by Matt Thomas

Something is off. You know it and they know it. Performance expectations are not being met. Customers are frustrated. Other team members are cautiously expressing their concerns. Your gut tells you it’s not going to get better, but your ego believes if any manager can turn this around it’s you!

Terminating an employee is expensive. It usually ends up costing a business 50% of the former employee’s salary. Lost production, resources invested in training, and more. If they are client-facing, you risk losing credibility with the customer or negatively impacting their experience with your company. Even when it’s the right move, letting someone go usually has some negative impact on the culture. At a minimum, it’s deflating.

Unfortunately, I have had to terminate dozens of employees over the past 10 years. I’ve fumbled this process more than once. On some occasions reacting strongly in the present moment and terminating too quickly. On others, giving second, third, and fourth chances in hopes that they would turn things around. Letting someone go isn’t an exact science, but there are a few principles that can help us know what to do, when to do it, and how to do it.

Jack Welch, the CEO at GE from 1981 – 2001 saw his company’s value increase 4000% over his tenure. On managing and terminating an employee he said,

“Little is worse than a manager who can’t cut bait.” -Jack Welch

I think he was right. In general, most leaders err on the side of caution, waiting too long to let an employee go. Sure, some believe every employee should be given the opportunity to turn things around and they’re not wrong. But how many opportunities? What is the timeline? How much rope do you give out? These are difficult questions and the answers are largely dependent upon your specific situation. Here are a few scenarios we see often in our work with our clients to assess and improve culture:

Do you have reservations about their character and integrity? Have they been dishonest or deceptive?

We hold to a hard and fast “two strikes and you’re out” rule. The first offense, assuming it wasn’t egregious, we hit head-on and discuss in detail with the team member. What we’re looking for is ownership. Are they taking responsibility for the mistake? If so, we give them a second chance with a clear understanding that if it happens again we’re done. Why not terminate the first time a crack in someone’s character shows up? Because even great people screw up with the right mix of pressure, stress, and imbalance.

Are they consistently falling short of performance expectations?

First, take a hard look at what you are expecting from your employees and how well you are equipping them to do their job effectively. Sometimes our expectations are unrealistic (“Hey new outside sales guy, why haven’t you tripled our revenue this quarter?!”), and more often our training and access to resources are sub-par. If your expectations are realistic and you’re confident your company is doing what it can to equip and empower this team member to be successful, then give them a timeline and stick to it. I.e. “You have 60 days to hit these metrics or we’re going to cut you loose.” And for the love, don’t move the goal post back just because they show a little improvement.

Is their behavior, temperament, communication style, or general disposition in violation of your culture?

See ya. This was a bad hire and you need to move on. For your sake, for theirs, and for the good of your organization. Keeping a toxic employee on board just because they are talented or experienced is one of the worst, and unfortunately most common, mistakes a manager can make. Your inaction will tell the rest of your team members what you value the most, revenue. Good leaders are willing to make the hard call that could negatively impact business performance in the short term but will pay dividends in the long run.

Is their personal life negatively impacting their performance at work?

This is the most common challenge we see with our clients. A team member’s health, marriage, children, finances, etc. are spilling over into the workplace and inhibiting them from executing at a high level. Well, you hired a human and humans suffer. It’s part of the deal. If you terminate everyone having a hard time at home you won’t have anyone left (and eventually you’ll have to fire yourself!). When things have really hit the fan (i.e. death in the family, divorce, serious health concerns, or a kiddo ends up in a bad spot) we believe it is better to give them a leave of absence to face the issues head-on then ask them to show up and pretend everything is okay. “Take as much time as you need” sounds great but it’s not. Give them a week, two weeks, even thirty days if need be, but be clear about when you need them to show back up. It’s possible they won’t ever come back, but if they do, you will likely have locked in a loyal team member for life. Again, you have to be willing to make short term sacrifices for long term gains. The exception? If a team member seems to be in perpetual crisis with annual breakdowns, you need to cut them loose.

We don’t build culture when things are going great. I have seen our clients close a round of funding and immediately install kegs in the office to “build culture”. Others have wrapped up strong quarters and taken the whole team to Top Golf and call it “building culture.” We build culture in the hard stuff. How we handle the gritty, ugly, difficult situations are what really builds culture. If you care about your people, then letting someone go should rank pretty high on the list of challenging situations you’ll face in leadership. Everyone wants to captain the ship until the storm hits. Go get ‘em.