How to Terminate an Employee

Author: Ron Morris, The American Entrepreneur

Perhaps the most distasteful job an entrepreneur/CEO/manager must do is terminating a non-producer.

I have either directly terminated, or at least participated in the termination of, more than two hundred and fifty people over the forty years I’ve owned companies. (Frankly, I’m not even sure of this number --- this is just my best guess.)

It’s an ugly thing. From the moment you first decide that it must be done until weeks after it has been done, the twenty or thirty minutes spent in that room with that individual replays --- over and over --- inside your head.

Could I have said that differently? Might he/she derive the wrong meaning from that comment? Am I legally painting myself into a corner by saying that? These are just a few of the thoughts that rattle around in one’s head following the process of letting someone go.

I use the word “process” because that’s exactly what’s happening. Or at least it should be.

Think about it. Step One is “making the case.” Here, you have to come up with a prima facie case for the termination itself. This means facts. This means evidence. This means corroboration.

Step Two is consensus. This simply means that you have taken the time to pull together like-minded people who support your decision. Needless to say, these must be people who have had the opportunity to observe the miscreant behavior themselves. And remember, these people cannot be pushed, pulled, or in any way swayed into agreeing with you. No, they must independently arrive at the same conclusions as you --- the individual in question must go.

Step Three is documentation. The days of terminating someone with just a handshake and a severance check are long gone. Now, you must have more paper than was needed to end World War II to effectuate a proper termination.

This is unfortunate, but it is reflective of today’s world. Here is some of the paperwork you will need:

  • The letter of termination/the letter of resignation itself – Keep in mind the fact that everyone who is terminated by you is automatically entitled (generally) to unemployment compensation whereas anyone who voluntarily resigns receives no such compensation. I’ll leave it to you to figure out where you go from there.

  • Employee files – It’s always good to have this folder on-hand. During an exit interview/termination questions and issues frequently arise that require referencing the employee’s file.

  • Property checklist – Make sure that you cull from their personnel file (if possible) all of the materials and items you may have loaned to that employee during his or her tenure. These are things like cell phones, door keys, electronic passes, and so forth. Anything of value that you’d like to retain for the next employee should be on your checklist. Talk to your other managers to see if you’ve overlooked anything. You have but one chance to get these things back.

    (And while on the topic, this is a good time to make sure that all of the financial records and issues between you and the terminated employee are reconciled. For example, perhaps somewhere along the way you loaned this employee some cash. Now is your last chance to get it back.)

  • Finally, the paycheck – Always provide this simultaneous with the termination. If your systems and procedures do not enable such action, instead make sure that something about the “final pay” is included in the termination letter. (Oh, and before I forget, this is a great time to clean up all of the expense reports that may be outstanding for this individual.)

The final major issue on my process list is what I call the “Action Issue.” This is the act of terminating the employee itself, and thus perhaps the most important process you will execute.

Actual face-to-face terminations are not for the squeamish or faint of heart. But then, you already knew this. So, here are some tips that might help you get through things:

  • Make sure you yourself are composed. Have a glass of water next to you. Take a few deep breaths. This is going to be rough.

  • Try to have before you a list of the answers to all of the questions you might imagine this person could ask. Questions like, “What about my health coverage?” and “What about my 401K plan?”

    Needless to say, there are numerous questions that you should prepare for in advance. As necessary, call in your HR people (BTW, someone from HR should be at this meeting anyway --- this should go without saying) and also you may wish to query the to-be-terminated individual’s peers. You never know when there may be some issue or issues outstanding. You certainly want to know the status of their projects.

  • My approach has always been, “get to the point right away.” The employee knows why he/she is there and so do you. Don’t dance around. Tell him/her that they are being terminated and then go through your various checklists. Do not spend time telling this individual what a wonderful employee they have been. Even if they have been this, it will sound false because you are, and remember this, letting them go!

Here are some things that I have learned over time to avoid:

  • Do not heap praise on the terminated individual (I know I just said that, but I’ve seen this so many times --- people want to be nice but it just doesn’t work).

  • Do not use this as an opportunity to re-make the individual in question. How many times does the boss, and halfway through the act of terminating someone, turn around and start to follow a path that would ultimately result in him/her keeping that individual, but instead under the proviso that the terminated individual will somehow “change.” Ugh! You couldn’t make this person “different” when they worked for you --- so why do you think you can remake this person in the last half of the ninth inning?

  • Do not pick up the telephone halfway through the termination meeting to call a good buddy --- to see if he or she might actually have a job for this forlorn person sitting before you. Not only have I seen this, I have actually done it. It’s called “Big Heart” disease, and it will get you nowhere but in trouble.

  • At the last minute, do not succumb to the temptation of calling in one of your managers to see if he can use someone of this individual’s caliber. I know this sounds ridiculous, but I’ve seen this and I’ve also done this.

Terminations are somber and almost sad chapters in any employee’s life. And because they are so, it is important that the business manager or owner respect the solemnity of the situation and deal with it accordingly. No amount of levity will assuage the employee’s mind. Remember that word, “empathy?” I have written many times that this is any salesman’s most important word.

Well, so should it be for anyone who is letting someone go. Put yourself in that person’s shoes. Try to understand that he or she must proceed from your office to his/her home to announce to the family that he/she has been canned. For a man, this is beyond traumatic. I’ve always said that men define their existence by their jobs while women, and for the most part, define their existence by their families.

Given this, it is incumbent upon you to fully grasp what’s happened. This individual may not have even had a clue that the termination was forthcoming. (And, if this is the case, then it’s important for you to spend a lot of time in front of the mirror.)

Let me close by paraphrasing something I read in a book by Lee Iacocca many, many years ago. I believe that the book was simply named, “Managing.”

Mr. Iacocca spent the better part of a particular chapter writing about the following premise:

“What percentage of this situation was caused by me?”

In other words, Lee Iacocca is asking his readers to measure the degree of complicity that they themselves may have had in any office-related screw-up.

If you follow this advice, you will frequently find that you are indeed quite guilty. And that ultimately, you are a big part of the reason why you now have to let someone go.

This is horrible when it happens. Actual lives are disrupted beyond belief simply because the manager wasn’t dealing in reality.

So, and if this is the case, please do all that you can to: a.) learn from it, and, b.) never repeat it.

Of course, the best scenario is no terminations at all. But unfortunately, we’re a long, long way from this particular paradise.

Ron Morris

About Ron Morris

Ron Morris puts over thirty years of entrepreneurial experience to work answering your business questions, solving your business problems, and bringing you all the latest information about everything that is happening on the entrepreneurial landscape. “I’ve built companies with ZERO money and I’ve been associated with companies who have borrowed money”, says Morris, “I’ve merged companies, I’ve sold companies, and I’ve even bankrupted a company. (My “greatest learning experience.”) So, when you tell me about your business problem, it’s a pretty sure thing that I’ve ‘seen it at least once before ... this ain’t textbook stuff ...this is ‘real bullets’, real world stuff.”

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