C’mon. Admit it. You want your professional colleagues and clients to believe that you are a savvy business owner. We all do. Maybe you’ve even been a little guilty of being a tad bit condescending when, chatting over drinks, your fellow business owner is bemoaning the latest employee leaving her company, and you offer up the brilliant little tidbit that you always hire slow and fire fast. Be truthful now and think about your last new hire or termination. Did you really have a thorough hiring process that put the candidate through a bit of a wringer? Did you really exit the under-performing employee (who has been with you from day one…who is your sister’s friend’s mother’s daughter…) as quickly as you should have?
As someone who works with organizations that are primarily family-owned, micro-employers (by definition, a small company employs up to 500 people), I promise you that every one of my clients has the best intent, but invariably suffers from two common issues when it comes to employment:
- By the time they decide to hire someone, they are desperate. They are tired of doing the job themselves that they know they needed to staff. Or they did not properly plan the timing of when to hire, or account for the time it would take leading up to the new employee’s first day to source and recruit that new hire.
- When it comes to separating an employee, nearly every employer has become emotionally involved with the person and either cannot terminate him or her, or puts together such a complicated termination plan that it will cost the employer a lot more, both financially and emotionally.
Turnover is costly (see a calculator here). It can cost you anywhere from 1.5 times the annual salary of the position that is turning to 3 or more times the annual salary. Where do these costs come from? Lack of productivity; presenteeism from the surviving staff; your time or your staff’s overtime pay to fill in and get the job done; absenteeism when the survivors are just too tired to come in and do their own jobs because they covered for the vacant position; the costs associated with posting the job and sorting the resumes, and then interviewing; the cost to train (again) the new employee, which may include classes or someone else being taken away from their job in order to train the new person; and the costs associated with new people coming into a company (technology, office supplies, uniforms, etc.). When you consider all of this, slowing down the hiring process starts to make sense.
When working with my clients on finding a new member for their team, we begin with a conversation of how we reached the point of our conversation. Who was last in the position? How long were they there? Why is the position vacant? What is the goal start date of the new employee? What is the goal start date of the recruiting process? What has been their process in the past? Once I understand all of this, I generally understand where many of the challenges will be (and have been).
From there, I educate my clients on my suggested very lengthy process for sourcing and recruiting. It begins with a solid job description (which yields a job posting AND the foundation for rigorous interviewing) and moves on through a sourcing process through multiple channels, a screening process that will hopefully pare my short list down to 3 to 5 good candidates, to a rigorous multi-step interview process, and finally through a few levels of background and reference checks. This process could take several weeks to a few months, depending on the flexibility of all parties involved. Generally, this scares most small business owners and right like that, the “hire slow” philosophy just went out the door.
The “fire fast” philosophy, while a good one, is also frequently a myth. Most small business owners, as naturally happens when you work side-by-side, day in and day out with a small group of people, build relationships with their employees that go beyond “just business.” I am not talking about inappropriate relationships. I am talking about the natural friendships that develop between people who are “in the trenches” each day.
Now imagine you learn that your employee (or as you tend to call him or her, your friend) starts acting like an employee. He or she never calls…or calls too late when you expected him or her in the office at 9:00 a.m. Or maybe what used to be excellent levels of work (in both quality and quantity) starts to fall off to mediocre or, heaven forbid, sub-standard levels of work. Do you start documenting and disciplining? Probably not. What I have seen generally happen is that you accept their stories, their poor excuses for even poorer performance. “They’re my friend!” you cry. “They wouldn’t do this to me!” you reason. And rather than recognize that you are the owner of a business in which you are fully financially, emotionally, and physically involved in (and they are not, usually beyond their scheduled workweek and job description), you begin to offer up your own weak rationale for their behavior. Rather than have a much-needed and frank discussion with them regarding their performance, you work longer hours and reason harder that this is a passing thing, not a performance issue. Rather than document, you dismiss. When the proverbial poo hits the fan, you now have a track record and no documentation wrapped up tightly in buzzing anger and the knowledge that this relationship cannot be saved. Yet, you still know them a little too well and if you terminate them they will a) not be able to pay their bills, b) tell everyone in your circle that you are a bad employer, c) get kicked while they are already down because their kid is failing his high school Geometry class, or d) tell everyone your secrets that you accidentally blurted out that one night when you all went out for a few-t00-many martinis.
Get over it. You run a business. You started your business for any number of reasons, the least of which was to earn your own living, and the best of which was to create something to leave for your own family or sell so you could retire to Italy (okay, that might be my ideal retirement creeping in…). You did not start your business to be a social worker for your extended family and friends who were ready for the hiring (possibly because nobody else would hire them), or to become a whipping post for those people you hired (as legitimately as you knew how to at the time) and who have grown into friends who take advantage of friends. Problematic employees cost you. A lot. (See the paragraph above right after the numbered list.)
From day one, develop policies and processes for all that could go wrong (generally called an Employee Manual) and all that will hopefully go right and move your company forward. Include a progressive discipline policy that has a first step of having a coaching discussion with the employee when something goes awry (unless what the employee did was so egregious…then terminate immediately). You should be direct and specific (and informed) as to what happened and explain this to the employee. Be very clear how this negatively impacts your business. Thereafter, document, document, document. Make sure the subsequent conversations that are being addressed are for the same issue, and that the disciplinary measures are progressive to the point he or she is terminated with cause. This process will generally not take that long and is the most ideal process to ensure that you don’t end up in court for wrongful termination, or end up facing an unemployment claim and increased unemployment insurance costs.
You best options, in both cases, is to have clearly define roles and responsibilities, underpinned by clear and consistent processes. Once you have these in place, hiring slow and firing fast start to make a lot of sense, financially and otherwise, and become a lot easier, financially and otherwise.
HR4SB 