Small Business

Firing People the Right Way

By Steve Strauss

5 min read
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One of the more stressful experiences a small business owner can go through is the process of terminating an employee. If this stress isn’t enough, it can compound greatly with any mishandling of the termination procedure. To help safeguard your business and your time, at minimum, your small business should have strong employee performance and conduct policies. Having them in place, however, is not enough. The policies must be applied consistently. And, you should develop a clear process to handle the termination itself properly. Here are five tips to help achieve those objectives that will help protect your business from a firing gone wrong. 

Review/revise your written HR policies 

When hiring, there is a legal assumption that people are hired at will, and they can be terminated essentially without cause. However, it is extremely risky to assume that an employee with whom you are unhappy can be summarily terminated with no explanation and no paper trail to support your claim that the employee should be terminated. Your employee handbook should contain a clear explanation of all employees’ at-will hiring status, so that they understand that you do not have to show cause. 

But to be safe – and fair – have clear employee conduct and performance review guidelines in the manual. These are policies and procedures that you will follow with all your employees. Set a company policy that once a year all employees must sign an acknowledgment that they have received a copy of your HR policies. Make sure that you highlight any changes in those policies. Consult with your HR specialist when developing these policies. If you don’t have one, that would be tip #2. 

Retain the services of an HR consultant 

The small business owner generally retains good legal and accounting advisors but may overlook human resources consulting services. An HR consultant should be part of your virtual advisory team. As your business grows, the human resources guidelines you put in place earlier may no longer serve you. More importantly, you should consider having a regular conversation with an HR professional, just to go over any current issues and to get updates from someone with their finger on the pulse of HR precedents. Get recommendations from others in your network. The consultant does not have to be local, just knowledgeable. 

Document it 

Even if you are the only supervisor at your company, make the time to track employees’ job performance. Your HR consultant should be able to help you create a system that works for you. Track job performance, let employees know on a regular basis (at least twice a year) how they are doing in terms of meeting the goals for their job, and offer to provide training for those who are not meeting their objectives. Don’t let improvement be an open-ended goal; give them a timeline for turning things around, and then stick to it. Document each step along the way. And if they are improving, let them know. It’s often easier to fix someone who’s fallen behind than to find exactly the right replacement. 

Prepare for the termination interview 

You’ve got strong policies and procedures in place. You’ve documented. And now you have an employee who is clearly failing. The axe must fall. It’s time to be thoughtful about the conversation most bosses hate most. But to protect your business, and out of respect for the employee and the rest of your workers, you must think strategically before you deliver the bad news. Here are some things to keep in mind: 

  • Paperwork: Bring it all to the meeting and make sure the employee receives it all with clear instructions. This includes last paycheck, explanation of benefits, perhaps a separation agreement you want the employee to consider before signing, confidentiality agreement(s), etc. 

  • A witness: This can go either way, depending upon your sense of the situation. In some instances, you may just want a one-on-one. But things can get testy, despite your determination to keep the conversation short and to the point. You may decide you’d like to have a trusted person with you–another manager, if you have one, or your HR consultant or attorney. Their presence will also help keep the discussion on track and give you a back-up if later on the employee disputes what was said at the meeting. 

  • Get company property back: Make sure you retrieve all company property before the employee leaves the building. Change the password on the employee’s computer, and make sure someone is scheduled to review the content on the computer ASAP. 

  • Leave with dignity: Schedule the termination interview at a time when the rest of the staff has left the office. There’s nothing more alarming to the rest of the team than watching one of their own empty out their office. It can lead others to immediately update their resumes. 

After the interview 

The rest of your employees will want some explanation of why the termination occurred. Even if you think the reason(s) should be obvious, employees tend to quickly examine their performance in the worst possible light to see if they are next. They will be waiting to see what you do next. But resist the temptation to defend or explain the termination. Put out a memo via email saying that the employee is no longer with the company, and that of course we all wish the person the best in their new endeavor. If you have key employees, you may want to meet individually with them and ask if they have any concerns about their status. Do not discuss the reasons for the termination. There’s a reason for the “left to pursue other interests” phrase. It withstands a legal challenge. 

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