94. Layoffs and Terminations - Letting Employees Go

What's the best way to let an employee go? What's the difference between a layoff and termination? What are the best practices for letting employees go? Dana Dowdell is a Human Resources professional and we discuss her experience in letting an employee go. 

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Transcript

Dana Dowdell  00:05

Hi, Mrs. Dana, how are you? I'm okay. Just okay. Just okay,

Russ Harlow  00:12

experiencing difficulties in life or business

Dana Dowdell  00:16

in business, and I think we're going to talk about it. Okay.

Russ Harlow  00:22

This is therapy session we're in.

Dana Dowdell  00:25

So, I have had my first layoff this past week. And so we thought it would be useful for people who are listeners to kind of understand what my thought process was around, laying somebody off. What were some things that I started to see that made me make this decision, and then how I handled it.

Russ Harlow  00:51

Yeah, I think, you know, as business owners, I know that you and I take it really personally, you know, we understand that we, we are impacting other people's lives in a significant way. I mean, they're gaining their, you know, their livelihood, through our businesses, and you don't want to make these decisions lightly, either hiring or firing, or whatever it is. So I can't imagine this was an easy time.

Dana Dowdell  01:18

No, and I've always taken the responsibility of, you know, being responsible for somebody else's livelihood very seriously, right. It's, it's not just making sure that you're paying them, it's making sure that the business is in a place that is growing and stable and sustainable, so that you can continue to pay them. And it absolutely was not an easy decision. I mean, I can tell you, I cried like a baby on the phone call, I cried like a baby after the phone call. So it's funny, you know, doing HR consulting, and I've said this time and time, again, is we're constantly telling what our clients to do, telling your clients what to do, when it comes to employees, and firing and hiring and all of that. And then, you know, when I have to do it, it just kind of it brings it back to real life. And that, you know, there's emotions involved, there's feelings, there's, you know, you're impacting someone else's life. So it's, it's, it's a hard decision to make.

Russ Harlow  02:28

I would think that it would give you some more perspective on that situation as you continue to advise your clients when they're handling those situations as well.

Dana Dowdell  02:39

Sure, absolutely. And I think, you know, I think it's important for us when we're talking, like, how, how did my decision making start? Right, you know, I think, I think as business owners, we can be a bit trigger happy, and be kind of quick to shoot from the hip. And I can only speak to my experience, but I will say, you know, the decision came in a couple of different ways, right? There's lots of words, you know, language that we're seeing about a recession. And so that started to really impact. My, I think, my anxiety a little bit, you know, like is, is the business? And how is the business going to survive? If there is a recession, so I was kind of impacted by that. And then I've also been doing a ton of work around Profit First, right? So if you've been a listener for a long time, you know, Russ and I have a lot of dear friends in the profit first and Pumpkin Plan camp. And I have started to become started the process of becoming trained in profit first, so that I can then train people on it. And so really looking at my numbers and where things were, there was just a high level of discomfort in terms of wiggle room. And full transparency. It often felt like I was still living paycheck to paycheck, which is really scary being five years into business. And so it was those two things. And then I had also recently hired some subcontractors. So I've hired a virtual assistant, through Tara Shea, your VA Tara Shea, one of the women that she trained, Aaron has joined me as a personal assistant. I hired a social media girl Her name is Emily, she comes to us from Sierra Stockland are our other friend of the podcast. And then I hired a copywriter to do some blogging and some newsletters for me and seeing If the value that I was getting from those relationships also influenced this decision, in that I wanted, I saw the value that those things were bringing to the business and I wanted to continue to be able to support those things. So it's like those three events that were happening all at the same time. really got me thinking, like, I'm not sure that having this person internally is the right thing to be doing right now.

Russ Harlow  05:36

Yeah, you know, and you mentioned Profit First and Mike McCalla wits, I remember, I'm pretty sure it was in Pumpkin Plan where he talks about, you know, having to let somebody go for the health of his business. Because if he kept them on his business, he wouldn't succeed, and then everybody else that's impacted by the business would now be affected. And so there's that there are there are companies who will just you know, we're going to keep in mind, we're going to make this work, we're going to, you know, there's just we're committed to them, because they're committed to us. And if your business can't survive, you're all out of work. And you know, you've got a really balanced that. So how did you? How did you kind of dive into the numbers? Because I know you're not numbers aren't always your favorite? So how did you dive in and kind of figure it out?

