Growing companies are vitally important to us. They create jobs, support their communities, and provide products and services that help drive the economy. It is hard to imagine where we would be today without the entrepreneurs who create growth companies. They are the visionaries and the risk-takers who believe in their dreams and refuse to be denied. Rather than follow in the footsteps of others, entrepreneurs choose instead to lead, to take the road less traveled.
For the past 22 years, we have proudly recognized outstanding business leaders from the Midwest area program. This year’s Illinois, Indiana and West Michigan participants have succeeded through turbulent economic times and personal sacrifice. They have risen to tackle adversity and change the world as we know it. They’re driven by accomplishment. They have defined sustainability. They’re not afraid to take risks and can see beyond them.
Ernst & Young’s Strategic Growth Markets practice is the leader in serving the Russell 3000 high-growth private companies, those with significant investments from venture capital or private equity firms, and companies planning to go public. We are committed to serving the entrepreneurial companies throughout their life cycle. That’s why we started the Ernst & Young Entrepreneur Of The Year awards. Since the first awards were presented in 1986, more than 12,000 outstanding businessmen and businesswomen have been honored with this distinction.
Join us in congratulating the leaders of today those innovators that have achieved their American dream. We, along with our sponsors and patrons, continue to be inspired and encouraged by the entrepreneurial business achievements of our nominees. The following pages highlight those individuals who pursued this coveted distinction. Ernst & Young is proud to recognize and honor the accomplishments of the people who make this country great.
Congratulations from Ernst & Young on your continued success!
RANDALL L. TAVIERNE is Ernst & Young Entrepreneur Of The Year program director, Midwest Area Strategic Growth Markets leader and a partner at Ernst & Young LLP.
Nicole Loftus was working as an executive in the promotional products industry when she realized the inefficiencies in the way the industry conducted business.
The standard business model was to view the customer through a territorial lens, discouraging any contact between the corporate and end customer and the manufacturers and importers closest to the products.
She knew that she could create a better business model and formed Zorch in 2002 to realize her vision. By emphasizing the branding and merchandising capabilities that Zorch could bring to its corporate customers and de-emphasizing the middle-man role that distributors have traditionally played, the company can be a better partner to its corporate customers. Zorch can deliver a more efficient, responsive order process as it facilitates communication between vendor and customers, it can bring higher levels of sophistication to the merchandising and design decisions and serve as a corporate “brand guardian” as well as deliver lower costs.
Loftus bootstrapped the company with loans from her parents and put up her house as collateral to guarantee bank loans to the business.
As her business model was most applicable to large customers with significant promotional product spending budgets, she faced scrutiny from large Fortune 500 purchasing departments. Nevertheless, through force of will and a compelling customer promotion, she was able to land a major insurance company as her first customer. Now, she has several of the largest companies in the nation as her clients, most of whom source their promotional products exclusively through Zorch.
HOW TO REACH: Zorch International Inc., www.zorch.com
In 1983, Edwin S. “Stan” Hooker III and a partner purchased Midland Paper, Packaging + Supplies from the jaws of bankruptcy. His vision was to create the premier independent wholesale distribution company for fine printing papers in the Midwest. Hooker has never wavered from his original vision.
Those early years presented a number of challenges, including apprehensive suppliers, minimal working capital, bankers looking for personal guarantees and a crowded market of competitors, many of whom had substantial resources.
Year after year, all of the profits were invested back into the business so Hooker could continue to build the business while gaining credibility and trust with suppliers, customers and banks.
MPC prides itself on having a flat management structure, which enables the company to be responsive to its employees and make key or strategic business decisions in a relatively short period of time. In addition, the company’s four stockholders are actively involved in the day-to-day business operations and practice an open-door management style. The culture has allowed the company to double its employee base during the last five years while maintaining a very low turnover rate among its middle- and upper-management team. It also allowed MPC to acquire several companies with a minimal impact on the underlying business.
Today, the company has grown to become one of the largest independent paper and packaging distribution companies in the country.
HOW TO REACH: Midland Paper, Packaging + Supplies, www.midlandpaper.com
True entrepreneurs are never satisfied. They are always pushing the envelope and preparing for future possibilities. Jim Fabris has continuously harnessed that entrepreneurial drive to convert his vision into business realities.
