The Perfect Punishment

by Vadim Liberman

Searching the world for the right way to discipline workers.

VADIM LIBERMAN is senior editor at TCB Review. He likes to be gently disciplined.

"We need to talk."

No matter how lofty your place in the organization, hearing your boss utter those stern words can carry you back to second grade, when Mrs. Cohen said the same thing after you failed to bring in your homework.

“I will complete my assignments on time,” she commanded you to write on the chalkboard fifty times. You learned your lesson.

Except: What lesson was that? Did scribbling something fifty times make you fifty times likelier to finish your next book report? (As if.) Or were you just fifty times more embarrassed and upset? This may have happened decades ago, but whether we’re 8 or 58, students or senior managers, when it comes to suffering the blades of discipline chainsawing through our guts, we spiral right back to our hyper-humiliated early selves.

Such queasiness is particularly acute in the workplace, where our bosses have replaced our schoolteachers and parents as the primary disciplinarians in our lives. Our attempts to please our superiors at least match our efforts not to displease them — especially in an increasingly volatile economy, when a warning today can lead to a pink slip tomorrow.

But as much as we loathe getting chastised at work, we are just as — if not more — wary of wagging our finger at subordinates, be it for misconduct or nonperformance. “It’s the hardest thing a manager has to do,” says Don Crosby, vice president of international and corporate HR at McDonald’s. It’s also rocky terrain for many executives, who simply do not know when or how to hold the stick, swinging it haphazardly and inconsistently, striking too hard, too soft, or not at all. Whereas union regulations usually steer disciplinary action for blue-collar workers, when it comes to their white-collar counterparts, there generally exists no similar playbook — or much of any book. An Amazon.com keyword search for “disciplining employees” yields a third as many titles as one for “rewarding employees.”

With such a dearth of information, it’s no wonder managers apply the same punishments that have for years been used on them. After all, when you’ve been conditioned to receive certain penalties, you’re equally likely to dish them out — without ever questioning the appropriateness and effectiveness of such methods. Still, some techniques must work better than others when penalizing white-collar workers. There must be a perfect punishment out there, right?

Wrong. Here’s why: (1) It will never be perfect, since it is impossible to craft a one-whip-fits-all punishment, and (2) it probably shouldn’t be about punishment.

Then what should discipline be about? How do you deal with a worker engaged in misconduct? How about an employee who fails to perform? Who better to answer these questions than top HR executives based throughout the world? As multinationals dive into ever more markets, they must tackle a mosaic of issues swirling around employee discipline. The insights of senior executives at these firms may not necessarily show you how to discipline — but you may reconsider how to think about discipline.

WRITING THE WRONGS
If you don’t set conduct regulations and performance standards, how will you right your workers’ wrongs? Enter the employee handbook, which typically focuses less on what people should do than on what they should not do. True, if you’re like most executives, you don’t need a booklet to inform you, as The Conference Board’s own code of conduct does, that “behavior such as physical violence, carrying of weapons and similar activities will not be tolerated while in the office” or that — now get ready for this one — “fingers are bruised when employees do not use handles to close drawers and typewriter desks.” (Yes, typewriter desks.) From the obviously obvious to the just plain obvious, corporate handbooks meticulously detail rules on dishonesty, “We need to talk.” abusive language, tardiness, insubordination, assault, and other infractions. But when it comes to specifying precise consequences, few elaborate beyond bruised fingers.

Why? Because they don’t necessarily need to. The best discipline system may be no system at all. Misconduct consequences may be easier to codify, but “in a corporate environment, you require people to work creatively,” explains Elaine Lin, HR director in China for healthcare giant Baxter. “Tasks are complicated. You cannot write a comprehensive handbook to cover all nonperforming situations. That would not be very effective. You just need a good manager to know how to raise the bar and help people improve performance if there’s a gap.”

Formalizing the discipline process can limit managers’ actions too — an if-A-then-B policy strips a supervisor of her ability to use her own common sense and judgment to exercise a potential option C. “In a white-collar environment, the range of issues you might face is too broad and complex,” explains an HR director for China for an international software maker. “You want to have as much flexibility as possible to do whatever you think is appropriate in a given situation.” Of course, no one is arguing that a firm should give managers latitude to discipline a worker who steals an extra hour for lunch the same way as one who steals much more than that. Clearly, there must be zero tolerance for the most egregious wrongdoings, but a policy that’s too strict, particularly for performance issues, can stifle a motivational culture.

