The Employee/Employer Relationship at Design Firms

Successful business administration includes overcoming the challenges of a plethora of employment matters. From determining staffing needs to interviewing, hiring, maintaining constructive relationships and firing, this whole process presents a constant struggle for all companies. For design firms, those problems are increased by the need for balance between creative and business goals and personalities. In this creativity-driven business, the essential fact is that the firm’s people are its greatest assets and they walk out the door every night. The key ingredients to a successful employment relationship, therefore, are communication and respect between employer and employee.

First, the design firm, large or small, just like any business, must put into place fair business practices and develop standardized employment policies. The problem is that few design firms review or track how employment decisions are made, although many have been given these tools by their parent company. Nor are individuals with these responsibilities trained as to how to interview or evaluate candidates, review or manage employees, or address problems properly. Even in small firms, one person should be identified to function as human resource administrator and be given the appropriate training. It is recommended that all employment decisions should include or be channeled through this person, as should all documentation concerning résumés received, dated and action taken (i.e., interviewed, considered, rejected, etc.) and all personnel files and other employment information (i.e., policies, health benefits, employee handbooks, etc.). This way, the firm will always have at its disposal some record of people who could be possible employees for the future, as well as documentation to protect against any possible legal actions. If the firm uses a recruitment firm, these records also can be essential to tracking referrals and pin-pointing possible conflicts from multiple referrals.

Second, firms must recognize that inter-personal dynamics are involved in these matters. Clear communication sets the right tone for a trusting, nurturing relationship in the workplace and provides a substantial foundation upon which to build the long-lasting relationship and promise of growth that both parties seek. The employment relationship is just that: an affiliation between an individual and a company, personified by individuals given the authority to make certain decisions.

Given the extent to which we in American society identify ourselves by our job, this is one of the most important relationships in life. Each of us have personal wants and needs in relation to the workplace. In creative firms, the value of the product is, obviously, its creativity, which is personality-driven and increases the identification between the individual and the firm. Managing creativity, therefore, poses unique challenges, requiring a sensitivity to the individual and the team. And those running firms often have a distinct vision of the type of environment they aim to create, which, not incidentally, has a direct effect on their ability to attract the quality of individual necessary to ensure success in the marketplace.

Job Descriptions, Interviewing and Hiring

A respect for these priorities must be established at the very beginning of the relationship. Key hiring requirements need to be identified, prioritized, and described. It is the rare design firm that goes through the effort of writing a job description. But this is an essential part of the process for it both forces the clarification of the qualifications needed and establishes expectations for the future of the relationship, thereby avoiding many problems down the road. It can also force the firm to question the realism of these requirements and expectations.

An important step toward creating a successful relationship is ensuring that the candidate understands the employer’s needs and the employer recognizes the candidate’s goals. Too often employers forget their own work history and the anxiety of looking for work. It may seem that the balance of power has shifted to the employer, but a savvy individual recognizes the underlying mutual dependence of the relationship.

The time to sort all this out is during the interview process, but unfortunately, few people are ever trained on how to conduct an interview. Common, tricky “interview questions” rarely tell anything truly useful about a candidate, unless the interviewer isvery cunning. And, of course, this is also a time for romancing, when some employers may gloss over important points about the firm. Others, trying to be very honest, paint an unrealistically bleak picture of the working conditions. Either way, the candidate is left with an unclear perception and, in the end, both sides often come away knowing very little about each other.

Again, clarity is required. Job descriptions help the interviewer hone in on what information is crucial. Checklists of these skills or characteristics can help the interviewer, especially when comparing candidates. Moreover, employers should instruct interviewers not to ask questions that solicit excess information that could be a discriminatory basis for making the hiring decision, or that could imply such information was the reason for that decision.

If care is not taken during the hiring process, even after a job is accepted there may be differing views of what the job entails (that is, its requirements, role and duties) or the terms of employment (such as, salary, bonus, review schedules, length of employment and grounds for discharge). Either the employer or the employee, under these circumstances, will sooner or later become dissatisfied and the relationship is bound to deteriorate. To avoid such difficulties, everyone involved in the hiring process should take care that all aspects of the position are clearly defined and understood. For this reason a job description is often given with an offer letter, stating that the terms laid out are intended as guidelines and subject to change.

