Art of Letting People Go
When times are hard, you can’t afford to be soft.
If an underperforming employee is dragging down your business, now’s the time to
Unfortunately, many small employers have a tough
time letting people go, even at the expense of their business. But to keep your
business healthy, you have two choices: either get underperformers up to speed,
or terminate them.
Luckily, both processes start at the same place.
There is a right way and a wrong way to let people
go. Do it the right way, and you give workers a chance to turn things around,
while protecting your business. Do it the wrong way, and you set yourself up for
a potential wrongful termination lawsuit.
A Must: Communication and Documentation
Managing performance is a process. It involves
clear, multi-step communication and detailed documentation.
Many entrepreneurs cultivate a “family” feel to
their business, which can inspire employee loyalty and effort. But it also makes
it difficult to critique sub-par performance.
No matter how small or informal your company is,
it’s only fair to let workers know what’s expected. That’s why employee
handbooks, job descriptions, and performance reviews are such useful tools. Yet
many small employers shy away from using them—something I encourage you to
In the meantime, if you have a problem employee,
you must sit him down and tell him what he’s doing wrong. Plan this carefully
and objectively; be factual and specific.
Frame your expectations in terms of quantifiable
goals. For example, rather than tell an employee he’s “taking too long” to
complete reports, specify they need to be turned around within X days. Now the
employee has something to shoot for and you have something to measure. Be sure
to schedule a follow-up evaluation.
Making the Cut
If an employee does not improve performance during
the probationary period, you have no choice but to terminate him. Get that in
writing, too, in the form of a signed severance agreement.
How do you get an employee to sign the agreement?
Offer a severance package. You agree to pay the employee X dollars over X amount
of time; he agrees not to pursue accusations of wrongful termination. (For a
sample severance agreement, call me at 800-818-0150 or email Ray@ProPres.com.)
How much do you offer? Whatever seems fair and
reasonable, and whatever you feel good about offering.
Once the employee signs the agreement, he has fixed
number of days in which to recant. Withhold payment until after this period.
Spread the payments out over time, and it will discourage your ex-employee from
a future change of heart.
The point is to make the termination as painless as
possible for both of you. Letting an employee go is never easy, but sometimes it
is the right thing to do—provided you do it the right way.
Ray Silverstein, a recognized small business
expert, is president of PRO (www.propres.com), a nationwide network of small
business peer groups. Ray is also the author of “The Best Secrets of Great Small