Decision Vision Episode 66: Should I Fire My Underperforming Employee? – An Interview with Peter Rosen, HR Strategies & Solutions
If I decide to fire my underperforming employee, how should I go about it? How do I mitigate the risks? Experienced HR professional Peter Rosen joins “Decision Vision” to discuss these questions and much more with Host Mike Blake. “Decision Vision” is presented by Brady Ware & Company.
Peter Rosen, HR Strategies & Solutions
Peter Rosen is the Founder and President of HR Strategies & Solutions. Known for his ability to quickly build trust and credibility with his clients and colleagues, Peter Rosen, a thoughtful and practical human resources executive and consultant, has a unique capacity to understand and assimilate into a variety of corporate cultures at different stages of the corporate lifecycle. With over 25 years of experience in both domestic and international companies, he is able to tailor his approach to specific HR situations and translate his larger corporate experience into start-up and growing environments. His contagious enthusiasm and optimism make working with him a pleasurable experience. Peter’s easy-going manner and hands-on approach helps him connect with people, understand their needs, and gain buy in for strategies that strengthen both organizations and individuals.
Peter uses a practical, business-focused approach to HR issues based on both theory and experience. He has built human resources capability and the infrastructure to support it in a variety of environments, from start-ups to Fortune 500 companies in the financial services, consumer products, technology, healthcare, and staffing industries. He has held strategic roles in established companies like The Coca-Cola Company, SmithKline Beecham Clinical Laboratories, Norrell Corporation, Alexander and Alexander, Capital One Financial Services and TeamStaff. As the founder and owner of a boutique human resources consulting firm, he now focuses on helping growing companies establish and implement HR infrastructure and works with their senior executives on strategic HR issues.
An expert in strategic planning, employee relations, independent investigations of employee complaints, executive coaching, business development, culture building, and team building, Peter has made significant contributions to companies throughout his career and has enhanced both individual and team effectiveness. He has developed and executed strategic human resources action plans, improved executive teams’ communication and performance, led the successful integration of acquisitions, worked collaboratively with dozens of labor unions, designed and gained acceptance for new departmental organizational structures, created and implemented new benefits programs, and successfully led change initiatives.
Peter’s reputation is one of integrity, trust, innovation, and common sense, backed up by solid experience, a strong educational background, sound business judgment, and self-awareness. He possesses a Bachelor of Science in Industrial and Labor Relations from Cornell University and a J.D. from St. John’s University School of Law with an emphasis on employment law. Peter is a member of the New York and Georgia Bars and is certified in the Marshall Goldsmith Executive Coaching Process, the Prosci Change Management Process and Tools, and the Myers-Briggs Type Indicator.
Michael Blake, Brady Ware & Company
Michael Blake is Host of the “Decision Vision” podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.
Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.
Brady Ware & Company
Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.
Decision Vision Podcast Series
“Decision Vision” is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision maker for a small business, we’d love to hear from you. Contact us at firstname.lastname@example.org and make sure to listen to every Thursday to the “Decision Vision” podcast. Past episodes of “Decision Vision” can be found here. “Decision Vision” is produced and broadcast by the North Fulton studio of Business RadioX®.
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Intro: Welcome to Decision Vision, a podcast series focusing on critical business decisions. Brought to you by Brady Ware & Company. Brady Ware is a regional, full-service accounting and advisory firm that helps businesses and entrepreneurs make vision a reality.
Mike Blake: And welcome to Decision Vision, the podcast giving you, the listener, clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic from the business owner’s or executive’s perspective. We aren’t necessarily telling you what to do, but we can put you in a position to make an informed decision on your own and understand when you might need help along the way.
Mike Blake: My name is Mike Blake and I’m your host for today’s program. I’m a Director at Brady Ware & Company, a full-service accounting firm based in Dayton, Ohio, with offices in Dayton; Columbus, Ohio; Richmond, Indiana; and Alpharetta, Georgia. Brady Ware is sponsoring this podcast, which is being recorded in Atlanta per social distancing protocols. If you like this podcast, please subscribe on your favorite podcast aggregator, and please consider leaving a review of the podcast as well.
Mike Blake: So, today’s topic is, Should I fire my Underperforming Employee? And we’re getting back to a little bit to normal topics. We still do have a couple of COVID-related business topics that are along the way. But every once in a while, it is nice to, at least, sort of pretend that we’re back to normal. And at some point, this whole thing is going to end. We are going to return to work. We are going to reopen restaurants, and cafes, and bars, and hotels. And God help us, so to actually get back on cruise ships as well.