Fabris joined Hurco Cos. Inc. 20 years after its founding, but he quickly understood the value of the company’s mission of providing unique software and equipment to the machining industry.
Combined with his conviction, tenacity and vision, he risked his career more than once to convince the board to make tough choices that were counter to company norms and even industry norms at the time. For example, while competitors continued to focus on the North American market in the 1990s, Fabris understood the value of globalization and the importance of building a strong global supply chain.
Fabris revisited the company’s mission to convince the board that painful choices in the short term were necessary for future growth. Much of the pain was due to his recommendation to abandon legacy products upon which the company was founded, which meant layoffs of employees associated with those products.
“I had to convince them that shrinking would actually make us stronger,” Fabris says.
Focused on the company’s core competencies, Fabris instigates continual innovation of technology that supports the company’s mission. Under his leadership, the company that pioneered interactive graphical computer controls systems continues to push the evolution of technology to new levels, which has led to unprecedented growth and profitability.
HOW TO REACH: Hurco Cos. Inc., www.hurco.com
In 1988, Bejan Douraghy made his way to Chicago with $1,000 in his pocket and an idea for a business. A prior job experience had taught him that you had to treat creative talent with the same level of respect as you treat your customers, because as a creative staffing agency, people are his products and his service.
Five years later, his company, Artisan, had tripled in size. A year after that, he appeared on the cover of Inc. magazine about how bootstrappers change their business practices to foster growth and move beyond the start-up phase.
Almost 14 years later, his words still hold true, and he emphasizes a commitment to his team and to the growth of Artisan, a creative haven for top talent, such as artists and designers, that balances the demands of businesses needing creative services while advocating for the talent filling those needs.
He has built one of the best-known brands in the United States’ creative staffing services industry, serving nearly 2,000 companies and providing challenging work to 8,000 artists. The company continues to gain recognition with promotional events that recognize the best artists and designers in the global creative community.
Douraghy knows that putting together the right people for his client needs is equally as important as putting together the right internal team for Artisan’s culture and sustained success. When employees ask for professional development opportunities, he examines the request, considers an appropriate budget and encourages them to pursue creative endeavors.
HOW TO REACH: Artisan, www.artisantalent.com
And the president of Carefree World Travel ensures that his customers keep coming back by building relationships with them.
“Stay in touch with your customer,” Dusing says. “Talk with them a lot to find out how things are going, and always look for opportunities in your industry to provide a service you’re not providing right now.”
Dusing says you must provide value-added services to your customers to maintain a competitive advantage, something he does at his $14.7 million company by educating his corporate clients about managing their trips and by studying their travel expenditures to uncover cost savings.
Smart Business spoke with Dusing about how he establishes partnerships with clients and how he keeps the lines of communication open.
Q. How do you build partnerships with clients?
We try to establish a relationship at each level of the customer’s company. Personally, I try to establish a relationship with the executive team, the owner, the president and the (chief financial officer) within the company.
Our salesperson is very good at getting in and meeting the travel coordinators and the people that deal with the management of the company’s travel program on a day-to-day basis. And then the agents work on a daily basis with the people actually doing the traveling.
If something goes wrong, we have that relationship and are able to identify the problem and get it fixed fairly quickly. There’s an open level of communication at each one of those levels so that if something does happen, we know about it.
Q. How do you keep the lines of communication open?
We meet and talk with them. It’s not through e-mail; it’s a personal relationship that we try to develop. If we have a new company that comes on board, we identify the people that we need to get to know, and then if there’s an opportunity, we’ll take our agents out and get them to meet the people on the other end of the phone.
Don’t depend on one relationship because when that person leaves, you have none.
Q. What one thing can prevent a company from growing?
Not talking with your customers and not knowing what their goals are. When you’re working with a customer, take the time to learn what their goals are.
You have to work together to make sure you’re delivering what they’re looking for at a fair price. If you don’t know your customers’ goals, you’re just not on same page.
Q. How can executives ensure that their employees hear their message?
There’s an old saying, ‘Somebody needs to hear something six to 10 times before it actually sinks in.’ I do see that, and it’s a frustration of management. If we have a meeting, we’ll put the meeting minutes out in writing, and at the next meeting, we’ll bring it up again because we realize it’s not going to sink in the first time that somebody hears it.
