Terminating an employee is an unfortunate, yet sometimes inevitable aspect of running a successful business. For a small business, where owners and employees often think of themselves as a “family,” terminating an employee can be an especially difficult decision. When the employee who is being terminated and the owner or manager have a long work history and possibly even a personal friendship, the situation can become even more charged. As a business owner, it’s important not to let personal feelings get in the way of making sound business decisions.
Signs It’s Time to Part Ways with a Long-Time Employee
Many employees can thrive in their careers working decades for the same employer. Long-term employees who continue to provide value to your business have deep knowledge about your products, services, systems, and business structure and are certainly worth holding onto.
Sometimes, though, even employees with long tenures at an organization can create difficulties that can be draining on a business. Although sometimes difficult to admit, if you’re honest with yourself, you may already have an idea of who these employees are. Long-term employees who have overstayed their welcome typically exhibit the following traits:
Obsolete skills
It often becomes clear that a long-term employee hasn’t taken responsibility for their career or training when they don’t actively seek out new information or express little if any curiosity about their industry or profession. A noticeably stale skill set is often one of the first signs it’s time to let a long-term employee go. These employees often have an outdated mindset and little, if any knowledge of current best practices. They only know what they’ve learned early in their career and have continued with those same processes for years, sometimes for decades.
Resistance to change
As industries and technology evolve, so should a business. A resistance to change could be holding your company back from operating at its full potential. You could be missing out on key opportunities to reach new markets or create innovative products or services. When an employee is perfectly content maintaining the status quo, it could be a sign that it’s time to move on.
These types of employees tend to be champions of old systems and familiar processes. You may often hear them say things like, “This is how we’ve always done things.” When employees are constantly undermining change and new or progressive initiatives, it’s typically a clear indication that it’s time to let that employee go.
Defensive attitude
Long-term employees may be painfully aware of their dwindling value within a company. As a result, they may feel threatened over particular aspects of the job. These types of employees may become defensive when questioned or having to justify their processes. They might even undermine or sabotage new hires by hoarding information or dismissing a new hire’s ideas or skills.
Slower productivity
Long-term employees may no longer have the skills or capabilities to efficiently produce high-quality work or work quite as fast as their peers. As a result of not having the appropriate skills for their position, long-term employees may try to compensate by working long hours and weekends. These types of employees often claim they are overworked and may even be too busy to attend meetings. They’re critical of co-workers who have a life outside of work and don’t put in extra hours. They may even see themselves as company martyrs and call out co-workers who don’t spend as many hours working.
Overcompensated
Often, long-term employees have incurred higher salaries over their tenure that can weigh heavily on a company’s bottom line. Of course, long-term employees who continue to provide value and have experienced growth within your organization are likely deserving of a higher paycheck. However, it can be harder to justify when a long-term employee’s salary and title is grossly inflated to reward them for their tenure when it doesn’t correlate with the value and skills of other employees.
How to Terminate a Long-Term Employee
When it comes to terminating a long-term employee, much of your usual termination process will be the same. However, there are some special considerations to keep in mind when firing a long-time employee.
Review past performance
Termination can certainly come as a shock to an employee, especially one who may have felt secure in their tenure with a company. You’ll want to ensure due diligence by reviewing past performance reviews and feedback. If the employee has only ever received positive feedback, you may want to wait until you can provide some honest feedback and evidence of negative performance. An employee performance review is an optimal time to set goals and expectations for an employee, identify areas for improvement, and provide resources for training. You may notice signs like resistance to change or a defensive attitude during this time.
Terminate long-term employees in person
When it’s clear that a long-term employee can no longer provide value to your organization, it’s time for termination. When firing a long-time employee, be sure to give them the news in person if possible. Not only is face-to-face firing the right thing to do, it can also help keep your remaining workforce strong, especially when losing a long-time colleague.
Be transparent with your remaining employees
Speaking of your existing workforce, you’ll also want to take into consideration how you communicate the termination to the rest of your team. The “loss of a colleague can send shockwaves—and extra workload —across the company. By firing someone, you’re asking everyone around them to take the news and the extra work in stride,” says Piyush Patel, author of Lead Your Tribe, Love Your Work: An Entrepreneur’s Guide to Creating a Culture that Matters. While transparency is key, you’ll want to focus less on the negatives and more on the positives. Leverage this as an opportunity to bring your team back together, understanding that additional tasks may fall onto your employees as a result of the loss.
Don’t fire employees by yourself
It’s also a good idea to have another person, such as an HR representative, in the room to serve as a witness when terminating an employee. There’s always a chance that your former employee may try to accuse you of an unjust firing, such as age discrimination. Having an HR representative in the room can help you stay on track and avoid any potential legal issues.
Severance pay
While post-termination severance packages are most commonly associated with executives, they have now become more widely extended to long-term employees. According to a Manpower Group survey, 75 percent of companies have a formal severance policy in place because “severance is one of the keys to ensuring a difficult action has the best possible positive outcome while speeding the return to productivity, profitability, and employee engagement.” Offering severance pay can also help you show appreciation for a long-term employee’s loyalty to your company.
Terminating a long-time employee may not be enjoyable, but it’s important that it’s done legally and gracefully. Need help creating a termination policy or managing employee performance? Contact GMS today to learn more about our employee performance management services.