In practice, significant guideposts in making the decision to hire or accept a position are inevitably a combination of objective criteria (such as issues of skills, title, money and the quality of the work), less tangible elements (office environment, work ownership, access to clients) and personal characteristics (personality, ambition, cultural match)—not to mention office politics. Some reactions are harder to identify and are of an intuitive nature and often chalked up to “chemistry.”

Candidates should always receive some feedback, even if the standard response is, “It’s not a right fit.” Understandably, designers may find the lack of critique hard to face, however, the word “fit” does tell a significant story. Fit means everything. But it is vital to base this decision and, whenever possible, to articulate it on the basis of objective criteria as well as fit. For this purpose, a proper job description is indispensable. And it will prove handy as a reference down the road, during periodic evaluations and in case problems arise. If a person ultimately is to be let go, this history of information is invaluable to that decision-making process.

Where the reason for refusing to hire someone is not clear, an employer runs the risk of facing a lawsuit with the applicant claiming the reason was some type of illegal discrimination. If that is successful, it can be very costly to an employer: the applicant may obtain an order to be hired, may recover compensation for foregone pay and, where proven, for mental suffering. In instances where the discrimination was considered especially flagrant, large punitive damages may be collected. A simple statement or notation to a file can fully eliminate this hazard.

Personnel Policies and Employee Handbooks

The clearest method to communicate employment policies is to set them out in written personnel guidelines, policy statements ormanuals, that have been reviewed by an attorney. These should be given to employees and/or kept in a place where they can be viewed. New employees should be givencopies, but also should always ask whether these policies exist.

Most employers reserve the right to determine responses on a case-by-case basis or make changes at any time, by simply including a clear disclaimer on all documents that these statements are guidelines only. Employees are sometimes required to sign an acknowledgment to ensure that the policy statements or manual have been received.

In rare instances, nonetheless, oral or written promises are enforced against an employer and are usually limited to statements that appear to be definitive terms of employment (such as “guaranteed bonus,” “discharges only for cause” or “our company will....”). And some reasonable and harmful reliance on these promises is required before any recovery can be had.

Enforcement of these policies against an employee (such as when an employee is disciplined or discharged as a result of failing to follow work conduct or performance policies or procedures), is usually done within the firm. But these cases may be challenged if the employer has not applied the policies consistently. Whether by reason of discrimination or favoritism, all “special cases” for which rules are set aside create confusion and animosities, and dilute the force—and enforceability—of the rule.

Employee Retention and Recruiting Through Incentives

Finding and keeping quality employees are significant and costly problems for many design firms. Therefore, attracting and retaining valuable employees and avoiding turnover become priorities. Techniques can include offering increased financial rewards and incentives, as well as finding new creative challenges for employees to stay “fresh” and interested.

Promotions and increases

Of all the possible incentives toward employee attraction and retention, the award of increased earnings and position with the company is the most powerful. How this is done and the relationship between staff in an organization is complex and dependent upon the variables within each organization.

From the financial point of view, the standard incentives (such as salary increases, promotions, and change of titles) work best in the early years of the relationship. However, the employer’s capacity to increase these benefits decreases in direct proportion to the length of tenure. Profit margins do not expand in proportion to the prospect of increased overhead and, in fact, the margins may be decreasing as the design field experiences a shakedown from the influences of technology. For those who wish to avoid the problems and costs of turnover, re-staffing (whether or not through recruiters), advertising, re-training, continuity issues with clients and disruption within the firm, there are solutions to be considered.

Is there a system of grade levels and titles within your existing organizational structure? The premise is that a system is necessary and has to be defined. In larger organizations, titles, job descriptions and salary ranges are often tied to a point gradation system. For example, under this type of system, entry-level administrative positions might be classified as a grade 1 position; grade 8 might be an assistant manager, whose salary would be in the $47-58K range; grade 10 might be a manager, earning $55-65K; and grade 12 might be a director, earning $62-75K. While smaller design firms may be able to utilize a simpler plan, they should still connect titles to a salary range.

