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How to Avoid Getting Sued When Providing a Reference and More of Your Questions Answered

Plus, entering a crowded market and what to do with a dysfunctional team.

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Our team is pretty dysfunctional. Nobody wants to go the extra mile, there’s constant petty feuding, problems just get swept under the carpet and as a result, we’re not performing as a business. I don’t get it. We pay good salaries. It makes me despair.

There’s a saying that if money could fix a problem, it’s not a problem. We’d suggest the first thing is to go and buy yourself a copy of The Five Dysfunctions Of A Team, the classic management book by business consultant Patrick Lencioni. The issues you describe form much of his “dysfunctional pyramid,” which from top to bottom read: 1) Inattention to results, 2) avoidance of accountability, 3) lack of commitment, 4) fear of conflict, and underpinning it all, 5) absence of trust. You may have thought he’s talking about your staff, but these are all management failings as well. At the risk of oversimplifying Lencioni’s work, the answers are thus: 1) Focus on outcomes, 2) confront difficult issues 3) focus on clarity and closure, 4) demand debate, and 5) the big one, be human and treat your staff like humans. To a lot of bosses, a great culture — i.e., the opposite of a dysfunctional one — means employees who will keep working hard even when no one is watching. Trust is thus central, and it underpins not just the last of these principles but all of Lencioni’s pyramid. Be clear about your goals and standards, demand excellence but also give your employees the space they need to do their best work.

I’m thinking of opening a store in what’s possibly the most crowded market in the country; there are over 50 jewelry retailers here in a college town of 400,000. I feel I know this market, but should I look elsewhere?

A crowded marketplace isn’t necessarily a bad sign; it may be an indicator of the huge demand for a product or service. The secret to business success isn’t finding an empty field, it’s filling a need, and that generally means a niche. Sometimes niches are created because everyone is chasing the big-ticket-buying crowd or the youth market, or there are changes in fashion or technology that the existing players may have missed. The real question is whether you can do something better or differently. “Just don’t think you can do it by being the cheapest,” says marketing expert Brad Sugars. “You’re the little guy; you don’t have economies of scale. The big guys can make up in volume what they lack in margin. You can’t.”

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We let an unsatisfactory employee go last year. Now a prospective employer wants a reference. What can I say without getting sued?

Employers get in trouble when they blurt out things they believed to be true — the staff member kept calling in sick when they weren’t, they shirked work, they were stealing — but then can’t back them up in court. The twin guiding pieces of advice on this issue are keep it brief and stick to the facts. Some employers, if they can’t give a glowing reference, provide nothing more than dates of employment, job title and final salary. You may live in a state that provides “good faith” protection to employers, but stick to the facts anyway. Don’t speculate on your former employee’s bad qualities or the reasons for his or her failure to perform. Limit your comments to accurate, easily documented information. Finally, don’t lie or sugarcoat things. If you fired a bad egg for something like violent conduct or sexual harassment and then don’t disclose that when asked, you risk being sued — this time by the employer — if it happens again. As with many such issues, the best approach is the pre-emptive one: Warn a leaving employee you will not be able to provide a positive reference. It’s also a good idea to designate one person in your store to handle all references and keep a record of every reference request and response. You may want to adopt a policy of providing references only in writing, so you’ll have proof of exactly what was said.

Do I have to pay overtime whenever an employee works more than 40 hours, or can we just give him or her the hours off later?

Federal law and most states allow you to juggle hours with the employee’s consent, but you are nearly always required to pay an overtime premium, which is usually 50 percent, be it in dollars or minutes. For example, if the staff member works 42 hours in a week, you owe three, not two, hours of time in compensation. You can, however, offer them four 10-hour shifts in a week and not break the 40-hour threshold. California, Colorado, Connecticut and a few other states use an eight-hour daily overtime standard, so your options are more limited. There are numerous exemptions in the laws, so it’s a good idea to check the Department of Labor’s website at dol.gov (do a search for “overtime”) and with your state labor office.

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Moving Up — Not Out — with Wilkerson

Trish Parks has always wanted to be in the jewelry business and that passion has fueled her success. The original Corinth Jewelers opened in the Mississippi town of the same name in 2007. This year, Parks moved her business from its original strip mall location to a 10,000-square foot standalone store. To make room for fresh, new merchandise, she asked Wilkerson to organize a moving sale. “What I remember most about the sale is the outpouring excitement and appreciation from our customers,” says Parks. Would she recommend Wilkerson to other jewelers? “I would recommend Wilkerson because they came in, did what they were supposed to and made us all comfortable. And we met our goals.”

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