Paying the price: events at Rent-A-Center prove that when employers don't respect HR today, they'll pay tomorrow - Cover Story - includes related article on learning from mistakes - Statistical Data Included

HR Magazine, August, 2002 by Robert J. Grossman

The settlement is one of the most expensive ever for a company the size of Rent-A-Center, which has $1.8 billion in annual revenues. The money will be paid to plaintiffs under a formula to be determined, and all of the women who lost employment will be given the option to return to work except for the 54 named plaintiffs, who will receive cash only.

Under the terms of the agreement, Rent-A-Center also agrees to:

* Create an HR department.

* Hire an HR vice president. This individual will report directly to Fadel, the president.

* Hire an outside HR consultant to serve as a resource to the HR department and to the employee ombudsman.

* Produce a company video, in which Speese and Fadel will state that the company won't tolerate discrimination, that it welcomes and values women and that it will guarantee a level playing field for jobs and promotions.

* Develop effective equal opportunity training programs for employees at all levels.

* Offer a toll-free hotline staffed by HR professionals to field discrimination complaints and inquiries.

Progressive Leadership Steps In

In all her years at the EEOC, Harper says she's never had a company agree to do what Rent-A-Center promised: To "really undo the things we claimed were going on." The credit goes to the current leadership spearheaded by the emergence of Fadel, who withdrew the 75-pound lifting requirement and will have ultimate responsibility for the new HR operations. Though Fadel was on board during Talley's heyday, he says--and industry observers agree--he had little influence on his willful boss. Now, he says he would have handled the HR aspects of the acquisition differently.

"I would have brought the HR pros into the room and listened to their advice. I would have discussed our business strategy, which required eliminating specialized positions and requiring all staff to handle all aspects of the business. I would have explained the business rationale for getting where we wanted to be, and asked them how we could achieve our goals without appearing to discriminate against any minority. The HR people would have told us how to go about it, how it might take six months to get there and how to back up our actions with proper documentation. You have to have documentation to prove your action was a business decision and not a discriminatory one."

"HR needed more depth when Ernie was here," says Davids, the marketing VP. "We had people doing HR functions, but not under one HR leader. We were lacking someone who could advise the company about things in the HR world that we needed to be doing to be proactive.

Getting on Track

Fadel started implementing the terms of the settlement agreement even before the court signed off. A new antidiscrimination policy has been issued and training sessions begun for all managers. And a new VP of HR was hired in June.

"These were things we were going to do anyway, so why not move ahead?" says Fadel. The new vice president will be at his side and will participate fully as a member of his strategic management team, he says.