoffs is hitting home for an increasing number of small-business employees. The integrity of the employer in committing the layoff--or the lack of integrity--as perceived by the terminated employee can turn a simple business decision into a lawsuit.

Daniel P. Skarlicki, Laurie J. Barclay, and S. Douglas Pugh write about this phenomenon in their article, "When explanations for layoffs are not enough: Employer's integrity as a moderator of the relationship between informational justice and retaliation", in the March 2008 issue of the Journal of Occupational and Organizational Psychology published by the British Psychological Society.

"Victims of downsizing often perceive their layoff as being unfair, which can lead to various forms of retaliation," they write (they mean retaliation not in the sense of an employer's firing or harassing an employee unjustifiably, but in the sense of an employee taking some sort of action in response to being fired). To head off retaliation in the event of layoffs, they prescribe what they call "informational justice," in which the employer offers laid-off employees "adequate explanations in a timely manner".

Does the employers' offering of informational justice--the employer's "integrity"--have the desired effect of avoiding nasty lawsuits and the like following sad but necessary layoffs? The author say it does: "Results from a field and laboratory study suggest that informational justice helps manage retaliation only when layoff victims perceived that their employer had high (vs. low) integrity prior to the layoff. In Study 2, we found that perceived sincerity mediated the impact of informational justice by integrity interaction on retaliation."

Let me translate the academic jargon into practical small business management language. It’s simply this: the origins of retaliation, i.e., lawsuits, don't begin with the employee's termination, but much earlier in the employer's past behavior. Even if you provide "informational justice" in the event of the layoff itself, that only goes so far to preventing your ex-employee from retaliating. What really makes a difference is effective, consistent communication throughout their time working for you. It's not only the right thing to do, it’s also good management--and good risk management.