Don't Let Problem Employees Ruin a Business
Eight Steps for Entrepreneurs to Consider in Terminating Employees
Nov 15, 2009
The worst human resource-related decision a business owner can make is to keep unproductive, disruptive employees on the payroll. However, the second worst decision is to fire employees without developing and following a plan of action that protects the business from grievances and law suits.
Unfortunately, entrepreneurs often become intimidated by the fear of negative repercussions from terminating an employee. There is good reason to be concerned because terminations performed unfairly, discriminatorily, or without proper documentation can lead to formal grievances or law suits. However, there are eight steps a business owner can take to minimize any negative impacts created by employee terminations.
Understand the Reason for Termination
When an employee’s performance becomes disruptive and unproductive, don’t fire him on the spot. Instead, begin the termination process by determining the exact reasons for the action. Is it performance based, inability to collaborate with co-workers, or some other reason? Whatever the reasons, make sure that the exact causes are understood before proceeding.
Develop Comprehensive Employee Policies and Procedures
Employee terminations are often compromised by the lack of formal and documented workplace policies and procedures. Create an Employee Handbook to properly document expectations for performance and behavior (not a “manual” which has legal ramifications that aren’t necessary). Ensure that the handbook covers relevant employee issues. There are many excellent employee handbooks on the market that can be adapted to a particular business or a consultant can create one effectively.
Explore Alternatives to Termination
Ensure that less severe actions have been taken or considered before proceeding to termination. Verbal or written reprimands, suspensions, or other approaches can often serve as a “wake-up call” to an employee. At the very least, it is important to document all actions considered or taken before termination to reduce the likelihood of a successful grievance or law suit.
Build a Case for Termination through Proper Documentation
It is essential to prepare supporting document for a termination including particular examples of poor performance, insubordination, or other incidents. Letters of reprimand to employees can also be helpful to document formal conversations or consequences regarding indiscretions. Make sure to include dates and even times that situations occurred and what impact they had on business operations.
Identify Legal Assistance
It is important to locate and hire an attorney who specializes in workplace issues. A business owner can place the attorney on retainer so that issues can be addressed as they arise. This may be cost prohibitive for many owners but it is essential to, at least, speak with an attorney to develop an action plan to address employee conduct or performance issues.
Strive for Consistency in Supervision of Employees
Creating an environment where employees are treated consistently and fairly is essential. Many grievances and law suits are generated from inconsistencies in the manner policies and procedures are interpreted and enforced by managers. Sensitivity to the way employees are supervised and managed is very important to reduce the likelihood of favoritism or scapegoating becoming an issue.
Don’t Take it Personally
Entrepreneurs often run the risk of interpreting negative employee behavior as being personal. For this reason, it is very important to handle problem employees with an analytic and unemotional attitude. Maintaining emotional distance from the situation helps to keep the entrepreneur objective and will reduce the chance of grievances or law suits being successful. In some cases, it might be wise to have another employee or legal representative handle the disciplinary situation if the owner finds it difficult to perform the task.
Consider Professional Liability Insurance
One critical mistake business owners often make is to assume that their business insurance covers employee grievances or law suits. This assumption is flawed and it is well worth an entrepreneur’s time to examine insurance coverage with a broker or agent to determine the level of protection. In many cases, adding professional liability insurance is very helpful in ensuring that the success of a business is not compromised by a grievance or law suit.
Employee Terminations are Appropriate if Managed Carefully
Entrepreneurs do not have to tolerate problem employees who can damage the business environment and workforce morale. However, successful terminations are only viable if time and effort has been taken to create appropriate policies and procedures that are enforced consistently and fairly, and that efforts are made to document employee transgressions that compromise the work environment. Hire an attorney if feasible or, at least, take time to prepare for the need to terminate employees by having processes in place.
Learn how avoiding certain hiring practices can lead to a motivated, productive workforce and reduce the need for employee terminations. Also, discover how attitude, focus, and perseverance and good initial planning can lay the groundwork for business success.
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