Have you ever had a problem employee who keeps affecting productivity or morale within your business but you’re not sure when to call it quits? Or maybe you’ve decided you want to let them go, but not sure how to go about doing it. Today we are tackling a difficult topic – refining your team and knowing when and how to terminate someone. We want to walk through some ways to help you navigate this stressful experience. The reason we are tackling this topic is that bad employees can negatively impact your growth and direction as a company. We have said before that people can make or break you and we don’t want them to break you! Listen to the full episode on our site or anywhere you get your podcasts.
What we cover in this episode:
- 03:22 – Intro
- 04:15 – Know the laws in your area
- 10:23 – What are the steps to complete before you terminate someone?
- 17:10 – Reasons why business owners don’t want to let go of someone
- 21:28 – Problems with keeping someone on the team who isn’t performing
- 24:24 – When to fire someone
- 27:59 – How to terminate someone
- 37:27 – After the terminated team member is gone
- 44:01 – What’s next?
Know the laws in your area
First off, we want to stress the importance of knowing the laws in your area. Part of being a business owner and hiring a team is that you are also now a team manager. There are laws covering managing team members and employment and you need to be aware of the laws in your state/area. The rules can vary by state and for salary vs. hourly employees or independent contractors. It is your responsibility as a business owner to follow the laws in your area. An article from the SHRM (Society for Human Resource Management) states “Many small businesses treat Human Resources much as they may treat fire safety: The day-to-day pressures of running the organization may cause them to neglect even the basic steps that keep them in compliance, and, when an issue does ignite, they’re forced to scramble.”
We need to avoid the scramble by having a trusted HR resource to call when you are unsure of how to proceed. It’s an important tool as a business owner and you may want to consider engaging with an HR provider, like ADP or Paychex, who also offers payroll assistance. There are also classes you can take with the SBA (U.S. Small Business Administration). If you do not have time to dedicate to this, make sure you have someone on the team that is managing HR for your business.
What are the steps to complete before you terminate someone?
Before you terminate someone, you need to manage them. As soon as you notice that there’s a problem, address it. Retraining or a reminder of procedure may be needed. Is this a management issue (lack of training and guidelines for the staff) or a team member issue (they’ve been trained and aren’t performing as expected)? Whatever the issue is, it is best to address it in private. It’s never too late to start doing this, even with people who have been on the team for a long time.
Document your conversation and make sure expectations moving forward are clear. It is important that you are addressing the problem/s and making sure your expectations are clear. You can do this with a formal “write-up” or if the two of you just had an informal conversation, document it after the fact. You can send them a private email or note summarizing the conversation, for example, “I just wanted to put this in writing. This is what we talked about, this is how things will be handled moving forward, etc.” If the issue is serious enough, you should have them sign on the note that they’ve received a copy of it, or ask them to confirm receipt of the email by responding to the email.
Reasons why business owners don’t want to let go of someone
It’s hard enough to make a decision to let someone go. Sometimes business owners have “warm-body syndrome.” They keep bad people on the team because they don’t have enough hands to do the work. That person isn’t great but they are at least doing some work.
Another reason is it can be expensive to hire a new team member, both in the time commitment of the team during the hiring process and time spent training a new team member. Plus, it’s an uncomfortable conversation to have. Firing someone is not fun but it is sometimes a necessary part of being a business owner.
Lastly, Kim references the honeymoon period. If this person is someone you’ve newly hired, you might feel like they’ll get better with time if you just give them a chance. Know that their behavior is likely not going to get any better than it is right now. They are likely on their best behavior and it will only go downhill from here.
Problems with keeping someone on the team who isn’t performing
In our experience, having someone on the team that shouldn’t be there allows for many other problems. They set a bad precedent that you are okay with slackers / poor performers (whatever the issue is) on the team. Other team members may lower their performance since you’re accepting substandard work from a particular individual.
If that team member has any contact with clients, they may be damaging your reputation. Remember, all team members represent you. Is this individual accurately representing how you want your clients to see you and your company? If this person is managing others, you may be losing good team members because they also don’t like the work this person is doing. They may move to another job to get away from a bad boss. You lose the respect of your team. If you allow a poor performer to stay on the team, you send the message to your team that you don’t care about them or your business.