Mike Blake: But we do have businesses to run. And although something like a quarter of the economy, maybe almost a third has an effect and had the pause button put on on it, that still means that two-thirds or three-quarters of the economy is still running in some fashion. And my hope is that most of you that are listening are in that two-thirds to three-quarters that are still functioning. But if you’re not, we certainly wish you a speedy transition to whatever positive outcome awaits you over the horizon.
Mike Blake: And speaking of positive outcomes, today’s topic is, Should I Fire My Underperforming Employee? And why do I say that that’s a positive outcome? Well, we’re going to learn just how important it is to make a decision as to whether or not an employee is going to make it because one of the things you learn as you as you hire and manage people is that certain underperforming employees represent a disproportionate draw of management, time and energy, employee morale, and overall organizational effectiveness.
Mike Blake: And it actually reminds me of a verse from an Elton John song called Empty Garden, which was put out in 1982 as a song about the assassination of John Lennon. And one of the lyrics that song written by Bernie Taupin is “It’s funny how one insect can damage so much grain.” And an underperforming employee can indeed damage a ton of grain. If you have a hundred employees, and one person is just not making it, it’s more than a 1% in overall effectiveness of the organization.
Mike Blake: And this topic is is particularly poignant today because as I sit here recording this, or we sit here recording this on April 10th, we have seen something on the order of 12 million people in the last four weeks declare themselves unemployed. And that’s probably undercounting because the phone lines are jammed up like a talk show host basically, and you can’t get in. So, all of a sudden, the music stopped, and we found out there are a lot fewer chairs than there are people that want to fill them.
Mike Blake: And then, it’s hard to ignore the reality that almost four years ago, we elected a president, whether you love him or not love him, the fact of the matter is his claim to fame in the last 20 years has been the catchphrase, “You’re fired,” right? And I think that has created a lot of mystique around him and really shows just how important it is to fire people, the right people at the right time because I think a lot of the appeal of that catch phrase and the show, The Apprentice, is that everybody has worked with somebody in their career that just is desperately begging to be fired.
Mike Blake: And when they’re not, and when it takes a long time for that person to be fired, if they ever are, I mean, the Peter Principle would say that they’re promoted, but that person can be so toxic to the organization. And people who’ve had to live with, work around accommodates somebody who just is not a constructive part of the team, whether it’s due to personality, temperament, professional competence, or some cocktail of the three, that makes life miserable for people who come to a job every day that they otherwise like.
Mike Blake: And I think it’s that visceral connection with having to put up with somebody who doesn’t belong in the organization, but the people who are running the organization may not necessarily be as be close to that situation. And so, that scenario is allowed to fester. And therefore, when you see that play out on TV, I think there are a lot of people that sort of stand up and cheer. Now, I’ve never actually seen the show. I’m sort of going on on what I’ve heard about it, but I do think there’s something to that mindset and, we’ll see how it goes.
Mike Blake: Joining us today to help us kind of work through this is is Peter Rosen. And I’m so glad we have him on. And now I’ll introduce him formally in a second. But firing an employee is a traumatic experience, right? Even though it’s necessary. I think any cancer patient – and I have not been one, thank God – will tell you that that exercising and removing a tumor, particularly if it’s of any size, is a traumatic experience. It is painful. It can take a long time to recover from that. And even though it is necessary for the ongoing health of the body, it is still a difficult thing to do.
Mike Blake: And it probably should be a difficult thing to do. I don’t think it’s a good idea for businesses or employers to take a cavalier attitude to firing people. That’s not a good idea either because it creates a highly politicized environment in the organization. It leads to mistrust. It leads to management by fear. And management by fear can work for a small amount of time, but it generally does not work well in the long run. And I’m highly suspicious of anybody who claims that they’re very comfortable firing people. It usually means they’ve done that a lot. And if people find they have to fire employees a lot, the problem may not lie with the employees. But we’ll get to that in a second.
Mike Blake: So, joining us today is my friend, Peter Rosen, who is President of HR Strategies and Solutions, a boutique consultancy firm addressing the unmet human resource and organizational needs of companies from startups to large organizations. Human Resources Strategies and Solutions provides human resources, leadership and expertise. They enable growth, improve efficiency, and prevent problems. From human resource strategy development to human resource recruitment, they do it all. Their clients recognize the importance of having a strong culture resulting in an aligned, motivated and engaged workforce. They’re committed from the very top to doing the right thing and to doing doing things right.
