When Is It Time to Fire an Employee?

Use these three tests to decide if it's time to terminate a staffer.
When Is It Time to Fire an Employee?
Image credit: Federico Gastaldi
Magazine Contributor
Founder of Pen Name Consulting
4 min read

This story appears in the December 2018 issue of Entrepreneur. Subscribe »

Q: My company is small, and every team member seems necessary. How do I know if I need to fire one? --Ben P., Florida

Nothing is worse than having to fire an employee. But for business owners, there is nothing more important than removing employees that are disruptive to your mission. This is a lesson I’ve learned over and over again. When I’ve leaned on kindness and given people the benefit of the doubt, it’s often led to a greater investment of time and resources spent on employees who, ultimately, were just not worth it. 

There’s a popular axiom that suggests you should hire slow and fire fast. That’s great in theory, but I’ve never found it especially practical. Hiring slow can cause you to miss out on potentially valuable employees (if they’re that good, others will want them, too), and firing fast can turn your business into the type of corporate morass people avoid. Instead, firing should be about knowing the principles of your business and making sure you establish standards to measure the value and purpose of every employee -- whether you have one or 100. 

Related: That 'Bad' Interviewee You Just Talked to May Be the Perfect Match for Your Job Opening

How do you measure value? Figure that out before you hire (or fire!) anyone. Every business will do this a little differently, but across mine, we’ve learned to assess employees based on these three values:

Value #1: Productivity

How much is this employee contributing? 

A productive employee accomplishes the goals set by the employer -- and then some. Minimum output is rarely enough. It’s why so many small businesses fold within three years. An attitude of “Here’s what you should do and that’s it” puts your business on the fast track to failure. Instead, give employees baseline expectations that will help keep the business afloat, but make it clear that you expect more. Going above and beyond will give you a competitive advantage, and doing more is what’s needed to succeed. 

Related: After Realizing He'd Hired All the Wrong People, This Food Startup Founder Hit Reset

Value #2: Efficiency and Capabilities

How are they making our operation better?

Growth isn’t always about what an employee takes on. Sometimes it’s about responsibilities they remove in order to create new efficiencies. If your employee is not making your life significantly easier (and increasing your bandwidth) or adding capabilities that were previously lacking, then you should really question their purpose.

Value #3: Personal Values

Do they make work enjoyable?

The emotional value of an employee is just as important as more quantifiable business metrics. Respect, communication and compassion might not show up on the bottom line, but they make a big difference with internal and external interaction and growth. If their personality doesn’t convey what you want, it’s an added vulnerability in the uphill battle of entrepreneurship. 

So when do you fire? When an employee can’t fulfill all three of the core values. If even one is missing, it’s too much of a risk to keep that staffer. And if all are fulfilled, it’s your job to put that employee in a position to succeed, love their work and feel well-compensated. 

Related: Millennials Are Old News: What Does Generation Z Want From Work?

Firing an employee will never be easy, but the process of evaluation doesn’t have to be hard. Set your values, make them clear, provide opportunities, and you’ll be more likely to build—and keep—a team that gives you the best chance to succeed. 

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