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Say hello to a better way of firing problem employees.
September 1, 2007

Jeff O'Shea remembers when he had to fire an employee for falsifying records. The employee didn't take it well. "He became confrontational and threatening," says O'Shea, the founder of IntelliTouch, a 19-year-old San Diego technology company with 22 employees and projected sales of $11 million this year.

O'Shea, 49, escorted him out of the office--only to have him return, ranting and raving. "It scared everybody," says O'Shea, who told the employee he was trespassing and had to leave, which he eventually did. The former employee later filed a suit with the labor relations board, and IntelliTouch hired a lawyer. The case was dismissed when the former employee didn't come to the hearing.

O'Shea's story is every entrepreneur's worst nightmare, and most would rather do anything than fire an employee. A March survey of small-business owners by SurePayroll revealed that 61 percent find it tough to fire an employee and 60 percent think firing doesn't get easier, while 78 percent admitted they had kept an employee too long.

When entrepreneurs do fire employees, they make mistakes like saying too much, framing an employment termination as a job elimination or over-focusing on the person instead of their employment. Firing in a small business "becomes a very personal divorce," says Jonathan Segal, a partner with law firm WolfBlock. Here are some tips for improving the process: