No Performance Improvement Plan? You Failed the Firing

"If you fire someone without giving a behavior-specific plan & time to improve, you failed, not them." I wrote that on Twitter last week, and it became my most forwarded tweet in months. Clearly I hit a nerve, no doubt a raw one among the many people who have been fired without getting a performance improvement plan. Most of those managers acted unethically.

Yes, I said "unethically." Unless an employee committed an illegal act, firing them without ensuring they knew what they had to change, in time to do so, and they knew the consequences of failure, fails the ethical test of every philosophical system I know and the Golden Rule found in every religion. It treats the employee as a replaceable part instead of a human being with feelings and the civil right to earn a living, ignoring the human right to due process and ability to grow. It also harms the morale of their supporters in the company, and usually steals money from the company in the form of unnecessary costs.

The Society for Human Resource Management and other sources have reported that replacing a worker costs the employer up to 50% of the position's salary. I'd like to know where they get that figure, but there is no question a firing creates at least these costs, mostly applicable to both regular employees and contractors:

• Administrative time to process the termination.
• Unemployment insurance costs—In the U.S., a company's firing history may determine how much they pay into state unemployment programs.
• Hiring a replacement—This requires creating ads, placing ads, productive time lost in interviewing, and administrative time to process the new hire.
• New-hire orientation—Besides the cost of formal "on-boarding" training, productive time is lost by the manager and coworkers getting the new worker up to speed.
• Net productivity—The work the fired employee would have completed between the firing and the time the replacement is equally productive is lost, though somewhat balanced by extra work others had to do prior to the firing because of the fired employee.

Pay a position $35,000 a year, and SHRM says you threw away $17,500 in profits. Even if the replacement's net productivity is 20% higher than the fired person (worth $7,000 annually), it will take you 2-½ years to make up the firing/hiring costs. These days, three years is considered long-term employment.

I have been involved in about 50 hirings, and am proud that I only had to fire one of those people. I am more proud that person was not surprised. Nor was another I inherited and had to fire. Making the best of a bad situation was as easy as creating a performance improvement plan or PIP. I had spoken to them multiple times about the behaviors I needed changed, documenting each instance after I perceived a pattern. With most employees over the years, that has been sufficient. In these two cases, the documentation suggested each was either unwilling or unable to change—or that I had not been clear enough. Like all people, managers often overestimate how well they have communicated, especially on uncomfortable topics. To erase that doubt, I drafted a PIP which:

• Specified the observable behaviors that needed to change, meaning actions others could see or hear. If you fire someone for a general word like "attitude," the animal part of your brain is doing the firing, not the rational part.
• Provided a specific time frame. I recommend four to six weeks, long enough to establish a trend in the right direction, but short enough to cut the company's losses if the PIP doesn't work.
• Offered help in the form of training, books, and/or mentoring.
• Stated that correcting the behaviors might not be enough to prevent a termination, but failure to change them would definitely result in one.

Then I met with the employee, let him read the draft and ask questions, and gave him a chance for input. This was not a negotiation, though. I might reword parts of it, and I was willing to put whatever they wanted in the "help" section within reason, but a firm stand told the employees they faced stark choices.

Each of these gentlemen made a good effort, but it was not enough. The inherited one should never have been in the position; he just didn't have the fundamental talents required. The other was the best fit I could find in a tight labor market at the point where I had to hire somebody. Nonetheless I was surprised he could not make the change. A month later I found out why. He died of a terminal illness I didn't know he had. Imagine how I would have felt if I had arbitrarily added to his burdens by firing him without forewarning and fair treatment. Instead, I can remember him being gracious, even friendly, freely admitting he had not met the plan's objectives and thanking me for trying to help.

The one other PIP I did, again for someone I inherited, also worked out well. She requested a transfer instead and landed in a role that was a better fit. That, too, was a win for both of us and our employer.

I have been fired thrice. An early firing was valid, given that I did not yet have the skills to manage a mid-size motel. The other was by a manager whose group was on pace to a 100% annual turnover rate and who himself was fired a few months later. The third one remains a mystery. I’d been given few corrections, had complied, and they were easily outweighed by my measurable successes.

In each case, the initial pain was nearly as bad as when someone close to me died. I volunteer at a grief center, so I know the emotion well. I presume you as a manager would not wish the loss of a loved one even on your worst employee. That being the case, you have an obligation to protect that human from similar shock and pain, and your company from wasted costs, by doing all you can to avoid the hurt.

Action Item: If you have a problem employee, bookmark this article in case you need it. Then start documenting their problem behaviors and what you did to correct each.