Human Capital

When change means terminating an employee

A company is only as good as its workforce. In the second part of our series on how successful businesses manage change, black enterprise reviews termination and how the law and nondiscrimination policies affect this aspect of the workplace.

Last winter, Arrelle Anderson, a Washington, D.C.-based business strategist, took on a client needing help in identifying ways his company could operate more efficiently. Her recommendation: Do more with less. “When people look at expenses, they first look at salaries,” notes Anderson. And exactly how to trim down is based on the impact each person has contributed toward the bottom line. “You take an objective look at performance, the number of employees you have, the revenues generated, and the expense to you as the business owner to maintain them.”

As Anderson and with the owner  examined sales data and the company’s structure as a whole, a total reorganization was decided, which would include an 80% reduction in sales staff.

So far the reorganization has yielded good results. The company retained only its top performers and saved more than $260,000, some of which would have been paid out in salaries.

Terminating employees who aren’t pulling their weight can directly affect a company’s profitability since they can be replaced with workers who are more productive. It also keeps one person’s bad habits from spreading like contagion throughout the rest of the company, says Melva Tate, president of Strategic HR Partnerships, a human resources consulting firm in Birmingham, Alabama. “I call it the ‘one bad apple syndrome,’” she says.

While it’s in a company’s best interests to remove bad apples, there are steps employers should take to protect their reputation and avoid potentially damaging litigation.

Know the law.
“Employment laws are not trying to penalize businesses for making good decisions,” says Natalie Holder-Winfield, an employment lawyer and president of Quest Diversity Initiatives L.L.C., a compliance and talent management training firm in Greenwich, Connecticut. In most states, employers have adopted “employment at will” policies, which means employers can terminate workers whenever they want (unless an employee signs a contract stating otherwise). However, federal law prohibits the firing of employees because of race, national origin, sex, religion, physical disability, or age.

Practice consistency.
Small businesses don’t need an official termination policy, though Tate advises they formulate one. What is most important, however, is treating employees similarly and fairly. A reprimanded or terminated employee could look for any difference in protected class and sue on that basis. “The person could say, ‘We both showed up late for work; however, I got penalized because I’m a woman,’” says Holder-Winfield.

Give your employees a chance.
Although you can fire someone  after a first offense, a progressive discipline policy, which gives employees a chance to improve, may do more for company morale. “It gives you a chance to review your expectations with the employee,” says Tate. Also, most workers appreciate progressive discipline, which promotes transparency by clarifying problems and setting specific goals. “Sometimes litigation results from employees who felt they were disrespected in the way they were terminated.” says Holder-Winfield. “not necesssarility those who felt wrongfully  terminated.” Respect is inherent in progressive  discipline since its goal is improved performance.

Put it in writing.

The best way to protect yourself is to have on file documentation of the business’ policies and the employee’s poor work performance. “It takes away from the he said, she said’ aspect of the dispute,” says Holder-Winfield. “With a written record, that employer can show, ‘over this course of time. I not only documented what this employee was doing, but I also made the employee aware that their performance was not in accordance with our company’s policies.’”        —Tamara E. Holmes

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