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Managing People Out

(this section includes contributions from InsideSpin member:  Jennifer Small)

One of the most difficult aspects of leadership is to end a team member's employment with the Company, especially if it's a founding employee or someone you personally recruited. In small organizations, it is likely someone you have gotten to know, had coffee with, perhaps a business dinner, maybe even teamed up with at a Company event. You may know their spouses or aspects of their personal life that make termination uncomfortable.

Businesses need to run on a track of excellence to achieve their goals. You can't do it with people who can't perform. Some leaders are ruthless, deliberately creating a specific amount of turnover each year to build the best team they can (survival of the fittest), other leaders are soft and continue to allow under-performers to remain, despite the negative impact on the people around them. Extremes in either case are often damaging to the team overall, the right balance between the extremes tends to work best. Again and again you hear "should have done that sooner" when under performer's are managed out, so why isn't the lesson learned?

 A small company CEO should be heavily involved in the process related to managing people out, larger company CEO's tend to get involved only for senior resources. This section will examine how to handle negative performers and highlight possible approaches to minimize downsize impact on your organization.

Early Detection

Managing people out of an organization starts with "managing people". The word "out" is added if they are not managed well, which is often the root cause of these types of negative situations. If you find yourself with too many of these situations, you need to examine the hiring process overall as you are likely selecting people unqualified for the job at hand, an indication of poor interviewing and/or leadership skills.

The first place to start is to make sure you have a success program in place at the earliest stages of the Company. This means individual performance measures are well-defined, measurable and known to all team members. This provides the reference points you can use to decide if someone can be coached into a successful contribution or needs to be managed out.

If you have implemented great HR processes, you will likely be able to Identify poor performers at an early stage. This is important as it shows teammates that the Company will not stand by tolerating poor performance while everyone else contributes. Letting negative situations ‘go’ without change not only infuriates team members (affecting morale), it is demotivating and sets the wrong tone for your level of commitment to build a successful business.

Keep in mind that this does not mean every under performer is shown the door three days after their first failure. There is always value in attempting to correct poor performance. There is a cost of hiring replacement people and more often than not, a poor performer does not necessarily know they are under-performing and can be coached back into the right direction. This section is about how to handle someone who is unable to change their level of contribution, so replacement is really the only option, early detection is key.

Performance Improvement Programs (PIPs)

The simplest most effective approach to managing poor performers is through constant communication and follow-up. Typically the coach or manager works with HR to review and ultimately present verbal and written warnings to the team member, with scheduled follow up and feedback provided.  Involving HR from the onset of identifying issues of poor performance, helps the manager to focus on the process of managing more efficiently.  It’s visible to the teammates which in turn builds trust in the Company overall. If the Company is small and does not have a formalized HR program (or person), the CEO should take on this role.

The following highlights some key coaching events that might occur with someone who is to be managed out:

  1. The employee turns in their first project well below standards. It does not meet expectations and it incomplete in a variety of ways. The employee thinks they did a good job.
    • Confirm that the right expectations were set when the project started. Sometimes a lack of clear and documented communication is at fault and the employee can quickly take corrective action now that the task is properly understood.
    • You review the project in any case to make sure the job can be fixed up properly and not just have first aid administered to it.
    • You meet with their manager to review the situation and determine where the fault occurred. Take appropriate corrective action -- a key thing to look for is a lack of communication skills and project handoff formality.
  2. The employee turns in a second or third project below standards. The same types of errors occurred (or different ones).
    • Confirm that the right expectations were set when the project started. You always need to allow for the fact that poor performance could be a fault of coaching. It is determined coaching was not the issue.
    • You review the situation with the relevant manager(s) and draft a PIP notice. The PIP should contain all the relevant history and a concise description of the areas that need to addressed. The PIP should also contain a fair but short term time line to see improvement (3 months or less is normal) with measurable criteria the employee can use to determine if they are on track.
    • You meet with the coach and employee at least two times during the PIP to review progress. Ideally you set some interim objectives so the path to success is charted.
    • If the PIP results in improvement, watch the situation closely for several more months.
    • If the PIP does not result is acceptable levels of improvement, you have a candidate for dismissal.
  3. The employee does something strongly contrary to Company policy (e.g. harassment, abuse, something destructive or deceitful, etc).
    • You are likely within your right to to issue an immediate dismissal. Consult with your legal council and take appropriate action ideally that same day.
  4. The employee turns in projects that meet expectations but other aspects of their performance are a hindrance to others.
    • The employee is regularly disrespectful of others
    • The employee is late for meetings and expected start of work day
    • The employee is not conforming to reasonable dress code
    • The employee will not take on activities away from their primary responsibility

    Each of the above require documented meetings with the employee. The purpose is to talk through expected performance or behavior and to review actions that can be taken to remedy the concerns. Employees who refuse to address these types of issues tend to ultimately be bad for an organization and should be managed out. Unfortunately sometimes they come from exceptional employees making strong core contributions so you have to decide if you and the team around them can put up with the relevant issues. Remember that it is generally true the organization is bigger than any one individual so replacement is always an option.

    Download Sample PIP

Document everything. It is very important a proper trail is created to document all performance issues, positive and negative. Given today's propensity to litigate (keep lawyers employed), you want to make sure a disgruntled former employee can not distract your business (or team) from its path of success.

Time to Go

When managing an employee out of the organization, you owe it to the employee to be completely ready for the final event -- actually letting them go. Some rules of thumb to follow (some may have legal parameters to know about):

Once the presentation is made to the employee, accompany them to their work environment so they can pack up and leave. They may ask to copy some things off their computer -- this is your choice of course and normally harmless. Every once is a while a disgruntled employee could do something destructive like erase a bunch of files -- it's a judgment call.

They are no great ways to dismiss someone but there are a variety of gentle ways to do it. Use your judgment. The person may want to say some goodbyes -- or delay packing until an evening as it is embarrassing to do it in front of their peers.

You should always make sure the process is followed up on. Did the departing employee have some papers to sign pending a review by their lawyers? Is there vested stock options to exercise (a time limit would apply). Did all Company property come back (perhaps they had a desktop computer at home or a cell phone)? Are all the internal systems properly updated with the new status of the employee (e.g. health care plans, payroll, etc).

Move on with your business -- it will likely be the case you tell yourself you should have done this sooner (and that you don't like doing it at all).

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