Firing people and laying folks off is a hard day. Here are some thoughts on how to do it.
Big Red Car here on a cloudy, but soon to be sunny, day in the ATX, God’s country. On Earth as it is in Texas! Muggy today.
So, a CEO has a series of things she struggles with. We talked about that right here:
One of those things is terminating employment either by firing someone (for cause) or laying someone off (not for cause).
They are both difficult to do. Here’s some thoughts on the subject.
Building and reducing staff is a normal part of a CEO’s responsibilities. It is, hopefully, not something that is done often or with a cavalier attitude. You are messing with people’s lives and what goes around, comes around.
Still it happens. Be ready, plan it out, execute it with precision.
I use the term “firing” to suggest that someone is being terminated for cause. It may be a matter of discipline or it may be a matter of not the right person. Could be culture misfit. You will know it when you see it.
I am an advocate of firing quickly. One criticism I would level at myself is that I always thought I could do missionary work and rehab the offending person — WRONG. It was all vanity on my part.
As an employer, your job is to provide a workplace, an environment in which your employees can be productive. It is their job to be productive. If you have done your job as it relates to workplace and environment, then unproductive persons are actually firing themselves.
From a global perspective, I have always thought that if a company got rid of its bottom 5-10% performers (on some objective scale), the enterprise would run better. I have found this to be the case.
Now, don’t go out and fire a bunch of people, just think about it.
So, Big Red Car, how do you fire someone?
Remember, firing is based on “cause.” Understand why you are doing this for your own purposes.
1. Document the cause. Write a memo to yourself and convince yourself it is the right thing to do.
If it is a senior person, run it by the Chairman of the company (particularly if you have a Comp Committee).
2. If there is evidence, aggregate the evidence. Put the evidence with the memo. Do not let that memo and evidence out of your possession.
No digital copies of anything. Keep it under lock and key. Show it to your Chairman if you must.
3. Call the person in and, in the presence of your HR person or CFO, tell them they are fired.
“Joe, we have decided to go a different direction and, unfortunately, your position is no longer going to be part of that effort. Thank you. Here’s what I have in mind for a severance arrangement.”
Look, there is no combination of words in the English language which makes Joe feel good about this. It’s like getting a flu shot. Get it over. Resist the temptation to linger.
You are amputating somebody from the body of the company. Wield a quick, sharp knife.
4. Pro tip: Do not tell them it is for cause. Tell them anything else you want. Give them no explanation. Say, “We are making some cuts.” Do not tell them you are firing them for cause.
If the guy has done something terrible, you don’t need to tell them why. They know.
This is hard to do and it feels unfair, but it is the smart play.
5. Do not linger. Fire them and have them leave immediately. For this reason, I like firing people early in the week at 4:00 PM with an eye toward being able to answer any questions from the team during the balance of the week and the person leaving the premises, never to return.
You can different opinions on this. Consider them all and do what feels right to you.
6. Do pay them severance. Since you are not positioning this as a “for cause” termination, pay them at last one week’s pay for each year of employment. Be generous.
You are buying peace. Peace is less expensive than litigation if done correctly.
Pay them their severance over the normal pay cycle. No lump sums. Their future paycheck creates caution. This is important as it may keep a crazy person from writing an article for Medium. Money is a handcuff when used correctly.
7. In return for the severance, obtain a mutual General Release which incorporates confidentiality, no hire, non-disparagement provisions.
8. Offer to provide a letter of reference. If they are an odious person, then only verify dates of employment, job description, and salary. Nothing more.
Give them the letter immediately, but don’t discuss it with them.
9. Turn off all access to anything the minute before they enter your office. This can be a huge consideration. Get the company credit card and turn off everything (repeating myself).
10. Do not apologize. Keep it short, crisp, professional.
11. Announce it to the company as quickly as you can. Do not be the second or third person to tell them.
Do not tell them the cause. Tell them, “I have decided to go a slightly different direction and Joe is not part of it.”
If you feel the inclination, take questions, but remember — this is a personnel issue and you don’t discuss personnel issues.
12. If there is an organizational change — Bob gets Joe’s job — announce it at the same time. Make damn sure Bob knows about it. Do not catch Bob off guard.
Remember that your objective is to get this done with as little blowback on your company as possible.
Now, there are folks who will try to tell you there is some secret sauce which makes this more digestible. OK, listen, but this is the advice of 33 years of having dealt with this personally and another six years of advising folks.
OK, dear reader, that is it for today. Tomorrow, we will discuss laying folks off. Until then, be good and enjoy life.