You may have missed this in the pre-Memorial Day revelry, but Merrill Lynch caught a lot of flak last week for a major change in its sick day policy. Employees used to be able to take up to four days 10 times during the year, but under the new “attendance guidelines,” workers only get to take three sick days at once before they have to talk to their managers about their absences and the impact on their jobs. At the seventh day of absence, Merrill Lynch workers may get docked pay and receive a written warning, and upon the ninth day of absence, firing is “recommended.”

This may sound like a big change, but a Merrill Lynch spokesperson told the Los Angeles Times that the new sick day guidelines are just a “minor policy adjustment,” adding: “We’re trying to reduce the number of people taking every Friday off in July.” The policy changes, according to the spokesperson, simply bring Merrill Lynch sick policy in line with that of its competitors.

Yes, this may simply be a change to stay competitive for Merrill Lynch, but I was struck by the nuttiness of enacting a new corporate-wide policy for 60,000-plus employees rather than dealing head-on with what seems to be a more basic problem: a raft of workers calling in “sick” so they could take three-day weekends during the summer. Why didn’t Merrill management just deal with that issue directly?

I was also struck by the abrupt change from an over-the-top-generous sick day policy (essentially 40 days a year) to an incredibly miserly one (only three days before you have to explain yourself). This yo-yo from one extreme to the other not only sends a terrible message to the workforce, but it makes employees wonder just what might come next. And employees who have something like this dropped on them out of the blue can conjure up all sorts of nasty scenarios if they don’t have any other context for what the company is doing, and why.

Workers don’t need much to distract them from the job at hand. My guess is that whatever Merrill saves in the long run from this policy change it will give back in the short run from a less-productive workforce that is now focused on what all of this new policy-making means, and what might come next.

There’s an interesting debate going on in the Workforce Management Community Center about the propriety of firing a person by phone. One person notes that discharge by phone is preferable to discharge by e-mail, as RadioShack did to 400 workers last year.

As I wrote then, there’s only one right way to fire a person—in person, face to face, supervisor to worker. There’s a reason for this, and it is simple: It should be handled that way because management should be forced to personally confront the consequences of its actions.

I don’t know any good manager who likes firing people, but unfortunately, it’s part of the job. Hopefully, it doesn’t happen often, but when it does, you owe it to the person you are firing to sit them down and tell them the reasons why.

Can you do it by phone? Well, yes, but that should only be used in an extremely unusual or exceptional circumstance. I’ve had to travel across the country on occasion to discharge a remotely based worker in person, and although I hated having to do it, I always felt it was a trip worth making. Why? Well, when you have to fire someone in person, you find that you are a lot less willing to consider doing it in the abstract. And that’s why doing it by e-mail or phone is a cop-out. It dehumanizes a process that is pretty inhuman to begin with.

Taking a person’s job away, for whatever reason, is one of the worst things you can do to another human. Doing it in person doesn’t make it better, but it does make it more personal and is one small thing that can help the departing person walk away with some small measure of dignity.

Just what does it take for a CEO to get fired for cause? This week, Home Box Office chairman and CEO Chris Albrecht provided the answer.

Albrecht worked for HBO for 22 years and had been CEO of the network for the past five. He’s credited for helping create such blockbuster shows as “The Sopranos” and “Sex in the City.” Along the way, the popular network became a hugely profitable unit in the Time Warner empire, making about $1.2 billion per year and setting the standard for creativity and quality in the television industry.

But Albrecht had a dark side—an alcohol problem that he had battled for a number of years. Last weekend, the dark side consumed him. According to a Los Angeles Times report, “[Las Vegas Police] Officers at the site of the Oscar De La Hoya-Floyd Mayweather Jr. boxing match came running when they spotted a man later identified as Albrecht grabbing a woman by the throat with both hands and dragging her toward the valet parking station at the MGM Grand. Police said Albrecht was unsteady on his feet, reeked of alcohol and said of the woman ‘She pissed me off.’ ”

Albrecht was arrested and spent the night in jail. He admitted to a drinking problem and that he would take a leave of absence. When the Times reported that HBO had paid a settlement of $400,000 to $500,000 in 1991 over another Albrecht choking incident (with a married senior vice president who worked for him, and that he previously had a relationship with), the company fired him.

If you enjoy HBO—probably the best of all the cable networks—you have to be troubled by Albrecht’s sad fall. But others could se this coming. As the Times pointed out, Albrecht was well known to many as a “creative genius given to emotional tirades.”

The thing that bothers me is that Albrecht should have gotten his walking papers in 1991, when HBO had to pay the better part of a half-million dollars to cover up his first choking incident. And I wonder: How many other managers would have kept their jobs if their employer had to pony up a chunk of money to settle inappropriate behavior on the job?

You know the answer to that. We seem to live in a world where companies lavish riches on CEOs and kit them out with golden parachutes even when they don’t perform. But Chris Albrecht is proof that even there, in the rarefied realm of the CEO, sometimes enough is enough.

Last month, I wrote both here and in my “Last Word” column about Circuit City’s curious decision to get rid of some 3,400 workers simply because they were getting paid “well above the market-based salary range for their job,” according to the company. It seemed to me at the time that getting rid of your highest-paid, most experienced (and probably best) workers is not the smart way to compete with Best Buy and other strong competitors.

Well, guess what? This week, Circuit City revised its financial outlook for the first half of its fiscal year that ends February 29, 2008, and now the company expects to post a loss for the current quarter, which ends next month. Analysts who follow the company say it is due to business lost to competitors—who have better-trained employees.

Mike Baker, a research analyst with Deutsche Bank, wrote in a report quoted in today’s Washington Post that the “Circuit City situation is mostly a result of its loss of informed workers.” Best Buy, he noted, “will fare better because of market share gains driven by weakening customer service at Circuit City. We believe that Circuit City’s store labor change … likely has had a worse than expected impact on Circuit City’s service levels and has enabled [Best Buy] to take [market] share.”

Circuit City continues to be in denial, telling the Post that it was too early to tell whether the dismissals had caused any of the falloff in April sales. “We will continue to monitor that,” a company spokesman told the newspaper. “Only two or three salespersons per store were impacted on average. Others were customer service representatives or warehouse employees,” which would point to other factors for the drop in sales, he said.

I feel for a PR flack who is paid to spout such gibberish, but Circuit City management just doesn’t get it. Getting rid of your most experienced and knowledgeable workers, simply because they make too much money, is penny-wise and pound-foolish. In an area where knowledgeable customer service makes a huge competitive difference, Circuit City has embraced a flawed and destructive workforce strategy that simply makes no sense.