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Let’s talk about one of the worst feelings in the world: the moment you realize you have to terminate someone.
Firing an employee, especially at the startup level, is hands-down the toughest responsibility a founder or executive has to take on. I know this sounds like an elitist problem: “Oh, it must be real rough to have to ruin someone’s life.” It is.
Of course a firing sucks for the fired person the most. But it sucks for the company too.
Recently, a woman I’ll call Maria messaged me through my website. She had recently returned to the family business and taken what was essentially the CEO position, reporting to a family member who was semi-retiring and would remain, essentially, the executive chair.
Within a short period of time, Maria discovered that a longtime and trusted employee we’ll call Jeff had been farming out business under the table and skimming the difference.
The last sentence of her email was, “I have to fire this guy, right?”
Before we go any further, let’s talk about why you fire people.
- For cause means what it sounds like: some kind of policy or ethics misconduct or significantly poor performance that damages the company.
- Any performance issue can lead to a for-cause termination, but unless those issues are egregious, performance problems usually lead to termination without cause.
- Firing for economic reasons means the company can’t afford to keep one or more employees—in other words, layoffs. (That’s considered without cause.)
- Strategic decisions can also lead to layoffs and can happen with a merger or a pivot or just organizational restructuring. But to me, strategic layoffs are a derivative of economic layoffs, just more proactive and ugly.
Maria’s situation is a clear-cut termination for cause. But even in situations as straightforward as this one, there are always factors to consider when deciding to fire someone.
First of all, never fire lightly. No company wants to be the company that fires anyone. Beyond the obvious negativity and the need to backfill that production, it’s also bad for reputation. And it can kill a startup if that former employee poisons a small recruiting well, no matter how strong the company or how deserved the termination.
And firing itself isn’t easy, logistically speaking. Once you consider terminating someone, for any reason, everything from that point forward becomes a formal process. (If you’ve never had an attorney on retainer or at least on standby, shame on you, but now is the time.)
Furthermore, the rigidity and coldness of a formal evaluation process can further damage the company’s relationship with the employee. In other words, once you’re considering terminating the employee, the steps you need to take can turn that consideration into a self-fulfilling prophecy.
In any termination for cause, after you consult your attorney, you’ll need to document everything you can in order to support the case for termination. This is not just to keep you out of legal jeopardy, although it’s not a guarantee that you won’t face legal action. But surprisingly often, the employee’s lack of ethics or lack of performance might come as a complete surprise.
You’ll need written results and notes from performance evaluations with dates and names. You’ll need emails of complaint from other parties. You’ll need evidence, not just assumptions or accusations. That said, any assumptions or accusations need to be investigated thoroughly.
Now, if the issue is abuse or harassment, of any kind, my encouragement to consult an attorney becomes a mandate, and it goes without saying that the accuser should be protected and given the benefit of doubt.
If you’re not doing the firing yourself, there needs to be a very good reason why you’re inflicting this job on someone else.
Once you have all your documentation in place, it’s time to make your decision. In Maria’s case, what was going on was definitely unethical and likely illegal. Without getting too deep into her story, my advice was that her first responsibility was to keep liability away from the company and herself.
As a founder or executive, you’re at least partially responsible for the actions of your employees, both ethically and legally. Once the facts are in and the judgments are made, the decision that comes out has to stand. You can’t waffle here. You have two choices: Terminate or don’t terminate.
Now, I’m a firm believer in second chances. So in the not-terminate category you have two more options: Either you were mistaken and the facts have proven that out, or you’re going to give the employee a second chance.
That second chance is also a formalized process, a probationary period by which both parties define and agree upon the details of misconduct or poor performance, establish a program with quantifiable goals and a set timeframe, and set review points along the way.
This is harder than it sounds—and it doesn’t sound great to begin with. I’ve had employees decline the process and choose to walk. That sucks, but I understand it.
Regardless, once you make the decision and/or lay out the program, you need to stick to it.
And make sure you’re the one communicating it. It’s my belief that if you’re the CEO, you need to do the firing. That’s what the “executive” in chief executive officer means. If you’re not doing it yourself, there needs to be a good reason you’re inflicting this job on someone else.
Also, you should never do it alone. Have someone from human resources there with you. If your company is too small to have human resources, it should be another member of the executive team.
Beyond these guidelines, I don’t want to tell anyone exactly how to terminate anyone else. But I will say this: Don’t drag it out. The time between the final decision and the communication of that decision should be the shortest amount of time possible, with one caveat—wait until the end of the day so they can leave with or after everyone else.
Even in the worst cases, be human. You’re judge and jury here, and emotion should not play a role, but humanity and dignity should. There’s no reason to extract a pound of flesh on the way out, even if it might be deserved.
Don’t leave any room for surprises. Be clear and unwavering. People deserve that. Finally, just watch out for retaliation. It will probably never get ugly, but weird stuff happens sometimes when you fire people. Emotions get unchecked.
All that being said, though, the best defense against having to fire employees is to have a good offense when you hire them. Be somewhat of a hard shop to get into. Always think about fit. Always onboard new employees and integrate them socially. Establish a company culture. And don’t just talk about it—live it.
It’s a lot of work up front, but all it takes is having to fire one person one time, and suddenly those preventative steps won’t seem like much work at all.