entrepreneurship

When To Fire an Employee: Early Warning Signs & Action Steps

Tom Mukaida

WealthFit Contributor

Fire an employee when the cost of helping them outweighs their contribution to the team. It’s plain and simple. You can’t sacrifice your team for the improvements of a single team member.

Performance issues aren’t easy to stomach. Most people don’t enter relationships excited about ending them. And thinking about the effect you’ll have on someone by terminating their employment isn’t likely to appetize you.

But it’s your responsibility as the leader of your team to deal with situations like these in a timely manner. Fortunately, there are simple steps to follow in order make dealing with an under performing employee simple.

Eliminate Risk

Before you hire anybody—let alone fire them—consider the ways you can create an environment that will foster productivity and respect.

A clear, concise statement of expectations and responsibilities is an essential ingredient for an effective workplace. Every person you hire presents a risk, and there’s nothing you can do to guarantee they will perform to your standards. However, you can prepare and mitigate that risk with outstanding communication.

Set guidelines and requirements for your staff’s continued employment, not just upon hiring, but continually. Re-state and update those expectations in regular meetings. If you’re both on the same page, it shouldn’t be difficult for either of you to gauge performance and communicate a need for adjustment. Ideally, your employees should always know exactly where they stand with the company.

But you can’t eliminate risk entirely. When an employee is underperforming or displaying undesirable behavior, you must do everything you can to fix it ASAP. If communication has failed and an employee has sunk below what’s expected of him or her, use this method to figure out whether or not you need to fire them.

Investigation: What’s the root cause?

When you notice that a member of your staff is under performing, it’s time to step in. Reach out to them and schedule a one-on-one meeting or a performance review. You want them to acknowledge their lapse in performance while maintaining free and open communication with you. The goal at this point is to figure out what’s causing their under performance.

Find out if there are extenuating circumstances surrounding the problem. You should ask, because it could be anything. Perhaps their relationship with another employee has gone sour, or their working environment is preventing them from operating at 100%.

It could also be the case that events outside of the office, such as the death of a loved one or a nasty divorce, are distracting them at work. They may not even have an explanation. Whatever the case, you need to get to the bottom of it so that you can respond appropriately.

This is the most important stage in your decision making. What comes out of this first meeting is what you use to decide on next steps. Should you attempt to salvage or terminate the employee? You might also need to talk with your leaders in order to put together an appropriate course of action.

Intervention: Plan and measure improvement.

The next step is to decide whether to fire or intervene with a plan. Intervening is only necessary if you’re sure the employee is worth the effort. Most candidates for termination shouldn’t require such careful consideration if you’ve set clear expectations.

That’s because the rehabilitation of a poorly performing employee is both costly and uncertain. And keeping a poor performer around opens up the possibility of creating a distressed work environment by placing more work on the shoulders of your other employees.

But intervention should always remain a consideration. You likely wouldn’t have hired them in the first place if they couldn’t provide value.

If an employee can explain their poor work through extenuating circumstances, and you think the circumstances are a good excuse, you should intervene with a solution.

The value they present, whether it is talent or team culture-fit, must outweigh their poor performance. Most importantly, you need confidence that they will listen to and quickly execute the intervention plan.

The employee must acknowledge their shortcomings and agree to whatever terms you set for their continued employment. Don’t attempt to work with anyone who will not reciprocate your effort. Their effort to improve has to match your effort to help them.

Finally, if you’re going to use time, energy, and money to help their performance, you will need to set a stop-loss to prevent yourself from over-investing. You need a boundary. A point where you say “enough is enough.”

Give them a specific time frame to make improvements. Make it clear that this is their last chance. It’s your final line in the sand.

Resolution: Keep or fire?

Times up. Did the employee meet expectations or fail again? It’s one or the other. If they didn’t meet expectations it’s time to let them go.

As the leader, you can’t abandon your responsibilities to the team to continually assist an individual member. If you’ve done your best to work with the employee, and they don’t improve, don’t waste any more effort trying to intervene.

Sure, ongoing performance reviews might help someone who under performed in the past to keep going at the required pace and to keep meeting company standards. But what are the costs of extra frequent performance reviews? If you’re a leader, the time you spend getting one employee to the bare minimum is time taken away from other essential tasks.

You know you need to fire someone when you don't feel bad about it.

Leif Babin

More often than not, it’s time to fire.

Reflection: Improving as a Leader

Great leaders exhibit vision, empathy, ownership, and sacrifice.

If you brought the employee onboard, you need to reflect on your decision.

Where did you go wrong?

Were you wrong to hire them?

Did you not prepare them enough?

Were your expectations unreasonable?

Don’t dwell on it, but every firing deserves reflection. Every firing is an opportunity to grow as a leader. Own the mistakes that are truly yours. Make sure you’ll deal with the situation more effectively in the future.

Take some time for reflection and then move on completely. Sleep soundly knowing you did everything you could.

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Written By

Tom Mukaida

Tom Mukaida's goal is to provide a high-level glimpse into the many and varied areas of learning that WealthFit covers.

Read more about Tom

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