Enterprise Software

Procedures make employee termination less problematic

Laying off employees, whether due to a weak economy or poor performance, is never easy. But CIOs who follow the proper procedures, use the right approach, and avoid liability can make the experience less traumatic for everyone.

Randy Nelson will never forget the emotional experience of firing employees. He ranks it as one of a CIO’s—or any senior executive’s—toughest jobs.

Terminations generally fall into two categories: the group layoff or staff reduction (rampant since the first quarter of 2001), or termination due to poor work performance. For Nelson, laying off employees due to corporate cutbacks was more painful than termination for poor performance.

Nelson, who spent 25 years working as a CIO, is now an IT headhunter with the Wendover Group, an executive search firm based in Houston.

He recalls one particular layoff experience in 1989 during a stint as CIO of a multimillion-dollar energy company. The CEO instructed him to reduce his department by 25 percent, which meant laying off 25 people.

First, Nelson had to establish the criteria for termination, which included the employee’s contributions, innovative ideas, and lastly, seniority.

“Telling employees that the company was reducing costs and we had to let them go was particularly devastating when the employee worked for the company several years,” Nelson explained. “In many cases, I had become friends [with the affected employees], which is hard to avoid when you work closely with people.”

The termination process
Although budgetary layoffs usually happen quickly, the move to terminate an employee for inadequate performance follows months of warnings and poor performance appraisals.

“If the CIO is doing his or her job, it shouldn’t be a surprise to the employee,” says Bob Lambert, managing director, technology and venture practice, at executive search firm Christian & Timbers in Irvine, CA. “One of the most fundamental responsibilities of a manager is to provide feedback to employees on a regular basis.”

As difficult as it is for both the manager and employee, termination must be done properly, said Lambert, who has firsthand experience gained while serving as chief HR officer for Stride Rite Corporation in Boston. And, like Nelson's, Lambert's experience took an emotional toll.

“The worst thing you can do is wing a termination,” Lambert said. “It takes preparation. The place to start is in human resources, where a personnel expert can guide you through the process. It’s also standard practice to have an HR representative and a labor attorney present as witnesses (in case the employee sues the company for illegal termination) and to help manage the process.”

Brevity is the key to a smooth termination, he added. Here’s a sample of how a CIO should begin the discussion: “The purpose of this meeting is to let you know your job is being terminated. Your last day with the company will be next Friday. I’d like to take the next few minutes to tell you how the company will help you over the next few weeks. An outplacement firm will help you polish your job-hunting skills, and HR will explain the benefits available to you.”

Layoffs and lawsuits
Be forewarned, though, that no matter how professionally the bad news is delivered, “the employee is always stunned,” Lambert said. “The only word he or she hears is ‘terminated.’ The most common response from the employee is ‘Why me?’”

If the employee is terminated for poor performance, Lambert suggests reviewing the employee’s performance details: “You’ve had several warnings during your poor performance appraisals. We’ve provided the opportunity for you to improve, but you failed to take advantage of it. This is the reason we are letting you go.”

No matter how employees are terminated, Nelson and Lambert stress the importance of keeping detailed records on employee performance. Even with documentation, a corporation always faces a lawsuit possibility due to disgruntled employees. John Brenner, a labor and employment attorney at law firm Sidley Austin Brown & Wood in Chicago, offers the following scenarios that often lead to a lawsuit following a termination action:
  • An employee being treated in an undignified manner: The employee believes that he or she was treated unfairly, such as being fired abruptly or terminated in front of coworkers.
  • Failure to comply with an employer’s policies: The employee believes the employer violated a contract or failed to follow policies in the company handbook.
  • Violation of civil rights enforced by the Equal Employment Opportunity Commission: The employee claims that the company terminated him or her due to race, gender, or age (over 40 years old).
  • Defamation and slander: The employee believes that derogatory statements were made about him or her to coworkers.

There isn’t one IT leader or manager who relishes reducing staff, even if it’s simply due to strategy decisions and cash concerns. It’s not pleasant to change someone’s world, even if he or she may deserve to be let go due to poor performance.

And no matter how often you’re involved in termination scenarios, it doesn’t get easier, according to the experts. But by following the proper procedures and making sure all the required performance evaluations are done, IT leaders can help avoid future legal hassles, making the experience a bit less traumatic.

How do you handle staff layoffs?
Send us your tips and insight on managing staff reductions or start a discussion below with fellow TechRepublic members.


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