MBA2525 Q&A Wednesday: How do I fire a long-time employee?

0:05Hey everyone, welcome back to the$100 MBA show. Today's episode is Q &A Wednesday where we answer a question from one of you, one of our listeners, one of our viewers, one of our community members. Today's question is from Terry. And Terry asks, how do I fire a long-term employee? I feel for you, Terry, because this is not an easy one. I've done this a few times with long-term employees. And I'm going to let you know that this is not easy, but there's a right way and a wrong way to do this. And I want to share with you what I've done and what has helped me through this tough process and what I've learned through that process so that you can have an easier experience with this person, because with this employee, because this is not easy, letting go of anybody's not easy, but let alone somebody who's been with you for a very long time.

0:57And we're going to walk through all the steps, things to look out for, the pitfalls that you might not see that I fell into and I want you not to fall into. And some of the things I think about about how to turn this into an opportunity for your business. Let's get into it. Did you know that nearly 70 % of employers have had to fire a long-term employee at some point? So you are not alone here, Terry. And anybody else who's watching, listening to this episode and are considering letting go of somebody that's been with you for a while? This is something that's very, very prevalent. That statistic, by the way, was according to a survey done by the Society for Human Resources Management.

1:39So great article over there that I found to support today's episode because I was wondering, like, how common is this? You know, because I've had to do this a few times myself. And there you have it, 70 percent. OK, so I want to share some strategies today on how you can handle this effectively, but also compassionately, because this is another human being. This is somebody's livelihood. Not easy to say to them, hey, this is no longer going to continue this relationship we have. Now, I know that sounds like sort of a relationship breakup, but that's what it is. You probably spent more time with this person in the last how many years at work than your significant other at home.

2:22So this is sort of a big deal. So you want to do this right. I remember when we had to let go a long-term team member at Webinar Ninja. It was one of the hardest decisions I've ever had to make, but I knew it was the right decision. This particular person was with us from the beginning, from early days of Webinar Ninja. So it was not easy. This was about five years in. But it came clear to me that this person was great when we first started, but they're not a good fit for the company now. The company has evolved, has grown, has changed. But unfortunately, they didn't change with it. And it was a tough conversation because they had a lot of great merits, right?

3:03This isn't hard, right? This is not a difficult decision if they don't have good aspects about their work ethic, their job, what they produce, whatever they do, right? Obviously, there's something good about them. This wouldn't be hard if it wasn't, right? Even if it's just their loyalty that you have to lean on. So obviously, they're going to have good points. But the point here is that you're trying to find the right fit for your company. And sometimes people just don't fit anymore. And that's okay. hey, that's the nature of life. We grow, we change, and you shouldn't feel guilty. There's a couple of things I want you to think about as we go through the process today.

3:42Two insights I would give you. These are insights I wish I can go back in time and tell my former self, okay? The first insight is that it is a part of your job. No, scratch that, not part of your job. It is your whole job to represent the customer. You're the champion of the customer. You serve the customer. The customer is the person that is looking to you so that you can continue to give them value. That's why they're paying you, right? And that's what business is about, is that you, as the leader of this company, you're in charge of making sure that you're giving 100 % value to the customer.

4:22In exchange, the customer is giving you money so that you can continue to grow the business. Okay? So you have to represent the customer. You have to defend the customer. And if somebody in your team is not doing what they need to do to help customers out, to solve their problems, to provide the product or service that you are expected to give the customer for any reason or potentially might not be able to do in the future, then that's on you. You need to defend the customer. You need to make sure that you are doing everything you can to make sure that that transaction, that value transaction you have with the customer is not interrupted.

4:59right and that includes letting go of somebody on your team and replacing them with somebody that is going to deliver for you okay that's point number one point number two this goes back to the lesson i learned from the book the obstacles away by ryan holiday when there's an obstacle when there's a challenge in your business in your life it's an opportunity okay what's the opportunity here well it's a reminder that it's so important to take your time and hire properly OK, hiring recruitment. What I learned after growing my software company for 10 years is that recruitment was really my main job.

5:35My main job as a leader of the company, as a CEO, is to bring in great talent, right, is to be great at evaluating. Is this person going to do what they need to do to get us the results we need? OK, that means not rushing this process. That means make sure that you take your time hiring. but when it comes to firing, don't wait too long, okay? You need to part ways when things are not going in the right direction as soon as possible because the more you wait, the more damage you're gonna do. And I say you do because you're ultimately responsible for what happens in the company. Yes, it's the employee that might be doing the work that's not up to snuff, but who hired that person?