Mike Blake: Known for his ability to quickly build trust and credibility with his clients and colleagues, Peter Rosen, a thoughtful and practical human resource executive and consultant, has a unique capacity to understand and assimilate into a variety of corporate cultures at different stages of the corporate lifecycle. With over 25 years of experience in both domestic and international companies, he’s able to tailor his approach to specific HR situations and translate his larger corporate experience into startup and growing environments. His contagious enthusiasm and optimism make working with him a pleasurable experience. Peter’s easygoing manner and hands-on approach helps them connect with people, understand their needs, and gain buy-in for strategies that strengthen both organizations and individuals. But he’s going to bring the goods today. Peter, thanks so much for coming on the program.
Peter Rosen: Oh, you’re very welcome. Thanks for mentioning that. I wasn’t going to miss this for for anything.
Mike Blake: So, before we get started, I noticed something today as I was preparing for the show. You and I have something in common, and that we are both big east guys. You actually hold a Law Degree from St. John’s University, do you not?
Peter Rosen: I do.
Mike Blake: So, you and I harken back to the days of big east basketball actually meant something. I’m a Hoya myself. So, we go back to the days of Chris Mullin and Patrick Ewing battling it out in the Big East. Later, Alonzo Mourning and so forth. But that was a different time. So, do you find that your law degree comes into play at all anymore with what you do in human resources?
Peter Rosen: Yes, absolutely. It was interesting because when my career got started, I was actually a trial attorney down here with the federal government, with the Equal Employment Opportunity Commission.
Mike Blake: Oh.
Peter Rosen: And I was a litigator. In a sense, litigating charges of discrimination brought by employees of companies like Georgia Power Company, a lot of the big organizations back at the time. And unbeknownst to me, there was another large corporation here called the Coca-Cola Company who was beginning to experience some of the strains of discrimination, affirmative action, and they were looking to start, at at the time, it was called an EO department. And somebody reached out to me, and I interviewed, and I got hired in the position, ended up being in the HR department, not the legal department. So, over the years, I have always kept up my legal knowledge. And I was a member – I’m, now, I’m inactive member of the bar because I get a lot of referrals from employment lawyers. And so, I don’t compete with them whatsoever. But I think my last five years at Coca-Cola, I was the head of HR for Europe and Africa. So, that’s how I got into the human resource piece of things.
Mike Blake: Well, I’ll say I did not know that. So, I’m glad you brought some color to that. So, you’re a bigger expert than I thought. So, again, thanks for coming on the program. The first question, I want establish kind of a foundation here for the rest of our conversation. And so, let’s start off with this. Why do companies find or managers find that they have to fire people?
Peter Rosen: You have about two hours for me to list the reasons why companies could decide to fire somebody.
Mike Blake: I’ve got the time if you do. It’s not like there’s a restaurant we can go get lunch at.
Peter Rosen: That’s why I have my coffee right here next to me. It could be anything from performance, a bad hire. The company made a mistake in hiring. It could be the person is a total jerk, which, by the way, is very often, the reason why companies would fire somebody. They could be toxic. They could be a bully. They are violating company policy. They could be sexually harassing. So, there are just so many reasons why a company would want to or choose to fire somebody.
Mike Blake: And the common thread among all those things is that they pose an effective, clear and present danger to the ongoing viability of the companies. Is that a fair way to wrap that up?
Peter Rosen: Yes. And the smaller the company, the bigger the impact. With larger companies, a lot of these toxic employees or poor performers may be in a particular department, the accounting department, marketing department. So, that’s the group that typically would be impacted, but it’s not the whole corporation.
Mike Blake: So, most the people that I interface with, work with, worked for, to a person, thankfully, I think they find it very difficult to fire people. We’ll come back to why that isn’t necessarily the best thing in the world. But does anybody find firing easy?
Peter Rosen: I would hope not, first of all. I would hope nobody finds firing-
Mike Blake: I am going to guess it’s the odd psychopath out there that just sort of just likes firing people, I guess. But I think people approach firing from a place of a lot of consternation, right?
Peter Rosen: A very insecure boss or ego-driven person, actually, would probably enjoy it. but it’s their only way to avoid conflict or avoid challenge because they’re insecure. That’s when they may like doing it.
