Thursday, April 03, 2008

First You Hire, Then You Fire

I talked Last Time about hiring my first employee.

Just as a recap, here are the key lessons I learned:

- Starting with sub-contractors is good.

- I don't recommend hiring a full-timer right off unless you've got some kind of a contract that will pay for it.

- Don't translate a consulting rate directly into a wage rate.

- Meetings and overhead are necessary.

- When it's not working (you realize the cash flow is wrong), stop and start over.

- Hire the assistant first.


Unfortunately, once you start hiring people, you will find that things are not always perfect.

Keep this in mind when you talk to people, meet folks at conferences, and listen in on webinars: People love to talk about positive experiences. That means they will go on and on about the great technician, the killer assistant, and the service manager who never did anything wrong.

But meanwhile, in the real world, you need to learn that you will hire people who won't work out.

This is a hard lesson. Because we are in a people business -- and a small business -- we tend to like people. So, when we hire someone, they become our friend. We work with them 20, 30, 40 hours a week.

But the people we hire are people. They're human beings. And you need to accept the fact that you will eventually have to deal with people who lie during interviews, steal from you, slack off, are incompetent, piss off your clients, and all kinds of stuff you can't imagine until it happens.

The problem is: If I came into your business and looked at what your employees were doing, I'd know right away who to let go. But you know the person, like the person, eat lunch with the person, and you rely on that person to help you get the work done.

Plus, finding the right employees is not easy.

So, you have a talk. Or you don't have a talk when you should.

If you read all the great business advisors (Brian Tracy, John Maxwell, etc.) you'll eventually come across this bit of wisdom:

The best time to fire an employee is the first time the thought crosses your mind.

That's not a touchy-feely "people person" approach. But it will save you countless hours of grief. It will allow you the luxury of getting on with your business.

Here is the evolution that most people go through with problem employees:

First, we ignore things as long as we can. See all the reasons above.

Second, we can't take it any more and have to fire someone. This is one of the hardest things you will ever do.

Third, we start to lay down procedures (having a personnel file, doing evaluations, setting standard, etc.)

Fourth, we evolve into a system filled with personnel systems. At some level this is unavoidable.

So are employee handbooks.

We have a few policies that are not standard, which we had drafted by a lawyer. But most of our employee handbook came from a kit the California Chamber of Commerce sells. These days, I think every state has a state-specific guide like this. Normally $50-100.

Pain in the neck. Do it.

I recommend you go through the standard forms and only use the ones that are relevant to what you're doing now. Don't have lengthy policies about out of state travel reimbursement if you (the owner) are the only one who ever does this.


So now that you've built a bureaucracy, you have your second problem employee. And you learn another hard lesson: You still don't fire them. You still avoid dealing with it. You might give them a bad review and put a note in their file. But you let the problems drag on.

Once the employee realizes they're being watched more carefully, they start playing games. "I thought you said . . ." or "The rules are . . .."

If you have children, this will all seem familiar. "I was just . . ." and "Tommy gets to . . .."

Stop it.

The best time to fire an employee is the first time the thought crosses your mind.

The last person we "let go" was amazingly unproductive. I think during his brief tenure at our company we shelled out about $40,000 in wages and benefits. Half of that was for training. Another 25% was just plain wasted. Which means we got $10,000 of work for $40,000.

We're not big enough to be firing people all the time. In fact, all of our technicians have been with us at least a year.

The result is, we're not "good" at firing people. We still fall into the same traps over and over again.

There are only a few things that will get you fired from our company immediately. If you cause us to lose a client -- even a bad client - you're fired. If you lie to anyone in our company, or any of our clients, you're fired.

Beyond that, it's the normal stuff. You can't steal, you can't harass other people, etc.

As a manager or business owner, you have to temper the friendship that naturally exists in a small company with a certain dedication to the business itself.

You can't lose money because you're afraid to fire someone. You can't lose clients because you're afraid to fire someone. You can't let one person sour the positive mental attitude of your company because you're afraid to fire someone.

Yes, you will feel bad.

For awhile.

But someday you'll come across the evidence of a major screwup they left behind, and you will say to yourself:

"I want to hire him back just so I fire the bastard again."

When this happens you will have accepted the reality that the best time to fire an employee is the first time the thought crosses your mind.

Remember, you're never trapped. These folks were looking for a job when they found you. So they'll look for another job. That doesn't make it easy. But you can't put your business at risk, or lose a bunch of money to feed someone else's family.

If you're going to have employees, you'll eventually learn these lessons.

You will have to fire a friend. And it will be very difficult. But it will happen if you're going to grow your business.

I'm not sure this post does anybody any good. But at least you know what's ahead!

Have a nice day.


  1. Anonymous1:45 PM

    Thanks Karl, so true. I think Arnie Bellini once said "Hire slow, Fire fast".

  2. Thanks for the post Karl.

    Highlights the fact that you need to hire on character first, skills second.

    Skills can be taught. Character can only be modelled.

  3. Anonymous11:42 AM

    Thanks Karl - this gave me the boost I needed.

  4. Anonymous3:53 PM

    Really really really good article Karl. You really touched on everything to do with this topic. I'm very impressed and will look for more articles by you. Thank you, you helped me make a very difficult decision.


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