The other thing that I really dislike from a management standpoint is e-mail. I’ve told my managers, ‘We don’t manage through e-mail.’ It’s so easy for a manager to send a quick e-mail out to the staff, but do the employees read it fully? So many employees in the work force today receive so many e-mails, it almost becomes a background for them.
And it’s the same thing in dealing with your customers: If you don’t have all the answers, pick up the phone and call them. Don’t play pingpong back and forth with somebody for a week to try to settle one small issue.
Q. What advice would you share with other leaders who are trying to grow their company?
Sign all checks to keep control over what is being spent in the company. If you’re signing the checks, you can see the money that’s going out and what’s being spent for different items, the office supplies or the travel or the utilities.
If your employees know that you’re signing every check and that you’re seeing everything, it curtails what they spend.
When interviewing someone for a position with your company, I would recommend having them take a personality test, and there are a lot of good personality tests out there. Get a focus on the employee, know what’s important to them and know what values they have before you hire them.
If you take the time to really look at the employee before you hire them, you’re not wasting your time. They’re going to work out, and they’re going to be a long-term employee. They’re easier to work with, and they get along with the other employees.
You want to hire someone that is looking for a career, not a job. I’m always looking for somebody that’s able to grow within the company. Everybody that is in management here has come up through the company, rather than being an outside hire.
HOW TO REACH: Carefree World Travel, (317) 899-4477 or www.carefreetravel.net
Prescription drug costs continue to be the fastest growing health expense in our country. Experts project increases as high as 13 percent during the next several years. Critics of rising drug costs are quick to blame the pharmaceutical companies’ advertising and aggressive sales practices when, in fact, there are many other factors that contribute to this increase. Primarily, the third-party payer systems have discouraged patients’ personal accountability for their health care decisions, says Sally Stephens, president of Spectrum Health Systems.
Other factors include increases in diagnosed chronic conditions, such as asthma, diabetes and heart disease. Innovative new treatments for osteoporosis and anemia, as well as more cost-effective applications of drug therapies, are also factors. These trends and rising costs have many companies re-thinking their generous health care benefits.
Smart Business spoke with Stephens about rising drug costs, the use of generic drugs and why generics shouldn’t be feared.
What options do business owners have to deter prescription drug costs?
A very significant trend gaining traction as a mechanism for managing these costs and encouraging individual accountability is defined-contribution or consumer-directed health plans. These plans place the decision about the right level of pharmaceutical spending where it belongs: in the hands of the consumer and physicians. Instead of paying on a prescription-by-prescription or visit-by-visit basis, the employer contributes a fixed sum that employees can spend at their discretion. Other tools utilized include pharmacy networks, in-house networks, mail-order programs and drug formularies. Prevention will always play a key role in managing costs. Early detection allows an individual to catch a problem prior to it getting out of control and becoming a crisis.
Do lower prescription drug costs mean lower rates of successful recovery?
With all the frenzy for cost cutting, employers should keep in mind the value that prescription drugs provide. Some prescriptions are used for preventive measures against serious and costly diseases and conditions. High blood pressure medication, when controlling blood pressure, can decrease medical costs from complications of high blood pressure, such as heart and kidney disease. In addition, employees who are compliant with their prescriptions return to the work force more quickly and are more productive.
Are generics good options for cutting costs?
One popular approach for managing prescription drug costs is by using formularies, or lists of specific medications that employers will pay for. Usually, formularies involve eliminating certain drugs entirely or substituting one drug for another. Two types of substitutions include: generic substitutions in which a generic drug is substituted for a brand-name drug and therapeutic substitutions where another of a similar type replaces a particular type of drug. Generics can still vary in cost by as much as 500 percent so a good plan will standardize pricing and limit how much the pharmacist can mark up a generic drug. Nevertheless, the potential for overall cost savings is enormous, generally 80 percent less, when employers are aggressive about steering employees to generic drugs.
Why do people fear generic drugs?
Historically, the main reason consumers shied away from generics is that they questioned the therapeutic effectiveness of a generic compared to the brand-name drug. Although some consumers claim that a generic drug does not have the same effectiveness as the brand name, there is, in fact, very little difference between the two. Today, employers and employees are aware of the equivalency of generic drugs so there is much less discussion about value. In fact, the change in the public perception of generics is stunning. They are no longer perceived as unsafe knock-offs, and market share for generics is projected to be around 53 percent.