At the same time, though, it can also foster fairness. Yes, a formalized system risks seeming too draconian. And sure, it can prohibit an executive from using his own judiciousness, but let’s not hoodwink ourselves into thinking that a single manager’s judgment is automatically better than what a corporate policy might prescribe. Inept bosses abound, and even the capable ones don’t always make skillful disciplinarians. Having a consequence-based policy, suggests John Last, Royal Bank of Scotland’s head of diversity, comforts managers and employees because the process is transparent to everyone. Furthermore, a comprehensive system encourages consistency. For example, if you fire Sally for missing a deadline three times, but Bob keeps his job after five missed deadlines during the same time period, Sally — and other workers — will question the fairness of her termination. As will her attorney when Sally sues you for gender discrimination.

Companies without a formal discipline system for their white-collar workers often designate a process for their lower-level employees. Which raises the question: Can you discipline everyone similarly regardless of the color of the collar?

Frequently, when dealing with their blue-collar employees, businesses employ a progressive discipline system, originally conceived in the 1930s, when unions demanded that organizations abolish summary terminations and develop a structure of progressive penalties to protect workers by making them more aware that their jobs were at risk. Generally, the process begins with an oral warning, followed by a written notice, then suspension without pay, and eventual termination. One part of the problem with this, says John W. Allison, FedEx’s Asia- Pacific vice president of HR, is the ineffectiveness of restricting pay as a means to discipline. “The only thing you get as a result of suspending an employee without pay,” he points out, “is someone who comes back to work unhappy because you made that employee miss an automobile payment.” Elaine Lin further cautions that “in an office environment, discipline actions cannot be so black and white, because the objectives are different than what you require of workers in a manufacturing environment, where processes are standardized.”

Critics also argue that a strict version of the system overemphasizes punishment by focusing on increasingly punitive measures without much room for dialogue. It establishes an adversarial parent-child relationship — perhaps more like documented child abuse, since opponents of progressive discipline grumble that the main objective is creating a paper trail to justify an eventual termination. Managers end up viewing each step as a mere hurdle to clear in order to win the race to lose a worker. In fact, we easily could have titled this article “The Perfect Termination,” given how quickly some interviewed executives veered toward speaking about putting a worker in his place outside the company. “We tell people from the beginning they can easily get fired. Boom! They’re out if they don’t follow the code of conduct,” says Angie Tsai, regional director in Hong Kong for organization effectiveness and development at EMC Computer Systems, a global information-services provider.

“There tends to be more of a focus on firing as it relates to discipline in some parts of Asia,” explains Tanya Srepel, General Mills’ vice president of international HR. “This doesn’t create a healthy environment. It basically says the employee is bad and I’m going to document it, which does not make the employee feel confident.”

“WE WILL WORK IT OUT”
 These days, HR practitioners the world over contend that a progressive- discipline system is anything but progressive. At firms eager to project modernity, progressive discipline may as well be the punishment that dare not speak its name. Rather, it’s “the performanceimprovement process” or “the employee-relations approach.” Behind the veneer of semantics, however, many organizations continue practicing a form of progressive discipline — which isn’t to say it’s the same version used to control blue-collar employees. For starters, companies are building flexibility into their newer systems by incorporating vague language, as in a manager “may” administer discipline “depending upon facts and circumstances.” Words like “must,” “shall,” and “will” rarely find their way into a corporate policy.

Moreover, the new white-collar adaptation of progressive discipline may travel the same road of increasingly severe measures, but deeper dialogues between bosses and subordinates swerve it away from punitive and more toward corrective tactics. For example, at McDonald’s, for nonperformance and mild misconduct, the discipline process begins with a face-to-face sit-down, during which a supervisor and employee must come to an understanding about the problem. If not resolved within thirty days, the manager and worker together draft a document highlighting goals and objectives for the employee to follow. If the issue remains problematic after ninety more days, the company terminates the employee. Throughout the process, however, the organization encourages conversation to work things out.

“We will work it out.” It’s a national saying in the Netherlands, according to Peter van Os, vice president of group HR at Aegon, a Netherlands-based international insurance provider. It’s also an axiom he repeats often in the office. Van Os explains that there’s usually no need for a boss to talk at an employee, since almost anything can be talked through. “Serious discipline measures should only be used once you’ve tried extensive discussions to correct people,” says van Os, who adds that most problems never escalate beyond the initial talking stage. “Management is about doing the right things right, not about trying to punish people.” It’s not that punishment fails to work — it’s that it fails to make people work better. With enough negative reinforcement, you can ensure that a worker no longer arrives late to work — but there’s a good chance he may no longer be motivated to stay later. “People are people,” explains Calvin Tsang, chief HR officer for Guangdong Esquel Textile Co., a Hong Kong-based textile and apparel manufacturer that distributes throughout Asia. “It’s not very effective simply to discipline. That doesn’t correct actions. You really have to explain things to people in order to motivate them. You can’t just give them a letter telling them they did something wrong.” (Maybe an e-mail, then? Unfortunately, Don Crosby says, quick e-chidings are a too-common practice at some businesses.)

