Never* Fire Your Employees

(*Almost Never)

Turnover is Damaging

Job security is going the way of the dodo, and a lot of business value is walking out with it.

When an employee leaves, regardless of the reason, (s)he departs with an accumulation of knowledge about the procedures, methods, and intricacies of the company, all of which make an employee more efficient at working in sync with the quirks of the firm. Worse, the team is short-handed, which means the departed employee’s work doesn’t get done, the department slows down, time and productivity are lost in the hiring process and then again in training the new recruit, and morale goes down.

After all, if people are leaving, it’s a sign that either there’s something wrong either with the department or the employee. If it’s the department, people will abandon the sinking ship. If it’s the employee, others can wonder if the same faults will be found with them. How well can people take the necessary initiative to do their work to the utmost when they know that pissing off the wrong person can get them the axe? Who can speak their minds and raise key concerns knowing that politics could leave them looking for a new job at a moment’s notice? Who would want to put in discretionary effort out of loyalty to the company and its aims when the firm could drop them like a hot potato?

For these reasons and more, turnover is expensive!

Termination, especially, is a contentious prospect. The downstream effects on morale are swift and brutal, and there’s always the threat of a lawsuit (wrongful termination, discrimination, etc.) and/or reputational damage. Yet, nearly all of this loss, acrimony, and fear can be avoided by following one simple rule:

Davis’s Rule of Fire: Never fire an employee you can’t arrest or sue.

Whenever clients hear me say that, I get a lot of but’s, but the reality is that those two reasons are the only viable ones for termination.

The first objection that usually comes up is violation of a company policy. Frankly, most “policies” exist because someone was an idiot. Most people aren’t quite that kind of stupid, so most policy-related infractions really aren’t that big of a deal, and can be handled with a combination of managerial discretion and counseling. The underlying spirit of a firm’s rules and regulations is ensuring that people actually do effective work in a legal and ethical manner. As such, as long as tasks are indeed being completed well, on time, and in a legal and ethical manner, does it really matter if “company policy” was violated?

The key to Davis’ Rule of Fire is that you don’t have to sue/arrest someone in actuality; you just need grounds for a lawsuit/arrest. For instance, if someone didn’t do the work, that is technically grounds for a negligence lawsuit. Since most companies have better things to do than sue for negligence, the alternative is termination. Violation of sexual harassment policies is another good example of grounds for termination, insofar as sexual harassment is very much not legal! Many forms of workplace bullying are also fireable offenses, as they often constitute assault, slander, libel, et cetera.

The other big caveat I hear relates to fit. If your company hired someone who doesn’t fit, it means there’s still a hole or two in the hiring system (unless the candidate engaged in deliberate misrepresentation, which can technically be grounds for legal action — fire away!). Since “fit” is an amorphous construct, firing people on that basis can lead to a lot of questions that you likely don’t want people asking, like whether “fit” is a euphemism for a specific [combination of] demographic[s], who else may not “fit” (and why not!), and so on. New hires don’t always work out, even when they do fit, and it’s important to realize that both the employee and the company are taking a chance when someone starts a new job. If things don’t work out, a termination can lead to an ugly situation in the short term, long term, or both.

Alternatives to Termination

The most important thing to do with competent employees who are not working out is to have an honest, genuine sit-down that begins with a win-win premise. That is, all parties want everyone to come out of this meeting with the company going in a good direction and with the employee having a clear and satisfactory path either in or out of the company. Such a win-win perspective is impossible when termination is an option, because the power imbalance gives the employee neither choice nor voice.

Instead of going in with an axe, start the conversation with an ear. Lay out the situation with the employee honestly, highlighting the desired outcomes, methods for achieving them, and expected knowledge, skills, and attitudes for a “fit”, and then ask both whether it is possible for the employee to hit those marks and, if so, what (s)he needs to make it happen. Another key question to ask is whether the employee considers those expectations reasonable after experiencing the job for a while. Be open to the possibility that the expectations really aren’t reasonable, or that they weren’t communicated effectively during the on-boarding/orientation process. It’s surprising how often simple miscommunications, or violated tacit expectations that could/should have been articulated, are easily remedied once identified. Sometimes, just laying out expectations in detail for a second time (you did do it a first time, right?) after both employee and company have experienced the realities of the job will make it easier for both to engage in a job crafting exercise that lets the employee align his/her value creation capabilities with the value proposition of the company.

But, when open dialogue highlights the impasse between the employee and the company, there is a chance for some serious good will all around by doing one simple thing: get the employee another job. If it is not possible to enable the employee to create value internally, you likely have a friend or non-competitor that would gladly take someone competent and thank you for the favor. The employee, too, will be grateful not to have a threat to his/her livelihood (which avoids all of the horrid things a threatened person might do), and will leave your company full of goodwill for a former employer (and might even know a good replacement, which saves you time). That’s a far better situation than a former employee feeling screwed over because someone at the company made the wrong hiring decision or didn’t onboard or communicate the requisite information properly.

In still other cases, it becomes clear that the employee simply must leave the company without an alternative job in place, and then both sides can put their heads together to develop a solid exit strategy in which everyone’s reasonable needs are met. This includes severance, additional services that the employee can provide for additional pay, loose ends of tasks raveled up along with transfer of information, and the like. This is a delicate situation, and requires that the company do everything possible to get the departing employee to understand and agree that the departure is best for everyone. Provided there is a safety net for the fall, the unpleasantness and consequent backlashes are usually mitigated, if existent.

Of course, there are times when an employee simply isn’t sufficiently competent, didn’t misrepresent his/her skills, and still somehow got hired anyway. That’s the responsibility of the company, and the company should provide the departing employee with a parachute to survive the fall it created (e.g., severance, career counseling). In still other cases, there are times when a business must eliminate jobs for financial reasons — these are not terminations, and are often due to circumstances beyond the control of the company.

In almost every bad situation, there is a way to a conflagration from hell, and a way to a win-win victory that puts everyone ahead. The latter, though preferable, is also the more difficult path in the short term. It often requires painful looks in the mirror, honesty about errors, admissions of suboptimal communication, and a willingness to accept responsibility. Yet, without having those capabilities in spades, neither a company nor an employee can have even the slightest chance at sustainable success. As such, consider that a would-be termination is an opportunity for openness, clarity, and goodwill. It allows talent to be moved to the places where it is most suited to create value, and might even enable more than one business entity to excel. With each potential separation from a firm, a company has two choices: burn people and money, or make people and money.