Mike Blake: So, for those of us who are maybe – I don’t want to say those of us. It gets misinterpreted. What are the dangers or risks of firing somebody? I want to ask this sort of a two-dimensional perspective. One is, what do most people think the dangers and risk of firing someone is or are? And then, what are they in actuality? Are the risks and dynamics of firing somebody, in actuality, do they meet up with kind of the anxiety that somebody feels before they’re going to pull the trigger on that?
Peter Rosen: It really depends on how the firing occurs. And there are risks to firing somebody. There are probably greater risks to not firing somebody if, in fact, it’s appropriate. And we can get into it later, the different ways you can accommodate somebody that you want to fire. But given our legal environment and the risks of that, there are ways to address it to minimize but not eliminate the risks.
Mike Blake: So, there’s a widely used expression of hiring slowly and firing quickly. I think I heard it coined out in Silicon Valley, but that may not necessarily be the origin. But can you describe kind of what that means? I’m sure you’re familiar with the expression. And do you agree with that philosophy?
Peter Rosen: I am familiar with the expression. I generally do agree with it. The most important thing is the hiring process. And I work with a lot of my clients on developing a more robust hiring process to really better assess candidates, to really understand what you are looking for for a person to bring to the organization. And we don’t slow it down, but we make it very robust. And I’m actually involved in the final interviews with a lot of my clients. And I also make it very clear that the CEOs and business owners agree that the hiring manager is the one that’s actually responsible for the decision to hire. What the process is doing is giving them more information and more data on which to make their decision. And they’re not doing it based on they just like the person or they’re referred by somebody. So, it’s a very thorough process.
Peter Rosen: So, that’s where the term comes, “Hire slow, fire quick.” Now, fire quick seems a little – I’m not sure I agree with that terminology, but I have been a student of terminations and firings pretty much my whole career. And there are studies out there too where when any time there’s a big change in an organization, or you ask a business owner or a CEO, “Okay, you’ve had a great career. What would you have done differently in your career? What would be one of the biggest mistakes or things you would have done differently?” And inevitably, it’s, “I should have gotten rid of certain people a lot quicker.”
Mike Blake: Now, interesting. On the hiring practice, I thoroughly agree with that practice. Even when I bring in somebody that is as junior, very junior in our organization, I still do like to have them meet a lot of people. And so, my colleagues do look at me like I’m an escaped mental patient when I’m using partner time to have them interview and spend a day for what is in effect an entry level position. But I agree with your observation. Just having different perspectives, different information, lots of information, I think makes the likelihood of a successful hire so much greater.
Mike Blake: And you also you also learn something about an applicant to when you take a slow hiring process, I think. And maybe this will be a different topic in a program, but I think you learn a little bit about how committed the employee is to pursuing the process, your learn about their patience, you learn about their mental toughness and their mental stamina, you learn about their emotional stability. And I think you correctly point it out, it’s not about hiring slowly but it’s about hiring thoroughly. But hiring thoroughly necessitates slowing things down just a little bit, I guess.
Peter Rosen: Yes. And again, it becomes very logistical. You can move fairly quickly because I have found, again, for the hiring manager, the debriefing sessions because, also, I am a big advocate of what I call group interviews – more than two, or three, or four people from the company interviewing the candidate at the same time. , that’s more efficient. , it avoids a candidate going from person to person being asked the same questions by people that are not really very good at interviewing. And that could turn off a good candidate to the company.
Peter Rosen: The other thing too is that there’s an exercise we can get in to later that I work with my business owners and executives. It’s called the ABC Exercise. But let’s just, for now, an A player is your top player, he person that represents the culture, they’re performing, everybody loves working with them. The only people you want in interviews are your A players because the B and C players are going to end up being threatened by good – and it comes across. It’s amazing how it comes across in an interview where they start challenging the person, and it becomes very uncomfortable. So, setting up the hiring process is the key to reducing the need to fire people.
Mike Blake: So, I think in most cases, and we’ll talk about the other scenario in a second, but in most cases, the decision to fire, usually, comes. And, again, we’re talking about firing somebody for underperformance, not because of economic necessity that just creates a mass layoff scenario but for performance. Most companies do try to give an employee an opportunity to make corrections before firing them. Part of that, I think, is a legal consideration. Part of that, I think, is a good business practice. In your experience, how much time or, for lack of a better term, how much rope should you give an employee to make those corrections before you decide, “Well, this just isn’t going to work out. We got to make a change here”?