Dana Dowdell  06:25

So this is the answer to your question is kind of like a big overall life question, right? Like I if you listen to our interview with Amber Duggar, like I have a horrible relationship with money. And so this past year, I've really been trying to work on that. And I think that I realized that, so part of it that it starts from a, an internal self realization that like, I was putting my financial security at risk by trying to keep a job for someone else. And so, yes, it's numbers driven, but it's also like, brain brain driven, you know, what is my experience, like, as an individual. So, you know, from a numbers standpoint, there just was a lot of there just wasn't much like, truthfully, there wasn't a reserve. And so that is not where I wanted to be, right? If I if I have this horrible relationship with money, and severe anxiety around money. Having a reserve, you know, having savings is going to help calm some of that anxiety. And when I started to kind of dive deep into the numbers of private first and figuring out the percentages, there was no room to start a reserve. Because my payroll expenses were too high. So those those things that I was seeing, and he and experiencing, really motivated it.

Russ Harlow  08:13

So I mean, it really emphasizes the need to know your numbers. And I think that's good for you know, our listeners to kind of sometimes QuickBooks scares people, and they have a bookkeeper to an accountant, you know, to handle those things for them. But it's because they're either afraid to learn about it, or they're avoiding what they already know to be true. You know, they're operating at a deficit, or, you know, they don't have a reserve, which let's face it, it's not just about anxiety, it's good business practice, to have a cushion. Because you don't know what's going to happen in your business, some major expense comes up, maybe you get, you know, sick and you can't work for a few weeks, and you've got to cover your clients. I mean, these are just important things. Now, I know we can cover HR and those things as far as letting someone go, but what, how did that process look, once you decided that, I think I need to make a decision, you know, how did you work through that with your employee?

Dana Dowdell  09:21

So it was really challenging. I this employee was my very first employee, you know, she was an intern for me. She was a student of mine. That's where it all started. She was a student of mine. And then she came on board as an an unpaid intern and then things got so busy that I had to hire her I didn't have a choice because I couldn't do the work that was being asked of us by clients and and then she graduated and so She, we had a good relationship, which I'm very grateful for, you know, and I think when I approached the conversation, some considerations that I thought of is like, you know, what's the timeline? What do I think sometimes when you know, when you're firing someone, or you're laying someone off, it's very final in that moment, right? It's very final. And I had to think about what does that timeline look like, you know, when I deliver the message that she's being laid off? Is that her last day? Or am I comfortable? And does it make sense to put a date in the future as her layoff date? And so I was comfortable. And to take a step back from an HR perspective, there's no right answer, right? As a business owner, you have to think about, you know, one, what can I afford? To is there risk involved here? So one of the big concerns of business owners is often like, Well, are they going to steal intellectual property, are they going to ruin relationships with clients, and my employer was a really mature individual. And so I had zero concerns about any of that happening, that may not be the case for everyone. And so I was very fortunate in that, I was able to put like, a future date on the layoff. And so when I communicated it to her, she, she was so kind, and her response, she, she basically was, like, you know, I had a feeling, because there just wasn't a lot of work for me to do. You know, so I think she saw it. And she was so incredibly mature about it, and asked some really great questions. You know, she, I think that's something else to take away, you know, let's say you're listening to this, and you're working for someone and you're getting laid off, you know, you can ask for a letter of recommendation, you can ask for a letter confirming that it was a layoff, so that when you go to file for unemployment, if I if anyone was to verify that, you know, you have documentation of it, and so she asked all those questions and, and was just very kind to me about it. And I was very grateful for that. And so we decided on, you know, essentially a two week layoff period to kind of wind things down. And then we kind of looked at, we looked at it again, right, it was a fluid conversation, a fluid process. And we wound up shortening that to a week. So Friday was her last day with us.

