When to terminate an employee or help them improve

Deciding when to fire someone is a delicate decision. 

There are many considerations such as: the cost of replacing the employee; whether or not the person could improve; balancing satisfaction among other employees; and avoiding potential legal issues.

Here are some of the tough situations you might be facing with an employee and how to help solve them.

“Mary is okay at her job, but I think we could get better results with someone else.”

The cost of high employee turnover has been well-documented, but many businesses don’t realize the true cost of replacing a terminated employee. While the average cost of replacing an employee stands at around 50% of their salary, this number can shoot up to well over 100% in the case of highly-skilled positions.

Costs associated with replacing a terminated employee might include:

  • Any accrued PTO;
  • Severance pay;
  • Continued health insurance coverage;
  • Productivity losses; and
  • Costs of bringing on a new hire like recruitment and time spent interviewing.

According to the Society for Human Resource Management, the average cost of a new hire is $4,129.

The truth is, it’s much more cost-effective to retain an employee than fire and replace them. If the employee in question doesn’t have any serious problems, you could invest some of the money you’ll save in retaining them to help them improve at their job. The best way to start this process is being honest about performance issues and developing a plan to help them improve.

Known as a performance improvement plan (PIP), this document should include:

  • Employee information;
  • Date of when the form was filled out;
  • Details about expected performance;
  • Description of actual employee performance;
  • Details of how employee is not meeting expectations;
  • Description of consequences, if necessary;
  • Plan of action with specific dates for continued conversations; and
  • Signatures of the manager and the employee acknowledging the contents of the plan.

You can find a template for free to get you started here: PIP Template.

“John just doesn’t have the skills necessary to perform in this position.”

While it can be tempting to “cut your losses” with an under-performing employee, the costs outlined show that helping an employee develop their skills, if they are willing and able, could be more cost-effective in the long run.

There are two types of skills that your employee could be lacking : hard skills and soft skills. Hard skills are teachable skills like math, typing, using certain software, learning another language, writing and reading comprehension. Soft skills are more interpersonal skills like effective communication, teamwork, time management, critical thinking and problem solving.

Hard skills are much easier to develop. You could even offset some of the costs associated with training employees using grants from the Tennessee Department of Labor & Workforce Development if you qualify.

Soft skills can be more difficult to train, but there are plenty of skills training and consulting firms in Nashville that can help your employees improve for less than the cost of replacing them.

“Mary does amazing work, but she’s alienating other employees.”

If someone is so lacking in interpersonal skills that they are causing conflict among other employees, or even deliberately alienating others, you could have a bigger problem on your hands than just replacing one employee.

Even if an employee is performing well in the hard skills area of their job with amazing results, you can’t let them “poison the well” of your office with negativity. In other words, you can’t let one employee bring down the overall satisfaction of other employees or you risk facing turnover from other employees leaving.

If you are hearing that any employee is behaving poorly towards other staff members, take their concerns seriously.

“John is not performing well and should be terminated, but he’s threatening legal action.”

It’s every business owner’s nightmare: you fire an employee for a good reason but still get hit with a wrongful termination suit.

Because Tennessee is an “employment-at-will” state, employers can fire employees for any reason without notice, if the reason doesn’t fall into any of the following categories:

  • Discrimination based on race, color, nationality, sex, pregnancy, religion, age disability, citizenship status or genetic information; or
  • In violation of a contract that guarantees employment for a certain length of time or promises that employees won’t be fired without good cause.

However, the fear or direct threat of legal action by a fired employee can keep some businesses from following through on terminations.

The best way to protect yourself is to document every infraction by the employee you’d like to fire. Even though Tennessee doesn’t require a reason, having a paper trail to document issues will help keep you safe from frivolous lawsuits.

If you’re going to be taking to plunge to fire someone soon, check out this guide to see the best way to fire someone.

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