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HRM Strategies & Tactics
Are you Settling or Paying for Peace? “Do you believe in cheque-book terminations?” BY: GARY TAYLOR, HUMAN CAPITAL STRATEGIST AND IPM FELLOW
I
was once asked this loaded question at an interview. To say it caught me by surprise would be an understatement, but it did get me thinking. The question revolves around the issue of individual settlements, the kind of dilemma which all HR executives face, namely: are we prepared to pay what is necessary to make the problem person go away? There are only few of us who would want to admit to cheque-book Employee Relations, and yet the more experienced HR Directors (when pushed) will admit to having approved some pretty hefty settlements in their time. Offering a “full and final” settlement can arise from a whole range of circumstances, and is agreed to for a whole bunch of reasons. As a PEOPLE DYNAMICS | May - June 2020
matter of principle, some employers prefer never to settle, and here’s why: • “Bad Precedent”
• The fear of creating a precedent is the greatest obstacle. The thinking goes “if we settle this case, then we will have every dismissed employee having a go at us.” There is some substance to the employer belief that (despite signed confidentiality clauses) settlements get leaked by vindictive ex-employees, as it is almost impossible to trace the source of the leak. No self-respecting HR director wants to be known as an easy touch. • “Bad Public Relations”
• From an internal PR point of view, it may appear that the employer has been forced to settle, ie they have a weak case, and are paying to appease their conscience for having made the wrong call, or having failed in procedural fairness. Everyone knows that the matter is going to be discussed in the hallways, and the employer does not want to be branded as paying for their mistakes. • “Principle” - euphemism for Pride
• HR departments preach that internal processes can legitimately be