There may be financial repercussions. If you have to repair client relationships or you lose clients, this can directly affect the bottom line. The time and money needed to do damage control can be much higher than the cost of hiring a new person.
When to fire someone
It is time to fire someone when documented warnings have been given and / or retraining has happened and behavior hasn’t been corrected. Sometimes people just aren’t a good fit for your business. It’s best to part ways if this is the case.
The other instance that can call for dismissal is when there has been a major breach of procedure that necessitates immediate termination. It is best if details about what types of things fall under “cause for immediate termination” are listed in some type of team handbook in advance, so team members are well aware of what could lead to termination.
How to terminate someone
Documentation
Confirm you’ve been documenting your conversations about areas that need to improve and expectations moving forward. If not, you may wish to document further before going forward. Verify with your state and area laws to create a termination checklist so you can ensure everything is done properly and timely.
Timing
Terminating the relationship at the end of the day or on a Friday is best. Your team will need to know that person is no longer on the team and this may affect morale for the rest of the day. They may need time to process and you may need some time too.
Keep it short
Keep it short and factual. If you’ve been documenting areas of concern, you can quickly hit the main areas of concern that have not been corrected by the team member and are the reason for termination. This will be an unpleasant conversation for both of you so keep it professional, short and to the point. They may want to draw out the conversation. You can keep it short by rolling right from listing the reasons for termination into what will happen next (review your state and area laws regarding some or all of this).
Have a witness and keep it private.
Having a witness can help keep the conversation shorter and on its best behavior. If the conversation goes badly you may want a witness to help wrap up the conversation. It’s best to stay professional at all times. You might want to prepare the witness ahead of time for what you expect from them and their participation in that conversation so they’re ready to step in if needed.
Be prepared
Some states require that the final paycheck is presented at the time of termination. How are they going to return company property such as keys, name tags, uniforms, laptops or other company property? These are items that need to be researched prior to the termination meeting so it’s handled legally. If you’re required to present their final paycheck at the termination meeting, but they haven’t turned in all of their company property, typically the cost of that item is deducted from their final paycheck. How would you recoup your cost? Name tags, keycard access must be returned to you in order to avoid fraudulent activity by them.
Wrapping up
Either you or your witness will walk them to their office / locker to remove their things immediately following the termination conversation. They also need to be escorted out of the building and off the property. This is important to do so there’s no opportunity for them to do damage either verbally or to company property. They are less likely to cause damage if you or your witness are present. Next, follow your termination checklist and remove access to all systems and change locks if necessary.
After the terminated team member is gone
Keep it confidential
Keep the fact that they were terminated and the reasons confidential. This information is private and there are laws governing the confidentiality of this information. The witness in the room also needs to know that everything said in the meeting and prior to it needs to remain confidential and needs to be kept private. They’re not allowed to tell anyone about it. If you have an HR team, they may discuss it amongst themselves because they are familiar with the laws. If the conversations you’ve had about that individual directly impacts a manager’s area, you can have conversations with them about the parts that affect their area. The rest needs to be kept private and confidential.
Notify your team
Let team members know that the person is no longer with the team. This is critical so the team knows this person no longer works there and they should no longer have access to team member only areas and team member only information. You don’t need to tell them that they were fired or terminated, they just need to know that they’re not a member of the team or they don’t work there anymore. If someone asks, you can say something like “I’m not allowed to go into details about that.”
How to handle references
If someone calls for a reference for the terminated person, this call should be referred to the person on the team that handles HR and this is the only person who should discuss this. Some laws dictate that you can only confirm dates of employment. You should confirm the laws in your area about this information. You may need to train your phone staff that if someone calls asking about former team members, you direct the call to HR or to the correct management team.
Reflect on what happened
Also, look back at what happened that caused you to have to fire that person. What could have been avoided? What red flags existed in that person when you hired them? What about their behavior? If you had caught issues earlier and addressed them, would it have fixed the problem? It’s important to use this as a learning opportunity to fill in gaps in your procedures. You may need to do additional training during the hiring process or establish filters in your screening process for potential candidates.