Russ Harlow  12:44

I'm guessing being in human resources, she already knew some of the right questions to ask,

Dana Dowdell  12:49

for sure. Hope, I think, but as an employer, you know, one of the a great piece of advice that I got from this wonderful human, his name's JC Thompson, and he used to work for this corporate training company out of Las Vegas, was when you have to deliver negative messaging, let them know what's in it for them. So like, as an employer, right, you're like, Oh, my God, I have to lay this employee off. This is so stressful for me, me, me, me, me, how am I going to do the conversation? What you know, here's the checklist of things that I have to do once they leave. But I think it's important to think about, like, what's in it for them? What can make this conversation a little bit easier for them? Because they're the ones that just got punched in the gut, right? They may or may not be thinking clearly. So if you can deliver it to help them understand, like, here's, okay, you're late, you're laid off, right? You're, you're getting laid off, here's all the things that are going to happen. You're getting severance, you can file for unemployment, here's what happens to your benefits, you know, help them through the process, because it's not about me, right? This This decision was hard for me. Yes. But it's not about me, as an employer, it was, how do I help this person through this transition?

Russ Harlow  14:14

So what about in a situation where, and I'm sure this happens in a lot of businesses, where it's performance based. So

14:25

you know, we're,

Russ Harlow  14:26

we're have a, let's say, I have an employee and they're struggling to meet, you know, certain guidelines or our standards, you know, what's the process for kind of setting them up for success? Or getting to a point where we say, we haven't met all of our standards, and now we have to say goodbye. So I know it's a different I'm sure people run into it.

Dana Dowdell  14:50

Oh, absolutely. You know, I, I'm going to approach it from like a general HR lens, right, like every state is different. Some states have Some states don't have like a traditional employment at will. So you want to be mindful of that. But generally speaking, it's not a good idea, or it's not best practice, it's not kind, it's not important good employee relations, to fire someone for something that they didn't know was wrong. Now, there's exceptions to that, right? Like, if somebody steals or is violent to someone at work, you know, those things are kind of these big events. And, and it's pretty easy to terminate for those reasons. But let's say you have someone who's just not picking up on a process or, or is having attendance issues, you want to make sure you're documenting it and having good conversations with them along the way, so that they know, okay, here's what we're observing. It's not okay. And here's the potential repercussions if it doesn't get fixed. So documenting it, and you have to have those difficult conversations. You have to you have to.

Russ Harlow  16:10

Yeah, so going back real quick for our listeners, because they may not understand what at will employment is. Can you explain that real quick? And what the difference is? If it's not that? Well,

Dana Dowdell  16:20

sure. So at will employment means that essentially, an employer can fire an employee for any reason, with or without notice. And without, with or without reason, as long as it's not discriminatory. And vice versa, the employee can leave the employment relationship at any time, with or without reason, with or without notice. So this idea of two weeks notice the courtesy, it's not a requirement. And it is a beautiful part of the employment relationship. Right, that, that it's not contractual, there's no contractual obligation to keep anybody employed. But you do want to be mindful, because there are exceptions to it. I actually, if I can plug my other podcast, I just did an episode on quirky HR, about employment at well, there's exceptions to it. I think it's Montana. I think it's Montana, Montana has exceptions to employment at will only exist within the first six months of employment. After that, you have to have a reason to fire someone. So it's really interesting topic in the HR realm.

Russ Harlow  17:39

That is interesting. And I know it sounds boring, but it's not because it's, you have to understand the ins and outs of business and dealing with these things to be successful. So if we're dealing with performance issues, we want to have I'm hearing you say regular conversations with people offer what needs to be done for corrective action, a timeframe for that corrective action, I would think and what the next step is, if that corrective action doesn't take place, and how we can get, you know, better retrain them, and what we're going to do to help them get there.

