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Capital One Firings*

May 04, 2002

Firings again questioned

Capital One also said to be targeting some high performers with big salaries




THE SYSTEM: Forced rankings fairness debated

Capital One Financial Corp. is firing its low performers. But it's apparently getting rid of some high performers as well - and their hefty salaries.

One person received a glowing appraisal just last spring, yet she was fired.

The former senior level manager claims she still doesn't know the reason for a misconduct charge that led to her dismissal. "I used to love that company," she said. "I thought I would retire there. Last year, the company just changed. It's cut-throat."

Capital One, the largest employer in the Richmond area, says it is not engaged in a layoff or a staff reduction.

What's more, it is actively seeking to fill 531 open salaried positions, said company spokesman Hamilton Holloway.

The company is hiring more people than it is firing, he said.

Holloway said people are terminated for poor performance. Dozens of current and former employees would disagree.

"I joined Capital One as part of the new performance culture," said a former employee. "I was part of the solution, not the problem. I was terminated [this spring] after receiving good reviews and positive feedback, a five-figure bonus and a six-figure stock option."

He said he was asked to fire 7.5 percent of his staff. He complied. Morale plunged. He was fired for poor morale in his department.

"Very early last year, the business side of Capital One responded swiftly to instructions to identify the bottom 7.5 percent and manage them out," he said.

The 7.5 percent cut came up repeatedly in more than 50 responses from current and former employees to an earlier Times-Dispatch article on firings at Capital One.

Some business departments were hit harder than others. Information technology was specifically targeted, according to internal company papers obtained by The Times-Dispatch.

The rash of firings has led to a dozen or so complaints with the Equal Employment Opportunity Commission. The EEOC, as a matter of policy, could neither confirm nor deny the number or nature of the complaints.

At least one racial discrimination claim was filed, according to sources. Another complaint says the company refused to accommodate a disability. Most, however, seem to be age-related.

"There is no doubt that being a white male over 40 and making over $100,000 pushes you over the edge," said a fired employee in his late 40s.

"Capital One has a right to fire people, but they can't violate federal law by cutting the oldest people," said attorney Harris D. Butler III of Butler Williams Pantele & Skilling.

Butler has filed six complaints with the EEOC against Capital One for age discrimination, alleging a pattern of dismissals of older workers.

He shrugs at the fact that people younger than 40 have lost jobs there as well. "You need some sacrificial lambs," he said.

Butler is working with former employees who were actively recruited by Capital One for their expertise. "These are people who met or exceeded performance expectations in the fall of 2001. All of a sudden, they were told they were not performing."

Capital One clamped down last year on its twice-yearly evaluation process. It initiated a forced grade distribution, meaning a certain percentage of employees would receive low grades of 3 and a certain percentage would get high grades of 5.

According to the company's instructions to managers for completing performance appraisals, 8 percent to 12 percent of employees would receive 3s (below expectations) or 3 pluses (approaches expectations), while 10 percent to 15 percent would get 5 minuses (excellent) or 5s (outstanding). The rest would fall in-between.

"The forced distribution and performance management layoffs are a source of huge frustration for me and my co-workers," writes a current employee.

Another had this to say. "I can assure you that working in a company that respects, honors and rewards good performance is very motivating." She works at the headquarters in Falls Church, not here in the company's operation hub in Richmond.

Employees, both current and former, say people who receive 3s or 3 pluses are terminated.

Holloway denies the process is that straight-forward, even though more people have been fired as a result of the tougher performance standards.

"If someone isn't meeting expectations, the objective is to improve performance," he said.

"The spike [in the number of people fired] is a remedy for the lack of discipline in our performance standards over the last four years. We're playing catch-up."

The company says it hires only the best and the brightest. The hiring process is rigorous. It includes psychological and aptitude exams. It can take months.

"We're not perfect," Holloway said, regarding new hires. "We set high standards. Our culture is very demanding. It's not a fit for everyone."

The manager who was fired for misconduct received an overall rating of 4 plus (well exceeds expectations) last spring. She was promoted three times in her six years at the company and her salary more than doubled.

She was awarded unemployment benefits, even though people fired for misconduct typically do not qualify for them.

The Virginia Employment Commission said employees are awarded benefits in the absence of proof of misconduct. Capital One offered no such proof in this case.

A person is generally eligible for unemployment benefits if they lose their job through no fault of their own, said F.W. Tucker, chief of benefits for the Virginia Employment Commission.

"Typically, we don't protest a VEC claim on performance," Holloway said. "We are not interested in preventing people from getting what they are entitled to from the government." He declined comment regarding the misconduct issue.

Misconduct is defined by the VEC as willful or substantial disregard of the employer's interest.

One employee said he proved his innocence on a misconduct charge, which Capital One challenged.

Others are simply trying to figure out what hit them.

"The many people I know who have been affected are devastated because they never saw it coming," writes a current employee.

Another employee, trying to hold onto his job, said, "I went from being praised in a staff meeting in February to a week later being put on a performance plan - the first phase of termination.

"The ironic part is I love this company. It's always rewarded top performers. . . . It's firing people that built this company."


Contact Carol Hazard at (804) 775-8023 or chazard@timesdispatch.com

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