Inside Small Business | Small Business & Home Business Marketing

Verbal Abuse Slows Down Productivity

Kevin Kennemer, SPHR

Anyone can have a bad day and lash out at a coworker. Civilized people will later apologize for their poor behavior. On the other hand, there are certifiably rude people in corporate America who have made incivility, rudeness and verbal abuse a way of life in business. The companies who employ these violent neanderthals in business suits should beware of their negative consequences.

In a recent behavioral study reported by Harvard Business Review, it was determined that workers on the receiving end of verbal abuse became impaired in their ability to perform tasks. According to researchers, “their studies indicate that after exposure to rudeness, people think hard about the incident—whether just ruminating or trying to formulate a response—and those thought processes take cognitive resources away from other tasks.”

“The mere thought of being on the receiving end of verbal abuse hurts people’s ability to perform complex tasks requiring creativity, flexibility, and memory recall,” according to Christine Porath of the University of Southern California’s Marshall School of Business and Amir Erez of the Warrington College of Business Administration at the University of Florida.

The study also found the environmental impact of rudeness to be very profound and overreaching to even those outside the receiving end of the abuse. Researchers stated, “Verbal abuse affects more than just those who experience it directly; it apparently can harm innocent bystanders.”

If you want your company culture to deteriorate with increasing doses of fear, risk aversion, inability to make decisions, and lack of communication, employ or promote rude people. In other words, trying to create a great workplace while employing rude people is a recipe for failure.

It is common for business leaders to allow executives, rainmakers, and movers and shakers to behave in a rude manner, including verbal and psychological abuse. Leaders falsely believe the rude rainmaker’s contributions overcompensate for the toxic venom they spew in the office. Some mistaken leaders believe a toxic tyrant’s abuse causes employees to work harder.

Do you want to build an energized, profitable and high-performance organization? Require your leaders to take a stand against rude behavior. At times doing the right thing is difficult—it calls for strength of character—but it brings great rewards. The CEO must weed out abusive employees no matter their position in the organization. By doing so, the organization can return to an environment conducive to creativity, flexibility, productivity and profitability.

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Kevin Kennemer is president of The People Group, LLC a consulting firm committed to enhancing employee lives, increasing business performance and improving society through positive people practices. With twenty years of people practice experience, Kennemer was formerly the chief human resource officer of an international energy company that rose from obscurity to #5 on Forbes list of largest privately held companies. Kennemer is a certified Senior Professional in Human Resources.

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The Investor’s Lawyer: Common Stockbrocker Fraud

Joel Beck, The Beck Law Firm, LLC

In my last column, I detailed ways to check out the background and disciplinary history of your prospective or current stockbroker and brokerage firm. Today, we’ll begin a series on the 3 primary types of stockbroker fraud, starting with unsuitable recommendations.

A broker has an obligation to recommend that his or her client invest in only appropriate, or suitable, investments, given the client’s financial condition and the investment objectives for the account. In making a recommendation to a client, a broker should usually consider the client’s age, net worth, investment objective, risk tolerance, tax situation and other holdings to determine whether any particular investment is suitable for that client.

An example: A broker makes an unsuitable recommendation when he advises an unsophisticated, elderly client of limited means who wants to preserve his or her assets, to invest in a speculative investment.

So what do you do as an investor to guard against unsuitable recommendations? First, understand the product that your broker is recommending, and investigate it yourself. Ask your broker why the product is appropriate for you, and ask specific questions about the product. Find out what the risks are, what the fees and charges are, how long your money may be subject to withdrawal penalties and what those penalties are. Also ask how this product compares to other investments in your portfolio, and how purchasing this investment meets your investment objectives. And, be sure to keep your broker informed about changes in your financial situation so that he or she can make the most appropriate recommendations for you.

Joel Beck, a former Enforcement Department lawyer for NASD (now FINRA), is now in private practice in the Atlanta, Georgia area. He opened The Beck Law Firm, LLC in July 2007. Joel’s practice focuses on legal matters relating to the financial markets. He represents investors in securities arbitrations, among other things. Learn more at his investor’s law blog at www.theinvestorslawyer.com and at www.thebeckfirm.com.

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