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August 13, 2010

Neglecting HR Costs CEO $1,000,000+

Here’s a story with a moral. A business owner was driving her red Beemer convertible along a beautiful stretch of straight road, when a four-way stop intersection came into view.  Her passenger saw the rapidly approaching sign and said, “Do you see the stop sign?  Are you going to stop?”  She replied, “ I see it.  I understand the law.  But there is no other car coming from any direction within my view.  I think I won’t stop.” And they continued on.

A bit later a second business owner, alone in his Lexus, came along and drove right through the intersection.  Unfortunately, a CHP car was hidden behind a boulder, stopped him, and said, “Sir, you ran that stop sign.”  The owner replied,  “What stop sign?”

This illustrates the plights of two CEOs that have made the news recently.

1. A civil suit for discrimination was filed in a California court against Lucasfilm by a woman who had received a job offer, then before her start date informed the company she was pregnant. She claimed that in response to this news the company representative who had hired her kept pushing back her start date, finally withdrawing the job offer, just because she was pregnant.

As you know from your Unlawful Harassment training (ahem), discrimination against a person who is pregnant is sexual discrimination and unlawful harassment under both federal and state law. And can any businessperson honestly say that he or she has not heard of unlawful retaliation – and that withdrawing a job offer after a prospective employee tells you she is pregnant sure quacks like the retaliation duck?

George Lucas, head of the company, was called to testify in the suit and basically said “Huh?” when asked how this could happen.  He indicated that he really did not get involved in hiring decisions on that level, had had no interaction with the claimant, and left all those matters to his staff.  His testimony didn’t do the Lucasfilm case much good, and the woman was awarded a judgment of over $120,000 and her high-profile attorney will be pursuing recovery of legal fees over the million dollar mark.

Based on what was reported, I presume that Lucas illustrates a dangerous mindset.  Why was some project manager, aided by a “personal assistant” of Lucas, in charge of hiring at such a high-visibility company?  Had that person been trained in lawful interviewing, job offers, discrimination law?  Why was the process not in the hands of a well-trained HR professional? Did Lucas permit a culture of disregarding HR in deference to operational or financial pressures?  As head of the company, Lucas is responsible for everything that happens even if he never lays eyes on an applicant.  It seems like an expensive lesson that should have been learned much sooner, and should have become part of the organization’s culture early on.

2. The second incident involved the head of Joie de Vivre properties, Chip Conley.  In addition to being an astute and visionary businessperson, he is somewhat of a free spirit.  He posted some less-than-conventional  (although not risqué or objectionable) photos of himself at Burning Man on his Facebook page.  His HR Director gave the opinion that the photos were “a cause for concern” and advised they be removed.  Conley listened, considered the opinion, and then decided the pictures stayed posted as per his philosophy of life and business.  So far, no ill effects have emerged from the decision; but if they had, it would have still been an informed decision and a considered risk taken.  It seems clear that Conley expected his HR person to be his trusted advisor and partner in ensuring the safety and prosperity of his operations –and therefore to speak freely about possible hazards to that safety, advise how to address them, and to have the serious and respectful attention of the CEO when such matters are brought up.

Now for a short quiz:  Based on the two drivers described in my story, which one was Lucas and which was Conley?  Which are you?

B.J. Van Horn is Senior Professional in Human Resources at The Business Group. She helps CEOs and other top execs avoid such expensive lessons.

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