6:17You did, okay? So this is a good reminder for you as the leader and as the head of recruitment, right? As the CEO or the management team that, hey, I have to make sure that I hire the right people, the people that have a growth mindset, people that are willing to be trained and to be coached and to move up in their professional and in their knowledge base of who they are as a professional, right? What I mean by knowledge base as a professional, meaning that they're not just happy with who they are. They're looking and they're hungry to improve so that they can add more value to your company and therefore to the customer, okay?

6:53So see this as an opportunity to be like, hey, where did I go wrong here with this person? And if I had to go through the whole interview process again, would I hire them again? Probably not because I'm firing them. Why not? What are they lacking? What do they need? This is what I should be looking for when I make the next hire, when I replace this person. So you don't repeat the same mistake over and over. So let's break down the steps of firing a long-term employee. And these are the steps that I came up with. This is what worked for me in my experience. I'm not saying it's perfect or the only way to do it, but I'm going to say this is what worked for me.

7:27The first thing I like to do is I like to evaluate the situation, right? I like to assess things as they are. I want to look for facts here, not how I feel or my hunches or the way it seems. No, I want to look at the data, right? Before making any decisions, I want to assess the employee's performance and their fit with the company, right? So what are they actually producing? How are they producing it? How's it affecting the company? Sometimes this is easy if it's a sales job because it's just numbers and how many sales they make and all that kind of stuff or marketing with leads. But with other types of jobs like management, like creative, you still can find a metric.

8:05Every team member should have a North Star metric. That means one thing that tells them if they're winning or they're losing in their job. And this is something you should set out if you don't have this already in your company, every position. So for example, if you're hiring a customer service agent, what would the North Star metric be? Well, because we're satisfaction rating. How high is their satisfaction rating? Is it 95 and above? That is really what they need to look at because the quality of their service is really what matters. OK, if you have to just choose one so that it makes it easier for them to focus.

8:35There could be other metrics on their KPIs and their evaluation, but a North Star metric kind of tells you if they're doing their job or not. Okay. Sales, revenue, right? Leads with marketing. What about management, right? Is there a number in terms of productivity? What about the number of people that are on their team that they hire in a single year? If you're trying to grow your team, maybe it's retention, whatever it might be. Find the North Star metric. So once you've looked at this long-term employee that you're looking to fires, metrics, numbers, data, does it fit your hunch? Does the data actually match your feeling of needing to fire them?

9:14If it does, you don't just keep it to yourself. You need to have a conversation with this person. This is where it gets difficult, but this is part of your job. You have to. You owe this to the person. You hired them. You entrusted them. You have a conversation with them. Listen, it's only fair for you to be honest with them and tell them they're not doing well so that they can have a chance to turn it around. But if they don't have any clue what's going on, it's really not fair. Okay. So my advice is to sit down with him, have a real honest talk, say, Hey, listen, and this is exactly what I did, by the way, you've been with us for a very long time.

9:48And I really appreciate all the years you've been with us and all your loyalty. But I took a look at your numbers and took a look at your metrics. And this is what I see. Okay. You're not doing as well as I was hoping. And we want to fix that. My job is to make sure you're successful in this company, because when you win, the whole company wins. And I personally win because I'm a founder, right? So let's just be honest here. Okay. And just be flat out honest. So here are the things that you're doing right now in your job. Here are your numbers. This is where you're lacking. These are the numbers I want you to be hitting.

10:20What can I do so that I can help you? okay where are you having difficulty is there something going on that i'm unaware of okay you need to give them a chance to explain themselves maybe they're having an issue at home but now it's over maybe they're uh frustrated with their line manager and their line manager really doesn't give them a chance to excel maybe their computer is slow and they're having a hard time getting all the work done whatever it is right get them to say their piece and if they don't have anything valid, you got to say to them, okay, then I need you to hit these numbers by X amount of time and be reasonable here, obviously, but tell them I'm here to support you.

10:59Do you need me to give you some training here? Is there some sort of help I can get you? Is there any kind of tool or equipment you need? Whatever it might be. Okay. You need to give them everything they need to be successful. Now, document everything. Keep detailed records of every conversation you're having. Okay. I don't know how comfortable you are, but I had a EA when I was at Webinar Ninja and they were on every single meeting. They took minutes of every single meeting. But if you don't want to have an EA, I also did in these intimate conversations is I took my own notes and then I wrote those notes and I put them into a document or a shared area so that everybody can see it.

11:39Everybody meaning me and the other employee so that we agree is this is what we agreed on. This is what we talked about. Do you agree with this. And then we have an action plan to say, okay, this is what we're moving forward. This is what we agreed upon at the end of the meeting. Okay. Moving forward, you're going to move your numbers and you're going to increase X amount every single week until we hit that goal. Okay. So again, you have an honest conversation. You document everything in the process. Now, however, you keep this professional and also just be compassionate. Make sure they know that you're on their side because if you can turn it around, that's amazing.

