“You’re fired.”

Those two words can be the hardest to say, but in the home service industry, they might be necessary as we sharpen our focus for a leaner 2024. It’s a tough part of being the leader of a company. There is a saying that 95% of the decisions can be made by others in your organization, but you earn your money making the tough 5%. This decision is definitely one of those. There are four key reasons why you should let someone go, and, also a right way to do it. Get this wrong and you make enemies for life and also can seriously affect someone's life for the worse. But get these right and there are great possibilities for future growth and even friendships moving forward.

1. Violation of Company Standards — This one is a no-brainer. Hopefully you have a clearly defined list of company values and an employment manual that lists out the offenses that are worthy of termination. You have to hold a strong line here or you risk setting a new standard that indicates you have no standards. This could range from breaches of safety protocols to unethical behavior. In such cases, it's crucial to act swiftly to maintain your company's integrity and the safety of your team. Ensure your company’s policies are clear to every employee from the outset. When a violation occurs, handle the termination process quickly and formally, documenting the incident and the steps taken to ensure fairness and legal compliance. Contact your human resources (HR) firm to get advice on taking action to avoid any issues.

2. Underperformance — Underperformance is a more nuanced issue. The first place to look when someone is underperforming is in the mirror. Make sure you, as the leader, have a clearly defined job description with expectations. Next, look at your training, development, and coaching efforts. Have you put in the work to grow this team member? Last, ask yourself if the person is a good fit for your team but just in the wrong role. Explore his or her strengths and see if you can utilize him or her in another role. If all of these have been done, and there is no improvement, then it may be time to part ways. Approach this with clear communication, providing feedback on where expectations weren't met.

3. Organizational Stagnation — What got you here, won’t take you there. This one is really difficult because you may have someone who played a significant part in helping you get to this point. You honor their contribution but also realize something has to change. This is why when someone buys an underperforming company, the first thing to go is the leader. It’s because everything rises and falls on leadership. A person's leadership lid is also the lid for your company. Don’t make this key move unless you also have clearly defined expectations and provided leadership training for your team. If you have, then it may be time to replace the leader and bring in someone with a new skill set and fresh perspective.

4. Economic Necessity — In challenging economic times, companies may need to get leaner to survive. This is about ensuring the long-term sustainability of the business. Evaluate roles critically: Can technology automate some tasks? Are there team members who, despite their efforts, aren’t contributing to profitability? When making cuts due to economic reasons, do so thoughtfully, considering the long-term vision of the company. Here are a few best practices to use in this highly difficult situation:

  • Clear and Compassionate Communication: When you speak to the employee, be honest yet empathetic. Explain the situation clearly and ensure they understand the reasons behind the decision.
  • Support and Guidance: Offer support in their transition. Whether it's through career counseling, providing references, assistance in job searching, or severance compensation, show that you care about them and their future.
  • Constructive Feedback: Give them feedback that is actionable and focused on their growth, which they can use in their next role.
  • Adherence to Legal Standards: Ensure the process is legally compliant to avoid potential complications.

Regardless of the reason for termination, having a systematic approach for an employee’s exit is vital. An exit checklist is a great way to do this and should include:

  • Retrieving company property;
  • Terminating access to company systems and ensuring data security; and
  • Finalizing any outstanding paperwork, including final pay and benefits.

Letting people go, regardless of the reason, is one of the toughest decisions a leader must make. It's part of the challenging 5% of decisions that define our leadership. By approaching these situations with a mix of strategic foresight and empathy, we not only ensure the sustainability of our business but also respect the dignity of those who are leaving. Remember, as leaders in the home service industry, our goal is to balance immediate needs with long-term vision, making decisions that are tough but necessary for growth and success.