Lessons on Firing Employees

by / ⠀Startup Advice / October 15, 2012

One of the hardest lessons for an entrepreneur to grasp is to hire slow and fire fast. Every new entrepreneur thinks it won’t be a problem. It sounds easy until they are faced with the situation.

I have no idea how many people I’ve hired over my career, but I know how many people I’ve fired – twenty-three.  It’s stressful on everyone. It never gets easier, but with more experience, the faster you fire people.

Here are a few lessons.

Situations rarely resolve themselves; they don’t just go away on their own.

My first firing was as a young design engineering manager. A project had been transferred to our division. In order to transfer the project, there was one employee that had to be transferred along with the work. It should have been a hint that something was not right since it was a low level employee. This employee had been given the highest performance ratings and biggest pay raises possible for almost 10 years – and it wasn’t because he was an exceptional performer. The previous management team had him design the same circuit over and over again, with the output of his work never used by anyone. They had put him in the corporate closet and paid him to just not bother them. This course of action can be done in a large company since the salary of one employee doesn’t matter and you can transfer them elsewhere. In a start-up, with limited financial resources, you can’t take this easy way out. The legal department didn’t want to fire the person; they were concerned that suddenly declaring a stellar employee to be incompetent would lead to a lawsuit. The survival of a start-up depends upon your ability to handle such unpleasant situations.

Be direct, not indirect

Don’t hint around. I once had a project manager and he wanted to fire an employee. He was an accommodating person and he always wanted to be the nice guy. He gave the employee a performance review thinking it would prepare him for the inevitable. He was so bad at delivering such news that the employee came out of the meeting happy and laughing. I couldn’t believe it. I talked with the employee in the break room and he thought he had gotten an awesome, glowing review. In his mind, he was a fantastic employee.  Make sure others in the start-up can deliver bad news and if necessary, fire.

Engage Outsiders before Employees

It’s not easy to find people who want to work for start-ups. Most people prefer an established company that’s stable.  Even if someone was a great employee for another company in a different corporate culture and environment, it doesn’t mean they will be a great employee for your start-up.  In start-ups, the first product concept is unlikely to be the one that works. If you hire people for that first product, you may have to fire them due to a skill mismatch when this change happens.  This is the easiest scenario because it’s a change in company direction and not a reflection upon the employee’s abilities.

Entrepreneurs should consider their new businesses to be experimental start-ups. Until entrepreneurs discover the right product, market and business model, everything about their new business is temporary – even the employees. This is the idea behind the approach of concept plans instead of business plans, and designing and conducting business experiments to find that winning combination. Entrepreneurs should think more think general contractors, hiring temporary employee and sub-contractors. This way there is no expectations of a long-term commitment, and therefore no need to get stressed out over hiring and firing people.

When the Employees Knows Beforehand

When employees know you aren’t happy with their performance, they may drop hints to you and the other employees about what they will do if anyone ever wrongs them in the workplace. I had one employee, who mentioned every day how he had sued some company over something. One such employee told me how he had sued a restaurant over how they had handed him change for his take-out food. It is a way of making an indirect threat.

Employees will often go into a work slowdown. They are looking for a new job. In this case, you are paying their wages and getting little in return. Employees may even start to avoid you. Fire fast!

The Aftermath

Even if an employee was expecting to be let go, some employees will cry and others will be shocked. Keep calm. On the other hand, I had one employee apologize for his behavior. In a fit of angry over a management decision, he had destroyed company property.

Stick to the facts. Don’t draw it out. Ask the employee to leave as soon as possible and don’t allow access back to the office or onto your computer systems. It’s easy to fire on a Friday when the employee has the weekend to settle down.

A boyfriend decided to handle the matter on the employee’s behalf. He stalked me for a few weeks, waiting in the parking lot when I exited the building. He wrote a letter to the CEO saying that I was incompetent, I should be fired, and his girlfriend reinstated. In a small company, where the founders or CEO are easily accessible, it’s not unusual for the employee to go higher up to discuss the matter. Make sure these people know why and when you are going to fire the employee.

I had another make prank calls and fill up my voice mailbox for months before finally giving up.

After the person is fired, expect the organization to be turned upside down for 2 to 4 weeks. Some of the other employees will think that you wronged the fired person. These are people who chitchatted with the person in the break room and he seemed like a nice guy. Other people will be wondering if they’re next. So expect the employees to either give you the evil eye or avoid you for a while. Eventually, it will settle back down.

About the Author: Cynthia Kocialski is the founder of three start-ups and helps entrepreneurs transform their ideas into new businesses. Cynthia is the author of Startup from the Ground Up and Out of the Classroom Lessons in Success. Cynthia writes regularly at Start-up Entrepreneurs’ Blog. and provides in her video series information on New Business Strategies.

About The Author

Matt Wilson

Matt Wilson is Co-Founder of Under30Experiences, a travel company for young people ages 21-35. He is the original Co-founder of Under30CEO (Acquired 2016). Matt is the Host of the Live Different Podcast and has 50+ Five Star iTunes Ratings on Health, Fitness, Business and Travel. He brings a unique, uncensored approach to his interviews and writing. His work is published on Under30CEO.com, Forbes, Inc. Magazine, Huffington Post, Reuters, and many others. Matt hosts yoga and fitness retreats in his free time and buys all his food from an organic farm in the jungle of Costa Rica where he lives. He is a shareholder of the Green Bay Packers.