12:14A little note though, and I'm going to be brutally honest here. In my 20 years of entrepreneurship and working and hiring dozens and dozens and dozens of people on my team, I would say less than 5 % of the time, people turn it around. Once I notice somebody is actually not a good fit for the team or is not the best hire for this position and we need to cut them loose, 95 % of the time, nothing changes from that moment, meaning they don't turn it around. And for some reason, this is just the statistic that I have gathered in my own experience. But for some reason, those who are motivated to win will never let it get to that actual state where they're about to get fired.

13:01Okay. They're probably already checked out, right? You just noticed late. they're already thinking about the next job or the next opportunity or maybe the daydream about something else or they're distracted by something that's out of your control okay i'm just giving you my honest experience but it's still your job to go through this procedure because maybe because the five percent you can turn it around now if for some reason they don't turn it around okay like i mentioned and you have that follow-up meeting because what i like to do is that when i have that initial meeting, say, hey, we're going to check back at X date, like in a month's time to see if you're hitting these goals.

13:41If you're not hitting these goals, we're going to have a different conversation. Okay. And I make it clear to them in the first conversation that there is a possibility we're going to have to part ways and say, hey, if this works out, great. We can continue to have a great relationship and continue to work together. But if this doesn't work out, we're going to have to make a change. And unfortunately, that might mean saying, you know, goodbye. And they need to know the truth. Okay. Some people, they don't do this. And then the employee gets surprised. They're like, you're firing me? What happened?

14:12I never knew this was a possibility, right? No, don't do that. Be honest, be straightforward. And that first conversation, let them know that these are the stakes here, right? If things don't change, we're going to have to make a big change. Okay. And we're going to have to part ways. That's just the reality of our relationship. Okay. So let's say you're having that meeting where you're going to have to part ways. There's nothing worse than you stretching this out and not being straightforward with people. Okay. So when I got on these calls, which I did not enjoy, but this is what I did. I sat them down and I said, a month ago, I sat down with you.

14:51We had a conversation. I told you that I was unhappy with the results that we were achieving with your KPIs. I told you that we needed you to hit X amount of sales or leads or whatever it might be. And we said that we're going to track it every week and see how you're going to progress. Unfortunately, you weren't able to hit those KPIs in those numbers. In that meeting, I told you that if we were not going to hit those KPIs, that we might have to part ways. And unfortunately, today is that day where I have to make the decision to say we have to part ways. I really appreciate everything you've done for us at our company and your loyalty for the last X amount of years.

15:30And this is not an easy conversation, but we need to keep moving forward. I have an obligation to make sure we keep moving forward. Your last day is going to be XYZ, and me and my team are going to do everything to make sure it's a smooth transition. You could speak to so-and-so in human resources who's going to tell you what the next steps are and how to make sure that you're successful in the next steps in your career. Thank you again for everything you've done. I really do appreciate it. That's it. That's all you say. You just tell them the truth. You tell them what's happening and you tell them what the next steps are.

16:04I try to keep this very short. The meeting is actually almost less than five minutes. Okay. Now, there's a few things around this meeting. Number one, you're going to let HR take care of everything else. If you don't have HR, have an EA. If you don't have an EA, it's just you, then you're going to have to take care of it at a different meeting, not this meeting. But basically, you want to offer them a transition plan. And this has a lot to do with whatever's in the contract that they signed or you put together for them. This could be severance pay. This could be services leave that you're going to pay out, whatever it might be.

16:37OK, and you can give them some time to figure things out. Sometimes you'll pay out the rest of their salary for X amount of months or weeks or whatever it might be. This is up to you and how you set the rules in your company. And of course, you want to abide by the laws of your land and wherever you're residing and operating. But the point here is that you have something already that they're expecting through their contract. OK, next, I make it a point every time somebody leaves the company, especially when they leave because they were fired, to address it in our all hands. Our all hands is when the meeting that we had with all our team members once a month.

17:15and in the beginning of that all hands, I mentioned, unfortunately, so-and-so is no longer going to be with us on the team. They did an amazing job when they were with us. We really thank them for all their contributions. I never speak ill of them, right? Because it's a very small world. What comes around goes around, but also everybody knows everybody eventually in our business, okay? So it's best for you to always say the positive. If you have nothing positive of a save was really nasty. You don't say anything. You just say, Hey, unfortunately, Samantha is no longer with us at the company. That's why she's not in the meeting today.

