Firing and Personal Finance

When is it time to let someone go? Plus, what to do when your credit is in shambles.

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Firing

Q When you think you need to fire an employee, is it best to terminate the person immediately, wait for him to make a big mistake, or give him a chance to improve?

David Michaels
CEO
Lexington International
Boca Raton, Florida

Donald Trump makes firing look easy--kind of a kick even. As usual, he's a unique case. CEOs consistently call termination one of the worst parts of running a business. It represents both the employee's failure (to perform) and the boss's failure (to extract performance) all in one dismal package.

It's best to get it over with fast, the way you remove a Band-Aid. That's the metaphor used by Clint Greenleaf, CEO and founder of Greenleaf Books, a publisher in Austin, who has fired about 10 people in the past few years. "So many times you keep putting it off," he says. "You can always find an excuse." But procrastination means more sleepless nights for you; meanwhile, the incompetent, unmotivated, or simply culturally misaligned employee could be hurting your company.

That doesn't mean fire on a whim: Employers are legally obligated to provide cause for termination. But they needn't wait to catch someone cooking books in the finance department or crystal meth in the kitchenette. The reason can be as simple--and subjective--as "you don't gel with the team" or "you're too negative." Ideally, dismissal won't be a huge surprise to the dismissed. Greenleaf recommends bringing up problems as they arise. "If there's an issue, address it immediately," says Greenleaf. "Don't wait around until the next review."

Senior managers usually prove hardest to jettison. "You feel the void will be too big," says Nancy Traversy, founder of Barefoot Books, a children's publisher in Cambridge, Massachusetts. Like many entrepreneurs, Traversy came to grips with firing the hard way. "I used to agonize over it," she says. "I'd sit through reviews pulling my hair out thinking this person will get better or maybe it's my management style." One day, Traversy realized she had kept an employee on nearly three years too long, hoping for improvement that never materialized. "I learned to focus my compassion on the rest of the team," she says. "They're the ones whose jobs have become more difficult because of this person."

No matter the reason for termination, Greenleaf advocates severance. The payment should be a bit higher for terminations based on murky issues such as personality conflicts, he says: "Let them leave with a slightly better taste in their mouths." After all, nothing dulls the pain of separation like exciting parting gifts.

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