by Al Vreeland
I report from the center of the Southeastern Conference (SEC)—where the arrival of winter means it’s firing time. Four of 14 SEC head football coaches have been sacked, and regardless of your tailgating preference, their terminations provide lessons on how to gracefully handle the exit of your top executives.
Penthouse to outhouse
No coach rode the elevator from the penthouse to the outhouse faster than Gene Chizik. The coach who brought Auburn the “shacket” (half T-shirt, half jacket) and its first national championship in 50 years found himself in the unemployment line by season’s end. Think about that. The CEO who captained the school’s best annual performance in half a century gets canned two years later. And along the way, his bosses expressed unwavering commitment to and confidence in his abilities.
As a general rule, we prefer to give all employees adequate notice of and an opportunity to improve their performance problems. Terminations shouldn’t be a surprise. With a top executive, however, the notice often is obvious (sometimes painfully so)—whether in quarterly financial reports or a dismal 3-9 season. Consider first if the manager is responsible for the overall performance of his organization, whether that be the entire company or merely a department. The greater his responsibility, the easier it is to tie his personal performance to broader performance metrics. Also, weigh whether the results are so far below expectations that additional time to improve poses a risk to the overall organization.
As another rule of thumb, we prefer to avoid terminations in the middle of the holiday season whenever possible. Even the worst employee can sound sympathetic to a jury when she explains that her kids had to miss Christmas last year because Ebenezer Scrooge (that’s you) canned her on Christmas Eve. If a holiday termination can be delayed without injury to the business, move it to your January to-do list. With some positions, however, the inevitable cannot be delayed. You may need to move quickly to prevent losing critical employees (or recruits) or to implement a turnaround strategy to save key clients or market share.
Arkansas, which is perfecting its skills at axing head coaches, recently took a different approach. Rather than sending John L. Smith straight to the breadline, the school announced his termination so it could begin its coaching search immediately. But it’s keeping Smith on the payroll as a “consultant” through the first of the year. For less media-worthy positions, an outbound executive can use that type of stopgap position to save face in the industry and look for another job. As the old adage says, a former employee with a new job is a former employee who is much less likely to sue you.
Shackets under the tree
Fear not, dear reader, for the Chizik household will not be shacketless this Christmas. Like most top executives, Chizik’s employment agreement provided for severance pay in the event of termination — a $7.5 million buyout through 2015. That’s $204,000 per month, which will buy a lot of shackets for the Chizik kids. Most severance agreements link severance payments to a release of all claims. In turn, a release eliminates any concerns about past performance, previous counseling, or the timing of or reasons for the termination — which is what we were just yammering about.
Auburn hired Gus Malzahn, a former Tigers assistant and Arkansas State head coach, to replace Chizik, meaning Bobby Petrino won’t be riding onto the Plains on his Harley Davidson with his mistress in tow to save Auburn’s football program. The school wisely weighed the risk of hiring a new top dog who was fired from his last gig for giving a cushy job to his mistress and then lying to his boss about it. The smell of sexual harassment and credibility issues will not fade quickly. Even if he behaves, he will be an easy target for a litigious employee. If his new employer decides he’s worth the risk, then it should adopt safeguards — that is, a contractual escape hatch for the school if he’s a bad boy again and a process for confirming that he keeps his eyes focused only on x’s and o’s.
Another important but very different consideration is how a high-level termination affects your ability to attract top talent. To pick an example out of the hat, take Tennessee. With Butch Jones being named the school’s fourth coach in six years, you couldn’t fault the average job applicant for being concerned about his long-term prospects as a Volunteer. Even with lower-profile positions, an employer quickly can develop a reputation in its industry for how it treats its employees. Keep in mind that the way you handle an executive’s exit affects the likelihood of a lawsuit by not only the canned employee but also the next contestant on the employee carousel.
Like an SEC football coach, top executives and managers are held to a higher standard than other employees. Because they shoulder responsibility for the overall performance of their organization, different rules may apply. They may be called to answer faster and with less warning than others. But because they generally are paid more for that responsibility, the risk attendant to their termination also is greater. Thus, a well- thought-out game plan for their termination and the aftermath of the discharge decision is essential. It is, in the end, all about the process.
Al Vreeland is a founding member and managing shareholder of Lehr Middlebrooks & Vreeland, P.C. and practices in the Birmingham, Alabama office. He has represented employers in the entire range of employment litigation from Title VII, ADA, ADEA, FMLA, OSHA and ERISA to claims under the First Amendment, Fourth Amendment, and the Due Process and Equal Protection Clauses. He is an Employers Counsel Network member and the editor of Alabama Employment Law Letter. He may be contacted at email@example.com
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Excerpted from Alabama Employment Law Letter, and written by attorneys at the law firm of Lehr Middlebrooks & Vreeland, P.C. The Alabama State Bar requires the following disclosure: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." Contact the attorneys at Lehr Middlebrooks & Vreeland, P.C.