17:50We wish her all the best. That's it. Okay. But you have to address it now in some cases. Okay. When I have to let go of somebody who's done work that is not less than perfect and they're not hitting their KPIs and I, we have to let them go, but more like they did something that is just not part of our culture that is really affecting everybody else. I had to let go of somebody because they were just incredibly rude to everybody and arrogant. And they just really were a negative energy in the team. And we had to let them go because they just were not helping us out, regardless of the fact that they were a tremendous worker.

18:30They were a really good engineer. And this engineer was incredible, but very negative attitude. And we just said that in the meeting. Hey, we had to let go of this person because the way they were treating other people. This is not okay in our company. We do not tolerate this. Despite the fact this person was very talented and did great work. But at the end of the day, if you can't be a professional, you can't be with us. And that was just very clear. So everybody understands why the let go. Because what happens is when people hear either through you or through the grapevine that somebody has been fired.

19:03The first question is, is am I next? So you need to clear the air to make sure that you're honest with your team so they know what to expect and know what's up, right? What's happening. So I want to tie this all together to make it simple and easy to remember. Three steps. Number one, have an honest conversation and let them know what the stakes are. Hey, we need to improve your performance. If your performance does not improve, we're going to have to fire you. We're going to have to part ways. We're going to have to end this relationship. Let them know this is what's going to happen. Number two, have that conversation.

19:38If you do have to fire them and let them know what the next steps are and, you know, fulfill your obligation that was stated in your contract. Okay. Number three, address the team. Let the rest of the team know what's going on. Be as positive as you can, even if there's a, you know, public reason why they're being fired, right? Like they're a bad influence or negative. They're being rude to people. I still sometimes just say, Hey, this person was doing X, Y, Z, and that's why they got fired. We don't tolerate that, but we do appreciate the things that they contributed because they did contribute to the business and they, in their own way, helped you grow.

20:14Okay. So those are the three steps that I have found have helped me tremendously when I had to let go of any employee, let alone a long term employee. Now, sometimes people that are part of the fabric of the company that's been with you for so long, it kind of a big shakeup. I can't believe this person's leaving, you know, and this happened, I know. And you have to make sure that you communicate to the team that yes, this person was significant and important, been with us for a long time, but no one's above our mission, right? No one can just get a free ride and just do whatever they want and get paid.

20:49No, we all have to do our part. We all have to pick up our part of the bargain, right? We have to pick up our side of the work. Okay. Whatever we have to do or responsible for, we all have to pitch in and do our job. Okay. And this communicates something. And my team members told me this. They told me when you told us this, we realized, oh, this is not a company where you can just relax and do the bare minimum. You have to continually prove yourself beyond the hiring stage. Okay. So you really want to make sure that you're always communicating that, hey, we have a mission. We're trying to do something here in this company.

21:32We're trying to achieve X, Y, Z. We all have to do our part. No one is too important or too special not to do our part. And we continue to grow together. There you have it. That's what I did over the course of my 20-year career as an entrepreneur when it comes to firing any employee, but especially a long-term employee, which is tough. I know it's not easy. A piece of advice for you as a founder, if you are hiring this person, okay, if you hired this person in the interview and you made the choice to hire them, be responsible for firing them. That's advice number one. I always had this rule in my company.

22:12If I hired you and it didn't work out, that's my mistake. I actually did a disservice to that person, right? So I have to do the needful. I have to be responsible for doing the firing. OK, and the reason why I encourage you to do that and why it helped me is that when you do the firing, that pain that you experience and that uncomfortableness and that awkwardness is a good feeling because it encourages you not to feel it again and do a better job hiring. OK, so that's number one. Number two, this is going to be a tough day. so I would recommend try to schedule a walk a break or something after this call after this talk that you're going to have with this person because you're going to need to shake it off you're human okay let's just be honest so uh no matter how many times I had to do this it's not easy I need some time off I go to the gym I come back I'm ready to go at it again at the business but just keep in mind that this doesn't get easier, okay?

23:13But you're just gonna get better at hiring so you don't have to do this as often. Thanks so much for tuning into the$100 MBA Show. I hope you found this helpful, useful and if you want more useful practical business lessons, just head on over to our website 100mba.net. You can check out over 2 ,500 business lessons, search by category, marketing, sales, finance, team, whatever you want, it's there. If you wanna show us some love and if you want to support us, the best thing you can do is subscribe. Whether you're listening right now on Spotify or Apple or you're watching on YouTube, hit that subscribe button.

23:46It means a ton to us. But only if you're enjoying these lessons, okay? Only if you're enjoying it. If you want more, hit subscribe. That's it for me. I will check you in the next episode. And remember, business is tough. It's supposed to be tough. This is going to be hard. Don't worry. It's going to get easier because you're going to get better. Over time, you're going to get better and the results you create are going to get better and it's going to be worth it. All right. I'll check you next time. Take care.