How To Fire An Employee

by Dawn Fotopulos on December 18, 2012

Most small business owners have no idea how to fire an employee. One of my former students who now runs a real estate company was telling me about a female employee who was being "inappropriate" with clients.

She was coming on to them, flirting with them, not doing the work she was hired to do. She became a stumbling block to the business. Records were lost or incomplete and closings were postponed (which means revenues were postponed).  To add insult to injury, customer satisfaction started deteriorating.

It was clear this woman had to go. She was only on the job for six months, but the patterns were clear. The challenge for management was that she was pregnanat which meant she could claim discrimination even if they fired her for cause.

What discrimination laws were intended to protect had become a smokescreen for non-performing employees. How do you fire an employee for cause?

Small Business Tip #1: Document all behavior.

Yes, it takes time, but you must have a record of someone's performance. This includes dates, times, situations, people involved, time of day, dates, behaviors, conversations and warnings and outcomes.

Create a form that you have for anyone who performs well or not well. You need this information anyway for performance appraisals. It should be a running log of someone's history with your firm. Usually, three months of clear patterns of non-performance is necessary to build a case for letting an employee go.

Small Business Tip #2: Have a probationary period for new hires.

Almost half of new hires don't work out for many reasons. Have a probation policy is like dating before you marry. Give a new employee a 90 day window of probation. Let them know at the end of that time, you will decide if it makes sense to continue their employment. That takes the pressure off you and puts the onus on them to show what a valuable team member they can be.

Small Business Tip #3: Capture accomplishments and problems in writing.

When things are done well, people assume its easy. Be sure to capture the good, bad and ugly when it comes to performance of employees. If you know an employee is not working out and its just a matter of time, do not reveal you are capturing all their destructive behavior in writing. They might try to game the system. Gather 90 days of data. Make sure the employee knows how they can improve their performance. Have at least two warning conversations with them.

If things still don't improve, then have the final conversation with the employee AND a witness. Never have that confrontational conversation alone. If you have the luxury of working for a company that has a Human Resource Department, ask for someone from HR to be present. If not, have a trusted colleague present.

Small Business Tip #4: Get non performers off the bus fast.

Great businesses don't churn more, they churn faster. They take longer to hire great people and less time to fire poor performers. The longer you keep underperformers, the longer your business will suffer. The longer it will take the business to recover from the damage that poor performer created. Customer attrition, degrading morale, loss of market share are all typical casualties.

So what happened to the pregnant woman who was looking at married male clients as her sugar daddy?

The firm documented all the incidents wtih clients and other employees that were problematic and shut the door to possible litigation. She was asked to leave as soon as possible as a result. She was shocked.

She was also unable to refute ninety days of written testimony against her. Unprofessional behavior is color blind and sex neutral. Bad behavior is toxic to great employees because if you don't do something about it, your best employees will leave you. No business can afford that.

Having the right people means having professionals working with you to create positive momentum in the business. There is nothing as exciting and as seeing the business flourish as a result.

If you need to fire someone, protect their dignity and speak the truth based on data, no drama. Capturing performance is not a game of "gotcha", but merely putting a mirror up to people so they know where they stand.

The best leaders ask others to do the same for them. That's why mentors for small business owners can be so valuable. They'll reflect where your strengths and weaknesses are as a small business owner.

Just remember, how to fire an employee is about allowing someone an opportunity to flourish somewhere else. Evaluating talent and deciding who should stay and who needs to move on needs to be a core competency for anyone running a business.

In your corner as always,

Dawn Fotopulos







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