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"You're fired!"
It may have worked for Donald Trump, but in the small business world, the decision to terminate an employee is a bit more complicated than that. At a small company, every employee plays a valuable role in the organization's success, and losing even one person has an enormous impact on day-to-day tasks and overall efficiency. But sometimes a staff member just doesn't fit the bill, and you have to determine whether he or she needs to be dismissed.
While a performance-based termination is often the result of a bad hiring decision, it's not always the hiring manager's fault. Perhaps the employee in question excelled in his or her work at first, but the worker's performance slowly began to decrease in quality over time. Or, personal circumstances have had a sudden and profound effect on the employee's output. No matter what the case might be, you need to ask yourself these four questions before you put that person on the chopping block.
Is the employee failing to live up to his or her job expectations?
This is perhaps an obvious question, but it's an important one nonetheless. Some employers want to get rid of an employee simply because they don't get along or their personalities clash, but there needs to be a valid, tangible reason for a termination debate.
"Performance-based termination should have one consideration — is the employee performing his or her goals at an acceptable level?" said Jay Starkman, president and CEO of professional employer organization Engage PEO.
Whether the employee is adequately carrying out the assigned job duties should be the first point of consideration, but you also need to consider whether he or she is living up to the cultural expectations of the company as well. Brent Daily, chief operating officer of employee engagement platform RoundPegg, noted that a failure to fit the culture at the team or manager level is one of the most common causes of termination in a small business.
"Everyone is on their best behavior in the interview process and both sides want to be wanted," Daily said. "Those desires often create blind spots and allow us to make excuses or to dismiss red flags. Highlighting the potential areas of misalignment ahead of time enables the interviewer to focus on the potential areas of risk rather than on the areas of common ground."
"A company's core beliefs need to be able to work as a measurement tool for employee fit," added Ulrik Bo Larsen, founder and CEO of social media management platform Falcon Social. "Then you can be concrete in your actions by letting a team member go, if the employee in question and the rest of the organization do not have a core belief that matches up."
How long has the employee's poor performance been happening?
Unless an employee has committed a very serious infraction, one or two instances of inadequate performance should not be enough to warrant instant termination. Everyone makes mistakes, and all employees should be given the chance to learn from theirs. However, repeated underperformance with no effort to correct the problem, or a continual lack of engagement are legitimate causes for concern.
"Lack of engagement [is] making excuses, not showing up for meetings, not being communicative with fellow employees, finding some reason why [a task] wasn't done rather than just taking the time and energy to do it," said Chad Parks, founder of retirement plan company The Online 401(k). "In some cases, employees have something going on personally, but if you see it happening more frequently after speaking to them, [you know] they've checked out."
Have I documented these issues and notified the employee of his or her low performance?
Starkman reminded employers that, if the decision is made to let an employee go, it's crucial from a legal standpoint to have any performance issues officially documented. Once you've noticed poor behavior, you need to speak with the employee and provide him or her with written notice about the observed shortcomings. If you don't outline employees' goals and provide evidence that they're not being met, workers may never realize that you had a problem with their performance until the day you fire them.
"The employee should never be surprised [at a termination]," Starkman told Business News Daily. "You've got to document everything along the way."
"If we believe an employee's goals are right but he or she is having trouble meeting them, we'll address those with him or her," said Trent Krupp, vice president of talent at Hired.com. "It's important to let employees know they have the confidence of the organization to turn it around."
Parks noted that workers' rights regarding documentation leading up to termination differ from state to state. It's important to research your state's employment laws to ensure that, if you must fire someone, you're safeguarded from any future lawsuits by the fired employee.
Was the employee given sufficient time and clear instructions to improve?
As an employer, you owe it to your staff members to give them ample time and direction to turn the situation around. A performance improvement plan with a clear timeline and benchmarks is legally required before performance-based termination in many states, but it also shows employees that you care about whether they keep their jobs.
"[Tell employees] specifically what they need to be doing differently to improve their standing in the organization," Krupp said. "[It should be] signed off on by both the employer and employee. Give a heads up to employees that if they don't believe the plan will be successful, they should probably start looking for another job. If they really are committed, [employees will] read through it, internalize it and start working right away."
If you answered "yes" to all of these questions and the employee still has not shown any sign of improvement, it may be time to let him or her go. It's rarely easy and painless to fire an employee, especially one who has served your company well in the past, but there are some things you can do to lessen the tension when you part ways. A severance package and reimbursement for unused time off is a generous way to help the terminated employee make the transition if he or she does not have another job lined up. You can also hold an exit interview with the employee to give him or her the chance to share that individual's thoughts.
"Exit talks not only give the employee the right to express his or her point of view — it also gives the company a chance to get valuable feedback," Larsen said. "We have had great success introducing it in our company, and even had former employees reach out by email afterward saying thank you and that they ... appreciated the opportunity to have their voices heard."
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