“Breaking up is easy to do.” Said no one ever. Even in business, it’s never easy. But if you manage people, at some point in your career, you will be faced with the hard decision of whether or not you need to let someone go.
People are essential to a business – most of the time, you can’t do it alone. But as much as the right people are essential, the wrong people can bring your company to a grinding halt.
Letting an employee go can bring up all kinds of emotions. There’s uncertainty, guilt, or even worries if you’re making the right choice. But often, it’s necessary for the business to thrive. Having the right people in your team is absolutely critical to your business’ success. I’ve experienced it firsthand. I’d usually been pretty good at knowing when it was time to cut the cord, and I was known for doing it quickly. However, in one of my businesses where I was a solo-founder, I didn’t have as much confidence. I kept the wrong people on for too long and it ended up being a huge part of the reason why I crashed and burned and eventually shut my doors.
I learned the hard way, but you don’t have to. It’s never easy to fire somebody, but here are five signs that can help you with your decision:
1. Misalignment on Skills and Core Values
Your employee may have been a good fit for your company at the beginning – they seemed to embody all your core values, and they got behind the company’s vision. They had the right skills that you needed at the time. However, that doesn't always stay the case.
For instance, say you hired a virtual assistant (VA) to help you with administrative tasks but now you realize that the job that you really need to be done is social media management. Your VA might have experience doing administrative work, but they are neither comfortable nor confident with what you need from them now.
This is where skill misalignment plays out. Your employee's skills are different from the skill set you're looking for now. Skill misalignment can cause a bottleneck for your business. If you think that a team member’s skills don’t align with your requirements, and they don’t seem willing to learn a new skill – or possibly, you need urgent social media management, then it might be time to find a replacement.
Another sign of misalignment can also happen with your core values. For example, if trust is one of your core values, and you’ve noticed that you find it hard to trust your employee with doing work independently – or maybe they lack trust in others, which holds them back from being a team player – then you are facing a problem that is best solved sooner than later.
Core values are more than a bunch of feel-good words and phrases mentioned during team meetings and emblazoned on your website. When you and your team are clear on your company’s core values, you can use them as a blueprint in making decisions, including hiring and managing your direct reports.
Your team members must exemplify the company’s core values in their work and how they interact with you, their fellow team members, and your clients. So if there's someone who works for you who doesn’t uphold the core values of your business, it's probably time to let them go.
There’s a tool called the People Analyzer that I learned from EOS (Entrepreneurial Operating System) that is a useful first step in determining if your employee is still the right fit.
Here’s how the People Analyzer works:
Write your employee’s name on the left side of a piece of paper. Along the top, write your core values.
Using one of three symbols, rate how they fit into your company’s core values:
- + means the employee demonstrates this core value most of the time
- +/- means the employee demonstrates this core value some of the time
- – means the employee doesn’t demonstrate this core value
Team members should be able to adopt your core values. If you’ve rated someone with more minuses than plusses, it may be time to let that person go. Note: it’s best if at least 2 other managers participate in this exercise with you so you can get different perspectives. Of course, if you’re a solo founder, you can do this on your own or ask a mentor to help you.
2. Poor Performance and Morale
Performance and morale are two of the most common considerations when letting go of employees. If you notice that an employee barely engages with work, doesn't show up or meet your expectations, it's probably time to let them go.
If you're torn between trying to solve these issues or letting your team member go, try the UMA test.
UMA stands for:
U - Understand - Do they understand their role? Beyond the qualifications you posted in the job ad, are they aware of your expectations? Do they clearly understand how they should help your business grow?
M - Motivated - Are they motivated to work for you? Do they show up on time, take the initiative, support other team members?
A - Able - Are they able to do the job? Can they commit and deliver? Can they give the results you're looking for?
If you answer more than one "No" to these questions, that's an indication that letting go of that team member may be the right thing to do.
But before acting hastily, you must also try to understand the reason behind your “No’s.” For example, if the employee doesn't understand their role, is that a training issue? If they don’t seem motivated, is there something happening at home that could be temporary? If they’re not able to do the job, have you provided them with the resources that they need to properly perform?
Make sure that the problem isn’t you. Otherwise, you’ll find yourself in this situation again and again.
3. Toxic Work Environment
Telling inappropriate jokes, bullying another team member, or gossiping at work is not okay. Keeping a toxic employee on your team is both stressful and risky.
You can first address the behavior with your team member to give them a chance to improve.
But toxic behavior can quickly turn your working environment into something that no one wants to be a part of. Especially if you’re a small business or you’re in the early stages of your startup. It’s critical to have the right people who embody your core values and fit your company culture – because otherwise, the culture can drastically sway depending on the people you let in, or in this case, the people that you keep around.
One wrong person can affect everyone around by spreading negativity at work. At the end of the day, it’s not fair to the rest of the team if you tolerate toxic behavior -- letting go of a toxic team member is usually the right move for everyone in the company.
4. Lack of ROI
When making a decision to hire, you're betting on the fact that this expense will help the business. But you can't always predict what will happen in the future. So, you should always be assessing if you have the right people in the right roles.
ROI should help you weigh the costs of your hire, so you can decide what to do. Based on their performance, can you still afford to keep them? If not, can you find a way to get the job done at a lesser cost?
5. Changes in Business
Any business is bound to change. One day, you might need to downsize and a role is no longer needed. Before you do so, ask yourself:
Could they free up resources in a certain department that is backlogged by taking on other work?
Could they fortify a department that is currently lacking?
Do they have a special skill set that you think will lead to an increase in revenue?
If these answers are no, it could mean that a layoff is needed. It’s a business decision, and you can help your employee understand that. Of course, you must comply with employment law, give them at least a 2-week notice, possibly severance pay and a good recommendation to help them find another job.
Performance Improvement Plans
Performance improvement plans (or PIPs), can save you from having to sever someone from your company. Sometimes, people just need guidance — we all lose our way from time to time.
The correct way to draw up a PIP is to include recurring performance issues (they need to know what to fix, right?) and goals for them to achieve in those categories. You can also let them know in the document that failure to retain good standing could result in severe repercussions.
You can also pair your struggling employees with ones that are stellar performers. By letting them shadow the top team members, they can see first-hand how they conduct themselves and excel at their work. It’ll help build their confidence, instead of them fearing a firing.
I’ve seen companies put employees through a PIP and they improved. I’ve also seen employees in a PIP that did not improve but the manager still let the person linger in their role. My advice – if you’re going to do a Performance Improvement Plan, you have to provide consequences for the employee if they don’t improve in the way you need them to.
Looking back at my businesses as a solo founder, I had two mis-hires during our early stages. What’s worse, I kept them for too long before I let them go. This was one of the things that eventually led me to close the company.
On the other side of the coin, I’ve had a lot of success when we’ve had the right team behind us. When you have the right people, who are well-managed, there’s nothing like it! Your people are what make your company vision a reality.
Let me know what you think about this article, what questions you have, and what your experiences have been in the comments!
Diane Prince started her first business in the back of a house, grew it to $50 Million in 6 years and sold it to a public company. She has co-founded, built and exited several companies since then. Now, she coaches founders and entrepreneurs.