Has any time frame or length of service been deemed necessary to attain a promotion?Have accomplishments been defined to justify a promotion such as excellence in performanceor advanced education? Who should be moved up through this system and when? These three questions relate to a difficult judgment, evaluating objective standards that have been established (some that should be outlined in personnel guidelines or manuals) and personal, highly subjective factors. They also depend on the quality of communication established between the employer and employee, especially during scheduled and ad-hoc employee review sessions. While in most businesses, experience is given primary weight, in creativity-driven businesses, performance or talent can supersede issues of longevity. The inherent danger in promoting a junior over a senior person is the possibility of friction and the implied message to the senior members that it may be time to seek another position.

Are you maintaining parity with other staff members and with the marketplace in terms of: basic equality of salary, title and relationship to the length of term of employment? A rule of thumb is that there are few secrets inside or between organizations, so the importance of parity cannot be over-emphasized. It is also an issue pegged to the necessity of an established structure to link titles to salary ranges. Each new hire by a firm offers the opportunity to review the existing salary structure to see if it is current with the marketplace. While keeping up may put additional pressures on budgets and profit margins, falling behind can mean losing staff to other higher-paying companies or losing prospective employees to counter-offers.

Have you established a financial cap to a defined position? It is recommended that a cap on a salary range for a specific title be established. If the employee is with the firm long enough to “outlive” the normal increases allowed for the position and cannot be promoted, the employer should consider the other alternative compensations outlined under Employee Retention.

Should a title change necessarily mean increased salary? In a word, yes.

Could you offer profit sharing/stock/equity as alternatives to annual salary increases? Many companies utilize an annual system of bonuses and/or profit sharing as a way of sharing the benefits of business growth as well as increasing employee incentives to motivate the perception that they are a part of the process. Most employees recognize that these moneys are not guaranteed, but the benefits of shared involvement and loyalty to the firm are substantial. Pension plans that are tied to years of tenure and vestment are very successful in bonding the employee to the company. For some firms the bonus/profit sharing plans supersede the emphasis on raises, allowing for lower annual increases. The inherent value in this case is to lower fixed overhead in favor of sharing concepts for “good years.” Generally issues of equity only come into play when the individual has become a key member of the firm. There are two key hallmarks of this form of reward:

  1. Does the individual participate in the administration of key decision-making processes of the firm?
  2. Would the individual’s contribution (creative or business side) mean a significant loss of business if that person were to leave?

If he/she is responsible and controlling a substantial portion of revenues and is part of the firm’s management, then some portion of equity should be a just consideration. A recent trend has been to offer equity at earlier stages as an enticement to join new ventures.

Consider other incentives

Recent years—particularly in the post-dotcom bust/post-9/11 world—has seen a real shift in emphasis on quality-of-life issues, and time has been as valuable a benefit as money. Employers do well to consider offering increased vacation, holidays or other paid time-off allotments, as well as sabbaticals or even other unpaid time-off options. Permitting shorter work weeks, flex-time or telecommuting has given many employers a real advantage.

The following list represents various options for additional incentives or “perks.” Some of these may be negotiated at the time of hiring—when the focus is on the short-term needs of attraction and not the long-term issues of retention—but perhaps would be better left for a later stage in the relationship when expanded incentives are advantageous. Some to consider are:

  • Increased insurance benefits: expanded health, dental, optical, life and disability
  • Health club memberships
  • Defined expense accounts
  • Transportation and/or commutation to and from work
  • Increased participation in pension plans, if company-wide
  • Education and professional improvement reimbursement
  • Seminars and conferences
  • Bonuses, company stock-options, equity and/or profit sharing
  • Child or elder care
  • Flex-time or job-sharing

Create a stimulating evironment and encourage professional growth. Some employees are content with maintaining a singular role within an organization. The employer must be creative in managing these people by finding ways to sustain the creative momentum to stimulate them and avoid staleness. Keeping up-to-date on aesthetics, design trends and technological advances is both the employer’s and the employees’ responsibility.

