Startup 101: How to Fire

Firing someone is always a difficult process. It requires careful planning, empathy, and clear communication. By preparing in advance, following legal and ethical practices, and prioritizing the well-being of both the departing employee and the remaining team, you can handle terminations with dignity and professionalism.

Remember, every decision you make as a leader sets the tone for your company’s culture. Approach firing with thoughtfulness and integrity to avoid leaving a lasting negative impact.

Firing someone is never easy. If it feels hard and impacts you emotionally, that’s completely normal. In fact, it would be concerning if it didn’t affect you at all. Losing someone from the team, whether their presence was positive, neutral, or even negative, creates ripples. Their contributions, relationships, and presence leave a void that will be felt by the team. Firing is a real-life decision with real-life consequences.

Legal and Unemployment Implications

Before firing anyone, familiarize yourself with the legal protections for employees and the potential consequences for firing someone improperly. Incorrectly handled terminations can lead to lawsuits, unemployment claims, and other liabilities for your business.

Consult with an HR professional or legal advisor to ensure you’re taking the steps that will minimize these risks and document EVERYTHING.

Off-boarding Playbook

It’s essential to have an off-boarding playbook in place. This playbook should cover key processes, such as:

• How to have a termination conversation

• Deciding the employee's last day

• Timing and logistics of final paychecks

• Details on benefits and severance

• Steps for returning company property

• Signing out of systems / password changes

  
  

Additionally, managers should be involved in the decision-making process from the start and be aware of upcoming terminations. They should help decide the timing and execution of the off-boarding process to ensure alignment and preparedness.

Key Considerations for Off-boarding:

1. Smooth Process: By having the logistical elements organized and conversations planned out, you can make a very hard thing a little less difficult for the employee and company. Stay organized to reduce the pain.

2. Responsibilities and Coverage: Know what the employee’s responsibilities are and have a clear plan for covering them after their departure. "They don't do anything anyways," is not an acceptable assumption. Decide if you will hire someone new or redistribute tasks among the team.

3. Communication Plan: Prepare a communication strategy for the team or company in advance. Transparency reduces rumors and reassures employees that there’s a plan in place. Refer to the Effective Communication article for guidance.

   
   

Why You Might Fire Someone

There are many reasons to terminate employment:

1. Policy Violations: Serious breaches, such as harassment or theft, that require immediate action.

2. Poor Performance: The employee isn’t meeting the expectations of their role.

3. Cultural Misalignment: They don’t align with the company’s values or culture.

4. Overstaffing / Financial Challenges: You hired too many people and need to downsize or the business isn’t performing well enough to sustain current staffing levels.

The reason for the termination matters because it dictates how you approach the process.

Policy Violations

For serious violations like harassment, theft, or safety concerns, immediate termination may be necessary. These situations require careful handling to ensure fairness, compliance, and the safety of all involved.

1. Investigate the Incident: Before taking action, gather all relevant facts and conduct a thorough investigation. Speak to witnesses and review any available evidence.

2. Prioritize Safety and Security: If the employee poses an immediate threat to others or the workplace, take precautions to protect your team. This might include temporarily suspending the employee while the investigation is ongoing.

3. Consult Legal and HR Professionals: Ensure that your decision complies with employment laws and company policies. A hasty decision without proper advice could expose your company to legal risks.

Handling Poor Performance

Dealing with poor performance requires a structured and empathetic approach to give employees every opportunity to succeed while also protecting your business. Here’s how you can best manage firing an employee for poor performance starting the day you hire them:

1. Set Clear Expectations

   • Start with a comprehensive job description that outlines key responsibilities and measurable goals

   • During onboarding, ensure the employee understands their role and how their performance will be evaluated

2. Provide Ongoing Feedback

   • Per the Essentials of Strong Onboarding article, hold regular one-on-one meetings to review their work, discuss challenges, and provide actionable feedback

3. Address Issues Early

   • Don’t wait for annual reviews to point out performance problems. Discuss issues as they arise to give employees the chance to correct course

4. Document Concerns

   • Keep a record of missed deadlines, quality issues, or other performance concerns. Include dates, examples, and any prior discussions about the problem

   • This documentation will be critical if the situation escalates to formal action

5. Implement a Performance Improvement Plan (PIP)

   • Create a written PIP that clearly outlines the issues, specific improvement goals, and a timeline (e.g., 30, 60, or 90 days).