Does lowering prescription costs for employers increase costs for employees?
Today, almost all health plans use higher co-payments on branded drugs to push employees toward generics. However, some health plans are eliminating co-payments or out-of-pocket costs for generics altogether. In some cases, health plans are requiring documentation from physicians that their patient actually needs a brand-name drug when a generic equivalent is available. Some plans won’t cover a brand-name drug if a generic is available.
Are there any prescription drug plans that benefit the employee?
An increasingly popular approach is a tiered plan where consumers are no longer charged the same out-of-pocket costs no matter what prescription they choose. Under these plans, the generic may cost a $5 co-payment, while the brand-name drug would cost $10 and a newer, more expensive drug would cost $15. Under the old system there was no financial incentive for the consumer to pick a lower cost drug over a name-brand drug. Many employers are even waiving the employee cost for certain medications for conditions such as diabetes or heart disease because they no longer want to risk the financial implications that deter employees from complying with the treatment plan.
SALLY STEPHENS is the president of Spectrum Health Systems. Reach her at Sally.Stephens@spectrumhs.com.
Mike Weaver is president and CEO of Weaver Popcorn Co. Inc., which means, of course, that he’s the leader of the company.
But that’s not how he views himself not exactly, anyway. As CEO, Weaver grandson of company founder Ira E. Weaver says that he really views himself as the person leading the leaders. At Weaver Popcorn, it’s up to the managers of each of the 400-employee company’s divisions to lead as they see fit. Weaver’s job is to stay in frequent contact with his division managers, make sure everyone is on the same page with regard to company goals and, above all, provide his managers with the resources they need to get their jobs done.
Smart Business spoke with Weaver about the best ways to lead your company’s leaders.
Make time for communicating in person. The best way to make time for face-to-face communication is when it’s on a schedule and laid out in advance, and everything is planned around being present at meetings. The second thing is reaching out to the senior leaders, and they to me, as needs arise.
I was raised that way during my early years in the company. My dad especially put a lot of emphasis on the face-to-face [communication]. It’s kind of in my DNA, and I’ll be honest, I probably don’t do it as much as I should do it because it is difficult with your time demands.
You just have to find out how important it is to you, and if it is important, then you make time for it.
In addition, you should coach your senior leaders to speak up when they have needs. My responsiveness when they want to meet face to face is important. I try to do it when they need to meet. That sends a key message to them that I’m really here to support them in helping them achieve what we agree they need to accomplish.
That’s important because they’re responsible for being accountable for achieving certain goals. I work really hard on it because I’m not really as good of a listener as I need to be. Perhaps one of the disadvantages of being in one company for years and years is the more you know, the poorer the listener you become. So what I have to remind myself of is that my senior leaders are responsible for achieving certain goals and objectives, and it’s up to them to figure out how to do that.
It’s incumbent upon me to put more emphasis on listening than for me to tell them what they should be doing, unless they ask for advice.
Keep your messages consistent.
Consistency of message is a challenge. The different divisions of our company represent many different types of businesses.
You need to be consistent with your values and your overall mission, but when you get down to the individual division, it becomes a lot more specific with regard to the customers the divisions are serving. You really rely on the leaders for the most part to take that message, the goals and objectives, and make sure that it is applied, carried out and achieved in a way that is consistent with your values and mission, but that it fits those customers and senior leaders. That’s where the responsibility really falls with the senior leaders.
Hire managers who mesh with you. First, we look for values and alignment with our values. That is the first and most important because out of alignment of values comes trust. Without trust, things break apart pretty fast.
To keep trust, it takes a lot of work, so if we have alignment of values, then we have a good opportunity to grow the relationship to one that is based on trust. Without that, we’re doomed.
Once we have the values alignment, then we look for smart people who are really able to adapt to changing challenges and opportunities. My experience is that smart people will adapt faster and understand situations faster and almost welcome a changing environment. That’s what we have in business today.
The third thing is commitment. The folks we have, I want them to be committed to becoming the best at what they’re doing in their lives, including being the best division leader.
