No matter how attuned you are to your workforce, there are details you will miss, and unfortunately those tidbits of information are often the ones you can least afford to overlook. That's why smart business owners set up a formal mechanism for employees to report problems, whether the complaint happens to be with one of their managers or co-workers, or regarding a broader systemic issue.
But you're not setting up a Dear Abby for your staff's petty grievances. You or whomever you task with handling these complaints should be on the lookout for problems that could injure your business. The four most common issues are harassment, discrimination, theft, and violence, and if they are handled improperly, the results can be frightening, dangerous, and costly.
How to Handle Employee Complaints: Setting Up a Channel For Complaints
Publicly-traded companies are mandated to have a phone hotline for reporting fraud and other forms of corruption, but for privately-held companies, the reporting system can be more flexible. You can have employees report complaints over a phone line, in-person, by e-mail, text message, or even on social media sites like Facebook and Twitter.
"A lot of times you have to think about how old your workforce is," says Matt Kelly, the editor-in-chief of Compliance Week, a Boston, Massachusetts-based monthly magazine covering corporate governance, risk and compliance. He adds that you should take into account the size of your workforce, whether your employees are in one office or spread out, and what departments might be most likely to have ethical problems to report.
Ultimately, the method of reporting is unimportant as long as the employees feel comfortable using it, which is not as easy as it sounds. A good first step is outsourcing the process.
"Oftentimes the company will just have an answering machine in human resources with a dedicated phone number, but 90 percent of the time it's ineffective and employees don't use it," says George Ramos, a managing partner and senior executive investigator at Diversified Risk Management (DRM), a Downey, California-based firm that handles corporate security and investigations. Employees reporting problems often fear retaliation and turning the complaint reporting mechanism to an outside company can help allay those fears.
However, anonymous tips can put you at a severe informational disadvantage when starting your investigation, so you should also have a couple of point people for face-to-face complaints. It's good to give employees these options because "one thing you don't want to do is require people to report only to their supervisors, because unfortunately that may be the person who they have a complaint about," says Lisa Guerin, an attorney specializing in employment law and the author of The Essential Guide to Workplace Investigations: How to Handle Employee Complaints & Problems.
Kelly singles out Best Buy as a company that does a good job of keeping employees informed and giving them avenues to report misconduct. Kathleen Edmond, the company's chief ethics officer, maintains a blog that educates employees on handling ethical quandaries, and the company provides a number of channels for reporting problems that are more welcoming to its young workforce.
Dig Deeper: A Sample Employee Complaint Form
How to Handle Employee Complaints: How to Have an Impartial Investigation
"By far the problem that smaller companies have is that they don't have somebody sufficiently independent to investigate these complaints," says Kelly. The head of HR or the general counsel's office are logical first steps. If you can't afford to hire an outside company, you want to pick the person with the greatest degree of removal from the rest of the staff. Picking a person with a legal and human resources background is also crucial.
If the complaint is serious or widespread, such as an instance of serial sexual harassment, or large-scale "creative bookkeeping," you want to hire an outside lawyer or accountant right away, but smaller complaints might not merit such a measure.
It also goes, almost, without saying that the person investigating should have no personal and as little professional connection to any of the parties involved in the complaint as possible. Even if the investigator doesn't know a person directly, if that person's reputation precedes them, it might be hard for the investigator to stick to the facts of the case. Guerin says, "It's human nature to think, 'Well, I know her, I know him, and here's probably what happened,' but you don't want to do that."
How to Handle Employee Complaints: Taking the First Steps
One of the first things Ramos' company does is "talk to management and get an understanding of the company's history and culture. [Then] we will try to isolate the department or the shift that they suspect this may be coming from." The next step is obviously confirming the allegations that the individual is making.
DRM will pore over employee hard drives and e-mails, place covert cameras in places where there is no expectation of privacy (i.e. not a restroom or a locker room), and even run forensic tests for controlled substances. As a final measure, "depending on the seriousness of the issue, we could insert an undercover investigator to work alongside the employees to gain firsthand knowledge," Ramos explains.
If you're conducting the investigation in-house, some of your methods will likely be much simpler. You want to interview all the parties involved as discretely as possible and in the case of conflicting accounts, collect as many objective details as you can. Guerin gives the example of an incident that occurred in the company break room. If one employee says the event in question happened there at 9 a.m. but that nobody else saw it transpire, you go to the break room at 9 a.m. If it tends to be crowded, that person's story begins to look fishy.
Handling different types of complaints will require different approaches. Here are Guerin's suggestions of what steps to take in the case of the four most common types of complaints.
• Harassment – In a harassment case, you would begin by speaking with the person who brought the issue forward. Then you would interview the alleged perpetrator. Depending on the type of offense you have a choice between taking disciplinary action or firing the person and you should definitely institute training for the entire staff. "Often what those cases reveal," says Guerin, "is that people were unclear as to how offensive their behavior was."
• Discrimination – Discrimination complaints often come up when someone feels they have been wrongfully fired or passed over for a promotion, for some cause other than their performance or merit. The first step the investigator should take is examining how other people were treated in the same situation. In the case of a promotion, they would consider who else applied for the position, who was eventually chosen, and how they stack up compared to the person who was passed over.
