Say hello to a better way of firing problem employees.
Magazine Contributor
3 min read

This story appears in the September 2007 issue of Entrepreneur. Subscribe »

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:

  • Offer a warning. Let low-performing employees know the score, and give them a limited time frame to improve. This lowers your risk of a wrongful termination, discrimination or retaliation suit. "The key is no surprises," says A. Michael Weber, an employment and labor attorney for Littler Mendelson. An employee handbook is also a good idea.
  • Script it out. Know what you're going to say, and have a backup person in the room for documentation purposes. Plan for disabling the employee's computer passwords and so on. First thing Monday morning is the best time to fire someone, says O'Shea. "They're not in work mode yet."
  • Get to the point. Sitting across from an employee you're about to fire isn't the time for small talk. Aim for a firm but empathetic tone, and avoid phrases such as "this hurts me more than it hurts you" that could make the employee angry enough to get even. Segal suggests phrases such as "I'm sorry we find ourselves in this position."
  • Focus on the future. Some employees may press you for another chance to improve or for additional details, but never go back on your decision or stray from the basic (and truthful) details they should already know. Instead, focus on references, nondisclosure agreements and COBRA coverage, if appropriate. Collect any company equipment, such as laptops.
  • Stay in control. If the employee breaks down or gets mad, offer a tissue but not a hug. You might offer to excuse yourself for a few minutes while the employee regains composure.
  • Follow the golden rule. If you were getting fired, how would you want it to go? You want fired employees to leave with their box of stuff and their dignity, too. "You want everyone to do well," says O'Shea, "whether or not they're with you."

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