Three-step theory: How to fire an employee as a startup

Three-step theory: How to fire an employee as a startup

There are ‘many firsts’ in the journey of an entrepreneur. If you think hiring your first employee is a tough job, there is something tougher- how to fire an employee for the first time. As a startup, you aspire to be known for a great working culture and ‘THE place to work for’. Firing an employee, if not done in the right way can damage your reputation and have adverse repercussions.

Firing is an inevitable situation. There could be many reasons why you would want to ask an employee to leave your organisation. You hired someone in desperation and the performance is not as good as expected. In another scenario, the employee is an above average or good performer but you have to cut costs as you cannot pay him/her a heavy salary every month. There could also be a scenario when you have a strong performer, can pay, but there is a culture fit gap because the person has a strong ego or unrealistic expectations that the company cannot meet.

In all these cases, one could adopt a three-step theory for how to fire an employee.  This theory would not only help to save the reputation of the startup in the ecosystem, but also encourage a good working culture in the organisation after the employee in question has left.

Be transparent

As an interviewer, one expects the employee to be honest while answering questions and sharing how long he/she would like to stick to the organisation or what  his/her future plans are . Similarly, an employee expects you to be honest if you cannot afford him/her anymore. Do not keep anyone in the dark about your intentions as an employer. Don’t surprise him/her with a termination letter. Have a conversation and objectively explain the reasons that have led you to the decision of firing him. For instance, if you feel the performance has not been up to the mark, give reasons. Explain how the performance did not fit in the overall business plans and you as an employer are not able to justify the salary. If you are asking an employee to leave because of cost cutting, have a frank discussion and tell that while you would really want to retain him/her, the company cannot afford it. Everybody deserves an explanation and honest feedback.

Give a chance

This is optional but highly recommended. If you are asking an employee to leave because of underperforming always give a last chance to prove himself/herself to you. Decide a timeline, say a month, and assess the performance minutely and fairly during that time period. Make targets and set a proper plan in place to which you will be giving constant feedback to the employee before asking him/her to quit.  Try to shift the employee to any other department/vertical in your organisation if he is not able to perform in a certain setup. May be their expertise lies somewhere else. Pranjal Prashar, Co founder & CEO- RepUp , says,

“Firing should be the last option. At times, we as startups hire in urgent need and it is not always the fault of the employee if he cannot fit in the organisation. Before firing them, make goals of engagement and give them a chance to prove themselves. Help them grow and achieve those goals.”

It is also very important to not have preconceived notions and be fair with your employee when you decide to give him/her a second chance. Remember, it will be additional cost to hunt for a new employee and make him understand the philosophy/ethos of your startup.

Smooth exit for employer and employee

The greatest fear people have while joining a startup is lack of job security. Recent cost cutting attempts by startups and erratic firing has strengthened the insecurity of youngsters before joining a startup. So how to fire an employee and still make others feel secure about your organisation? Whenever you decide to fire an employee, have a ‘town hall’/discussion with other employees in the organisation about the exit of the employee who is quitting. Tell them that your company is a safe place to work and this was a one-time scenario and there are logical reasons behind it. Leave other employees with an impression that you can be trusted as a startup.

Last but not the least, in many cases, if you feel that an employee is someone you have really invested in and he deserves better -you could help him and refer the employee  to a few people in the industry and find him a job. As a startup, you always want a good word to be spread about you as an employer. This will help you build long term relationships with employees and your company will attract the right kind of talent.

Diksha Dutta is an Indian columnist and media professional. She has a wide experience of writing on startups/VCs/PE during her six-year long stint as a full-time business journalist. At present, she is also working on a book on Indian businesses with Bloomsbury India. Diksha works at Ashoka University, a pioneer in liberal arts education in India. She is based in New Delhi, India.

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