• Theft – A theft investigation might not begin with a complaint unless someone is stealing from one of your employees. Rather you would first catch wind of it because of an accounting irregularity or inventory that goes missing. A theft investigation can get off to an easier start because sometimes there is a limited group of people with the type of access required to commit the theft. After you resolve the situation, you want to put additional controls in place to prevent it from happening again, for example, requiring two people instead of one to sign certain types of checks.
• Violence – Instances of workplace violence need to be handled very rapidly, and they can be even more delicate than other types of investigations because of the potentially explosive results. Guerin advises meeting with the accused person – who often has not attacked anyone but made a verbal threat against another employee – outside of work hours or off the work site. Depending on the severity of the situation, you may want to involve security or law enforcement personnel. Finally, if one of your staff members has an outside source of violence directed at them, such as domestic abuse, the employer itself can get a restraining order to make the work environment safer for that person.
Dig Deeper: Leigh Buchanan on Encouraging Employee Complaints to Boost Morale
How to Handle Employee Complaints: Being Transparent
Depending on the type of complaint that comes in you're going to want to keep relevant portions of your staff appraised of it while simultaneously safeguarding the privacy of the individuals involved. It's important to be transparent in these situations because "employees are probably going to know this on the office gossip vine anyway," says Kelly. "They want to see that management is aware of it too and that management does take action and demonstrates a commitment to a higher ethical standard."
Some companies include write-ups of complaints and how they were resolved – with personal details expunged, of course – in their monthly newsletters. This has the added benefit of encouraging reports of future problems by demonstrating your proactiveness. At a smaller company it may be easier for the CEO to just call a general meeting, but you would want to consult a lawyer to make sure you don't violate the privacy of the employees involved in the complaint.
This transparency regarding ongoing complaints should be coupled with a strong program educating employees on the procedure for raising a complaint, the certainty that they won't be penalized for coming forward, and the assurance that the company will investigate and take action when appropriate. When it comes to transparency, not only will this benefit your employees but Kelly says, "regulators are looking for the same thing if you need any other incentive."
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How to Handle Employee Complaints: How to Prevent PR Damage
Sometimes a disgruntled employee will go to the press with a problem that they're having but Guerin notes that employees usually do that because they feel they weren't taken seriously. Letting them know you will handle their concerns quickly and fairly can forestall a media disaster. Kelly adds that, in his experience, "most employees don't want to do a hatchet job on their employers," rather they want to see their problems solved to everyone's benefit.
Jason Calacanis got angry when an employee left his company, Mahalo, for a position elsewhere. Calacanis proceeded to vent his anger at the employee via e-mail and terminate his company e-mail account. As a result, the whole exchange ended up on popular blog TechCrunch. The lesson: try not to lose your temper, and if you do, don't leave a paper trail.
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How to Handle Employee Complaints: Be Prepared
As in any business scenario, thinking and planning ahead regarding employee complaints will do wonders to mitigate your risk. Ramos' company works with businesses that have anywhere from five to hundreds of thousands of employees. For an extensive investigation, DRM's fees can be anywhere from $3,000 to $25,000 per week, but "the cost of a lawsuit is much higher especially if you're talking about punitive damages," Ramos says. "As a result of conducting a thorough investigation, we have saved [some of our clients] hundreds of thousands of dollars in legal fees."
Two particular areas where you can plan ahead are background checks and other HR policies. "A lot of times an employer does not do a pre-employment background check to simply weed out people that can cause the company harm," Ramos says.
You can get even better protection by having a clear policy and reporting procedure regarding potential issues, particularly harassment. The Supreme Court has said that if you do that, it drastically decreases your liability, unless a manager or someone with the authority to speak for the company perpetrated the harassment.
Dig Deeper: Be Prepared, Advice from Norm Brodsky
How to Handle Employee Complaints: When to Bring On a Mediator
Sometimes, after an incident, you need to bring on a mediator in addition to providing employees with training. Training educates employees about company policy and the legality of certain behaviors, particularly in the case of harassment, but mediation serves a slightly different function. "The purpose of a mediator or someone else who does conflict resolution is to preserve a relationship," Guerin says. This is useful if the guilty party in a complaint has been disciplined but not fired. In that case, the two people will have to overcome any past bad blood to continue to work together. The mediator does not have the power to enforce a solution on anyone but they help the parties establish common ground rules for future interactions.
Dig Deeper: Explore the Benefits of Alternative Dispute Resolution
How to Handle Employee Complaints: Don't Cut Corners
Some employers don't want to take the time or money to conduct a proper investigation so they just fire the accused employee to make the problem go away. This exposes you to some serious risks as Ramos explains that if an employee has a history of bad behavior, a company might just jump the gun and fire him or her without probing the situation further.
To prevent discrimination lawsuits, employers will sometimes fire that person with a group of others so that they can claim it was for economic reasons. Another risk however, is that you may treat the symptom but not the cause; there may be other involved employees who go undiscovered as a result.
Dig Deeper: Tips on Avoiding Wrongful Termination Lawsuits
How to Handle Employee Complaints: Resources
Compliance Week is a Boston, Massachusetts-based monthly magazine covering corporate governance, risk and compliance.
Diversified Risk Management is a Downey, California-based firm that handles corporate security and investigations.
Contacting organizations such as the American Bar Association and the American Institute of Certified Public Accountants can help you locate professionals who specialize in employment law and investigating employee complaints and misdeeds.