Others, who desire professional growth, can face a glass ceiling, where internal organizational structures and overhead restrictions tie the employer’s hands. The reality is that certain people will leave for these reasons and some people will need to leave because the organization may have outgrown them as well.

While employee retention can be an important goal, there are advantages to turnover that offer creative growth and financial stability to a design firm. This includes the option to replace individuals with less-experienced talent that is perhaps also newer and fresher, and offer savings to the firm. The overriding challenge to the firm is to know when to pursue which of these directions.

Performance Reviews and Discipline

Regular, periodic performance evaluations will ensure clarity in the employment relationship by giving all involved the opportunity to communicate. Written evaluations provide the best documentation and should be discussed at the reviews and included in personnel files. These efforts put the employee on notice of problems, provide the chance to respond or defend against any charges, and raise his/her own questions or problems. It is always preferable to give an opportunity to correct the problem and a follow-up evaluation. These steps also set the groundwork in case there is a need to discipline or fire the employee.

An employee may behave in a manner that is simply unacceptable and requires a response. Common misconduct includes lateness, absenteeism, on-the-job drug use, foul or abusive language, open discriminatory treatment of others or disruptive behavior. Nonperformance or insubordination can also be a failure to follow rules regarding appearance or dress or a refusal to follow an employer’s instructions in fulfilling the duties of a job. These matters should always be investigated and addressed quickly.

Firms should, whenever possible, use “progressive discipline” or disciplinary measures that become increasingly more severe as the employee continues to engage in misconduct or fails to improve. Generally, employees are first given a verbal warning (with a written memo added to the personnel file). As the behavior continues, a written warning is given, followed by suspension from work without pay and, ultimately, the employee is fired. Also wise are meetings with the employee to discuss the discipline and methods for correction, and to provide notice of steps that the employer will take if the problem continues. This way, the employee has been treated fairly by having several chances to correct the behavior.

Termination, Resignation and Firing

In the best of circumstances, an employment relationship will evolve and end relatively amicably, quietly, and with a mutual sense that it “just didn’t work out” or “it’s time.” In many of these cases, the employee simply outgrows the position and no longer finds it challenging. In others, the employer’s needs were either not evident or have changed over time and it becomes impossible to give the employee the type of role or responsibility that is commensurate with his or her background and experience.

Sometimes employment is terminated by the employer because of matters unrelated to the specific employee, based on a business or economic situation. These are generally called “layoffs” rather than “firings” and can be precipitated by the general business climate, a downsizing, a company re-organization or the closing of a division or business. Layoffs are governed by specific legally required procedures.

Under more unfortunate circumstances, the relationship is ended by one party only and is a disappointment, if not a complete surprise, to the other. Unwelcome resignations stemming from employee discontent often occur when there is lingering confusion over job duties, differing expectations concerning the growth of the position or poor work conditions. Firings are caused by employer discontent when there is unsatisfactory performance, unacceptable behavior or insubordination.

All too often, the pertinent complaints have rarely, if ever, been communicated before the surprise announcement to end the relationship. These regrettable situations should be addressed quickly, in open discussions so that the problem can be corrected. The firm is, of course, in the best position to establish policies and procedures to address each situation. For the employee, this may be trickier and battles must be chosen carefully and handled diplomatically.

Whatever the reason, the best manner to deal with these matters is by taking the time for quality communication. Most situations can be solved through a straightforward discussion; usually it seems that the practical route for all involved is to move on. But without an adequate resolution, the end of an employment relationship is often marked by blame, denial, anger and insecurity, which may lead to an unnecessary ongoing dispute or public bad-mouthing of the employer.