Dana Dowdell  18:15

Exactly. You know, it's, it's, I think about it like children, right, like, I don't have kids, but I like to ask people who do have kids, you know, how many times did you have to tell your, your kid to look both ways before crossing the road? And the answer is usually, oh, all the time. And I'm sure there were times that you caught them not doing it, right. Yeah, all the time. So you think about your employees the same way, you have to constantly reinforce like the performance that you expect that of them. And if they're not performing, you have to have those conversations and document it. Because it's also not again, it's not fair. It's not kind it's not good employee relations. When you're not having those conversations with people. People generally want to know if they're doing well or if they're not doing well.

Russ Harlow  19:08

In your, in your field and helping people deal with human resources and HR issues. Do you find that companies and employers have issues with how the performance of some people may be substandard or affecting their other employees? And how do they ever put it off to they're like, wow, you know, it's probably going to be okay. Or, you know, how do you kind of work through that when they're reluctant to face the facts

Dana Dowdell  19:47

all the time, all the time. It's like, it's just it's a it's like avoiding that tough conversation you have to have with your spouse or your bookkeeper. You know, anybody in your life people generally don't dive headfirst. with enthusiasm and to difficult conversations and that's, you know, the the fastest way to demotivate a good employee is to show them that you expect less from other people. And it's okay. And so those performance areas that are not in line with your organization and the performance you expect of everybody else, you have got to address those. And it's also important to understand that people stay employed for a variety of different reasons. You know, I've run into situations where someone knew that they weren't doing well, and felt it saw it could not improve, right, they just didn't have the skill set to improve. But they stayed employed because they were a single mom, or they were the only wage earner in their family, and they wanted to make sure that they could make rent, and someone told them that if they quit, they wouldn't be able to collect that employment. You know, so it's really important to recognize, every circumstance is different, and people stay employed for a variety of different reasons. And your duty and obligation as an employer is to coach them, mentor them, train them and hold them accountable for the behavior that you expect.

Russ Harlow  21:22

And as business owners and employers, I think most of us, the vast majority of us have been employees at one time or another. And I can say without a doubt, one of the most frustrating things I had to deal with as an employee is picking up the slack for people who weren't doing as good a job and getting paid the same. And sometimes more. Nothing made me want to leave that environment faster than you know. It's why I wanted to business, I feel like I was one of the better guys in the room. And you know, getting treated just like everybody else. I'm like, You know what? No. And that just creates a bad environment and a bad culture within the company. And so if you don't address these, you don't have to take it head on. You don't have to be aggressive or abrasive. You just you could have a kind hand and address it. And everybody can still

Dana Dowdell  22:23

move forward. Oh, absolutely. I've we've had situations with clients where you know, something simple, like an attendance issue, someone scheduled to show up to work at 730. And they constantly show up at 745 or eight o'clock. And so I had the manager come to me and say, you know, this is continuing to happen, what do you think I should do? And I say, you know, you need to address it. Do I need to be involved? Not necessarily I, you know, I I work. My style is to really empower the managers to have those conversations with the staff that they manage, because that's where the relationship is. But you have to address it. And when she finally addressed it, the employees response was, oh, we just thought you didn't care what time we showed up.

23:08

Oh, okay. Yeah.

Dana Dowdell  23:12

Right. So but if you're, if you're not, not having that conversation, and just letting it continue, does more damage than having the conversation?

Russ Harlow  23:22

Right. I mean, by not communicating it, clearly, you have communicated something. And I think that's what you have to remember. Is that Oh, that is acceptable. Oh, okay. No big deal. I mean, it's not like I'm punching in at 730 and not starting work till eight. I mean, it's not like I'm stealing. Right? It's just really, I can just come in late because it's no big deal.

Dana Dowdell  23:47

And I think people, business owners managers get scared, sometimes because of things that they hear around people, you know, prior employees suing them or you know, like the legal ramifications. But I when you are making a decision, whether it is a layoff or a termination for cause, if you can support that with a business decision, right, that that the layoff had to happen, because business operations couldn't support that position anymore, or the laugh had to happen because we were downsizing or because that division was shutting down and being outsourced like when you can support it from a business perspective.

24:37

You

Dana Dowdell  24:39

it's much easier to defend against those claims. It's funny, my I was seeing my esthetician and her and I were talking about HR stuff as we do, because that's what you do when you go get a facial.

