If you have an employee who has stopped performing up to the standards you’ve set, you need to act quickly. Constant errors can affect your team’s credibility and chip into your profits. On the other hand, terminating an employee on a whim can be a risky move for your business. Before terminating an employee for poor performance, you need to follow a practical and fair process to reduce your liability, and give the employee ample opportunity to improve.
After all, recruiting, hiring, onboarding, and training a new employee is a high cost of employment. It’s best-practice to follow a progressive discipline process – which generally includes a series of increasingly severe penalties for repeated offenses – if you want to conduct performance-based terminations the right way. Unfortunately, in some cases, termination is unavoidable.
If you’re considering terminating an employee for poor performance, here’s 4 things you need to do first.
1. Document everything
Documentation is key. If you don’t have a record of something happening, it’s easier to argue that it didn’t happen at all. Even notes from informal conversations, when written and organized in a notebook, can be helpful and count towards documentation. HR technology platforms make it easier to track and organize important records like performance reviews, time and attendance, disciplinary actions, or other personnel files. Documentation will be your greatest ally if you ever have to defend your decision to terminate an employee. These documents show that you’ve made an effort to help your employee be successful, and may help decrease legal liability for your company.
2. Communicate expectations
Every job should have a job description, even if it’s informal. Having a solid understanding of the functions and responsibilities of each role in your team will help you communicate what it takes to be successful. Clearly define their roles, and you’ll make it easier to pinpoint and correct problems. It’s essential for your employees to know what’s expected of them, and you can’t assume they do. Effective performance reviews can play a large role in properly communicating these expectations with your employees.
3. Be a good coach
Is your employee struggling to perform because of a lack of skills that could be taught or improved upon? Don’t be too quick to dismiss these cases. You don’t want to lose someone who is the right culture fit and a solid team player, especially if they could develop the skills needed. Disciplinary cases could become great employees if they have genuine potential and if developing their skills costs less than restarting the hiring process.
In many ways, business leaders are also their employees’ coaches. You praise the good, correct mistakes, celebrate successes, and focus on keeping your team motivated and inspired.
Your employees need lots of feedback to understand what they’re doing well, and how they can improve, long before you consider termination. Consistent, constructive feedback is the best way to keep everyone on track and nip performance issues in the bud before they become serious.
4. Create a performance improvement plan
If you’re providing ongoing coaching, but you’re still seeing major issues in performance, it’s a good time to develop a performance improvement plan. This plan should specifically explain what the issues are and give detailed information on how to correct them. The improvement plan should also set up reasonable timelines and hold the employee accountable.
Document the conversation and the plan, and ask your employee to sign an acknowledgement form to confirm their understanding. If you verbalize the improvement plan instead, make sure you at least send a follow-up email so that you both have something in writing. However you handle it, include plans to check in on a regular basis. Document these follow-up meetings too, and keep giving specific feedback on the employee’s progress. If you continue to see errors, and feel the employee isn’t making progress, address it quickly. Again, in writing, detail specifically what needs to improve and how it can be accomplished.
Best practices for terminating an employee
Despite all your best efforts, termination is sometimes unavoidable. Once you reach this point, you should have clearly documented what you did to help the under-performing employee improve. If a performance-based termination comes as a surprise to your employee, you’ve done something wrong.
Before you terminate, take the time to check off the following tasks:
- Review all the documentation leading up to the termination decision
- Contact your legal counsel or HR representative to ensure you’re making a justified, well-supported decision
- Confirm with your HR representative that you’re following all the wage and hour regulations
- If you use employment contracts, non-competes, or non-solicitation agreements, ask your legal counsel for enforcement guidance
Having the termination conversation
When it’s time to sever the relationship, don’t disguise the real reason for a performance-based termination by saying it’s a “layoff” or something else. Be honest and direct. If your decision is supported, the truth will come easily. A performance-based termination statement sounds something like this: “John, as you know, we’ve talked several times about your attendance. We haven’t seen the improvements we expected. That said, we have made the decision to terminate your employment effective immediately.” Leave no room for misinterpretation. You’ve stated the facts, and made your decision. This is a better approach than avoiding the truth or rug sweeping.
The timing and location of this conversation are also important to think through. The right answer for your situation depends on a number of factors like the reason for the termination, the employee’s disposition, your company’s culture, and maybe more. While there’s never a “good” time for this kind of conversation, you can try to make it as smooth as possible, and think about the impact to your team overall.
Termination should be seen as a sometimes necessary last resort.
Give your employees every opportunity to improve, and make sure you’re enabling their success with constant support, clear expectations, and accountability. And if you notice performance issues, act quickly to get them back on track. Document everything, just in case a performance-based termination becomes unavoidable.
With the right HR support, you can reduce some of the risks and liabilities of being an employer, and focus on attracting, retaining, and developing the best talent. Get in touch with us, and start a conversation around improving your human resource processes to better support your growth.