Matters Column

Firing a malignant employee is a difficult but necessary chore

February 6, 2015
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I hate to use a sports story to make a small business point, but this one is just too good to pass up.

The Detroit Pistons have been one of the worst teams in the NBA for several years. In desperation they acquired the services of Josh Smith, an extremely talented but socially disruptive young man. Last month, again in desperation, the team divested themselves of his services, costing the team many millions of dollars. The Pistons then went on to a nine-game winning streak.

Have you ever been in that situation? I have, and I hated having to confront the beast.

There is an assumption that small business owners don't face the same problems big business faces. That’s not true. The dollar amounts are smaller and there is no press coverage, but the stress is the same. Josh Smith was making millions a year and it cost millions to get rid of him. In a small business, the amount could be $5,000 and it would hurt more than the losses suffered by the Pistons.

Nevertheless, the lesson holds true.

Facing a disruptive employee can be one of the most difficult issues in managing a small business. To people who have never managed a business, it might seem simple: Fire them. To fire an employee 50 years ago was simple — you just did it. Today, it’s not so easy.

Contracts can make firing difficult. The Detroit Pistons had a contract with Josh Smith for a specified length of time. It would be hard to build into a contract firing someone for a bad attitude. Once the contract is in place, unless the employee violates the contract, you have to pay them. In the Pistons’ case, they released the employee even though it would cost them millions. The payoff was a 12 and 3 record after the release.

In your situation, you may not see such an instant and obvious reward, but the payoff will be there.

Fear of a lawsuit is often a deterrent to firing a bad employee. I participated in a discussion several years ago about an employee who was seriously disrupting the function of an organization. We had a long, heated discussion about the issue and came to an interesting solution. We asked legal counsel what the likely settlement amount would be from litigation. Then we computed the cost in lost productivity, additional staff required to do what the employee wasn't doing, etc. In the end, even if we lost a potential lawsuit, we found we would be further ahead financially by pulling the plug.

The financial issue is measurable. What cannot be measured is the loss of good employees and potential new business and the simple joy of working in an environment of co-operation. Unhappy people spread unhappiness like evangelists spread salvation. “Misery loves company” is a fact, and you don't want that misery to spread through your company.

There is a scene in the movie "Shackleton" that starkly states this reality. The movie is about explorer Ernest Shackleton who led his crew heroically out of the Antarctic ice in 1915. He and his crew faced almost certain death at 50 below zero and 1,800 miles from civilization. One of the crew began whispering negative comments about their chances for survival. Shackleton took the man aside and explained that his negative attitude could cost all of them their lives. He informed the man that if he continued his negative comments, Shackleton would shoot him. The crew member ceased his comments and miraculously, 18 months later, they reached safety.

Do you know how many times, when confronted by malcontents, I wished I could use that method of management? 

What if the unhappy employee is a family member, friend or any other person with whom you have an emotional attachment? Hiring family members or friends can be risky. Sometimes it works. When it doesn't work, firing a relative makes Thanksgiving pretty uncomfortable.

Firing for most managers is uncomfortable. Firing a sibling, cousin, in-law, etc., takes a great deal of emotional fortitude. On the other hand, employing a relative right up to the day you file for bankruptcy due to their incompetence seems rather stupid in retrospect. 

Another interesting situation is when parents become involved in business decisions. I have seen situations where a sibling needed to be fired, and mom and dad stepped in to influence the decision. Families have been known to split up permanently over issues such as these. That is sad, but sometimes it is the only alternative.

I guess the point is that almost no case can be made for retaining a truly malignant employee. Think of them as a cancer. With skin cancer, removing the malignancy is often relatively simple and non-life-threatening if it’s done early in the early stages. A new employee with a bad attitude is like early-stage skin cancer. The longer a cancer is left untreated, the more likely it will spread until it reaches a vital organ. It is the same with a malignant employee. The longer they are allowed to metastasize throughout your business, the more at risk your business becomes.

Over the years I had several admirable clients who conducted their business in a relatively unemotional, analytical way. People who worked there knew what the expectations were and understood what happened if those expectations were not met. Rules were followed and teams worked together for the benefit of the whole organization. Anyone who felt adverse to the culture was given the opportunity to find Nirvana somewhere else.

Make a malcontent happy. Confirm their negative view of the work place. Fire them and give them the chance to experience the reality of their attitude. Then go back and thank your loyal employees for their contribution to the success of your business.

Paul Hense is the retired president of local accounting firm Hense & Associates and past chairman of the Small Business Association of Michigan.

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