How to Fire Employees

Return to main page


Digital Library > Human Resources Management > Firing"How to Fire Employees"

Firing employees is never easy, but this Quick-Read will help you set up systems to make the termination process smoother for both you and the employee.

OVERVIEW [top]

Firing employees poses problems for any employer. For fast-growth entrepreneurs, this grim task is especially tricky.

Entrepreneurs must often make quick personnel decisions in a rapidly changing, high-stakes business environment. Yet proper termination procedures unfold in a slow, deliberate manner, with frequent reviews and multiple checkpoints along the way.

What's more, business owners rarely have time to document every little infraction. But unless you issue written warnings and add probationary memos to the employee's personnel file, your decision to fire can trigger a wrongful discharge lawsuit.

The most vexing problem for many entrepreneurs is timing a termination. If you don't have an HR manager to handle firings, then you may procrastinate and wind up leaving a poor performer in place too long. The result: Even more damage is done, and firing becomes increasingly tough.

In this Quick-Read you will find:

  • How to lay the groundwork for a smooth termination.
  • What to say when firing an employee.
  • Ways to preserve the departing employee's dignity (Real-Life Example).

SOLUTION [top]

Laying the groundwork for a smooth termination

Firing employees is easier when you remove the mystery and eliminate surprises. When workers know what's expected of them — and they repeatedly fail to meet minimal standards — you're in a much better position to issue warnings and eventually terminate them.

Develop written policies to address key performance issues and indicate what actions will trigger termination. For example, many companies have a probationary period for new hires, noted explicitly in the contract or hiring document. After your lawyer reviews these policies, require that every employee sign an acknowledgment that they received them. As your firm grows, establishing this precedent will help prevent legal trouble.

Take these steps to pave the way for termination:

  1. Leave a paper trail. Consistently document any and all performance problems. Most termination meetings should occur when both parties realize that prior warnings did not suffice. Ideally, an employee's personnel file should tell its own story; in fact, some business owners will simply hand the employee a pile of probationary memos and say, "This stack is too high to allow you to work here any longer."
  2. Review your promises. If the employee has a written employment contract, honor its terms. Also check if any oral commitments were made to the employee. Comments such as "You can expect to be doing this job for one year" can be construed in some state courts as creating a contractual relationship.
  3. Don't prejudge. Give the employee a chance to correct problems by identifying them specifically and proposing clear corrective behavior. Provide coaching as needed to ensure the employee has a fair opportunity to improve. That way, you can more readily justify an eventual termination.
  4. Solicit input. Before concluding that an employee must be terminated, meet with the worker's direct supervisor or an HR manager. In a small company, you may not have many others within the firm to help you review the situation and offer advice; in that case, ask a mentor or join an entrepreneur peer group. Try to avoid making a termination decision in a vacuum.

What to say when firing an employee

Arrange for a witness to attend the termination meeting, such as the worker's supervisor. Start the meeting by delivering the news: don't ramble or try to lighten the mood with jokes or gentle asides.

After allowing the employee to respond — and not getting defensive or debating the merits of the termination — provide benefit information. This includes giving them their last paycheck (including unused vacation time), reviewing the status of their company-provided health insurance and providing information on COBRA and other programs. Give the employee the name of a contact person who'll help with follow-up questions or concerns about benefits. Also discuss to what extent you'll serve as a reference or handle future job inquiries.

If you pay severance, ask employees to sign a release form that forfeits their right to sue for wrongful discharge. Your lawyer should prepare the document and instruct you on how long to give each employee to sign and return it to you.

REAL-LIFE EXAMPLE [top]

Kathi Gonsalves, human resources manager of Gem Case Inc., a jewelry box manufacturer in Cranston, R.I., has fired many employees in her nine years at the company. She always stays positive and shows support, even when there's precious little good news.

"Never let someone leave the room feeling they can't be successful at anything," she says. "Preserve their self-esteem. Make them feel it's not personal, and that just because they couldn't do the job doesn't make them a complete failure."

She always holds termination meetings in her office so that she has information on benefits and vacation time handy. She also invites a witness, usually the employee's supervisor. And she diverts all calls to her voice mail to avoid interruptions.

One of her toughest terminations involved an office aide who, while somewhat capable in her job, never smiled and complained constantly about having to use the same restroom as the factory workers. She kept insisting in derogatory tones that she wouldn't share a bathroom with "those people."