Russ Harlow  24:55

I wouldn't know. But she was asking

Dana Dowdell  24:57

me she's like, well, what, you know, can I just lay some money off and then hire that replacement. And I see this a lot where small business business owners want to, you know, I'm just going to tell them it's a layoff, but really, it's because I can't, you know, I can't handle their performance, right. And that, so that's a way of, of avoiding having the difficult conversation about their performance. But the risk there is that if you lay them off, and you consider it a layoff, and then you immediately hire someone to replace them, that's not a layoff, right? That is a termination, a termination and involuntary termination. So you kept an alternative circumstance would be that you lay someone off through an attempt to outsource, let's say, you lay someone off and you decide, you're going to outsource it, and you try to outsource it, and it doesn't work. And so then you hire a replacement 30 days later, you at least have a business proof. Yeah. And a paper trail of your decision making that it was driven by the business, right, like we tried to outsource, it didn't work, we couldn't find anybody, you at least have the documentation to support that.

Russ Harlow  26:10

All right, so let me ask you a question. I know this is going to be wildly variable based on state and, you know, laws and regulations regarding unemployment. So if I have to fire somebody, and I know we're in Connecticut, so in Connecticut, are they eligible for unemployment, if they're terminated for cause?

Dana Dowdell  26:29

Generally, no. If it's an involuntary termination for cause, and the employer can prove that the termination was due to willful misconduct, meaning they did something that they weren't supposed to do, and they knew that they weren't supposed to do it. And that's why we fired them, they generally are not eligible for unemployment, if an employee is terminated, because they, through no fault of their own right, downsizing, layoff, that type of thing, they're generally eligible for unemployment. If someone resigns without suitable employment, generally not eligible for unemployment, right? Unemployment is meant to support people who are actively unemployed, not willfully unemployed. Now, of course, there's always exceptions to any rule in HR, and it's always a muddy, muddy, gray Lake have different circumstances. You know, I've seen people get unemployment because of circumstances in their personal life that were affecting their ability to come to work on time. I have seen employees get unemployment who have voluntarily quit, who then claimed it was because they had no other choice but to quit. So there was either stuff going on internally within the organization or externally in their personal life, and they were awarded unemployment. Generally speaking, it's really important for an employer understand like, you don't have the choice and unemployment. So your, your choice and the time, or the place that you need to spend your time and energy is doing the documentation to support your decision making. So threatening an employee with oh, we will, will deny your unemployment. It's not up to the employer.

Russ Harlow  28:24

Right, and I don't want to this was never intended to be a commercial for your business. But this is why to have somebody who's an HR professional, either as a consultant or in your organization.

28:36

Because, you know, now it just starts bringing back all kinds of questions. And I'm thinking,

Russ Harlow  28:39

thank God, I have Dina as a resource. So let's say I get I'm an idiot, and I blow up and I get angry at an employee and I go, you know, what, you're fired. Gone. Um, yeah. And there hasn't been any kind of corrective action or anything leading up to that, you know, and let's just say it wasn't, I just wasn't happy with the way I was, I woke up, I didn't have extra cup of coffee, or maybe I was on the wrong side of the or whatever it happened. Just all of a sudden, and this happens right before that's it, you're fired. I'm tired of your garbage. Just get out. You know, take your tools to get out of here. How does that I mean, I gotta think that that's gonna they're gonna end up in eligible for unemployment because that wasn't necessarily caused. They're

Dana Dowdell  29:24

probably Yeah, probably if especially if there was no documentation around it.

Russ Harlow  29:32

My son's work with me and so they're gonna be here anyway. I can't really fire him.

Dana Dowdell  29:38

Oh, god, that's a whole nother bag of worms working with family. Yeah.

Russ Harlow  29:45

Yeah, it's just about good business practice and doing all the things that you need to do properly. I guess. we've kind of gotten off of, you know, your experience dealing with having to let somebody go, but I mean, at some point we all have to look at it and with In our businesses, and it's important to evaluate, you know, what we're doing, why we're doing it? And, you know, is this sustainable, you know reevaluating our business and who's in our business, and what the cost is what the benefits are. And I guess the other side of that is, when you're talking about using independent contractors, it always raises the question of, and we've talked about it somewhat before, you know, is this a person eligible for a 1099? And so how do you determine, you know, who you can hire and who you can just kind of serve out to?