However, it is really difficult to identify those characteristics during the interview process. There is no guarantee. It’s about the time you spend and who is involved. When I don’t include other people in the process, it’s amazing how my success rate tends to drop off. I include different people at different levels. I don’t think there is any other substitute for the time you spend face to face in the interview process.
Also, we promote from within. There is nothing like bringing people up through the organization. We’ve had success in filling roles both ways, but when you bring someone up from within, you really know them a lot better than when you bring someone in from the outside.
In any case, it’s the amount of time we spend together that determines to a great degree the probability of the relationship being successful. But it’s tough. There is no magic formula that we have found yet.
HOW TO REACH: Weaver Popcorn Co. Inc., (765) 934-2101 or www.popweaver.com
It’s one thing to ask employees to assess their job satisfaction in an anonymous survey that rates their responses on a scale of 1 to 5. But you’ll learn quite a bit more if you ask them to tell you a story about their life on the job, says Dan Evans, president and CEO at Clarian Health Partners Inc.
The $3 billion consolidated health care organization recently conducted 600 interviews of its nurses and asked each of them to tell a story about life on the job. Several nurses at Riley Hospital for Children relayed the touching story of a young boy whose final days they were able to make just a little bit brighter.
“His love was construction equipment,” Evans says. “There is nothing but construction going on around our hospitals. We’re building new stuff all over the place. However, his window looked out over a street, not a construction site. If these nurses had asked the bed assignment people if they could move the patient, they might or might not have heard back from them quickly. Instead, they just did it.”
The boy was moved to a room where he could see the construction equipment and the bed assignment staff was told later of the switch.
“They felt secure enough to go ahead and do it,” Evans says. “That tells me the nurses were intently focused on the needs of the patient. They were willing to take a risk and do something in an unapproved manner because they weren’t afraid the system would punish them.”
As the leader of an organization, you need to go out and create an environment where your employees feel comfortable offering their input and even taking action when they believe it’s the right thing to do, just like the nurses did. When you do that, employees act in the best interests of the customer instead of being afraid to act because of company policies.
If you have developed a clear set of values to live by, you should-n’t worry that this freedom will be abused.
“A just culture is one in which we learn from our mistakes and we are able to re-evaluate real time what is happening because people trust each other not to be punished for using creativity and innovation in how they do their jobs,” Evans says.
“You sure as heck don’t want people abusing the system and taking shortcuts to go home a little earlier, to look a little better or to shift work to somebody else. So the culture itself, that is your coworkers, they have to watch out for each other and constantly remind themselves that their culture is a just culture. You’re allowed to be creative in a way that permits you to use your intellect. From time to time, you might make a mistake. But the culture is not going to punish you for making a mistake that wasn’t purposeful.”
Here’s how Evans has developed a culture among his more than 15,000 employees that gives people the chance to take meaningful steps to improve their organization.
Be more than a boss
Evans recalls a lesson his father, who ran a chain of department stores, once taught him about executives.
“He said, ‘There are two kinds of executives: Elevator guys are the ones that come in the morning and punch a button to go to their floor and never saw a customer or an employee; the escalator guys are the ones who rode to the floors all day long every day to check with the customers and check with the employees. If you don’t have happy customers, you probably don’t have happy employees. If you don’t have happy employees, you probably don’t have happy customers,’” Evans says. “I think it’s translatable. I bet there’s not a factory manager in this country who doesn’t learn more going to the floor than he does staying in his office.”
If you want a culture where people are helping you improve the organization, the key is to realize that your job as the leader is not simply to be the boss.
“My job is to help them do their jobs better,” Evans says. “I am the steward of the system within which they operate. I can’t understand how well the system is or is not operating unless I learn from the folks in the system what they think needs to be done to improve it. Most of the good ideas come from the people who do the real work. Very few ideas come from the muckety-mucks, like me, way up top. My job is to find the good ideas and implement them.”
A large chunk of Evans’ daily activity is spent “rounding,” or visiting employees and checking out various locations across the Clarian organization. Sometimes the visits are scheduled, and sometimes they are impromptu.
The visits help reduce what Evans calls the authority gradient. Once you accept that you don’t have all the answers, you need to make your employees comfortable with giving you some of those answers.
“People are reluctant to tell their boss they’ve got a better idea than he or she does,” Evans says. “It has to be a place without fear to do it.”
