Question: A reader wrote: “We have an employee we in HR thinks needs to be terminated. The operations team leader keeps hesitating. We repeatedly hear: “Timing isn’t right,” “current workload is too heavy”, or the supervisor inevitably replies “let wait and see if he improves.” Should we push to terminate this ongoing performance problem?
The decision to terminate is never easy, nor should it be. If you have arrived at the point where the immediate supervisor, management and Human Resources all agree to separate someone, the decision is straight forward (notice I did not say easy). Unfortunately, what we observe in many situations is that companies may be waiting too long to terminate. Why do I say this?
After studying the impact of terminating employees, the rationale for waiting, hoping, or even investing in course correction may be costing the organization far more than initially realized. Companies, educational institutions, even not-for-profit organizations avoid firing people. Why? Early research points to a condition we have labeled “corporate latency.” We assume organizational delay in terminating can be attributed to wanting to avoid conflict (kick the can down the road) or to circumvent even messier future situations. However, an organization’s delays, reassessments or failure to act on known performance issues may have far greater costs than may initially appear at face value.
INFOGRAPHIC: How to Fire an Employee
Can an organization really “suffer” by retaining an employee “too long” or beyond the point where termination is the only option? The answer is yes. There are significant and essential considerations for addressing performance and “fit” issues forthrightly. One case study of a consumer products manufacturing organization highlighted important items to consider about terminations. They found that poorly performing front line employees earning $30k a year could cost their company 10x that amount, $300,000 annually!
Corporate latency can cost you (in real dollars along with even additional and costly unintended consequences). For example:
- Increased costs for accidents and injuries incurred by disengaged employees who are more likely to cause accidents or suffer injuries.
- Productivity losses may result from declining morale, team dysfunction, unauthorized breaks, failure to collaborate. Bad habits, negative attitudes and poor performance can be contagious and challenging to turn around.
- Consumer impact may result if production expectations cannot be met. If poor quality results from poor execution, consumers may elect to spend their money on competing products.
There are numerous and legitimate reasons for moving slowly and with all due caution when terminating an employee. In the US, every state except Montana has “at-will employment regulations.” An “at-will employment arrangement” means that an employer can terminate an employee with or without justification. Remember, that even in at-will states, there are laws that prohibit firing due to unjust reasons. Employers need to consider the case for termination carefully to avoid protracted lawsuits and ongoing employee discontent.
Here are some of the more frequently cited reasons for management hesitancy:
- Fear of wrongful dismissal action. Check with an employment attorney on state and local regulations concerning what constitutes wrongful dismissal. Some of the more frequently cited reasons include:
- Discrimination – based on age, disability, gender, genetic information, national origin, race, religion, or sex.
- Harassment – Employers are typically required to operate a harassment-free work environment. Failure to do so can complicate, even invalidate performance expectations if harassment is present.
- Retaliation – When an employee reports a situation or pattern of behavior which the employer is obligated to resolve, the individual stepping up cannot be terminated for making such an allegation. Avoid the perception of firing someone for reporting an issue, or fear threats of management revenge.
- Breach of contract – Failing to live up to the terms of an agreement through termination may constitute a breach of contract. Labor agreements often have separate and detailed processes governing dismissal of their members.
- Violation of public policy claims – When an employee refuses to do something illegal or outside of accepted practice, their employment may be protected. Additionally, public policy “whistleblowing” regulations can protect someone from dismissal.
- Management does not see “sufficient” cause. The “how bad is it really” test is often the fallback position offered by managers who don’t directly manage poor performers. Seasoned leaders have likely endured the impact of terminating an employee and may be willing to put up with problems rather than tackle them directly.
- Substandard management – A recent Proudfoot Consulting study noted that 43% of executives ranked management as the second leading barrier to productivity. Gallup research reinforces this perspective, suggesting that only one in ten managers are qualified to manage.
- Lack of talent – With tight talent markets, maybe a substandard performer is better than no performer at all.
These examples of “latency” rationale can be costly, disruptive and messy and as such should not be underestimated. Yet, they should not excuse leadership (including HR) from assessing and taking reasonable/necessary action. Potential brand and market implications and even financial considerations need to be included in the decision making. The worst of all cases is the failure to address performance problems – followed by capriciously or callously terminating staff with insufficient cause. Human Resources owns driving fair and measured processes to ajudicate performance, fit and organizational requirements.
RELATED: The Elephant in the Room: Firing an Employee When it Has to Be Done
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HR professionals will be challenged to bring clarity, sanity, and equity when evaluating the “case” to terminate. Understand the impact and importance of acting timely and with appropriate rationale. The bottom line here is straight forward: there can be a cost for a “wait and see” approach. Step up, step in and be deliberate.
Have a question for Dr. Winter? Email her here.
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