As a new CEO, it is only a matter of time before you have to fire someone for the first time. Nobody starts a company to fire people, but the reality is that it is rare to run a company for any real length of time without having to do it.
There are many different reasons why you might need to do this. There are a variety of performance reasons and, particularly in fast-growing companies, there is the issue of people who simply don’t scale—some people are a lot better at starting companies than they are at leading large teams. I’ve written about a variety of these groups and their characteristics before so I won’t repeat that all here.
I am also not going to talk about laying people off or making them redundant, which is a related but actually very different process. Today I’m going to focus on the steps you need to take before firing someone for the first time. For obvious reasons, it’s a subject that is not commonly discussed, so my intention is help CEOs and founders find their way along a path full of potential difficulties, embarrassments and awkwardness.
Step One: Get the Legals Right
It might sound like a simple point, but put it this way: if you get the legal aspects of firing someone wrong, it could have a catastrophic effect on both your business and the individual concerned.
The legislation surrounding firing people is well defined in every jurisdiction.
Popular culture leads us to believe that firing people is hardest in France and Germany, and comparatively simple in California and New York. This is a commonly held fallacy – the process of firing people is tricky all over the world, as it should be.
So before you engage with the employee in question, hire a lawyer who knows what they’re doing, and who has done this before. Nailing the legals will save the process from spiraling out of control, will protect you from racking up a large legal bill as you fix a mess later and help to ensure that the leaver doesn’t exit with a very sour taste in their mouth.
Step Two: Put Yourself in their Shoes
You need to be very honest about what you’re about to do: you are firing someone. No matter how considerate you are, and how understanding they are, the person you are about to fire is going to have a bad day.
Remember a few things: the person you’re firing is talented. You hired them for a reason. They obviously exhibited something that you, or a member of your team, valued very highly only a few months or years prior. They haven’t lost that spark, it’s just going to shine brighter somewhere else.
Therefore don’t make it more awkward than it already is. Consider things that will matter to them: have the conversation in a neutral location, and pick a time of day when they won’t be under the watchful eye of their colleagues, who will know that something is amiss. And, above all, be ready for the fact that it’s going to be a tough conversation for them and, unless you’re a robot, you.
Step Three: Think about Yourself
I don’t want people to start shaking their fists at me, so by way of caveat: being fired is, quite obviously, the worst part of the deal. But having to fire someone is also awful.
Nobody who has founded a company enjoys having these conversations – save for a few organizational sociopaths who belong in clichéd HBO workplace dramas.
It is unwise to go into these meetings without considering how this is going to affect you. Give yourself some time to rehearse the conversation, and consider how this will impact you emotionally. Of course, these conversations rarely run exactly according to the ‘script’, but this will help guarantee that there are fewer surprises for both of you.
Also, remember that what you are doing will make things better for you, better for the business and, even though it may not feel that way at the time, it will—in the long run—make things better for the person who is leaving the company too.
Step Four: Be Helpful
There are very few occasions where it is inappropriate to be helpful. Unless circumstances are dire, feel encouraged to provide accurate and fair references; and help them, in whatever way you can, to get their next job.
Remember that this person isn’t going to disappear, and they will usually hang around the same industry for a long time. They will talk about your company, and if you help them on their way out, they are far more likely to remain comparatively positive.
The one footnote here is that you should talk to your lawyer first. In rare situations, you may be prevented from doing some of the above due to legal constraints.
Step Five: Think about the Rest of the Team
It is understandable to consider only yourself and the person you’re firing, but you have to also think about your entire team. This step is the one that I find most rookie CEOs forget to address the first time.
You may have already considered those who work closest with the person who is going to lose their job. Often you won’t be able to talk to them ahead of time, but commonly you will have your immediate plan of action ready to go: you know who will step into the breach in the short term, and whether you’re hiring a replacement.
But you need to share the news with the team at large. If your company is still a size where it is realistic to hold an all hands meeting, do so. Address the team, express regret, and take time to explain that why the course of action that has been taken was the right thing to do.
Your team will benefit greatly from the closure that this process affords. It is far better for your staff to hear an honest explanation, rather than to regurgitate water-cooler rumours that the CEO hasn’t been brave or visible enough to quash.