Peter Rosen: It really depends on the performance issue. Let’s use an example of somebody that is just has a history of getting things, projects, or whatever part of a project they’re working on late. They’re late in getting things done. They don’t meet deadlines. That is worth confronting directly saying, “From now on, if you’re not going to meet a deadline, you need to let us know,” because they hadn’t been letting them know, and you’re basically on final warning ’cause we can’t afford. It’s not fair to anybody else. You give them the chance. You give them whatever meager, 30 days. And the first time during that 30 days, if they’re late, you say, “Listen, we already warned you. It’s time to move on.”
Mike Blake: So, that brings to mind, the depends, I think, brings to mind different scenarios. One scenario, it seems like, is there’s an issue of performance in terms of how you go about your business. That’s sort of behavioral, right, whether it’s time management, whether it’s communication, as you point out here. And then, there can be underlying issues where maybe the person has good “work habits,” but maybe they don’t have quite the skill set that you thought they did when you interviewed them and they walked through the door, right? Maybe there’s a flaw in interviewing, or bad job description, or something happened, right? And maybe the issue is … or maybe it is a behavioral issue but training is required. Does that timeline get altered perhaps if it’s an issue that you think might be remediated with training versus, “Hey, this is not going well. Fix it”?
Peter Rosen: If it is a particular process or skill set that training could lend itself to, as long as the person has a good attitude, it’s worth trying it. But if the company made a mistake in hiring the person, they thought the … and this happens a lot in smaller companies. They thought they were really looking for this when, in fact, they really needed that. And if they made a mistake, what you do is you sit down with the employees and, “Listen, this is not working out. We want to be fair to you. We’ll give you 30 days of severance to help you look for another role, but we do need to part ways.”
Mike Blake: So, let’s go back to the first issue where there’s a fundamental issue. It’s not necessarily a hiring mistake, but it’s something that is fundamental to the way the employee approaches their job. And if you’ve done things right, you’ve issued some kind of warning. There’s been some kind of review process that makes it known to the employee that there’s, I guess, for lack of a better term, an effect on notice. I’m curious, in that scenario, how often is it that employees actually then take that and are able to make the meaningful corrections that stick versus once you get to that point, do a lot or most employees really kind of never make it? Does that question make any sense?
Peter Rosen: Yeah. Well, I think statistically, and I will not swear to this, but statistically, for my experience, I would say more employees don’t make it than make it. And again, I work with-
Mike Blake: That’s my belief too.
Peter Rosen: And I think, probably, if there’s data out there, and there probably is, it’s going to support that. With performance reviews, and I work with a lot of my companies too, and there are a lot of good performance reviews systems out there or HR systems that have performance reviews built into them. And one in particular, which I really like, but it includes quarterly peer feedback, and it is so eye opening to hear the peers talk about it. You sit down, you’d be subtle and be discreet. You can say, “Hey, Bob said this about you,” but it gives the manager, “Hey, wait a second. This person has really not been working well with the graphics department,” or this and that. And then, you have to deal with that. And if it’s not addressed, then, again, I think most times, it’s not. I mean, it’s addressed but not corrected, then you have the documentation and the reason to make the move.
Mike Blake: And I want to touch upon something that you mentioned because I think this is very important. When it becomes necessary to fire an employee, and if he can’t look back and do a postmortem, if you will, or after-action analysis, how often is it that the employee may well have been fine, but the employer just simply made the wrong hire? Maybe they made a poor evaluation, they didn’t ask the right interview questions, or maybe they just tried to take shortcuts. Talking again about hiring too quickly. Maybe they didn’t do the diligence, such as checking references. How often is it the company’s fault that they’ve got a square peg in the round hole?
Peter Rosen: I would say it happens frequently.
Mike Blake: And do you agree that that happens frequently because … is it because … I mean, a few reasons. And sometimes, I see this, there’s a danger of, even in my own firm. I’m not going to tell you that it’s actually true, but I know there’s a danger here. Does it happen because when you feel like you’re understaffed that people think about just sort of the warm body, and we’ll figure it out, or do employers have underdeveloped talent acquisition skills or some other systemic issue within the firm that leads to these outcomes?
