Management

Firing People is a Lousy Way to Build a Company

MattStraz-260There are some CEOs who believe that you should only hire “A” players and fire everyone else that doesn’t measure up. I am not one of them. Don’t misunderstand—I have fired people who cannot or will not do what is asked of them. But I don’t believe that automatically thinning the herd is a good technique for building a company. Here’s why:

Culture. When I was at MEC, the media agency, we built a digital practice up from almost nothing to two hundred people over the course of six years. During that time I can only recall a couple of employees who were fired for non-performance. Was every person in the organization an “A” player? Of course not. Did every employee have the appropriate work experience before joining us? No. But our culture was one of helping each other to meet our company’s goals. As a result, we all got better as we went along.

Leadership. People cannot get better at what they do if they don’t have a clear idea of what is expected of them. For this reason I am circumspect of any leader who blames their “B” players their company’s under performance. Castigating the troops for your own failings as a leader is unfair and shortsighted.

Process. If you hired a person that didn’t work out then something went wrong with your hiring process. I still kick myself for some of the hiring mistakes I made when I was younger but I can take some solace in the fact that I have made fewer of them lately.

Coaching and Appraisals. Unless you’re dealing with someone who is truly unmotivated or has personal problems, most employees want to get better. This is where regular check-ins and monthly or quarterly appraisals can help. If you’re having a performance issue with an employee do not wait for the employee’s next annual performance review to deal with it.

Responsibility. Some startup CEOs claim that the pressure to succeed is so intense that they can’t afford the time it takes to help their people get better. That’s nonsense. Great CEOs make everyone better, no matter what the obstacles are.

Stability. Nobody, not even “A” players, wants to work for a company that is unstable and constantly firing people.

Reward. Some CEOs with far more skin in the game than the rank and file demand that everyone around them work as hard as they do… or else. That’s unrealistic and unfair.

Cost. Churning through people can take up a lot of resources in terms of time, severance pay, recruiting fees and even lawsuits. Just ask Time Inc., who recently took a $60 million charge after letting hundreds of people go.

Firing should be an option of last resort and not a strategy to build a company.

  • George Straz

    Excellent!

  • KenN

    Agreed, Matt. There is a fairly well-known CEO in Silicon Valley, widely disdained, but also known for their mantra about firing people ‘every few months.’ Funny enough, even after that, the firm has had to downsize by 50%…more than once. And they have also cost their VCs/investors untold millions. But oddly…they themselves remain un-fired, even as the company does anything BUT grow. Go figure…

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