Termination: War or Peace?

December 17, 2008

Termination: War or Peace?
From the PHCC Educational Foundation via third-party

Got employees?  Of course you do – that’s what makes you a company.  And if you have employees, you will eventually have to part ways with one or more of them.  As with any other human parting, such times are fraught with emotions, actions, and risks.  This article addresses the process of termination and includes thoughts on both the initial decision-making and the actual actions to undertake.  Our goal is to have you experience as peaceful a termination process as possible.  We focus on employment changes initiated by you, the employer.  However, as we get into the actions you take at termination, we will also indicate what to do whether it is you or the employee who initiated the termination.

The Decision
Why do we consider terminating the employment relationship with an individual?  There are a number of reasons ranging from gross misconduct, to poor general performance, to “lack of fit” or other nebulous forms of performance failure, poor business performance, and reorganization.  This is not an exhaustive list, but the “top five” reasons that employers initiate a termination.  Each situation brings unique characteristics associated with the cause of termination, and unique issues related solely to the specific employer and the specific employee. 

Probably the largest initial challenge is making the termination decision in the first place.  Many organizations take far too long to make a termination decision, although there is also risk in moving too quickly.  In the latter circumstance, the overriding concern is making the wrong decision – not taking enough time to make sure that all options are considered, efforts made to ensure that the fault is with the employee not the employer, and giving the employee a fair and reasonable opportunity to improve his or her performance, attitude, contribution, etc.  Let’s look at some general suggestions in each of the major categories of employer-initiated termination.

Gross Misconduct – One of the easier areas that cause termination is gross misconduct and is often something that included in an employee handbook.  Generally terminations for gross misconduct fall into the obvious categories of theft, willful destruction of property, harm or substantial risk or threat of harm to other employees, willful misrepresentation (e.g., lying), and other egregious actions.  Critical employer actions leading to “successful” terminations for gross misconduct are quick information gathering, sticking to the facts, direct and factual communication with the employee and any others involved, records of facts taken contemporaneously to the events, and, on some occasions, the involvement of the authorities to ensure that a third party with expertise is present.  Generally, terminations for gross misconduct happen quickly, with little or no advance warning, and with an obvious path to follow for the employer.  They are rarely peaceful.

Poor Performance – Poor performance terminations, on the other hand, tend to take longer to recognize and initiate, longer to implement, and can appear to others and to the employee in question to be less decisive.  This can lead to ambiguity and ambiguity is the scourge of peaceful employment termination.  The antidote to ambiguous terminations is identifying, understanding and sharing with employees how you expect them to perform.  Remember that performance communication starts during the recruiting process and should be a regular feature of ongoing supervision.  There is no question that the more time you spend on performance communication and expectation setting before performance comes into question, the more peaceful your termination process will be when (and even if) needed.  However, when you realize that performance has deteriorated, make sure that you consider the following questions and actions:

• Has something changed in the employee’s work or personal environment such as new supervisor, reorganization, illness at home, etc.?  If yes, can this be acknowledged, resolved, removed, understood, or accepted for an agreed period allowing the employee to get over the situation and return to acceptable performance?

• Have you outlined and communicated the poor performance to the employee, ensured that he or she understands, told the employee what you want changed, made sure they have support to make the change, and understand the consequences of not making the change?  This the performance improvement conversation and it goes like this:

“When you (describe poor performance), it causes (implications and context).”
“What I’d like you to do in the future is (describe corrected performance).”
“I’m prepared to help, please let me know what you need me to do.” 
“Please also understand that failure to make this change will mean (describe consequences).”

• Have you ensured that you, the employer, are not the cause of the problem?  In our estimation, at least half of the performance terminations we encounter reflect poor performance on the side of the employer vs. the employee.  Examples of this include poor job design, impossible expectations of performance, poor leadership, co-worker issues, etc.

It is prudent to review all three areas, but once poor employee performance is confirmed, the most important thing is to reach a termination decision and proceed steadily.  Having reduced the concern about ambiguity, the second largest mistake associated with termination is failure to act promptly.  Why is it a mistake?  First, it means that you have an underperformer in place and that affects your business success.  Second, poor performance is de-motivating to others and can be contagious.  Third, failure to act promptly can result in mixed messages to the underperforming employee and this can be troublesome when you do terminate, leading to the risk of employment litigation or adverse unemployment decisions.

“Lack of Fit” (and other less obvious termination reasons) – The king of the nebulous termination process is the category “Lack of Fit.”  There are all kinds of labels that this takes on in daily employment life including “lack of confidence”, “something’s just not working”, and “I just can’t put my finger on it.”  Perhaps the most difficult situation to be in, this kind of concern often begs the involvement of others to help pinpoint the cause for discomfort.  There are generally two outcomes – either the employer investigates and determines that there is truly a performance problem, or analyzes the situation and decides it is an internal employer situation that can lead to such actions as reorganization, the reconstitution of a team, or a change or revitalization of leadership.  Terminating an employee for “Lack of Fit” is a risky proposition.  It is risky from an employment law perspective and from the surviving employees’ morale perspective.  If you have a nebulous situation, make use of advisors, colleagues, the employee’s supervisor and an HR professional or employment attorney to help better articulate what you are experiencing and to help derive a plan. If you operate in an employment at will state and if you have clearly articulated you are an at will employer, your advisor might suggest you limit your investigation and communications to reflect a termination under at will employment.

