Your organization should have a clear plan for when it's time to let go of employees, understand best practices for actual firings and know the risks associated with litigation.

Firing employees is a difficult, but important, part of an HR leader's job. According to Gallup, disengaged employees cost businesses $450 to $550 billion per year. When employees are making mistakes, no longer contributing or creating a hostile work environment, it is sometimes necessary to let them go. However, it's important to understand how to handle staff changes in a way that protects you from getting sued and doesn't erode your organization's culture. Hiscox reports that an employment lawsuit costs firms an average of $160,000. Many managers aren't fully trained in how to handle firing employees so they don't know the legal considerations nor do they have the personal skills to handle a difficult and emotional situation.

To help managers successfully navigate this challenging aspect of their role, here are four important takeaways from, "Firing at Will: A Manager's Guide," by employment attorney and author Jay Shepherd:

1. Take Decisive Action

While terminating an employee is difficult, it's often the best decision for the business. As Shepherd writes, "When it comes time to let substandard performers go, it is a task that must be carried out with dignity, respect, compassion and precision — sometimes a surgeon must cut in order to cure. We do people no favors when we let them languish in jobs they are not capable of performing well or for which they have no heart."

He identifies nine core reasons that employers have to let employees go: poor performance, disloyalty, workplace violence, dishonesty, theft, criminal activity, insubordination, serious or willful sexual harassment and serious or willful discrimination. Taking action lets you address these situations swiftly, with your organization's and the employee's best interests in mind.

2. Retain People's Dignity

Any day you fire someone is a bad day; however, Shepherd writes that "people don't sue people they like." He then explains, "Employees don't sue their employers just for money. They sue because of emotion: anger, hurt, sadness, betrayal." As managers, it's important to focus on preserving an employee's dignity as much as possible and make the human element a central factor in the way you handle letting talent go.

In his years as an employment litigator, Shepherd found that a lack of retained dignity was the No. 1 indicator of a future employment lawsuit. Taking steps to lower what the author calls "natural anger" and "feeling screwed" during the nuts-and-bolts portion of firing an employee, outlined below, helps significantly with preserving dignity.

3. Know the Nuts and Bolts of Firing an Employee

Shepherd notes there's no ideal day or time to terminate an employee, but that you should try to minimize the number of other workers around. Find a private place within the office, such as an office or conference room with a closed door. Consider having a witness on hand, seated in a neutral area during the conversation. This can both discourage an angry response and minimize the chances of an employee making a harassment or discrimination claim later.

Focus on what you say and how you say it. It's fine to have notes, but don't rely on a script. Clearly state that the employee has been let go. Remain calm and professional in your tone, and don't engage in debates. Be clear about why the termination is occurring, without shaming the employee.

4. Handle Terminations With Worst-Case Scenarios in Mind

Employee lawsuits are the greatest risk with terminations. To minimize the potential for business harm, consult with your employment attorney to verify your plans are in compliance with state and federal laws and to identify any potential risks related to a discrimination suit.

Next, assess your paper trail. Have you compiled a clear case for termination? Previous negative performance reviews, incidents managers have written up and emails documenting disciplinary conversations are all examples. As with other employment issues, having ongoing legal advice in this area can help ensure you're handling terminations and underperforming employee problems the right way, from the moment they arise.

Protecting Your Team and Your Business

The best way to avoid firing employees is hiring the right talent, That said, none of us can see the future, and ensuring your managers are fully prepared for the eventual day when they'll have to let someone go is vital to protecting your company. While firing employees is one of the hardest facets of any leadership role, it's necessary to learn how to do this correctly for both your team and your business.

Have a clear plan for when it's time to let go of employees, understand best practices for actual firings and know the risks associated with litigation. When employee firings are handled with professionalism and preserve employee dignity, you're able to safeguard your organization's reputation and minimize the risk associated with terminations.

Tags: talent