Dana Dowdell  30:39

Yeah, and again, I think it needs to be based on the business decision, right? Is it based on business needs business operations? And really assessing what contribution they're going to put to the organization? And also whether or not they do what you're subcontracting in other capacities. So before we were recording, Ross and I were asking about the subcontractors that I was using, and all of them do this business and this work for other small businesses, so they very clearly fall under the definition of a 1099. But it is it's complicated. And you do you want to it goes back to having that bail team, you want people on your team and in your sphere that can help you navigate these situations and the circumstances when they come up.

Russ Harlow  31:30

Well, what else can we learn through this process, both in your experience and with this employee and in human resources, as we kind of move forward with our businesses and try to grow, because sometimes you've got to prune in order to promote growth. And I think, you know, that's one of the things you've chosen to do within your business. You know, what can our listeners do, as we grow our business to, you know, make our business more healthy, by pruning off some things that maybe aren't growing the way we want them to

Dana Dowdell  32:07

love that prune, to promote? Um, I would say that, you know, don't go into these decisions lightly, make sure that you've put a lot of thought into whether or not is the best decision for what your outcome needs to be. And also, you know, remember the humanity of it, that you're, you're impacting someone else's life. And, yes, they should be grateful to have a job and you know, all the other things that I'm sure that you think as a business owner, but just remember that you're, you're dealing with a human, and that it's really important that you don't forget that.

Russ Harlow  32:59

You know, and, you know, breaking up is hard to do, right. And I think in a lot of our small businesses, we develop strong relationships with our people. And so, it, it gets hard on both sides, I think it was great that you kind of mentioned, it wasn't just about you, even though you knew how hard it was for you. And this is what I got to deal with, and how do I have this conversation, to remember that you are dealing with somebody that you've probably grown to care about, to some extent, or, you know, maybe they come had a picnic at your house, I mean, a lot of small businesses, we operate like that. It's like extended family, for a lot of us who don't have, you know, 50 employees, and even when we do, they're still there can be a good family atmosphere. And it's not something to take lightly. And if you've built a good culture, you know, it's one of the things that when you come to somebody and say your performance isn't what it needs to be, they, they probably want to meet those expectations, you know, especially a good employee, and so giving them that opportunity, and not just the opportunity, the retraining that they may need in order to achieve it, if it's not something that comes naturally for them. You know, it's all part of your overall business culture. You know, it's, we say it at the end of every podcast is not personal, it's just business. But, you know, it is really personal, too. And I think it's important to remember that

Dana Dowdell  34:28

it's really funny when I was doing the last conversation, that's what the employee said, they're like, I get it, it's it's business like, it is.

Russ Harlow  34:39

That's great. I mean, it's, I think it was fantastic that she was as big person as she was to say, No, I get it. You know, I saw the writing on the wall and I totally understand it. And that you were like, How can I help you? Moving forward with this is the process You know, this is what happens with benefits and everything else and moving forward. I think that's, I think that's great. I think it's great what it's doing for your business and helping you grow as well.

Dana Dowdell  35:11

Thanks for as well. I think that's it. I know, I think listeners know where to find me. But if you don't go to the it's just business, Instagram, and we always link where we are. So you can find us that way. Or if you go to it's just business podcast.com. Also, we have our host profiles on there as well, so we can connect there.

Russ Harlow  35:40

Well, thanks, Dana. I'm sorry, you had to go through that. But I think it's the best overall. And I think that's why you made that decision. Yeah, it's not you it's me, I guess. Right? I guess so. Well, it is personal. But here we are at it's just business. Find us on all the places. It's just business podcast, send us an email, leave us a review. Let us know what we need to do better. Thank you for listening. Share this with a business owner who are maybe struggling with some of these things in human resources are having a hard time dealing with an employee situation, because it's out there. Thanks for listening. This just business