MLR

Executive Terminations: Sever Ties Carefully

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PictureFiring someone in a big corporation is hard enough. In a smaller company, it can be a very personal issue. And if you do a bad job handling the firing of an executive in a close-knit company, the results can be disastrous.

It’s difficult to get rid of a longtime — but no longer effective — person because they probably have many connections in the firm. There is likely to be a sense of betrayal among your staff even if that feeling is not justified.

If you’re up against this problem, here are some recommendations on how to proceed.

Don’t make it a surprise. It can be exceedingly difficult to discuss performance with co-workers who you are friendly with. But it’s necessary. Wrongful discharge suits are one of the fastest-growing forms of litigation, so being frank about an employee’s shortcomings and strengths is vital. In court, formal evaluations can be the best evidence that the termination was justified.

Make notes and add them to an employee’s file when you have tough conversations so you’ll have evidence in hand if it ever comes to that. Proof of performance difficulties gathered over several months or a year is often what it takes to win a case. If you don’t have any evidence, it’s probably wise to delay a termination until you do.

Ease them out. At the executive level, it’s generally not enough to give two week’s pay. The standard package is usually generous, designed to save face and includes these elements:

  • One to four weeks pay for every year of service with a minimum of six months.
  • Out-placement support to help the executive find a job. A lawsuit is unlikely if he or she is still technically employed. If you really want to help, offer to post-date the separation for a set period of time. That way, the executive can honestly tell potential new employers that he or she is presently employed.
  • Paid health insurance for the duration of the severance.
  • Agreement to not fight any unemployment claim — if it should come to that.

Put it in writing. Get your lawyer — one who is experienced in labor and employment law – to draft a separation agreement. Make sure it’s in plain English so there’s no doubt about what you’re offering. Include the financial settlement, any agreement to delay the official termination date, and the procedures for handling references. In addition, seek a release of any claims against your organization and you personally. Other things that you might consider putting in the agreement include a request for confidentiality, a non-compete agreement, and an agreement to disagree only through arbitration. Lay the terms out in a way that allows both sides to hold up their heads and separate gracefully.

Do the talking yourself. Turning a termination over to a Human Resources representative or someone else may backfire if it leads the person to believe they can come to you for an appeal.

Seek consensus. Ask the person you’re terminating to sign the separation agreement. If the employee is part of one of the so called “protected classes” for reasons of health, sex, age — and many people are these days — federal law gives them nearly a month to have their own lawyer look the document over, amend it or reject it. Be patient and flexible. This probably won’t be settled in a day.

Security is an issue, but be kind. Handle the matter at the end of the day, so the employee can leave afterwards unnoticed. However, showing somebody the door without giving him or her a chance to collect personal items creates enormous ill will. If you’re concerned about computer security, change their pass-codes, but leave them enough access to get any personal files. Check computer-use logs and monitor usage for copied files.

It’s a good idea to make arrangements to have an outplacement counselor or someone neutral from human resources help them pack up — maybe over the weekend.

Try to manage rumors. People will talk and spread misinformation. Without going into unnecessary detail, alert other key people that the employee is no longer with the company. To avoid a defamation lawsuit, don’t discuss the specifics of the terminated person’s case but do what you can to reassure other staff members that they aren’t next on the list.