Team Management

How to Decide When to Fire an Employee

Jeff Haden Inc. columnist and small business management expert 
portrait of professional women in workplace half covered by a shadow

Jim worked slowly. Jim was difficult. He never offered to help other employees and almost always turned down their requests for help. 

He loved to hold the meeting after the meeting. He’d support a decision in front of the group, then pick away at it with specific individuals afterward.

Jim’s behavior and attitude dragged his team down. But he wasn’t terrible. Which left me, as his supervisor, with a tough decision: Should I fire him?

When an employee isn’t great… but not terrible

Arguably the most onerous leadership task for small business owners is deciding when you need to fire an employee. Determining what to say or, just as importantly, what not to say when you need to fire an employee? That’s relatively straightforward. 

Determining when it’s time to fire an employee and under what circumstances? That can be tougher, especially when the employee isn’t dramatically underperforming. 

In those cases, it’s tempting to wait and hope an employee turns the productivity corner, or that somehow, some way, they will one day “get” it. 

But waiting rarely works. And in the process, it allows a bad situation to fester. Your job isn’t just to build a team. Your job is to ensure that every one of your employees can be part of a great team—which means you need to dive in and address the situation as quickly as possible.

Taking the right steps can result in “rescuing” an underperforming employee. If not, those same steps will allow you to feel confident in your decision, both from a personal and legal standpoint, that it’s time to let the employee go. 

8 steps to be sure it’s time to fire an employee

1. Identify the gaps.

That’s always step one: Once you notice an employee is struggling, determine—objectively—where they are falling short.

Doing so is crucial because the only way the employee can correct behaviors or improve performance is to understand where they are missing the mark. And the only way you can assess improvement is to know exactly what you expect to see.

Think things through. List out what’s not working and what you’d like to see instead. Make sure your asks align with your company goals and values. Then…

2. Set expectations.

Once you understand what you expect, ensure your employee knows, too. Have a frank conversation to let them know you’ve noticed these gaps. Where you can, provide direction or advice to help get them back on track. 

And make sure employees know that while you take the matter seriously, you also want them to succeed.

3. Provide formal re-training.

If performance doesn’t improve, determine if additional training and resources will help. If so, consider introducing a performance improvement plan or PIP.

The plan can focus on the gaps you identified earlier. For example, Jim worked on a production line with objective performance standards. Evaluating his productivity and deficiencies was straightforward. 

Those gaps formed the basis for his performance improvement plan. I made sure he understood the skills he needed to display and the performance standards he needed to meet.

When you’re trying to change behavior, it’s not enough to say, “You need to work harder.” I described the additional training Jim would receive. He didn’t love the idea. To him, “re-training” not only felt remedial; he felt the extra attention would make him look bad.

“I understand,” I said, “but my goal is for you to succeed, and I’m going to do everything I can to help you.”

4. Create a timeline.

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While the job Jim performed required effort, it wasn’t particularly difficult. Most new employees came up to speed within two to three weeks. 

Since Jim was already into his second month, I told him we’d evaluate his performance after three weeks. That would give him plenty of time to absorb additional training and put it into practice.

Set targets, but also set timelines. Not only will you create a sense of urgency, you’ll also crystallize expectations and leave a clear paper trail.

Speaking of paper trails…

5. Document everything.

Unless a zero-tolerance violation has occurred, determining when to fire an employee is the result of a process whose steps should always be put in writing.

Where the initial gaps are concerned, document everything: performance plans, additional resources, the conversations you have with the employee—everything. 

Documentation can help you be confident that you gave the employee every chance to succeed—and it helps protect your business in the event the employee later feels unfairly treated.

6. Follow up.

I checked in with Jim several times over the next few weeks to see if he needed any help, how he felt he was doing, and to check in on his daily productivity. I also encouraged him to keep working hard.

See this stage as a simple, repeatable process:

  1. Share recent performance results.
  2. Detail areas for improvement.
  3. Offer to provide help, training, etc.
  4. Set a date for the next check-in.

In short, don’t just communicate the improvements needed. Communicate the process for evaluating performance, determining next steps, and what actions may be necessary in the future.

Three weeks later, Jim’s performance had improved a little—but not consistently. He picked up the pace when I walked by. He worked a little harder when crew members made pointed comments. But his numbers were still significantly below standards. 

As a result, I gave him a formal written warning (one that we both signed), again laying out the objective standards he needed to reach to meet job requirements.

That conversation didn’t go well. Jim thought the crew “had it in for him.” He felt they didn’t like him and that he didn’t fit in. While I was empathetic, I also explained that the performance standards he needed to meet were not crew- or teamwork-dependent.

I also reminded him that several crew members had gone out of their way to help him with tips and advice, and that “fitting in” with any team starts with being a solid performer.

“I understand your concerns,” I said. “And we can definitely look at them down the road. But right now, what is most important is that you meet the standards you need to meet.”

I asked if he felt he needed any additional training. He said no. I asked if he needed any other tools or resources. He said no. 

By this point, he had been on the job for two months. I told him we would evaluate his performance for the next two weeks before coming to a decision.

He said he understood, and I spent the next 20 minutes documenting the conversation.

7. Follow up again.

Two weeks later, Jim still didn’t meet performance standards. In fact, his performance had dropped. 

Still, he begged for one more chance.

“I’m sorry,” I said, “but per our last conversation, you haven’t met standards. Unfortunately, that means we have to let you go.” 

He got sad. Then he got mad. I let him vent. 

I didn’t argue; there was nothing to argue about. I didn’t get drawn into a conversation about whether the decision was fair. The standards—and his performance against them—were clear. Discussing whether a decision is fair—having any substantive conversation at all—usually only serves to make the employee feel worse.

Because at this point, you should be absolutely sure that the decision to fire the employee, based on facts, figures, and objective criteria, is the only course of action that remains.

That’s especially important when you’re on the fence. During the performance improvement period, some employees will sporadically meet standards. Some will even, occasionally, do great work. But then they’ll revert to their sub-standard mean. 

As a small business owner, you don’t have time to actively manage employee performance. You can’t afford to waste time continually pushing and prodding inconsistent performers. You need self-starters. You need employees eager for more responsibility, more authority.

You need employees eager to do more—not less.

If you find yourself on the fence about an employee, that’s almost always a sign that you need to make a change.

And to do it the right way.

8. Be prepared to describe next steps.

When you need to fire an employee, handling the termination both professionally and legally is important. And doing so with empathy, allowing the employee to maintain as much pride and dignity as possible, matters even more.

Describe when and how a terminated employee will receive their final paycheck. Explain how benefits are affected and when they will end. Explain how personal property can be retrieved and company property can be returned. 

The smoother you make the process, the better. 

See the “firing preparation” stage as a final test of your decision. If describing the next steps gives you pause, think objectively about every step in the process to date. 

Because sometimes the best way to test how you feel about a decision is to pretend that decision has already been implemented.

Updated: January 24, 2020

Jeff Haden
Jeff Haden Jeff Haden is a writer, speaker, small business management expert, and Inc.’s most popular columnist. He's the author of The Motivation Myth: How High Achievers Really Set Themselves Up to Win.

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