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Managing Employee Terminations: A Small Business Guide
Managing Employee Terminations: A Small Business Guide
executive summary
EFFECTIVELY MANAGING EMPLOYEE TERMINATIONS
One of a managers most difcult tasks is dealing with the termination of an employee, regardless of the reasons. In addition to the impact it will have on the employee being let go, a termination can have repercussions throughout the workplace. Given all of the negative effects of a termination, the best way to handle such a situation is to avoid having to make adverse termination decisions. Many terminations are the result of poor hiring decisions or ineffective management of employees. Nevertheless, even the most careful hiring and effective management practices cannot prevent the occasional need to terminate an employment relationship. And while situations involving employee terminations can be stressful, The impact of employee an employer can minimize the negative impact on the company and the individual involved through dened processes and procedures. Proper terminations can be planning also can help in avoiding costly lawsuits and other legal issues related to the termination of employees.
Employee terminations fall into several general types, each of which can be handled more effectively by focusing on key practices that have proven to be effective at companies of all sizes.
VOLUNTARY TERMINATIONS
Avoid the resignation of good employees When it is in the best interest of the organization, try to avoid a resignation by working out differences or issues with the employee. Create a plan for departure Immediately after notication by the employee, begin planning for replacement, training and reassignment of responsibilities. Conduct an exit interview Be sure to use an exit interview template to ensure that you get answers to important questions, including the most obvious one: Why is the employee leaving?
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Handling terminations effectively can mitigate their negative impact on the employee, the employer and the entire workforce.
GENERAL GUIDELINES
Each of the three types of termination is unique and requires a different set of processes, but there are some general guidelines that can minimize the negative impact of terminations of all types.
Providing communication
Proper communication is essential and should be in place long before a termination becomes necessary. In addition to being applied fairly, a companys policies must be clearly communicated to all employees. Employees should know what is expected of them and the consequences of not meeting those expectations. By clearly communicating expectations and consequences, employees will not be surprised by employer requirements or consequences of their actions.
Legal issues
Employers must be sensitive to the legal issues involved in each type of termination and should consult with knowledgeable legal counsel to ensure they are complying with all requirements. An example of a legal requirement regarding terminations is the Worker Adjustment Retraining and Notication Act, a federal law that generally requires organizations with more than 100 employees to give 60 days notice before a mass layoff or plant closing involving more that 50 people. Penalties for violation of this law include back payments and other consequences. GEVITY INSTITUTE
There are many other legal requirements, and they cant all be listed here, but this example clearly shows their importance and the damaging consequences of ignoring them. While good communication in the form of employment policies and an employment termination checklist, as well as understanding legal requirements, are all important, the different types of terminations are unique and require specic efforts to be implemented effectively.
VOLUNTARY TERMINATIONS
From a management perspective, voluntary terminations are the least stressful, because it is the employee who is choosing to leave. But it would be a mistake to underestimate the impact of a voluntary separation. It can cause a company signicant problems, including the loss of a good employee, although many problems can be minimized through appropriate practices.
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In addition to verifying the need for the workforce reduction, your investigation should include fully understanding the underlying factors can have a lasting impact on the that created the situation as well as an accurate estimate of how many and which employees you will need to let go to ensure the companys viability. employees who remain. Ensuring that the right employees in the right numbers are terminated helps protect against having to rehire in the near future or discovering that employees possessing knowledge vital to the operation of the business have been laid off. While miscalculating the size of the reduction or which employees to terminate can be expensive down the road, the short-term cost of layoffs can also be high. It is important, therefore, to investigate the cost of a workforce reduction, because terminating employees for economic reasons is not always a viable option for saving money in the short term.
Termination Tips
do
Show employees proper respect Have a manager make the notication Make the notication in a private setting
dont
Violate employee privacy Make the notication by telephone or email Rush through the meeting
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Outplacement counseling is usually provided by an outside rm that offers training and counseling to departing employees to help them to secure new employment. While outplacement counseling does not guarantee that departing employees will nd employment, it can be a valuable tool that once again demonstrates your commitment to both departing and remaining employees.
Step 5 Prior to implementing terminations for economic reasons, consult legal counsel or a human resource professional.