“If I said to you, ‘Hey, I don’t think you should use a keyboard,’ and you were my boss and you said, ‘Boy, that’s a stupid idea,’ I’m never going to give you advice again.”
But if you approach employees and ask for suggestions and offer positive reinforcement, an atmosphere of trust and mutual respect develops.
Walk with a purpose
You have to be diligent about the way in which you interact with employees and visit the different locations in your organization.
“Walk around with a purpose,” Evans says. “That is, go to specific places within the organization with specific questions. Be looking for a specific thing and see if it’s consistently done in the places you visit. ... If you round with a purpose, then you keep notes about it, and you can reflect on your recollection from week to week and month to month and have your own judgment as to how accurate your view is as to what’s actually going on.”
When you hear something that resonates in your mind, it only increases the chances that you’ll take some type of action in response. And you must respond to what your employees tell you if you expect to hear from them in the future.
“Employees have got to believe that if they have an idea, it has a fair shot of being evaluated,” Evans says. “If it’s a good idea, it has a fair shot of being implemented. If they think their ideas are being ignored, then they won’t submit ideas. There has to be a feedback loop. It’s one thing to have a suggestion box or a computer linkup for ideas. It’s another to have one where you say, ‘Hey, that’s a pretty good idea. Let’s talk that one through.’”
One of the best ways to get those kinds of thoughtful responses from your employees is to ask them to tell you a story.
“If I say to you, tell me a story about your job, I’ll learn more by that story about you and your job than I will by saying, ‘Are you satisfied or dissatisfied with your job? Do you trust your boss or not trust your boss? Are you paid an adequate salary or not?’” Evans says. “Stories are very powerful. People remember stories. They don’t remember data.”
By listening to the stories told by his employees, Evans learned that they are very focused on customer needs and want to do what they can to help Clarian’s customers.
“We have to constantly ask people and see what they have got to say,” Evans says. “We do the town-hall meetings, but we learn more from these stories than we do from anything else.”
Be clear about your goals
If you are going to ask and expect your employees to abide by your values of ethical behavior and honest empathy for your customers, you must set the right example with your own actions.
“When somebody says something to me that indicates to me they don’t trust and respect me as the CEO of the company, that really gets my attention,” Evans says. “I want to know why. Is it because they think I say something different than what I say internally? If that’s true, I want to understand that. That means that senior managers and the board have to have a high level of self-awareness and not live in some fantasy world where they think they are loved by everybody because it just ain’t true.”
You must constantly be measuring your behavior, along with that of your employees, against your organization’s vision and goals.
“Around here, our goal or vision is pre-eminence,” Evans says. “We measure pre-eminence by being in the 90th percentile of whatever the function is that is being measured. ... We know that our standard is not to compete against the local competition. Our standard is to compete against the best in the country.”
Your commitment to these goals must be emphasized repeatedly, whether it’s through a one-on-one conversation in the hallway, at a staff meeting or at a charity fund-raiser your company is involved in.
The message can be conveyed both in words and in actions. “On Christmas morning, I rounded all three of our downtown hospitals with the chief medical officers of each hospital and visited with the employees who were at work on that day,” Evans says. “The purpose was to hear what they have to say about working over the holidays.”
Constant communication is the oil that keeps the engine that is your company operating smoothly. It ensures as much as possible that your employees understand what the organization is all about and can make the right decisions that a just culture enables them to do when a choice needs to be made quickly.
“You are going to find people that abuse a just culture and view it as a way they can make excuses,” Evans says. “The culture itself has to say, ‘That sounds like an excuse to me, not a reason.’”
Evans discovered the true value of his just culture recently when a friend received a letter in the mail after his wife had been brought to a Clarian hospital and where she succumbed to injuries suffered in an auto accident.
“The letter said, ‘Dear Mr. Jones, [not his name] we are aware that you lost a loved one at one of our hospitals recently,’” Evans says. “‘We are very sorry for this. Regrettably, you will receive a bill for services rendered. We are sorry about that. Please know we care, and call this number and ask for this person when you get the first bill so we can talk about it.’ ... They were in that man’s living room two weeks after his wife died literally. He’s by himself opening his mail and that could have been a terrible experience. That’s a culture I’m proud of, people who would have thought that up.”
Evans says he talked to someone in patient financial services and discovered the department had decided after a tragedy a couple of years earlier that it needed to change its letter for those circumstances.