The best practice is to establish voluntary, clear, written rules of conduct for the workplace and expectations for work performance in statements and personnel manuals. These should include specific penalties for non-compliance and internal procedures, if any, to review any problems as they arise. Employees should routinely be given copies or notices of these policies so that they are aware that they will be held bound to them. Employers can reserve their right to change these policies and to determine their responses on a case-by-case basis by stating this right on the document.

Employers should also avoid treating any one employee differently than others by excepting them from policies covering work conduct or performance. These so-called “special cases” only create confusion as to what is required and resentments among the staff based on perceptions of favoritism. Ultimately, they dilute the force—and enforceability—of the rule.

Severe misconduct or performance delinquencies may be sufficient to warrant an immediate suspension or discharge. These may include insubordination or engaging in illegal activities (such as theft, falsification of records or sale of drugs) on the employer’s premises. But, typically, the employee will be sent home while the employer investigates the matter and determines the appropriate penalty.

Of course, once circumstances have reached a certain level, the employee must be fired. Many employers require approval from a neutral manager or a human resources specialist before the action is taken. Firing, while never pleasant, can be eased by a few simple procedures. Advance notice allows an employee time to tie up loose ends and find alternative work. Notice may be given at home, the end of a working day or the end of a pay period in order to give the employee time to deal with the situation before spending time in the offices. In some cases, however, it is necessary to take measures to move quickly, sometimes even requiring immediate departure, to ensure that the employer’s property (including business files or documents related to trade secrets) is not taken.

Exit Interviews

A final meeting or exit interview should be held in all cases to givenotice of the termination and/or to discuss separation issues (such as the effect on benefits), as well as review any previous disciplinary actions or poor performance appraisals. At this time, the firm may offer a letter of reference or confirmation of employment—or the employee may request one—and a copy should be included in the employee’s personnel file.

It is always helpful to be very clear with the employee about the reason for the termination without being insulting or inflammatory. Here, as always, glossing over the truth leads only to confusion over the actual cause and resentment at the decision. If this information is not forthcoming, the employee may want to request it at a meeting or in a follow-up letter. It is best, however, to avoid extended, overly emotional conversations about the situation. Written notice of the reason can be given when possible; this documentation should be kept in a personnel file and can be helpful in case of a challenge or to counter claims for unemployment insurance if the termination was for cause.

In extreme instances, employers have tried to dodge actually firing someone by forcing someone to quit. However, if an employer establishes work conditions so unbearable that a reasonable employee would quit (e.g., extremely abusive treatment by a supervisor or sexual harassment), that termination will be deemed under the law as a constructive discharge, caused by the employer, rather than a voluntary action of the employee. The employer would then be liable just as if the employee had been fired. No one wins.

Most employees will choose not to protest a termination because it requires a significant investment of time, money and emotional energy to deal with complex litigation. The employer’s vulnerability could be prevented or limited by the employee’s “at-will” status or the lack of any other specific legal right. To be binding, employment commitments must be contractual, established in a personnel manual or by law (such as in the case of discharges related to discriminations. These rigorous requirements can be overwhelming to the individual who may decide that it is just not worth it. Of course, if there is significant cause to believe that there was wrong-doing by the employer—or sometimes, if the person fired is just angry or hurt enough even if wrong—a legal action may be filed. And whenever action is taken, it is costly and time-consuming for all involved. That is why firms should always remember the ancient adage that “an ounce of prevention is worth a pound of cure.”

In conclusion

Design firms have grown in sophistication over the decades. Today, in an ever-more competitive marketplace and with an educated pool of designers and marketers, design firms of all sizes must function as structured businesses. Remaining sensitive to their creative cultures, firms need to develop systems allowing them to function as an organizational unit. The quality of employee relationships is the nucleus around which all else revolves. Smoothing out these processes will eliminate many problems, ease morale and cultivate an environment with the freedom to create. Communication, equality in the workplace, identifiable structure and planned decision-making are the most important tools. Taking the time to handle these matters thoughtfully can save everyone time, costs and the emotional hardships that can adversely affect workplace morale. Finally, an emphasis on these priorities and decisions will create the positive synergy needed between employer and employee for successful, long-term relationships.