Friday, November 11, 2011

SOP Friday: Firing Process

Perhaps the hardest lesson I ever had to learn as an employer is to fire - or lay off - employees. It is still very difficult for me.

Layoffs due to lack of work are a different animal from actually firing for cause. But if you're in business long enough, you'll eventually do both. In either case, there are two basic components of letting someone go. The first is the decision to get rid of someone. The second component is the process of letting someone go.

I'm not going to talk about the decision to lay off an employee due to lack of work. That's another topic. So I will discuss the decision to fire and the process of letting someone go. Note that this process is essentially the same no matter why an employee is leaving.

The Firing Decision

There's an old adage: "The best time to fire an employee is the first time the thought crosses your mind."

Unfortunately, this is a lesson some of us have to learn over and over again. When I have a troublesome employee, I tend to work on changing behavior, changing attitudes, and changing motivations. In some cases we have been able to turn an employee around for six months or even a year. But eventually, when an employee becomes unhappy, they end up leaving.

And whether you like it or not, when an employee's behavior interferes with the smooth operating of your business, you need to let them go. We all know that, but it's very difficult to execute in a small business because we know these people better, and work with them more closely than you would in a large business.

Something happens when an employee is no longer contributing to the success of the company. Almost imperceptibly, they work less, they work more slowly, they argue more, they become sloppy with details.

In other words, they begin to cost you money.

Sometimes, employees just aren't getting enough of your attention. Or they've hit a wall and need training (on technology, on customer service, on processes, etc.). So don't fire too fast: Find out why performance is affected. Fix the problem if you can. After all, there's a lot of work and expense to hiring a new employee.

But you also need to be honest with yourself. Talk things through with a spouse or friend. If you find that your heart tells you what you need to do but your brain won't let you make the decision, then you're stuck. You end up spending more and more time on an employee who is contributing less and less.

Once you realize that it's just not going to work - give up. End the relationship. Again, I don't want to make this sound easy. Once you execute the decision, you'll realize you should have done it sooner. Hence the adage: "The best time to fire an employee is the first time the thought crosses your mind."

The Firing Process

Whether it's a layoff or firing, the process of moving someone out of your company is pretty much the same. Of course you need a checklist to make sure you don't forget anything. Here are a few things to start with.

1. Letter of Termination/Layoff
No matter what the circumstances, the employee should receive a letter of termination. It only needs to be a few sentences. If it's a layoff, you don't even have to state "why" the layoff is taking place. If the employee is being fired, you should state some reason, but you don't need to go into extensive detail. Some states have "at will" employment, so you don't have to give any reason. When in doubt about what to say, consultant an employment attorney.

State the day employment will cease and whether any benefits will continue. If there are any loose ends, tie them up here.

Note: This letter should include a statement reminding the employee that they signed a non-disclosure agreement when they came to work for you, and that the NDA remains in effect with regard to information within your company and for your clients.

2. Determine the Last Day of Employment
For practical reasons, the day you tell someone they're fired is probably their last day.

3. Prepare a Final Paycheck
Whether or not it's required by your state laws, you should settle up your account with the employee on their last day. The exception would be someone who was "on call" and you simply need to inform them that you won't be calling any more.

If you provide holiday pay, accrued time off, or similar benefits, make sure you are in compliance with your stated company policies here.

Subtract from the final paycheck any money owed to you by the employee. This might include advances, repayment for lost tools, etc.

Add to the final paycheck (or a separate check) any money owed to the employee. This might include mileage or meal reimbursements, etc.

4. Collect Company Property
At a minimum, your employee might have a set of keys. But they may also have a box full of cables, documentation forms, network cards, tools, parking permits, and other company property. This includes a company gas card or credit card. You will have a company property form for each of these items. Make sure you get them back.

In one case, we found out that a technician had lost the "scary box" of equipment that we require all technicians to carry in their cars. He was afraid to tell anyone, so we didn't find out about it until we asked for it back. It represented the kind of behavior that led to his dismissal.

5. Meet with the Employee
Despite the ridiculous advice that Hollywood writers repeat over and over in the movies, DO NOT hold this meeting in a public cafe. Just go into your office and call the employee in.

Very briefly state the fact: We are laying you off.

Hand the employee the letter of dismissal and a copy of the Non-Disclosure Agreement they signed when they were hired. Tell them what happens next. Thank them for their service. Answer their questions.

Do not be surprised the first time someone cries under these circumstances - including yourself. As I mentioned, small businesses are made up of a handful of people who work closely together and become friends. This is the human side of parting ways.

6. Do a Quick Exit Interview
Unless you are literally kicking someone's butt out the door, try to do a quick exit interview. Ask what the employee thinks went wrong. Find out their side of the story. Soak it in and be honest with yourself about things you might need to change.

7. Update Address Information
You will need to send a W-2 or other paperwork at the end of the year. Make sure you have an accurate mailing address for the employee.

8. Let The Employee Clean Out His Desk
Let the departing employee take a minute to clean out his desk and say goodbye to other tech. Again, this isn't the movies are you're not running a CIA branch office, so you don't need to have goons in suits escort employees to the door.

9. Shut Down Access
On the computer systems, you need to change the employee's passwords for the PSA, email, domain account, etc. I recommend that you do NOT delete these for at least a month. You might need to go find something in his email, on his PC, etc. That will be easier if the account exists.

You should make a checklist for you company of all of the access services that need to be shut down. This includes PSA, hosted services, vendor sites, resale or service administration sites, SharePoint, hosted storage, email, etc. Everything you can think of. NOTE: If you have an accurate list of access setup during your employee onboarding process, that's a great start for the exit process.

For PSA systems or other systems that charge you per user, you need to decide when to eliminate these accounts. Don't forget them. As a general rule, it's better to create a new account rather than rename an existing one. If you simply rename, then the system might give you reports with the new employee's name on work that was done by the former employee.

On the physical access side, you need to change alarm system codes. And if you have any facilities with combination locks, you'll need to change those.

Archive Note: I recommend that you export the employee's Outlook data to a PST file and store it on your server. Then simply redirect that email address to the relevant manager. This insures that no email direct to the employee is lost.

10. Telephones
Have someone change the greeting on the phone system, voicemail, etc. If employees are allowed to set personalized voicemail passwords, resent the password.

Check the departing employee's voicemail - old and new. Create service tickets for any items that need to be done.

Change the phone tree as needed.

11. Dealing with Clients
For the most part, we don't inform clients of personnel changes unless the departing employee is a very visible manager. For technicians, we wait until clients ask. At that time, we just say that they are no longer working with us.

We never discuss why an employee is no longer with us. If there is any concern, we do take the opportunity to remind clients that all employees are under NDA and that a reminder of the NDA is provider upon departure.

High Profile Employees and Managers

You may need to have additional processes and procedures for key managers and other high profile employees. In such cases, a letter to the clients or a press release may be in order.

For corporate directors or partners, you may have a much more gradual exit process as you deal with money issues and legal issues.

If someone is a true stakeholder in your organization, you may want to meet with an attorney to verify your process and communications.

. . . As always . . . Your feedback is welcome.

Related Blog Post:

First You Hire, Then You Fire

Can Do vs. Will Do

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About this Series

SOP Friday - or Standard Operating System Friday - is a series dedicated to helping small computer consulting firms develop the right processes and procedures to create a successful and profitable consulting business.

Find out more about the series, and view the complete "table of contents" for SOP Friday at

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Next week's topic: Naming Conventions for Machines and Servers


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Service Agreements for SMB Consultants: A Quick-Start Guide to Managed Services

by Karl W. Palachuk

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1 comment:

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