Sunday, July 18, 2010

An Occasion For Reeducation from the Lebromination

Lawsuit Prevention Strategies Employers Can Gain From Dan Gilbert’s Reaction

Most employers do not lose employees in the public and spectacular way that Dan Gilbert’s Cleveland Cavalier’s lost Lebron James to the Miami Heat on July 8, 2010. Yet, almost all business owners and CEOs can relate to the potential damaging effect that a key employee’s abrupt exodus can reek on future business profits and worth. That is why it is critical that business owners and managers learn from the mistakes that Gilbert made in writing an Open Letter to Fans on the Cavalier’s website in immediate reaction to James’ decision. The Open Letter not only created potential for legal ramification and lawsuits, but was a blistering example of poor leadership in the wake of an employment crisis.

Nevertheless, using it as an example of how employers/managers should not react when an employee announces his/her departure, the following Lawsuit Prevention Strategies emerge:

Lesson #1: Amend Before You Send
Obviously, for many managers and employers, business is not always “just business” and can become very personal. Gilbert, who felt he had a personal relationship, an expectation of loyalty and an alliance with Lebron James, expected James to respond in kind with a decision to re-sign with the Cavaliers. Feeling deeply wronged, Gilbert’s Open Letter was a reactionary, scathing rebuke of Lebron James departure. He said,
“This shocking act of disloyalty from our home grown "chosen one" sends the exact opposite lesson of what we would want our children to learn… this heartless and callous action can only serve as the antidote to the so-called "curse" on Cleveland, Ohio. The self-declared former "King" will be taking the "curse" with him down south…and will unfortunately own this dreaded spell and bad karma.”

Ouch! Making a common mistake that managers make in anger that often creates litigation, Gilbert posted his comments on the web without first getting advice about the legal ramifications of this publication. Had he consulted an employment lawyer or even the Cavalier’s counsel (presumably he did not), he would have been advised to amend his comments and informed that brutal and personal criticisms about one’s former employee can leave an employer and company open to devastating liability. Suppose, for example, the Miami Heat decide to drop James, fearing that they signed a “problem” employee. Although unlikely, this is a scenario that does occur frequently in today’s corporate America. In this case, Lebron James (or the former employee) can sue Gilbert (his past employer) for interference with future contract, defamation and intentional infliction of emotional distress. Perhaps a Cavalier fan will feel justified or empowered by Gilbert’s stating,
“Some people think they should go to heaven but NOT have to die to get there.”
If they harm James or his family, he can sue Gilbert personally for the foreseeable damages incurred.

Lesson #2: Minimize the Damage, Don’t Compound It
No one wants to lose a key employee and the worst way to do so is without notice or a plan for succession, but when that does happen, as it does in business, management must act in a way that minimizes the damage done. In the case of Gilbert’s Open Letter, not only did he compound the damage done by receiving a fine for $100,000 from Commissioner David Stern, but he also undermined the future of the Cavaliers’ ability to attract free agents that could succeed James in talent and experience. Will free agents desire to work for Gilbert in light of his unprofessionalism and vitriol? If so, it will be with Rod Tidwell-esque familiarity - “Show Me the Money.” That is, Gilbert will be paying a premium for his demonstrated unattractiveness as an employer. Consequently, his actions have cost the Cavalier’s even more than the loss of James, alone.

Lesson #3: Show Leadership in Crisis
Finally, Dan Gilbert may go down in history as the biggest example of poor sportsmanship that there ever was. Soon after James announced his decision to leave the Cavaliers, Gilbert changed the price of the Lebron James Fathead poster (pictured above) to $17.41. Fathead is a company owned by Gilbert and the new price is a reference to the birth year of Benedict Arnold, a U.S. general who defected to the British side during the American Revolutionary War and whose name has become synonymous with “traitor.” Rather than finding innovative ways to lament the past, Gilbert should be using the days after James’ announcement to reinvigorate his remaining employees, talent and fans for the future. In the wake of a key employee’s departure, remaining employees look to management for reasons to stay, reasons to reinvent and reasons to remain optimistic. Managers and owners must use the crisis as a leadership opportunity to remind those “left behind” that the “company” is not defined by one employee and that the remaining employees extra efforts to sustain the entity throughout uncertainty are appreciated and recognized.

Can you think of other example of good/bad leadership in the wake of a key employee’s departure? Let me know.

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