Poor Business Performance and Reorganization (Layoffs) – The need to change an organization for either poor business performance or reorganization to achieve better results can cause the need to terminate one or more employees.  Understanding the nature of the situation, planning the change, and determining ongoing needs are all critical first steps.  Once you identify the framework, it is important to consider the viability of the staff you currently have in place as your “first choice” for staffing.  By using existing staff, you reduce the legal challenges, raise surviving employee morale, and lower training/orientation time.  However, this should not substitute for making the right choice and, if you identify employees who cannot contribute to the future direction of the company, it is better for both you and the individuals in question to terminate employment relationship at the time of the business change.

Post Decision
Once you make the decision to terminate an employee, consider the checklist below to bring as much peace and order to the process as you can. 

• Confirm your rationale and decision with someone you trust and who is experienced in terminations.  This can be an advisor, a colleague or an employment attorney.

• Prepare an outline of the process. It is important to think about such things as timing, impact on others, communication sequence, the employee’s last day, temporary work coverage, conduct of the termination meeting, security and information protection, and the employee’s legal rights in terms of, for example, benefits, wage payment, etc. (see below).

• Consider if someone should join you for the termination conversation.  If you anticipate problems with the employee, or even if you feel that having someone with you will help you “stay on message” it is often a good idea to have someone sit in on the termination conversation.  Prepare a script, run the script by an advisor (preferably an employment attorney) and stick with the script.

• Take time to learn about the termination issues specific to your state, the situation and your employee benefit offerings.  Do you need to offer COBRA or benefits continuation (varies dependent on size and state)?  How will you respond to reference checks? Some states protect employers giving references, others do not – legal advice is best here.  What is your exposure in regards to unemployment? Getting a resignation letter proves voluntary termination; accurate performance documentation that includes written warnings clearly stating that failure to perform will result in termination can make a difference in unemployment decisions.

• Prepare materials in advance.  At the minimum, prepare a termination letter outlining the details of final employment date, final pay, payment of leave benefits (as appropriate), and what must be done by the employee to continue benefits, if applicable. State laws vary on the timing of final paychecks.  For example, in the District of Columbia, you must have the final paycheck on the last day of employment for involuntary terminations.

• Unless a termination is for gross misconduct, which usually happens more or less on the spot, select the day and the time for the conversation. There are varying theories about the best day of the week to terminate an employee.  Let’s face it, there is no “right time” – you must pick the “least worst” time and that is dependent on your specific circumstances.

• Conduct the termination conversation in a private area.  Be respectful, polite, professional and stay on message.  Resist the temptation to deviate, explain yourself, or sympathize.  However, you are human and empathizing – that is to say acknowledging that the situation is unfortunate – is acceptable.  The ratio of you listening to what the employee has to say (if he or she wants to talk) versus you talking should be a minimum of 10 (listening) to 1 (talking). 

• Depending on the termination plan, you may or may not be informing the employee that this is his or her last day of employment.  If you plan to have the termination effective immediately, be prepared to escort the employee to his or her work area to gather belongings.  Do this with dignity, respect and professionalism.  If you expect the employee to work out a notice period, consider letting him/her leave immediately after the conversation on the day of notice to allow the employee time to regain his/her composure before returning to work.

• Don’t forget to communicate to others.  Depending on the nature of the situation, plan a small campaign, beginning with those whose help you may need during the termination process, continuing with immediate coworkers and culminating with the remainder of your staff.  Keep the communications minimal, factual and forward looking.  Try to anticipate the concerns others will have (“Am I next?” “How will we get the work done?”), but also be thoughtful to avoid any promises or commitments that you might not be able to keep.  For example, do not answer, “Am I next?” with “No, I would never fire someone like you.”

• Gather together all notes, performance warnings, performance reviews, resignation letters, and other supporting documentation in writing.

• Finalize and “close” your records.  Follow-up with notes from the meeting and any subsequent conversations you have with the departing employee.  Make sure you track all activities that you and the employee need to undertake in regards to benefits and final steps.  You have a responsibility to complete these, and it is in your best interest to remind the employee to complete their end of final proceedings as well.

There are many things in your control to ensure that the termination of an employee is as peaceful a process as possible.  By far the largest sources of difficulty come from an employee who feels that he or she was wrongly treated – not informed of problems, not treated with respect, not given what is due upon termination.  Thinking carefully about why, when and how to manage a pending termination will generally result in a calm, non-contentious, and tolerable outcome from what is never a pleasant situation.

This content was provided by a third party via the PHCC Educational Foundation. Please consult your HR professional or attorney for further advice, as laws differ in each state.

The PHCC Educational Foundation, a partnership of contractors, manufacturers and wholesalers was founded in 1987 to serve the plumbing-heating-cooling industry by preparing contractors and their employees to meet the challenges of a constantly changing marketplace.

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