   • Include measurable criteria to track progress, such as sales targets, completed projects, or quality standards

   • Review the PIP in a meeting, allow the employee to ask questions, and have both parties sign it

6. Support the Employee

   • Offer resources such as additional training, mentorship, or adjustments to their workload to set them up for success

   • Maintain open communication throughout the PIP period with regular check-ins to review progress

7. Evaluate the Outcome

   • At the end of the PIP period, assess whether the employee has met the improvement goals

   • If they’ve shown significant progress, celebrate their success and discuss how they can sustain it moving forward.

   • If they’ve failed to meet expectations, move toward termination with confidence, knowing you’ve given them every opportunity to improve, with the proper documentation that can help avoid unemployment liabilities

By taking these steps, you can ensure that poor performance is handled fairly and consistently while maintaining team morale and protecting your company’s integrity.

Cultural Misalignment

In some cases, you may encounter high-performing employees who, despite meeting their performance goals, are not a cultural fit for your company. This misalignment could stem from personality clashes, conflicting values, or a sense that they won’t thrive in your organization long-term. When handled thoughtfully, a “soft termination” can help ease the transition for both the employee and the company.

What Is a Soft Termination?

A soft termination involves working collaboratively with the employee to plan their exit in a way that minimizes disruption and ensures critical responsibilities are transitioned smoothly. This approach is reserved for employees who:

• Consistently meet performance expectations but are not a good fit for the company culture

• Hold key relationships, certifications, or institutional knowledge essential to your business

• Are loyal, reasonable, and unlikely to undermine the company during their departure

  
  

Steps to Implement a Soft Termination:

1. Have an Honest Conversation: Start by discussing the cultural misalignment or long-term concerns. Be clear and upfront about why their role at the company isn’t a sustainable fit. Approach this conversation with respect and empathy, emphasizing your appreciation for their contributions.

2. Develop a Plan for Transition: Work together to create a detailed plan for transitioning their responsibilities. This includes identifying key tasks, relationships, or certifications that need to be handed off. Establish a clear timeline and define specific milestones to track progress.

3. Offer a Severance Bonus: The severance bonus in a soft termination is both a gesture of goodwill and an incentive for the employee to ensure a smooth transition. Here’s how to structure it effectively:

   1. Clearly outline the expectations the employee must meet to receive the severance bonus. For example, completing all assigned handover tasks, assisting in training their replacement or documenting key responsibilities, maintaining professionalism and refraining from negative behavior, such as badmouthing the company or disrupting team dynamics.

   2. During the initial conversation, explain the terms of the severance bonus and its purpose. Frame it as a recognition of their contributions and a way to support them during their career transition.

   3. The severance bonus should be contingent upon fulfilling the agreed-upon terms. Communicate that it is a discretionary offer based on good faith and mutual cooperation. Include a clause stating that the bonus will be forfeited if the employee violates company policies, breaches confidentiality, or fails to complete the transition tasks.

   
   

Why Use a Severance Bonus?

Offering a severance bonus helps ensure the following:

• Smooth Transitions: Employees are motivated to leave on good terms and complete all necessary tasks to minimize disruption.

• Goodwill Preservation: It leaves a positive impression, reducing the likelihood of resentment and preserving the company’s reputation.

• Future Opportunities: The employee is more likely to act as a brand ambassador, refer talent, or maintain amicable relationships.

Final Note on Soft Terminations:

Soft terminations require a delicate balance of honesty, empathy, and strategic planning. They are not suitable for every employee or situation but can be highly effective when dealing with cultural misalignments involving high-performing individuals. With a clear plan and structured support, soft terminations can benefit both parties, ensuring a respectful and orderly separation.

Handling Layoffs or Downsizing

Layoffs or downsizing are emotionally taxing decisions that impact not only the employees leaving but also the morale of those staying. Handling these situations with transparency, empathy, and responsibility is critical to maintaining trust and credibility.

1. Admit the Truth—Take Responsibility: Be upfront with your team about the reasons behind the layoffs. If you over-hired or failed to meet revenue or operational goals, admit it. Employees can often see through vague explanations, and owning your mistakes builds credibility.

2. Offer What You Can: Even if your budget is tight, provide what you can in the form of severance to help employees bridge the gap while they look for their next opportunity. A small financial cushion can go a long way in showing you care. Go beyond financial assistance by offering letters of recommendation and references

3. Show Empathy and Gratitude: Express genuine gratitude for the departing employees’ hard work and contributions. Make them feel valued even as they leave. If available, offer access to career counseling, resume-building workshops, or outplacement services.

By handling layoffs or downsizing with honesty, empathy, and preparation, you can demonstrate leadership and maintain trust during a challenging time.