Peter Rosen: I would say that there is a lacking of recognizing the importance of doing it right. I mean, a lot of the type, especially in professional service firms like you, like your firm, there are a lot of people, a lot of consultants, and I worked for Capital One for a number of years, and they were made up of all these McKinsey and Boston Consulting Group people that got paid to be right. And when the hiring decision, when somebody in a professional services firm, they just trust their own judgment rightfully or wrongfully. “I’m right. I made my assessment,” and that value, the input that they would get from so many other sources. They just want to get it done. And then, when it’s on the back end, that’s when the problems occur. And another benefit of having a little more robust hiring process is you give the candidate more time to really see the culture in the organization. So, they ultimately can make a better decision for themselves.
Mike Blake: I think there’s a lot too. I think there’s there’s a lot to that self-selection. I think it comes in two places. One, if you’d like a candidate to kind of withdraw if they see that there is not a good fit in advance. And I also think, going back to the negative review, I would like an employee, particularly if the employee thinks are doing a good job, right, and then you tell them that they’re not, I would like to see an employee then kind of put their resumé out on the street at that point because it’s one thing. And the people who can’t be self-aware and you say, “Hey, look. You’re not doing things one, two and three. You need to fix them.” And there are people that will deny and say, “No, I’m doing a great job.” No, you’re out of order. But on the other hand, there are people that say, “I think I’m okay. But this, really, is a warning shot. And maybe I’m just going to make everybody’s job easier and find a better fit for myself.” Do you think there’s something to that?
Peter Rosen: Yes, it happens very often. And I have a couple of clients, those owners or the CEO will work with somebody and say, “Listen, you’re a good person. This is just not working out,” they’ll start looking for a job. Maybe we’ll limit their function a little bit because we don’t want them to continue where they’re not performing and do the right thing. And especially when other employees in that organization really know that this person has been trying hard, they’re a decent person because every time you fire or don’t fire a person, there are a lot of repercussions within the organization.
Mike Blake: Yeah. And in our industry in accounting, we have a term called counseling out. For the most part, we try to avoid the Dr. Evil scenario where you push a button and the person just adheres through a trapdoor on the floor, and there’s fire that sort of burns them on the way out, but we try to have that conversation and say, “Look, for whatever reason, it’s not working out, but let’s do this discreetly and give you some time to find something new,” ’cause it’s easier to find a job when when you already have one. And it doesn’t mean the person’s a bad person.
Mike Blake: In our industry, public accounting is hard. And public accounting, particularly for a busy season, the mental and physical rigors of 55 plus billable hours from January 1st to April 15th, that is not for everyone. And for some reason, entry level, you may think you’re ready for it, but you don’t know if you’re ready for it until it actually happens. And for other people, maybe you’re ready for it when you’re aged 23. But then, you’re aged 27, you’re married, and you have a kid, life changes, right? And maybe you have decided that accounting is not going to be your thing. You don’t want to take part. It doesn’t make you a bad person. It doesn’t make you incompetent. It just means that a mismatch has developed from the demands of the job versus what you’re able and willing to provide to it. And so, I think that model of counseling people out, I think, is one that works well for us.
Peter Rosen: There is so many different ways to have a person leave. And that’s why it becomes so situational and so dependent on the organization, the culture, the person. And you remember, I know you remember Jack Welch.
Mike Blake: Yeah.
Peter Rosen: And Jack Welch had this matrix. Yeah, I think it was called the Culture Performance Matrix. And like if you have an employee that was performing really well, and they were really a great guy that they lived the culture, that’s a no-brainer, that person, you need to figure out a way to keep them. Then, you have, on the other hand, the person that’s totally underperforming and they’re a jerk, that also becomes very simply, you get rid of them. The questions, the difficulty becomes the person that is – and this happens very often in sales, they’re a rainmaker, performing like gangbusters, but they are abusive, they’re toxic, they have high turnover. I mean, I don’t find it that difficult, by the way, to make that decision, but a lot of business owners who’s dependent on the revenue would have some difficulty making that decision. And then, there is the person that is really, again, lives the culture, accepts the values, everybody loves working with them, but they’re just in the wrong job. That’s the person you give another shot to to try to find another role for them.
Mike Blake: Yeah, essentially, you’re bringing up the sales role because it’s so hard to walk away from revenue, right? The key worry, I think, in every business leader’s mind is, “Am I going to be generating enough revenue?” The thing that I wake up every morning worried about is, do I have enough projects to keep my people busy, and engaged, and to generate ROI of our department? The thing worry about when I wake up in the morning, the thing I worry about before I go to sleep at night. And in addition, because it’s so hard to hire a competent salesperson, I do think that employees probably wind up giving salespeople a lot more leeway than, perhaps, they should because of the perceived scarcity of that skill set of someone who can actually sell and wants to do it.
