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Employees suck.
I've tried every theory of management under the sun. My most costly lesson came at the hands of my own theory. When I was a worker, I always thought that if the management would just pay the workers more, they would get more.
So I built a retail concept, and paid the people a fortune. We started out overstaffed, and each of the staff members was paid roughly 40% over market price for a clerical retail sales worker. My longheld theory was that the more you paid, the more you would get.
What I got was the same level of performance as average employees, and I paid 40% more than the market mandated.
My miscalculation was this : no matter whom you hire, an employee will NEVER (without exception... NEVER) treat the business with the same degree of concern, investment, and financial protection that you as an owner will. Even in the cases where the employees are blood relatives, and in some instances that can be even worse. The single exception I have found to this rule is in immediate family members, but I caution you that hiring immediate family members can bring on completely different problems of it's own.
Anyway, employees suck. You can train them to do specific tasks, but the one skill you will never be able to teach is how every single decision regarding your business affects your net profit. Quite simply, there is no incentive for them to really care. You can incentivize on profit, but then they may make decisions for the wrong reasons therein.
As it pertains to hiring people, your job as a business owner is to get the best possible employees for the best possible value to your business. Burger flippers will never be worth $15 an hour, but the right personnel can (and should) grow your business. Choose carefully.
So what happens when you make a mistake? I've hired, laid off, and fired a lot of people over the years. Laying people off is tough. Firing people is never tough. If you have to fire someone, there's a reason, and they caused it. The old bullshit is a bad employee is a reflection of bad management is non-tenable. Especially in this generation, where work ethic is not a life skill many millennials aspire to, firing people is part of hiring people.
So, how do you fire people? First, the state of Minnesota (still) requires me to tell you I am not an attorney. So, firstly, if you have any legal questions about firing people, seek an attorney's opinion and counsel.
In situations ranging from mundane to egregious, you'll likely need to fire someone. So, I am going to throw down a little checklist to make sure when you fire someone, you get to walk away without it becoming a residual problem for you or your business. This is not an exhaustive list, so feel free to contribute from your own experiences. However, the guts of this are taken from world class retailers like Best Buy and Walmarts hiring and firing practices. So, here's an outline of how to not get sued when you fire someone.
Start from the beginning:
When it's time to fire someone, there's a reason. As such, it's part of what you signed up for when you decided to hire someone.
I've tried every theory of management under the sun. My most costly lesson came at the hands of my own theory. When I was a worker, I always thought that if the management would just pay the workers more, they would get more.
So I built a retail concept, and paid the people a fortune. We started out overstaffed, and each of the staff members was paid roughly 40% over market price for a clerical retail sales worker. My longheld theory was that the more you paid, the more you would get.
What I got was the same level of performance as average employees, and I paid 40% more than the market mandated.
My miscalculation was this : no matter whom you hire, an employee will NEVER (without exception... NEVER) treat the business with the same degree of concern, investment, and financial protection that you as an owner will. Even in the cases where the employees are blood relatives, and in some instances that can be even worse. The single exception I have found to this rule is in immediate family members, but I caution you that hiring immediate family members can bring on completely different problems of it's own.
Anyway, employees suck. You can train them to do specific tasks, but the one skill you will never be able to teach is how every single decision regarding your business affects your net profit. Quite simply, there is no incentive for them to really care. You can incentivize on profit, but then they may make decisions for the wrong reasons therein.
As it pertains to hiring people, your job as a business owner is to get the best possible employees for the best possible value to your business. Burger flippers will never be worth $15 an hour, but the right personnel can (and should) grow your business. Choose carefully.
So what happens when you make a mistake? I've hired, laid off, and fired a lot of people over the years. Laying people off is tough. Firing people is never tough. If you have to fire someone, there's a reason, and they caused it. The old bullshit is a bad employee is a reflection of bad management is non-tenable. Especially in this generation, where work ethic is not a life skill many millennials aspire to, firing people is part of hiring people.
So, how do you fire people? First, the state of Minnesota (still) requires me to tell you I am not an attorney. So, firstly, if you have any legal questions about firing people, seek an attorney's opinion and counsel.
In situations ranging from mundane to egregious, you'll likely need to fire someone. So, I am going to throw down a little checklist to make sure when you fire someone, you get to walk away without it becoming a residual problem for you or your business. This is not an exhaustive list, so feel free to contribute from your own experiences. However, the guts of this are taken from world class retailers like Best Buy and Walmarts hiring and firing practices. So, here's an outline of how to not get sued when you fire someone.
Start from the beginning:
- Your new employee gets an employee handbook on the first day, outlining every possible situation from attire to ethics. They sign an acknowledgment that they got the handbook, and agree to everything in it. I don't care if you have one employee or one hundred... they all get the handbook. I don't care if it is a burger flipper or a Vice President of Sales, they all sign the receipt and acknowledgment. Then, a copy of that goes into their employee file. You can find a lot of employee handbooks online, including creating a customized one during a free one week trial on Legal Zoom.
- Your new employee gets a specific, detailed job description. The job description covers everything from daily and weekly expectations to broad, generic sweeping generalizations that you can use later for what ever additional direction you may add that is not specifically outlined in the job description.
- Every employee has a 90 day performance evaluation and trial period. After 90 days, let them know there will be a review at that point of how they are doing, and how they move forward past the 90 day preliminary evaluation window.
- Every employee signs an "at-will" employment statement as part of their initial hire paperwork. If you are issuing a formal offer letter, there should also be an at will paragraph within your initial offer letter that talks about how both the employee and the employer are entering into at-will employment. If you don't know what that means, study it. All states recognize "at-will" employment relationships, but some states have restrictions on it. Study that before you hire anyone. Here's a brief overview : What States Are At-Will? List of At-Will Employment States
- Keep an employee file, specifically including any additional written direction, specific job task requests, and measurable performance data
- Have regular, formal performance reviews
- Make sure it is clear from the beginning that the performance reviews are NOT tied in any way to salary increases. If you decide to give someone a raise, don't do it at the same time as you give them a performance review. Keep it separate so the employee isn't expecting a business practice of "every six months (or year) we have a review and a raise). Raises are earned, not programatic.
- Document infractions to specific directions, integrity breaches, or more mundane issues like punctuality.
- Keep it simple
- Keep it ALL documented, including every point you cover in the termination meeting
- Have someone attend the firing meeting with you. It doesn't matter how awkward that is, do it.
- The last one I did, I recorded the whole (4 minute) discussion with an iPhone, letting the person know I was recording it. 100% eliminates the "she said" part of any followup to the termination discussion itself.
- Keep it succinct, professional, and direct.
- Do not use emotional, apologetic, or sympathetic language
- Outline the specific reasons for termination
- If possible, pay them ON THE SPOT for their final payroll
- Keep this meeting short, and don't allow for counter points, negotiation, or further discussion. This is not a bargaining session, nor time for you to demonstrate how this is a two way street. It's not. You're there to fire them.
- Wish them well, and roll on.
- Even in "at-will" employment where you can fire people for any reason or no reason, you're always better off to have several reasons (real ones).
- In the employee file, you should have discussed the reasons with the employee beforehand and documented them
- Employees fired for "cause" are not entitled in most cases to unemployment benefits, so if there is a real, specific reason (or ten) for their termination, most likely that also will be a defense against unemployment claims. Most hourly employees will never even go that route, especially if your termination meeting is handed with specificity and documentation.
When it's time to fire someone, there's a reason. As such, it's part of what you signed up for when you decided to hire someone.
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