The phrase,"What we’ve got here is (a) failure to communicate" is, of course, the famous line from the 1967 film Cool Hand Luke starring Paul Newman. The quote is attributed to "Captain, Road Prison 36," who was played by the late, great American character actor Strother Martin. It’s become so much a part of the culture that it’s #11 on the American Film Institute’s list of the top 100 movie quotations in American cinema.
And that quote came to mind the other day after reading Rollover Systems’ article in their Weekly Exchange, Terminated Employees Can Be Toxic to the Health of Your Plan, by way of BenefitsLink. The LaRue decision, they say, demonstrates again why plan sponsors should distribute benefits to terminated employees. They go on to explain that
The necessity of communicating with ex-employees results in increases workload, plan costs, and your liability. (Ted) Benna says some former employees who harbor grudges against their ex-employers have used the non-receipt of plan information as a reason to file suit.
But the "What we have here is failure to communicate" situation goes beyond the non-receipt of documents. The grudge part that Mr. Benna alludes to has to do with the plan sponsor’s integrity – or lack thereof as perceived by the terminated employee.
It’s what Daniel P. Skarlicki, Laurie J. Barclay, and S. Douglas Pugh write about in their article, When explanations for layoffs are not enough: Employer’s integrity as a moderator of the relationship between informational justice and retaliation, in the March 2008 issue of the Journal of Occupational and Organizational Psychology published by the British Psychological Society. They say in the Abstract:
Victims of downsizing often perceive their layoff as being unfair, which can lead to various forms of retaliation. Informational justice, defined as providing employees with adequate explanations in a timely manner, has been prescribed as a way to mitigate the retaliation tendencies associated with unfairness perceptions. Few studies, however, have examined contexts in which informational justice might be more vs. less effective in this regard. In the present research, we explored whether employees’ perception of the employer’s integrity moderates the relationship between informational justice and retaliation among layoff victims. Results from a field and laboratory study suggest that informational justice helps manage retaliation only when layoff victims perceived that their employer had high (vs. low) integrity prior to the layoff. In Study 2, we found that perceived sincerity mediated the impact of informational justice by integrity interaction on retaliation.
So if we translate their academic research into practical retirement plan communication practices, the origins of retaliation, i.e., lawsuits, don’t begin with the employee’s termination but in the context of the employer’s past behavior. Effective, consistent communication and investment education can be good risk management.
Hat tip to our friend, Dr. Christian Jarrett, the Writer and Editor of the British Psychological Society’s Research Digest Blog,