Consulting legal counsel or a human resource professional on the front end of a reduction in force can often reduce the potential risks that may arise. In addition to reviewing an overall reduction in force plan and discussing potential laws that might be implicated, legal counsel can assist employers in analyzing selection criteria to ensure that each termination decision is based on the best criteria possible for the situation or assist the business in validating any selection criteria that have a disparate impact on a protected class of individuals.
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Discipline policy
Even under the best of circumstances, it will be necessary from time to time for managers to terminate employees whose conduct is not acceptable. A key to creating a fair environment in your business is to set up a discipline policy that is consistent, timely and objective. The rules, policies and regulations for your organization should be clearly communicated to all employees. An employee handbook or book of company rules and policies can be posted on the Web or otherwise made available to every employee. Included in that handbook should be policies related to common problems that can lead to discipline or termination such as tardiness, poor work quality, absenteeism, sexual harassment and theft of company property or supplies. In addition to clearly communicating the expectations of the organization, it is important that you clearly communicate the consequences for violating those expectations. This makes it much easier for you as an employer to consistently administer discipline in the organization. Employees should never be surprised when disciplinary action is taken or they are terminated for their actions. One effective technique in this regard is called progressive discipline. Under a progressive discipline system, employees receive consequences that increase in severity with each repeat offense. This process is slow and methodical, but it ensures that the employer takes every opportunity to help the employee improve, and the employee is given every opportunity to improve before termination takes place. On the next page is an example of steps that might take place in a progressive discipline system.
(Note in file )
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Suspension
(Note in file)
Written Warning
(Note in file)
Verbal Warning
With such as system, most employees will be able to alter their behavior before termination, thus helping you avoid a difcult situation. Progressive discipline also helps you to be consistent, timely and objective in the discipline of employees. Employees will be aware of the disciplinary process, and its effectiveness will help create a sense of fairness.
Gross misconduct
On occasion, an employee may exhibit behavior so extreme or offensive to the employment relationship that immediate termination may be justied. The legal literature often refers to this as gross misconduct, which entails conduct by the employee that is sufciently outrageous that you as an employer are not comfortable having the employee return to work. The complete legal denition and case law surrounding gross misconduct is too extensive to present here, but some examples include: Theft. Fraud. Assault. Deliberate damage to company property. Major abuse of email or Internet policy. On-the-job abuse of alcohol or drugs. Serious negligence resulting in unacceptable loss, damage or injury. Major insubordination. Violation of the companys policy against discrimination, harassment and retaliation. In these types of cases, the employee should be notied of what is taking place and then escorted from the premises, if possible, with all access rights or ability to return rescinded at that time.
Documentation
Good disciplinary and discharge systems are based on good documentation. No discipline, including termination, should be given without adequate documentation of the need for such discipline. Documentation often plays a key role should a company later need to defend a termination decision. GEVITY INSTITUTE
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Post-discharge
Employers must also be sensitive to their actions after an employee is terminated. Terminations should be kept as condential as possible. Anyone concerned with the termination should be instructed not to discuss the discharge or the circumstances surrounding it, except to those with a true need to know. It is also important to establish procedures for handling post-employment inquiries, such as reference checks. Having a central source for such information is often helpful in processing such requests and in ensuring that only the appropriate information is disclosed. In order to avoid potential claims, only the names, dates of employment and position held should be provided to potential employers or other third parties, absent a subpoena or governmental order.
conclusion
Employee terminations are an unfortunate but sometimes necessary part of a managers duties. While dealing with the termination of an employee will never be a pleasant experience, advance planning and established procedures can ease the stress and help you minimize your exposure to legal problems, lost productivity, termination-related expenses and any lasting impact on employees who remain with your company.
references 1 Mansour-Cole, D. & Scott, S. (1998) Hearing it through the grapevine: The inuence of source, leader-relations, and legitimacy on survivors fairness perceptions, Personnel Psychology 51, pp 25-54.
2
Dessler, G., (2005) Human Resource Management, 10th edition, New Jersey Pearson Prentice Hall. Noe, R.A., Hollenbeck, J.R., Gerhart, B., & Wright, P.M. (2004) Fundamentals of Human Resource Management, New York McGraw-Hill. GEVITY INSTITUTE
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