Mike Blake: But that other part of the matrix brings a question up that I want to ask anyway. So, it’s a great segue, which is what about the employee that isn’t an obvious fire, right? That’s in the lower-left hand quadrant, but it seems like a worthwhile person has sort of the right attitude, is smart, are there realistic alternatives to firing that person? Maybe it’s finding him a new job. Maybe it’s additional training. Maybe it’s something else, right? Are there other alternatives that can be looked at, so that you can salvage that asset?
Peter Rosen: The answer is yes and no. On my website in one of my articles, and I didn’t write the article, but I’ve contributed towards it, it was called the Transfer Trap. And back in the old day, and I think it’s still occurring now, if somebody was an issue, they just moved him to a different department and let that other department deal with it. That’s usually in larger corporations. That’s the transfer trap. And that person, because they didn’t want to fire him because they were uncomfortable, conflict-avoidant, or fearful of legal risks, whatever the reason may be, all you’re doing is taking a toxic particle and exposing it to more parts of the organization.
Mike Blake: Yeah. So, just shifting a problem from one person to another, basically. And maybe because you don’t have the guts to pull the trigger yourself.
Peter Rosen: And back in the day, and I hope it’s not done as much anymore, but the receptacle for problem employees was HR.
Mike Blake: Yeah.
Peter Rosen: And if you remember, during the FBI issue, I don’t know, three years ago, it was struck or something, one of them was taken out of his role and was assigned to the human resources department.
Mike Blake: Really?
Peter Rosen: Yes. So, I guess it still occurs.
Mike Blake: Interesting. So, one of the things that I think most business owners and executives are familiar with, at least, is the need for some kind of documentation prior to firing an employee, right? Because there is some legal exposure that we have to be aware of. You’ve been on the prosecuting end of some of that as I just learned at the start of this interview. How much documentation do you need to protect yourself prior to firing an employee?
Peter Rosen: The most documentation that you need is consistent for every employee that gets terminated. The amount of documentation also decreases the higher up you are in the organization. If somebody is performing more day-to-day tasks that can be measured, then you need to document not getting things in on time and things like that. But as long as you end up letting the person know, and you’re consistent in how you apply it through all your organizations with all your people, you should be fine. That doesn’t mean you’re not going to get a charge or a lawsuit against you, but the point is you’re just doing it the right way. And the higher you are, usually, it’s a personality issue, it’s a bullying issue, it’s communications issue, it’s more interpersonal the higher you go, typically.
Mike Blake: So, now, in an ideal world, you want to kind of have some sort of documentation that presumably describe … again, you’re talking about having a consistent firing process. I imagine, also, there’s some documentation to document that you have communicated concerns about performance prior to firing somebody, right?
Peter Rosen: Yes.
Mike Blake: And it’s important to point out that a lawsuit is always … I think a lawsuit is always a risk, right? Because at the end of the day, all you need to levy a lawsuit is a lawyer and a judge is willing to take the case. And if you get those two things, it can be a lawsuit regardless of the merits of the case. It’s rare to get them dismissed. But what if you don’t have the documentation? And that may arise for a number of reasons, and I want to get to one in a minute, but maybe you’re just a small organization or maybe you just, frankly, are not that great at HR, or you’ve expanded very rapidly and, again, you just don’t have the documentation, does that mean that the problem employee gets a free pass because you don’t have the documentation to back it up, or you have to wait until documentation can catch up? And if you’re in that position, what is that decision process look like now?
Peter Rosen: Okay. Well, since the company put themselves in that position, you have to adapt. And one way to adapt is saying, “Okay, do I want a lawsuit or an EEOC charge, whatever it may be – age, race, sex, whatever it may be, or do I want to pay some severance pay and offering this person knowing that, ‘Hey, I screwed up as a company, therefore it’s going to cost me, but it’s going to cost me a lot less than if I have to deal with a lawsuit?'” So, you just have to pay for it in a different way.
Mike Blake: So, I want to ask a question about a so-called zero tolerance policy. And I think we’ve heard that term a lot in the in the Me Too Movement, but you hear that you hear the term pop up a lot elsewhere. And the question I want to ask is this is, is a zero tolerance policy truly sustainable or more than anything, is that just sort of a buzzword that, in reality, gets nuanced somewhat?