“That’s a culture that wants to do everything as well as they can,” Evans says. “That means they had to feel comfortable they would-n’t be punished for not sending out a standard letter.
“That’s what I meant when I say walk the talk. When I walk around this building, if somebody doesn’t use the word patient in the first few minutes of our conversation, I figure I don’t need to have the conversation. I think that’s a pretty good test.”
HOW TO REACH: Clarian Health Partners Inc., www.clarian.org
Times have changed and so have accepted behaviors within a place of employment. An employer that doesn’t have a clear policy on how employees should report harassment and discrimination complaints is simply asking for trouble. Andrea Marsh of Sommer Barnard PC’s Litigation and Labor and Employment Law Groups says a clear policy allows an employer to become aware of any complaints and also protects it from potential litigation.
Smart Business spoke with Marsh on just what a good harassment and discrimination policy is composed of and the importance of documentation.
Why is it important to have an effective complaint policy and procedure?
Every employer should have a clear policy setting out how and to whom employees report any complaint of discrimination or harassment. An effective complaint policy and procedure serves two purposes: First, it ensures that an employer is aware of any employee complaints so that it can promptly investigate them and take any action necessary to correct the situation. The best way to prevent any potential liability under federal equal employment opportunity laws is to ensure that the workplace is free of discrimination and harassment. Second, having an effective policy is critical if the employer is later faced with a discrimination, harassment or retaliation claim because it allows the employer to show what the employee could or should have done to address the situation.
What comprises an effective complaint policy and procedure?
First, all employers should have a clear policy that retaliation against any applicant or employee making a complaint will not be tolerated. Second, the employer should identify the person or people within the organization to whom an employee can report any allegations of discrimination or harassment. There should be at least one person outside of an employee’s direct chain of command to whom the employee can make a complaint. The policy should be communicated to employees clearly and regularly. The employer should ensure that supervisors, in particular, understand the employer’s policy barring retaliation. Once the employer has an effective complaint policy in place, it must be sure to take any employee complaints seriously, gather any information relevant to the complaint and respond to it promptly.
What are the risks associated with retaliation and what can a company do to ensure employees avoid this?
Federal employment laws protect any reasonable conduct by employees in opposition to an unlawful employment action and any reasonable participation by employees in the investigation of a claim of an unlawful employment action. An employer can be held liable for retaliation if it takes any adverse employment action against an employee who’s ‘opposing’ an action he or she reasonably considers to be discrimination or harassment, or ‘participating’ in an internal or EEOC investigation of the alleged discrimination or harassment. The employer can be liable for retaliation even if it’s later determined that the activity opposed by the employee is not discrimination or harassment. It’s important for employers to communicate clearly with supervisors in particular regarding their policy against retaliation and what kinds of actions may violate that policy. Any supervisor or employee involved in an investigation of another employee’s discrimination or retaliation complaint should be reminded of the policy prohibiting retaliation, and the employer should document these conversations.
Why is documentation so important in a harassment or discrimination case?
Good documentation showing the steps taken by an employer to investigate and, if necessary, to remediate a discrimination or harassment complaint is critical if the employer is ever required to defend a retaliation claim. In defending a retaliation claim, the employer will be required to show that it conducted a prompt and thorough investigation of any complaint made by an employee. Documentation is also important to allow an employer to later show the basis of adverse employment actions that it takes. For example, if an employee is terminated for performance reasons, the employer’s file should reflect the employee’s performance deficiencies and any steps taken by the employer to remedy those issues. In some cases, good documentation can mean the difference between getting out of a case early or even preventing a lawsuit in the first place and having to defend an action through trial. In that way, a well-documented employment file reduces the employer’s risk associated with harassment, discrimination and retaliation claims.
No matter how the case is resolved, how does a company recover from it?
Retaliation claims can be expensive for employers to defend, even if the employer is ultimately successful. These cases can also be disruptive to the workplace. The best way for employers to reduce their risk of facing an employee retaliation claim is to have an effective complaint policy and procedure and to fully and promptly investigate any employee complaints.
ANDREA MARSH is a member of Sommer Barnard’s Litigation and Labor and Employment Law Groups. Reach her at (317) 713-3500 or firstname.lastname@example.org.