When Is The Right Time To Fire Employees?

Putting employees first doesn’t mean holding on to employees who aren’t working out. Although we all try to avoid these situations, sometimes the best thing to do for everyone is to fire employees. So when do you do it, and how do you do it? Also, how do you make sure you show them the respect and dignity they deserve during the process?

Reasons To Let Someone Go

The decision to fire employees often comes down to two key questions:

Is the company better off without them?
Are they better off without the company?

The second of those two questions is often overlooked but just as important.

Not a cultural fit

When a company has a robust culture, or it is trying to establish its culture, your team members need to buy into it. If employees don’t understand the mission of the business or are actively speaking out against the purpose of the business, then you need to start the process of evaluating if they should be there.

Is the company better without them?

The company could be better off if the employee is creating tension in the team that is affecting the quality of their team’s work. It will also be better off if the employee consistently undermines initiatives that the leadership team is trying to roll out.

Is the employee better off without the company?

Are they complaining on a regular basis? Who wants to be in a job where you don’t like showing up every day? If they don’t want to be there, then help them find a place they want to be. It might be painful for them in the short-run, but the longer you stay in a role or company you don’t like, the more miserable you become. It also prevents you from going out and finding a position that is a better fit.

They are not succeeding in their role.

The employee may not live up to their paygrade. They are not performing essential functions, or they might not have the skill set to perform the necessary job functions. The worst is when they are just okay, and you know you can find someone better to do their role.

Is the company better off without them?

Are other employees picking up the slack for this one? So, other employees can’t do their job because this employee can’t do theirs. They aren’t getting better, they make the same mistake over and over again, and they drag down the performance of the company and their co-workers.

If the employee is just okay, not thriving but also not failing, can be the toughest to judge. If they have a growth mindset and can show that they can improve, then I would take a chance on holding on to them. But, if they are not learning and growing, then you will probably waste a lot of time and money on that employee. Eventually, there will also be animosity that builds from their lack of performance that could create a culture problem.

Is the employee better off without the company?

They probably have a great skill set, but it just doesn’t fit what the company needs. They will eventually get frustrated and start to hate their job. They can find another job that better fits their skill set, but don’t want to take the chance of not finding it if they quit.

Another issue is when you don’t have the skill set or bandwidth to grow the employee. You see this a lot in startups and small businesses, you need the employee to take ownership of their growth, and some people can’t. They should go to a company that has the resources to help them grow, rather than wasting their potential in a role where they won’t succeed. This issue is especially true for employees that are just okay. If they can’t take ownership of their learning, then there is not a path for them to improve if you don’t help them. Let them go and find a place that is a better fit for them.

The employee presents ethical or legal issues.

These issues are straightforward; are they doing something potentially illegal or unethical? Are they making other employees uncomfortable? Did they break ethical rules like putting excessive pressure on co-workers, suppliers, or customers to make themselves look better? Is there evidence of legal issues such as harassment, money laundering, or fraud? These issues never go away if you sweep them under the rug. Most issues companies run into on this is not the first action, but the company’s reaction to it. It is critical that if you suspect anything, you reach out to the appropriate authorities and your legal counsel and follow their guidance.

Company performance

When the company is underperforming, then one prominent place to save money is by laying off employees. In this case, I often suggest that you add a third key question to the two we’ve used so far:

Did this employee do anything wrong that led to the company’s situation?

If the employee did nothing wrong and did not contribute to the company being in the situation it was currently in, then they should not be let go unless there is a yes to the other vital questions. If they didn’t do anything wrong that led to the company’s situation, then you should be letting this person go even if you weren’t in a distressed situation. It is difficult for a business to recover if you let go of great people who are a great fit when times get tough.

Also, inform your employees of your financial situation before laying people off. They may have solutions that you haven’t thought of, such as temporarily reducing everyone’s salary or moving everyone to part-time until business picks up.

How To Handle It

Coach your employee to help them improve

The first step is coaching your employees to help them improve. If you don’t let them know that there is an issue or give them a chance to improve, then you did not treat them with the respect they deserved. Often, the employee doesn’t even know there is a problem that needs to be improved. Know Your Team has a great article on how to coach your employees. I highly suggest you read it before starting the process.

If you are actively coaching them, then they will also be more in tune with their performance. So, if your coaching sessions turn into coaching out sessions they are more receptive to those conversations.

Document Everything

Document the issues when they strayed from your culture or underperform, and all of the coaching sessions or training you did to help them improve. You may think at the time that this is overkill, but if you get to the point where you need to fire employees, you will be very thankful for thorough documentation.

Turn your attention inward

Is there a systemic problem that caused this issue, or is it isolated to this one person? You don’t want to make the same mistake twice. So, it is critical that you look at how you got to this situation to make sure you won’t just fire employees in the future for the same reasons.

Talk with a lawyer

Consult with your legal counsel before you fire employees. Make sure they review your severance package and your documentation for completeness and appropriate language.

The moment you know you can’t fix the problem, fire employees.

The decision to fire employees is hard. But, the longer you wait, the more problems you will create. As soon as you know the situation can’t be fixed, you need to fire the employee.

Always give a severance package

It is the right thing to do, even if you are firing them for cause. It gives the employee a small safety net until they find another job. Everyone doesn’t have savings, and you need to make sure that you aren’t ruining their life. Note, talk to your legal team before giving the severance to make sure the language on the severance agreement is appropriate.