How to fire an employee (spoiler: it sucks)

The best way to do the least fun thing.
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Howdy, beautiful business people!

Today’s topic is about the worst thing you have to do as a manager:

  • How to fire someone

Hopefully, I can help make this a better experience for both sides of the table.

(Want to watch today’s topic as a video? I just released it this morning - you’ll be my first viewers! And subscribe while you’re there, I’m working hard on building my channel.)

There’s tons of stuff out there about how to hire great people. It’s fun, exciting, and you come out ahead! 

But the opposite is letting people go, which is no fun for anyone. It’s horrible and the worst thing you do as a boss or manager.

Every manager will have to let someone go sooner or later. So you want to be prepared, and do it in a way that is kind and direct and compassionate. 

I’ve had to do it plenty of times. Here’s what I consider:

  1. The legal stuff (reason, etc)
  2. Severance/assistance
  3. The letter
  4. The conversation
  5. The aftermath
  6. Housekeeping

Let’s walk through each of these steps. 

The main thing is to do it with a level of kindness, professionalism and love for people as they move on to find their next thing. 

Because in the end, that’s what matters. Do we treat people as human beings with the kind of respect we would want and that they deserve?

I adapted this from one of my playbooks for Scalepath — a CEO peer network for small business owners, all virtual, built for people doing business all across the country. 

In addition to the peer groups, members get a library of playbooks like this one: actionable, one to two pages, covering the basics of what you need to know as a CEO.

Here we go:

1. The legal stuff

You always want to do this stuff by the book. 

Rules vary between states, and definitely between countries, so make sure you consult the professionals in advance. 

That might be your HR team, your lawyer, or a Professional Employer Organization (PEO - basically outsourced HR). The PEO we use for a number of my businesses has a 15-page form to fill out for every termination.

In Texas, we have a thing called at-will employment. Basically, it says that an employee can quit for any reason, and an employer can quit for any reason.

Other countries don’t have this as much, but it ends up being a really good thing here in the US. It lets everyone be more efficient at finding the right fit, both as an employer and an employee. 

But at-will employment doesn’t mean you can be a jackass to your employees. There are rules. And you can get in a lot of trouble if you don’t let people go correctly.

Generally, there are three categories of terminations: 

  1. Performance — this isn’t necessarily the employee’s fault. Sometimes the job requirements change over time.
  2. Misconduct/policy violations theft, lying… I’ve had employees who got into fistfights at the office. (One time it was actually a father and son punching each other!)
  3. Restructuring or downsizing — Sometimes the company has to change directions, and you no longer have a job that person could do.

The common advice is to start documenting the reasons and details for the termination. (Though in Texas, you can let somebody go without documenting any of it.)

2. Severance and assistance

Consider how you’re going to help this person move on to their next thing.

Personally, I think severance is always the right thing to do. You want people to leave on good terms and set them up for success. Even when I’ve been disappointed in people, I never regret doing the right thing in retrospect. Plus, it’s good karma. Treat people like human beings as much as you can.

That said, if you’re downsizing and the company’s struggling financially, you may not be able to do much for them. 

In Texas, you don’t have to do it, but it’s a good thing.

The other thing you can do is offer to help them find a new role. That could mean writing a letter of recommendation or offering to connect them with someone from your network.

3. The letter

The next step is making a termination letter. 

This should have the date of their final paycheck, information about their benefits, the severance agreement, details about the retirement plans, etc. This is also where you put any confidentiality clauses or that kind of thing if that’s important.

Again, consult the professionals on this, since the requirements are different depending on where you are.

You can use this example from Scalepath as a template.

Now comes the worst part…

4. The Conversation

This part sucks. There’s no way around it.

I recommend just being straight with people. Direct but kind. You want to show people the respect they deserve. 

The meeting itself is usually short. Most people don’t hear much beyond “we’re letting you go”, because they’re in a state of shock. That’s why you have the document to give them.

Here’s how I recommend running the call:

  • Schedule a 20-minute meeting first thing in the morning, at least one day in advance, with a generic title like “Discussion.” Face-to-face is ideal.
  • Open by stating this will be a difficult conversation.
  • Clearly state you’re letting them go, and that the decision is final. (Some folks think they can maybe argue or change things here. Make it clear that’s not happening.)
  • Explain why this is happening. If they violated a policy, tell them exactly what they did. If you can’t afford them, say that. Don’t mince words.
  • Clearly state today is their last day. Tell them when they need to be out of the office by. (Keep this window short.)
  • Pause and acknowledge this is a difficult situation. Ask them if they have questions. If they have feedback, acknowledge and thank them for it.
  • Go through the details in the paperwork.
  • Wrap up by asking them to sign the termination agreement. Give them an opportunity to read everything, but set a deadline.

When you get through this call, go buy yourself a drink, or go for a walk, or do whatever you do.

5. Announce it to the team

If you’re in a small company, the loss of one person will be stressful for everyone.

Hold an all-hands meeting that afternoon, once the former employee has left the building, if that’s something that will help everyone deal with the change.

This isn’t essential, but read the room and do the right thing to help the team get through it.

3 things to do here:

  • Take ownership: it was the company’s decision to hire an employee that was not the right fit
  • Talk about what could have been done differently, and how you’re working to make sure it doesn’t happen again
  • Open the floor to questions or feedback. some text
    • Expect questions about who will handle their workload. 
    • If you’re asked uncomfortable or confrontational questions, acknowledge the feedback and thank them for it. 
    • You don’t have to answer everything during the meeting — you can be honest if you don’t have an immediate answer

One more note: never badmouth the person you’re letting go. It’s bad form and often reflects badly on you. I’ve seen times where the boss looks petty and small. It can also make everybody nervous they might be next. Always take the high road.

6. Housekeeping

Cross your T’s and dot your I’s.

Ensure you have a process to remove access to all internal systems on their final day. 

You also need to make sure their work is covered. 

Get proactive about documenting systems to keep them “out of people’s heads”. I’ve seen many managers struggling to fire a bad fit employee because they’re the only one who knows how things are done. 

While there will always be key employees that are painful to lose, you never want to be stuck with someone. 

You may also get clarifying questions from the former employee. It’s common for people to essentially “black out” the rest of the conversation once they realize they’re being let go.

As depressing as this topic is, letting people go is an essential part of being a business owner, entrepreneur, and manager.

And I think doing this right is essential to being a good person. Treat the people around you the way you want to be treated: with love and kindness.

I hope this helps!

If you liked this, I made a video of it too!

That’s all for this week, folks! I’ll do a lighter topic next week. Promise.


P.S. Was this helpful? There’s a whole library of playbooks on topics like this available to Scalepath members, plus a great community of CEOs!