How to Terminate an Employee: 5 Steps

How to Terminate an Employee

Firing is one of the most difficult things leaders must do. How to terminate an employee involves being humane and empathetic. Here are 5 steps to follow.

The right way to properly fire someone begins well in advance of the actual termination. Knowing how to terminate an employee requires being humane and empathetic. According to the ADP Research Institute® report, Strategic Drift: How HR Plans for Change, 76 percent of executives say they intend to do more to find internal opportunities to develop employees and prevent departures. The converse of this is for leaders to identify, coach and, occasionally, release those employees who aren't performing or developing to allow opportunities for those who can.

Harvard Business Review notes how firing an employee is one of the most difficult things a leader must do. A leader must remember what's important for the organization and must focus on how the firing makes good business sense and helps the team going forward. However, before the actual firing occurs, several other steps must occur first in order to ensure the termination is aligned with the organization's goals and therefore, good for the firm. In other words, firing is "the final step in a fair and transparent process," as outlined below.

1. Identify and Document the Issues

Except in relatively rare cases where an employee endangers someone by completely ignoring safety rules or commits a breach such as breaking confidentiality, most poor behavior is noticed and documented well before a firing. As such, it's pertinent that a manager notice the unwanted behavior(s) as early as possible and document them. This begins the HR compliance trail that can be used to deny an unemployment claim and to help prevent unlawful termination suits.

2. Coach Employees to Rectify the Issue

Employees need to be coached and counseled at the first signs of performance problems. Some employees may need additional training or resources to fully perform their job. If so, this must be identified and made available as early as possible. Nobody comes to a job with the same set of skills and abilities. Training and coaching can provide those individuals who are motivated and who have the acumen with the assistance they need to improve their behavior. Coaching involves formal, face-to-face conversations that have the goal of eliminating undesired behaviors and reinforcing desired behaviors.

3. Create a Performance Improvement Plan

When work is continually subpar, it's wise to recommend a performance improvement plan for the employee. This plan should clearly state what the unacceptable behaviors are, what acceptable behaviors are required and any mandated individual or organizational training. It's also important to include the dates by which these need to occur. The employee should have regular meetings with their manager to obtain feedback. HR can determine how long the plan needs to be.

For example, it could be anywhere from 30 to 90 days. It's also important to determine the consequences of failing to comply with the plan or returning to the unwanted behavior not long after successful completion of such a plan, and whether that should result in termination.

4. Terminate the Employee

According to Harvard Business Review, the best practice regarding how to terminate an employee involves sitting down face-to-face with them. Ask the employee to accompany you to a private place where you can't be overheard. Be direct and to the point. Inform the employee that, unfortunately, today is their last day. Then succinctly state the reason for the firing in one to two sentences. Be compassionate but confident in your delivery of the information. Be sure to use past tense so that you don't provide false hope for yet another chance at redemption.

5. Have HR Conduct an Exit Interview

HR can either conduct an exit interview with the terminated employee or the employee's manager can sync with HR prior to having the termination meeting with the employee. The objective is to ensure that HR considerations regarding vacation pay and benefits are provided. However, the hiring manager or employee's manager should consider fully completing the firing. It's best to have an HR representative ready to take over immediately following the conversation, so the fired employee can pack up and leave thereafter.

Firing is a task that many leaders hate, especially if an employee has been with the organization long term. However, as financial leaders, you understand the impact that poor performers can have on the overall morale of the firm. Whatever the reason for the poor performance, knowing how to terminate an employee compassionately after having fairly and consistently worked to improve their performance is an ability that managers must develop to achieve business results.

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