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How to Fire an Employee

Posted by Dave Clarke on October 31, 2013 at 9:48 AM

Last week, we talked about how to hire your first employee. Today, we'll visit a less rosy topic: how to fire an employee.

As a small business owner, firing an employee is something you will undoubtedly face, for one reason or another. While those reasons are certainly important, how you approach and handle the task is perhaps more so. The insights below can help you tackle firing an employee...

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Do Not Sugarcoat

Let's face it, the firing conversation isn't easy for either party—and dancing around it doesn't benefit anyone. As an employer, once you've committed to the decision, be straightforward and clear. There's no sense in telling the employee how much you like them or how great it's been working together. You owe them respect of cutting to the chase. Lead with something along the lines of, "So this meeting has to do with your employment here..." Treat them like a professional.

But Be Sensitive

The meeting should consist of more than two words. Sitting the employee down and simply saying, "You're fired," isn't the way to go. While this is first and foremost a business decision, it's to your benefit to remember just how important the job is to the employee—even if they haven't been performing up to par. A job is a big piece of how people self-identifty; how they feel purposeful. So while firing is the task that needs to be done, respect the individual by being sensitive to how they will likely react.

Be Open and Encourage Discussion

It's critical that you communicate to the employee why this is happening. If you've reached the firing stage, it's likely that you've had previous meetings with the employee regarding performance, accountability, reliability, etc. Be prepared to communicate how certain milestones or expectations—that have been discussed over and over—simply aren't being met. Ask why this has been the case. Encourage the employee to ask questions. But—and this is important—in this discussion, be clear that you have made your decision and there's nothing that can be done to change it.

Understand the Finances

There are two financial elements at play here. First, internally, you need to understand the financial implications the firing has on your business—and it's more than just salary or wage you don't have to pay any longer. Firing an employee can actually come with a cost. If this is your first rodeo, talk to your accountant or payroll specialist. They'll be able to tell you what financial outcomes you and your business need to prepare for. The other financial element to consider is in regard to the employee. Identify where you are in the employee's pay period. Also consider whether or not you're willing to pay severance and for how long. And if the employee is on your company's benefits plan(s), talk to your provider specialist to understand how you take him or her off, what your post-termination obligations are and what the firing does to your plan's finances.

Be Smart About Your Tech and Data

If you think fired employees take the news and politely head for the exit, think again. From downloading confidential company files to personal thumb drives to mysteriously "losing" company issued hardware, everything is fair game. It's your job to have policies and procedures in place in advance, perhaps documented in a company handbook and/or employee agreements, that protect the information and materials your employees have access to, especially after termination. Do you need to escort them out immediately? Unlikely. But, the most important thing for you is to be conscious of what might happen and to inform the employee in the meeting what the immediate next steps are (i.e, "So here's what's going to happen...").

As grim a task as firing an employee is, it's something all small business owners will face. The key is being prepared and professional.

Topics: Know and Grow Your Business