"I said to her, 'You don't seem happy here. This isn't working out,'" Gonsalves says. "When she realized she was fired, she smiled for the first time!"

Firings rarely end with smiles, however. Terminations are stressful for both sides, and employers should use caution to avoid angry confrontations with a "disgruntled former employee."

"There are two kinds of anger. One is the everyday kind when someone feels something is unjust. The other is the result of perceived betrayal, and taps into feelings of rage," explains Dr. Arky Ciancutti, whose San Anselmo, California-based Learning Center offers teamwork and leadership training and conflict-resolution programs for businesses. To prevent anger — and to avoid legal problems — firings should be handled in stages, he advises.

Ciancutti took four steps when he fired an unsatisfactory employee two years ago. First, he scheduled a private conference. "I asked 'What's happening?'" Ciancutti says. "I didn't say, 'You're screwing up!' and I didn't hand him a pink slip. Those things are set-ups for rage reactions."

Second, Ciancutti presented a choice: improve or leave. The employee wanted to improve, so Ciancutti took step three: He retained the employee for a trial period with definite parameters. "It's important to make clear it's not forever, and that there's a way to win and a way to lose," he says.

The employee's performance temporarily improved. But soon he started giving what Ciancutti calls "brilliant excuses" for poor-quality work, and tried to get his peers to take his side.

Step four was termination. But Ciancutti says his approach kept the situation under control because he had offered help and prepared the employee for the ultimate outcome.

"Unbeknownst to me, he had a substance abuse problem. If I'd ignored the situation, I would have enabled him. This termination turned him around. He realized he couldn't 'skate' anymore," Ciancutti concludes.

DO IT [top]

  1. Never say to an employee, "This is a permanent position," which can be interpreted as an employment guarantee. Use "regular" instead.
  2. Keep a checklist that specifies under what conditions you'll issue an oral or written warning, put an employee on probation or resort to termination. Follow these guidelines; don't make exceptions or otherwise act inconsistently.
  3. Quantify oral warnings, rather than issuing vague threats or general concerns. Example: "Chris, today is the fourth time in the past two weeks that you arrived at least 15 minutes late."
  4. Organize written warnings into three parts: your work performance concerns, the corrective steps the employee must take and the consequences if these steps aren't taken.
  5. Begin a termination meeting with a "why statement": the reason why you're taking this action. Example: "This wasn't a good fit because…, and that's why you can no longer work here." If the employee protests, calmly repeat the "why statement" verbatim. This way, employees will know exactly why they're terminated.
  6. Always keep facial tissues within reach of the employee.
  7. At the end of the meeting, give the employee a list of items to return to you, such as keys and ID badges.
  8. Write a checklist reminding you and your staff to change phone access codes and computer passwords and take other steps to protect your company's intellectual property.

RESOURCES [top]

Books

101 Sample Write-Ups for Documenting Employee Performance Problems: A Guide to Progressive Discipline & Termination by Paul Falcone (AMACOM, 1999).

Rightful Termination: Defensive Strategies for Hiring and Firing in the Lawsuit-Happy 90's, by James Walsh (Silver Lake Publishing, 1997).


Videos

Fairness Factor: Managing Termination. CRM Films, 1998.


Newsletters

Employee Termination Law Bulletin; (800) 229-2084; Quinlan.com.


Internet

Parting Ways: Effective Termination Techniques. U.S. Small Business Administration Online Business Women's Center.

From Hiring to Firing: The Legal Survival Guide for Employers, by Steven Mitchell Sack. Business Week Online, 2001.

When Is It Improper Not to Fire? CCH Business Owner's Tookkit.

U.S. Equal Employment Opportunity Commission (EEOC)


Article Contributors

Writer: Morey Stettner and Kathy Furore

Related Articles

Using Personality Tests as a Hiring Tool

Sharing the Wealth: How ESOPS Turn Employees into Owners and Companies into Industry Leaders

Service Above and Beyond

Saying 'No' to Doubling Growth Helps Staff Say 'Yes' to Family-Friendly Firm

How to Fire Employees



Human Resources Management

Articles in our Entrepreneur’s Resource Center appeared in print and online newsletters published previously by the foundation. More than 1,000 articles can be found in the categories below, addressing timeless challenges faced by entrepreneurs of all types.