In addition, most multinationals these days prefer to separate performance from misconduct issues in order to avoid unfairly tarring individuals who underperform with the same brush as those who have committed misconduct. In doing so, some companies apply a progressive approach to misconduct offenses and draw a softer line when it comes to nonperformance, preferring to dole out “reminders” rather than “warnings.”

Elaine Lin is among those who’d prefer to use her stick to tap rather than whack workers. “Ten to twenty years ago, Asian companies were much stricter,” she recalls. “Even white-collar office workers had to clock in and clock out. HR managers would walk around the office to give warnings on lateness. Now, a lot more Asian companies are trying to provide a more flexible environment.” Lin explains that a Western influence on discipline has been refocusing management philosophy in China: “Workers used to feel that all they had to do was show up at the office and behave. Now companies expect them to improve performance. We care more about job performance rather than sending people letters reprimanding them on how they dress or their lateness.”

DISCIPLINE AVERSION
A discipline system is only as effective as the managers doing the disciplining — that is, if they’re disciplining. Why reprimand your workers when rewarding them is much easier? That way, everyone’s happy. But remember the well-known studies demonstrating that people dread losses much more than they value gains. “Unfortunately,” Angie Tsai explains, “when you reward people, they remember it for one week, and then they forget. They’re also never satisfied with the reward because they think they deserve more. But if you discipline them with warnings, they pay more attention and remember longer.”

Not that a balanced workplace regimen can’t include both sticks and carrots. “No one gets better from only being punished,” explains Siobhan Martin-Wells, Mercer Consulting’s European HR director. “You feel absolutely miserable and crappy. Your motivation and engagement are broken at that point.” To combat such despair, for example, Tanya Srepel coaches executives at her company to give workers two positive comments for every negative criticism during a discipline session.

When you don’t address misconduct issues immediately, you risk low morale among other workers, suspicions of favoritism, or accusations of incompetence by those above and below you. If the ultimate goal of discipline is to correct and improve behavior and motivate workers, then think how de-motivated others will feel when they see a manager not taking a stand on issues — and not just on issues of misconduct. Nonperformance problems must also be handled in a timely manner. The annual performance-appraisal meeting should not be your sole opportunity to tell your subordinate he’s not working up to standards.

In fact, workers who aren’t performing well may be failing as a result of bad management, says John Harker, Citigroup’s head of HR in Europe. “When employees have seriously gone off the rails, I very often look at the manager: How did you allow this to happen? Why did you allow things to get this bad?”

Vivek Patwardhan, vice president of HR for India-based Asian Paints, recalls an employee whose repeated mistakes irritated his sales manager, so the manager began reducing the worker’s responsibilities. Over the next few years, the two continued to clash, and the employee’s job duties kept shrinking. “The sales manager came to me and said that we don’t need this person because he doesn’t do anything,” says Patwardhan. “But it was the sales manager who took those responsibilities from him.” Before administering discipline, he recommends, managers should first ask employees if they need something from the company in order to do a better job.

Even when executives get around to disciplining, some do it in an offhand manner that almost guarantees that an employee won’t take the matter seriously enough. “A manager might say during lunchtime, ‘Do you have issues at home? Because you’ve been late a lot recently.’ It’s done so lightly that the worker doesn’t perceive the importance of the message,” explains Lillian Liu, Nokia’s director of HR for China. Months later, when the manager feels even more frustrated that the problem persists, he may again approach the worker, asking, “‘Hey, I talked to you about this problem already. Why haven’t you fixed it?’ And the employee will genuinely not remember the initial conversation.”

Then there are those cases in which a manager hesitates to discipline a problem employee because he’s a top performer in other respects. “I’ve seen firms that don’t want to risk losing a person,” recalls Robert Chong, managing director of HR for Temasek Holdings, a Singapore-based international investment firm. “They allow him to get away with more. But in the process, companies should ask themselves: Is it worth compromising corporate values for one person?”

“No matter how robust your recruitment policies are, no matter how much vetting you do, a big organization will reflect society,” says John Last of the Royal Bank of Scotland. And just as the world around us teems with thieves, liars, sloths, and incompetents, so will your company. Because no two thieves, no two liars, no two people or infractions are exactly alike, there is no ideal form of discipline.

Regardless of an employee’s infraction, managers must strive to maintain a positive working relationship by remaining open to dialogue and ensuring that the worker understands why he’s being reprimanded. It’s no small task. As management professor Lawrence Stessin wrote in his 1960 book Employee Discipline: “Employee discipline is the real drama of labor relations. It is the panorama of industrial conflict.”