Strategies: Firing

In today's corset-tight labor market, the only thing more exasperating than roping in recruits is having to cut them loose. Firing someone always feels like an enormous letdown, and knowing where to draw the line on termination is never a cinch. But doing away with poor performers doesn't have to be a tangled, drawn-out process.

For instance, Ralph Fascitelli, CEO of Imagio (#379), gives new hires just 30 days to prove themselves; if they don't, he'll show them the door. And Kenneth Hubbard of Hubbard Health Care (#178) designs rigorous performance plans for his senior staffers, who either meet their benchmarks or hit the pavement.

These CEOs have concluded that it's best to act fast when recruits don't cut it. Yet for Hubbard, that was a painful realization. In mid-1998, as complaints about his nursing-home company crescendoed among both customers and employees, Hubbard was slow to swing the ax on the senior executives he knew were chiefly responsible. Instead of firing them, Hubbard tried to bring them in line, an effort he now regrets. "In my attempts to save a few individuals, the business suffered," says Hubbard, who ended up terminating the offenders anyway.

Going forward, the CEO decided he could help keep his senior staff on track by clarifying a companywide strategic plan, which since late 1998 has served as the blueprint for personal-performance goals. The time frames for achieving those individual benchmarks vary, from two to six months. But if staffers fall short, well then, "it's already been agreed on and decided in advance that they need to start looking elsewhere," says Hubbard, who estimates that 10 senior administrators have voluntarily quit since he instituted the self-driven system.

Imagio's Fascitelli thinks his 30-day employee-trial period eliminates many potential problems before they arise at his public-relations and advertising company. Imagio newcomers have to show that they're self-starters with team spirit within one month. If they don't pass the test, they're likely to get canned. "Some people can turn it around, but most can't," says Fascitelli, who pegs Imagio's attrition and turnover at around 15% annually.

Fascitelli says he tries to preserve goodwill toward the company by sending nixed workers out the door with a full three weeks' pay. More important, though, Fascitelli says his 30-day assessment finds favor among his swelling ranks. "When someone is let go, everyone understands that that person wasn't carrying their weight," he says. "It sends a signal to the people here that their hard work is validated."

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