How to Fire Someone: How to Decide, When to do it, and How to be Guilt-free


When to Fire

Why Warren Buffett Fires People

Warren famously invests in management, specifically to avoid firing people. He does not enter companies where a management change is part of the plan.

“One thing I don’t like is when I have to make a change in management, when I have to tell somebody I think somebody else can do a better job.”

That’s an interesting way to phrase it — that someone else could do a better job. Not that the manager is bad or incompetent or doing anything wrong — simply that there is room for improvement and he has a duty to make that improvement. That doesn’t make it easy for him though:

“It’s pure agony, and I usually postpone it and suck my thumb and do all kinds of other things before I finally carry it out.”

It seems like most people are the same way — firing may be the most-procrastinated task in the business world. No one wants to pull the trigger.

“Lose money for my firm and I will be understanding. Lose a shred of reputation for the firm and I will be ruthless.”

As an employee working under him I understand that completely. It’s a rule that I’d be proud to work under. This iron rule is a great setup for a story from Buffett’s friend and business partner…

Charlie Munger’s Favorite Firing Story

Charlie Munger, for those uninitiated, is Warren Buffett’s right-hand man at Berkshire. He’s a brilliant investor, billionaire, lawyer, and thinker. This story is excerpted from one of his more famous talks, The Psychology of Human Misjudgement:

What’s quoted here is the only part on firing, but the whole thing is great.

The Hard Call to Fire on Performance

It’s much easier to make the call to part company when someone has violated an ethical boundary. A far more difficult challenge is to make a decision based on low (or even mediocre) performance on the job.

Jack Welch on ‘Rank & Yank’

Netflix on ‘Adequate Performance’

Netflix has a very progressive culture, and it’s HR practices are cutting-edge. They’ve quickly built an incredible company, and much of that is due to how they hire, fire, and manage their culture.

“The real company values, as opposed to the nice-sounding values, are shown by who gets rewarded, promoted, or let go.”

This deck from CEO Reed Hastings, suggested by Itamar Goldminz, has some very clear words. Here are the three slides that define Netflix attitude toward when to fire and how to decide:

Bonobos’ CEO on Sculpting a Team

What I like about Andy Dunn‘s attitude about firing is that it presumes that it’s a required part of building an organization. There’s no sense of dread or doom to it, it’s a stated fact that it’s an important skill, one that every manager will need to hone and exercise:

What ‘Jeff’ is Costing You, Personally, as a Leader

This fantastic post from Rands on First Round Review is chilling. He addresses an aspect of postponing firing under-performing employees that I haven’t read anywhere else:

Ben Horowitz’ Most Important Advice

Ben Horowitz is not afraid to fire people. His book, The Hard Thing About Hard Things, is a must-read for all managers, and it has multiple chapters full of great detail on firing and the nuances of communication. Definitely get it.

Richard Branson Hates Firing People

As you might suspect given his public persona, Richard Branson is not a big fan of firing people. Here are a few of his thoughts on when firing is appropriate from his book, Business Stripped Bare:

How to Fire

When to fire is the decision — how to fire is the execution. Both are crucial to get right, and damaging if mishandled. Here are some things to think about when you’ve decided it’s time to fire someone.

No Surprises

Outside of some extreme circumstances where immediate firing is called for, as Munger, Buffett, and Branson talked about, most firing comes at the end of a protracted process of underperformance, evaluation, and communication — or at least it should.

Jack Welch’s #1 Rule of Firing

No surprises here — it’s “No Surprises.” The best workplaces are built on clear expectations and candid feedback. In those circumstances, no one should be surprised if they find themselves in that bottom 10%.

The Startup CEO Field Guide on Firing

This excerpt from ‘Startup CEO Field Guide’ also reinforces this belief, with an explicit prescription for explaining this in very clear terms:

Intervene as Early as Possible

This is Rands’ response to the problems of the Performance Improvement Plan, listed in #2 above. Using PIPs seems to be a point of contention for companies, and for good reason. They’re formal, transparent and methodical, but they’re often deployed far too late — used as proof of underperformance rather than a genuine attempt at improvement.

How to Avoid Feeling Guilty

Many managers avoid firing because of the associated feelings of guilt that come along — this section will show you why you don’t have to let that feeling dominate this process.

“That’s exactly the construct that produces guilt — the assumption that those are at odds. I’ve got 100+ other people working their butts off building this company. I’m optimizing for those people”

In order to protect the interests of the rest of your team, you must handle underperformers — and do not feel guilt. Here’s what the CEO had to say:

How to Maintain Order and Confidence

Firing poorly can have some very detrimental side effects to the morale and loyalty of the rest of your employees. Communicating clearly with the whole organization is crucial for firing to be executed well.

“you have to understand how it’s going to be interpreted from all points of view.”

If you fire someone in a humiliating and public way, employees will understand that is a possibility for them as well. If you happened to humiliate a good friend of theirs, they’ll begin to resent you as well.

Minimize Humiliation

Bill Campbell is the most famous CEO coach in Silicon Valley. He provided counsel for Eric Schmidt, Steve Jobs, and many more — and he believes the same thing. Here’s his advice as quoted by Ben Horowitz:

Communicate with the rest of the Team

Another important thing to realize is that anyone around the employee in question is also concerned for their jobs. This departure will affect their work, their team, and their output. They deserve to be informed. Also, understand that in the absence of correct information through communication from the company, there will be dubious information spread through rumor.

What the rest of the team sees, hears, and feels

A good illustration of that is this short story featuring the leadership of Richard Branson at Virgin Airlines. When new planes were making the position of flight engineer irrelevant, hundreds of people had to be laid off. The alternative was becoming immediately non-competitive. So they did, but they compensated them well for the inconvenience:


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Thank you

Massive appreciation for who suggested pieces of content (or wrote something new) for this Edition of Evergreen: Brad Roberts, Aaron Wolfson, Jonathan Howard, Derek Baynton, Itamar Goldminz, John Oxley, and a special thank-you to Mike Smith, who bought and donated the domain Evergreenlibrary.com to the cause. Thank you Mike!

Never Enough

As my Father always says: “There’s always room for the best.” There’s always a better resource out there. These collections can always get better, and I hope that they do. If you can think of anything that was missed, I welcome you to share it.

If you liked this, check out other Editions of Evergreen:Building and Managing a Team:How to Find and Recruit the Team you Need
How Not to Hire like a Clownshow
Compensation Rules Everything Around Me
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How to Boost Employee Retention
How Performance Reviews are being Reinvented
Secrets to Perfecting Organizational Communication
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What you actually need to know about Company Culture
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Mission & Method of EvergreenFollow me on Twitter: @EricJorgensonAnd Please... Join Evergreen.

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Read and write. Listen and speak. Think and unthink. Fixing the biggest broken market in the world at Zaarly. I am a Terrible Investor. Tw: @EricJorgenson

Evergreen Business Fortnightly

Timeless Wisdom on Business Topics, created from the best resources suggested by our readers. Each week there’s a new topic and a new Edition of Evergreen Business Weekly. Become a member at Evergreen.instapage.com