What’s next?
If you’ve identified some gaps in your procedures after listening to this podcast, start addressing them immediately. Violating employment laws can be very costly for your business. Consider hiring a trusted HR advisor such as ADP HR solutions or Paychex HR solutions.
Most importantly, learn from your mistakes. What did we find from these experiences so we can avoid it in the future? No one is comfortable in this situation and it’s not fun for anyone. It’s not good for your team and it’s not good for business. Do your best to know the laws and if you don’t have time to do it, find someone who can to avoid costly mistakes.
Conclusion
In this episode, we discussed an uncomfortable topic that business owners must face – refining your team and knowing how and when to terminate an employee. We started with the most critical element – It is critical to learn your state and area laws. The rules can vary by state and for salary vs. hourly employees or independent contractors. It is your responsibility as a business owner to follow the laws in your area.
What are the necessary steps to complete before you terminate someone? Before thinking about termination, you need to manage your employees. As soon as you notice that there’s a problem, address it. Document your conversation and make sure expectations moving forward are clear. It is important that you are addressing the problem(s) and making sure your expectations are clear. You can do this with a formal “write-up” or if the two of you just had an informal conversation, document it after the fact.
There are many reasons why business owners don’t want to let go of someone. Sometimes business owners have “warm-body syndrome.” They keep bad people on the team because they don’t have enough hands to do the work. But problems can arise in keeping someone on the team who isn’t performing. They set a bad precedent that you are okay with slackers / poor performers on the team. Other team members may lower their performance since you’re accepting substandard work from a particular individual. If they have any contact with clients, they may be damaging your reputation. There may also be financial repercussion which can directly affect the bottom line. The time and money needed to do damage control can be much higher than the cost of hiring a new person.
Next we address when it’s time to fire someone. You know you’ve reached that point when documented warnings have been given and / or retraining has happened and behavior isn’t corrected. Sometimes people just aren’t a good fit for your business. If there is a major breach of procedure it might necessitate immediate termination.
Next we discussed how to terminate someone. Confirm you’ve been documenting your conversations about areas that need to improve and expectations moving forward. Verify with your state and area laws to create a termination checklist so you can ensure everything is done properly and timely. Terminating the relationship at the end of the day or on a Friday is best. Keep it short and factual. If you’ve been documenting areas of concern, you can quickly hit the main areas of concern that have not been corrected by the team member and are the reason for termination. Have a witness and keep it private. Having a witness can help keep the conversation shorter and on it’s best behavior. How are they going to return company property such as keys, name tags, uniforms, laptops or other company property? These are items that need to be researched prior to the termination meeting so it’s handled legally. Either you or your witness will walk them to their office/locker to remove their things immediately after the termination conversation. They also need to be escorted out of the building and off the property. This is important to do so there’s no opportunity for them to do damage either verbally or to company property.
After they are gone, there are still steps that must be completed. You must keep the fact that they were terminated and the reasons confidential. This information is private and there are laws governing the confidentiality of this information. Let team members know that the person is no longer with the team. This is critical so the team knows this person no longer works there and they should no longer have access to team member only areas and team member only information. If someone calls for a reference for the terminated person, this call should be referred to the person on the team that handles HR and this is the only person who should discuss this. Also, look back at what happened that caused you to have to fire that person. What could have been avoided? It’s important to use this as a learning opportunity to fill in gaps in your procedures. You may need to do additional training during the hiring process including filters on screening potential candidates.
Terminating an employee is never easy for anyone, however it’s critical for the health of your business and team that you focus on what’s best for everyone. Ultimately your goal is to make your business a well oiled machine. Tighten up your procedures, identify any gaps in procedures and focus on hiring the correct people. Bottom line is that if you have a team of people, you will have to fire some of them. It’s inevitable, however it’s better for yourself, your team and your business if you’re ready ahead of time for when it happens.
Links mentioned in this episode:
- How Small Business Owners Successfully Delegate HR – SHRM
- U.S. Small Business Administration – Learning Center – Introduction to Human Resources
- ADP
- Paychex
