How to Know When It’s Time to Fire an Employee

Deciding when it’s time to fire an employee isn’t an exact science. Occasionally a burst of outrageous behavior will make the decision obvious, but that’s seldom the case (fortunately!).

Putting the issue in a broader perspective helps. I once heard someone divide employees into four groups:

• Type D: Those who won’t do their work, or rarely do their work, or require constant supervision
• Type C: Those who will do their work when told
• Type B: Those who will do the work they’re told to do and then ask what else they can do
• Type A: Those who will do the work they’re told to do and then find what else needs to be accomplished and do it on their own.

Ideally, you want all the positions in your small business to be filled with Type A and Type B workers. They make your job much easier and they make your small business much better. But we live in the real world, and not everyone you hire will fall into one of those top two desirable categories.

When Type D employees aren’t doing the work they were hired to do and you have given them sufficient training and sufficient feedback, then you’ve given them a sufficient chance to make it; fire them. While the process or act of firing anyone is never easy, in these cases at least, the decision should be obvious.

When to fire ‘adequate’ employees

Your job as a small business owner and employee supervisor is to help your employees get better at their jobs and also become better employees. In other words, you should try to help Type C employees become Type A or B employees, and Type B employees become Type A employees. You should put Type A employees on a path of increasing responsibilities and don’t be surprised one day if they decide it’s time to go off on their own and start their own business.

But despite your best efforts, there’s a good chance that some of your employees will be solid Type C workers and unlikely to progress any further. They are happy where they are at and have no desire or drive to be promoted. To help you determine if you should keep them on your team, evaluate them in light of the following questions.

• Is the employee bringing people down, having a negative influence? If the employee’s work habits are detrimental to others, then it’s probably a good time to part ways. This assumes, of course, that you have spoken to the employee and worked with him to turn around the negativity.
• Is the employee demanding too much of your time, or of his direct supervisor’s time? If the employee is a high-maintenance “time eater” then it’s a good idea to fire him. Your productivity and the productivity of the employee’s supervisor are being diminished. You might find that firing this employee is almost like hiring someone because overall, more will get accomplished!
• Will the employee be easy to replace at the same salary? Can you afford to pay more? If the Type C employee is being paid very little, it will be far more difficult to find a replacement who is a Type B or Type A “out of the box.” If you can, bump the pay rate. If not, hire for attitude and ambition when you bring a replacement on board.
• Is the employee making progress toward becoming a Type B employee? This is implied by some of the previous points. However, it can be difficult to judge. Here’s a good way to assess this: Does the marginal employee seem like he wants to improve only in the few days or weeks immediately after having been reviewed, or does it look like the employee is making steady improvement? If the marginal employee will only “turn it up a notch” when the heat is on, then it’s time to find a replacement.
• Are your customers or vendors complaining about the employee? Your small business success hangs on your reputation and if you have an employee who is tarnishing your reputation to either customers of vendors, the situation needs to be corrected very quickly.

The points above generally apply to the marginal employee who will fulfill the minimal stated requirements of the job. I have one more question that could be applied to all employees, whether they are close to being fired or are a star on your staff:

• Is the employee opposed to the culture you’re trying to create or maintain?

If the counter-culture employee is marginal, then the decision to fire is easy, but what if it’s your best salesperson?

There is no easy answer here. First, you need to work with the employee and be sure that he understands how important it is to you to create and maintain a certain company culture. If it seems like the employee understands and begins to adapt, great. If not then you have two choices: Fire the employee, or create a situation where the employee has little or no impact on the culture.

You could “compartmentalize” the employee. If the employee was in sales, for example, he could have a territory that keeps him out of the office most of the time. It’s not an ideal situation, but it could buy you time and give the employee time to evolve into someone more attuned to your culture.