Peter Rosen: Probably. Now, there is a niche of my business that I had not mentioned, which is I do a third-party, independent investigations of employee complaints.
Mike Blake: Oh.
Peter Rosen: Because of my background and whatever, I’m brought either by the employment lawyer themselves or by the company. So, as you mentioned, zero tolerance. If there is an allegation, zero tolerance can go as far as an allegation of can you get rid of them. But that, to me, is a horrible culture of the organization. What you do is you take an allegation seriously. You have it investigated either internally or through somebody like me. And then, I would end up making a recommendation, a third-party recommendation, because very often you’re going to find out that this was an isolated incident or there’s a pattern of it. So, you’re really not dealing with zero tolerance. Actually, the investigation is enabling you to dig deeper into the pattern or lack of pattern. So, I don’t agree. I don’t support in any way zero tolerance. But if somebody is found to have done something egregious after you’ve investigated it, then I would definitely support termination.
Mike Blake: Peter, so, what you’re talking about is interesting because I hadn’t I really thought about it this way, but I think it makes sense. When companies use the term zero tolerance policy, what they really mean is presumption of guilt on the part of the person that’s accused. And that’s not the same thing necessarily. I mean, I guess it is a zero tolerance policy but it’s a hyper zero tolerance policy as opposed to a much more more constructive application of zero tolerance policy in which there’s an actual fact-finding process and trying to ascertain whether or not there actually is merit to the accusations rather than just simply assuming they’re true and firing somebody, creating exposure that you don’t necessarily need to do.
Peter Rosen: It’s a company that is committed to taking employee complaints or allegations very seriously, but yet, at the same time, will bring in an independent investigator to dig deeper and provide the company with the facts that they need to know the weather on how they’re going to respond.
Mike Blake: So, we’re going to wrap up here. We’re running out of time. I want to be respectful. I know you have a lot of other things you got to do today. But a question I want to make sure that I sneak in here is, should you fire an employee for one mistake? We’ve seen the TV shows, somebody makes one mess up, and they wind up getting let go. Does that happen? Is there a case for that to happen in the real world? Or is that just something that makes good TV theater?
Peter Rosen: It’s like anything else, it depends. But generally, my answer would be we all make mistakes. Now, if somebody makes a mistake, and it’s an obvious mistake, and they don’t have the emotional intelligence, or the self-awareness to accept the fact that they made a mistake and learned from it, that’s a whole other issue. So, I would generally say no, firing for one mistake. Again, it’s an outburst where somebody punches somebody in the workplace, that is probably a determination for one mistake is appropriate.
Mike Blake: Yeah. So, as we have this interview on on April 10th, 2020, we’re in an unprecedented economy and unprecedented labor market, and one that there’s a lot of imbalance. As I mentioned at the outset, we have a lot of people that suddenly found themselves jobless through no fault of their own or even their businesses. And on the other hand, if you’re in the right industry, you cannot hire people fast enough and there’s a perception that maybe you do need just sort of warm bodies. In that kind of environment, does that change the firing dynamics in any way? Does an underperforming employee perversely have unusual leverage because you just sort of have to have a pair of hands doing things? So, what’s your view on that?
Peter Rosen: I would be consistent to the culture that you’ve been wanting to have in your organization. And again, it varies. The answer to that question really varies on the level of the employee. Now, if you were talking about a customer service rep that is maybe not as fast or as efficient as you would like because it’s so difficult to find people, then maybe you put up with it for a while. But if you have a manager of a call center or a manager of customer service reps that is not a very good manager and causing turnover, I would still you act and you address that situation.
Mike Blake: Peter, it has been a great conversation. I think our listeners are going to get a lot out of it. Everybody wrestles with this problem from from time to time. The only people who doesn’t is somebody who’s never managed, or fired or hired somebody. If somebody was to learn more about this topic, maybe get some advice from you, how can they contact you?
Peter Rosen: Well, there are two ways. The two best ways would be my email address, which is email@example.com. And my website is hrsas.com.
Mike Blake: So, that’s going to wrap it up for today’s program. I like to thank Peter Rosen of HR Strategies and Resources so much for joining us and sharing his expertise with us. We’ll be exploring a new topic each week. So, please tune in, so that when you’re making your next executive decision, you have clear vision when making it. If you enjoy this podcast, please consider leaving a review with your favorite podcast aggregator. It helps people find us, so that we can help them. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company. And this has been the Decision Vision Podcast.