Every experienced manager has had to let someone go at sometime in his career – and it’s unpleasant to say the least. Now imagine that you are the CEO of a company going through No Man’s Land and you have to replace a member of the management team. He may even be your number 2 guy, your right hand man, your confidante or your drinking buddy – or all of the above! He is one of the people who have helped bring the business this far. Now you risk being seen as casting him off just as the company might be about to start generating good salaries for its employees and wealth for those who have equity in the firm.
You have known for a while that this day would come. You just didn’t want to admit it or face it. The problem is that your staff may know it too and they are wondering why you are carrying this person. The performance problem could be any of a myriad of issues:
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Inability to keep up with current technology
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Lack of experience that is relevant to changing client base
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Problems with handling the volume of work the growing business requires
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Managing the travel demands due to geographic expansion
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Negative attitude about the business and its direction
Or it could be a combination of issues. In any event, after many sleepless nights you have finally come to the conclusion that for the business to be successful, you need to make a change.
Now that you have moved past denial, it is time to get organized to terminate the relationship in the most respectful, professional way possible, with the least disruption to the organization. You need to address:
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Preparing for the termination
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Timing and reassignment of duties
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What to say
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Impact on the culture
Getting your Ducks in a Row
The first requirement is to check on your legal standing for such a termination. You and/or your attorney should look into any potential roadblocks that could arise due to existing employment agreements or contracts. He should also look into any potential EEOC compliance problems.
The next step is to review the documentation of past performance discussions and annual reviews that address the performance issues. Being terminated should never come as a surprise to the individual! There needs to be a record of discussions regarding performance issues and the steps to be taken to improve. A good way to organize the conversation is to have a copy of the job description and point out his or her deficiencies. This is especially important if the role is changing due to the growth of the business. The future role may be even more complex and challenging than the current role.
Timing
In addition to reviewing the calendar for the obvious dates to avoid (birthdays, Christmas, anniversaries, etc.), it is important to look at the big picture when deciding on the timing of a termination. Is the business cyclical, making it difficult to lose someone during the ‘busy season’? Is the role cyclical, requiring someone to handle monthly reports, quarterly filings, year-end statements, etc.? Even though the employee’s performance was subpar, he or she was getting some work done so it is important to decide who will take over the job responsibilities. If the proper planning has been in place, a more junior staff member may be ready to step up to the requirements of the job. In some situations, the job responsibilities can be divided among other staff members. In either case, one must be aware of the impact to the corporate culture, which we will discuss later.
If the decision has been made to hire from the outside there is the question of bringing the person on before or after the termination. There are pros and cons to each approach and again the impact on the company’s culture and the employees’ mindsets should be considered.
On the positive side, you may want to use this opportunity to restructure the job or the entire function to improve efficiencies. The termination of a person in a key role gives you the freedom to redesign the entire functional area or business unit to meet the changing needs of a growing organization.
In the second half of this article, I will discuss how to handle the termination meeting and the impact of the termination on the company’s culture and morale.
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Contact Ann at ann.oconnell@newportboardgroup.com
