Unfortunately, something that no one talks about when they are forming a team for their start-up is how to let someone go efficiently and correctly. The reason for this? Simple, it is an extremely difficult and uncomfortable situation. However, all of us that have done this successfully know that this is the key in order to develop an excellent work team.
There is a statement by StartupSchool regarding this specific topic, and I fully agree with it: “You will not be a true entrepreneur if you never have to fire anyone.”
Our company currently is made up of 34 members and over the past 8 years we have fired 5 people. Each time we had to do it, it was very painful but it left us with big learning points. It is for this reason that we would like to share them in the following so that other entrepreneurs can learn from our mistakes.
1) Don't leave for tomorrow what can be done today.
I will start with the biggest error: not firing someone quickly.
The problem with forming a team from zero for our business venture is that generally we tend to hire our friends, ex-classmates from university, or ex-colleagues from work whom we already know and have an established relationship with. This isn't bad; on the contrary, it has huge benefits. However, the biggest disadvantage in this is that it makes the decision for firing them even more difficult in the case that things don't go the way that we initially thought they would.
This situation sometimes takes days, weeks, months, and even up to years when the reality is the decision and the reasons are already more than justified. This delay is our main enemy for building a great work team because if we hire an inadequate employee they stay with us more time than we would like, which could make an excellent employee prefer to step aside (making the worse thing happen: we lose an excellent employee and on top of that we remain with the wrong one!).
As Mark Suster, excellent investor for Upfront Ventures has shared: “Hire fast, fire fast.”
If you are an entrepreneur for the first time, please don't make the same mistake we did, firing someone a week or a month too late will not make things easier, on the contrary, it will be more difficult and complex as much for us as for them. If the decision has been made, the sooner we carry it out the better for everyone.
Additional Note: Another interesting thing that we learned is that if something is not functioning correctly, the person that we are going to fire also knows this. And at the moment of firing them, surprisingly or not, it ends up being a relief (solution) for this individual as well.
2) Put a procedure in place.
Today, every business has a procedure for each activity that needs to be carried out. From: “How to look for new clients”, or: “How to design a new product”, to: “How to hire a new employee.” But in the great majority of the new companies it surprises me to see that an established procedure does not exist for: “How to fire an employee.”
If we want to form a great work team, we should have a procedure developed by the founder where each step necessary for firing an employee that is not doing their job correctly is clearly stated.
Some useful advice in order to correctly carry out this task, based on our own experiences with our company:
a. Be direct and sincere: we don't invent diplomatic excuses as to why we are firing this person. Example: “We made the decision to let you go and we thank you for all the effort you gave during this time.”
b. The best is always to do this personally (face to face) and ideally with a third person present.
c. We pay all the salary and vacation time accumulated by the employee. This is not optional, it is required by law.
d. Let us not forget to eliminate their access, physically as well as digitally, to the company's materials. A clear example of this is what happened between Uber and Lyft.
e. If the employee that is being fired has stock in the company in their vesting process, we should buy them back immediately.
3) Learn from mistakes.
Finally, it is essential that before going to search for a replacement, we understand what the reasons were as to why this person was not appropriate for our company.
I recommend that this lesson be appropriately documented so that errors that can be avoided do not happen again in the future.
The best way to do this is for the person that takes care of human resources or one of the start-up's founders that is dedicated to doing such work, be in charge of adding these lessons (filters) to the procedure that we have defined regarding: “How to hire a new employee.”
As Jason Calacanis shared in Startup Basics: “When you have to fire someone it is very likely that it is because of an error that you made in the hiring process. You should learn from this and correct it immediately.”
This article was written by Engineer Cristian Ángel, creator of PréstamosMéxico. Currently is professor at the Universidad Católica de Córdoba (Argentina) and angel investor in the region of Latin America.
