Wednesday, December 24, 2008

EAPs and the Great Uncharted Territory of Cost-Benefit

(In this post, I am going to add a bit more to my previous post in November on EAPs and management liability. I see that I missed a couple points.)

The great uncharted territory of cost-benefit for EAPs is the positive impact they have on the bottom line in helping prevent lawsuits brought against companies by their employees for employment practice missteps and wrongdoings.

Did you know that the average out-of-court settlement for wrong discharge is over $100,000? The average jury award is over $500,000, and employers lose over 60% of the time. Health care dollar saved by EAPs do not compare with the size of the awards employers face in the lawsuit arena.

Discrimination, wrongful dismissal, constructive discharge, and dozens of other employment practices violations cost American employers billions in awards. Many of these awards are secretly agreed to by undisclosed out-of-court settlements.

So risky is the employment setting that a new insurance emerged in 1991 called EPL (Employment Practices Liability) insurance. Two companies existed then. Now over 80 insurance companies offer EPL. None of these insurers are using EAPs as cost-containment products like managed care is doing for their products. And, hardly any company is considering how an EAP can help reduce this liability in general.

EAPs are frequently first to learn of an employee's intention to sue. Indeed, how often have you had an employee in your EAP office say, "I think I want to sue?" "Hey, do you think I can sue!?" or a similar statement?

As an employee assistance professional, your task is to help the employee get their needs met in more effective ways. The buzz phrase for thwarting lawsuits and handling disgruntled employees is "alternative dispute resolution." (Yes, I know this is really a term used in labor disputes, but let's broaden this term for a second --- really, to be more precise, this term describes official channels established by management to deal with disputes employees bring, which if not managed effectively, could lead to litigation. Very frequently EAPs work things out and save management and litigation dollars. I see our ability to management conflict in organizations as a form of ADL.

Does the human resource department of the organization understand your ability to align constructively with employees and help them get their needs met without turning to lawyers? The biggest weapon you offer is an empathic listening ear and the most valuable benefit you offer employers is empathy for employees and redirection to constructive help. It’s called “putting out the fire.”

This impact of empathy toward employees that EAPs provide and that cannot be provided by other individuals in the organization who are closely aligned with management (human resources, occupational health, etc.) is under-researched and under-appreciated.

The employer who understands this empathy-redirection-protection paradigm will give you more time to educate managers. They will ask the EAP to be involved in providing management consultation. And your influence will expand as an EA professional beyond the limited role many HR managers mistakenly believe you only fill now.