BBB Small Business Advice on How to Let Employees Go

6/2/2008

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One of the most difficult parts of being a business owner or manager is sitting down with an employee and giving them the bad news that they’re fired. Letting an employee go requires a solid grasp of legal concerns and security issues as well as an awareness of the tools and techniques that allow the employee to retain their dignity. Following is advice from your Better Business Bureau on how to effectively let an employee go.

Given an uncertain economic picture, many businesses, both large and small, are making the decision to cut staff. According to the Bureau of Labor statistics there were 1,308 mass layoff actions in April 2008 alone affecting the lives of more than 130,000 workers. 

“With some business sectors being forced to restructure, small business leaders across the country are finding themselves ill-equipped for the task of delivering the bad news to employees,” said Steve Cox, BBB spokesperson. “Not only are there numerous legal concerns to consider when letting an employee go, but leaders also need to be aware of the potential impact on an employee’s confidence and should find ways to help them retain their dignity during the process.”

The following step-by-step advice from BBB provides guidance to business owners and managers on how to effectively deliver the bad news to a terminated employee:

Preparation for “the Talk”

Maintain good record-keeping. If it is a performance-based termination, the employer should keep a detailed record of the employee’s actions that led to their being fired. Not only will this help the employer justify the action, but the record will be crucial if the former employee files a lawsuit against the business.

Consult Human Resources. Not all companies have HR departments, but those that do should keep HR in the loop about any firings. HR can provide advice on company protocol and any laws that need to be followed. 

Do your homework. Prior to letting an employee go, managers should prepare all paperwork for termination and ensure they are equipped to answer any questions the employee might have about benefits and severance. The manager will also need to research state, and in some cases, federal laws governing employee termination.

Practice the speech. Leaders should consider practicing what they are going to say to the employee, as well as preparing appropriate responses in case the employee becomes argumentative or extremely emotional.

Delivering the Bad News

Consider Timing. Some experts argue it’s better to fire an employee early in the day, others say it’s better to wait until the afternoon when fewer employees are present. The worst time to fire an employee, however, is on a Friday or before a holiday because it provides several days for the employee to grow angrier and for rumors to spread.

Don’t do it alone. BBB recommends having a third person present when discussing the termination with the employee. If a representative from the HR department is not an option, another manager is preferable. The third person can take notes, as well as serve as a witness in case the employee decides to sue the company for wrongful termination.

Be clear and firm. The employer should explain the reasons for the employee’s termination clearly and succinctly. A long-winded speech and laundry list of reasons can make the employee combative or feel this is a negotiation instead of a final decision. Personal attacks on the employee are never acceptable.

Solicit feedback. Provide an opportunity for the employee to share his or her feelings without engaging in an argument. If the employee has a lot to say, encourage them to collect their thoughts and perhaps prepare a letter that outlines their grievances.

After “the Talk”

Keep the process moving. Managers should explain the process the employee will follow after the termination meeting and guide them through the rest of the day. Give the employee enough time to collect their things, tie up loose ends and say their goodbyes, but make sure the process is completed by close of business.

Maintain company security.  If security is a concern for the business, the employee’s computer passwords and access to sensitive data should immediately be terminated. Keys, ID badges and any business property such as laptops should also be collected before the employee leaves. BBB recommends monitoring the employee’s departure, but from a distance that allows the employee to retain dignity. Only in extreme cases should the employee be escorted out of the building.

For more BBB advice on issues affecting small business owners — including how to manage employees effectively, go to www.bbb.org

 

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