Perhaps your company came through the recession intact, and even hired new staff. But as the economic recovery has dragged on longer than many expected, you may be overstaffed.

Having too many employees can be more harmful than too few. You’ll carry more overhead, along with the potential for employee-related issues. In addition, more staff require more of your time and attention.

Keeping your staff at just the right level can be tricky, but once you know how much work there is to be done and the number of people needed to do it, you’ll be on your way.

Start by monitoring cash flow. Most businesses have stronger months or seasons, and those where sales are down. Know what your long-term cash flow looks like, then project sales for 30, 90, 180 and 360 days.

Consider how many employees it takes to handle the peaks. Are staffers overworked during these times, or is this level just right to get the work done? If it’s just right, then you probably have too many employees during slower times. Plan to cut back, and you can always add temporary staff or pay overtime to existing employees when business increases.

If you want to keep all of your employees, but current sales won’t support the expense, there’s a sure cure—get new clients. Create a new business strategy and deploy it, and with success, the business will be able to handle current staffing levels.

But if sales efforts don’t pay off right away, you might have employees with not enough work to do. In this case, the business must come first—and the extraneous workers must go.

When’s the best time to let an employee go? Usually by the time you’re thinking about it, it’s too late. Ask ten business owners if they should have fired a staffer sooner, and eight of them will say “yes!”. Business owners usually put off firing because it’s not an easy task, especially if the person isn’t doing anything wrong. But if you don’t have enough business to justify every employee, someone has to go.

Sometimes employment decisions don’t go well. Seemingly good hires turn out badly, because of performance issues, attendance problems, inability to follow the rules, or other terminable offenses. Even the best employee screening process cannot tell you whether a candidate will succeed at the job.

When it’s time to terminate, many employers struggle with doing it right. In this age of litigation, fear of discrimination or wrongful termination lawsuits have kept many sub-performing employees on the payroll.

Employers have the right to terminate employees, but it’s best to avoid any possibility of a lawsuit. Doing so takes some organization, preparation and follow-up. And it means sticking to your reasons for termination throughout the process. Changing your story at any point is confusing to the employee, and can lead him or her to believe you are not telling the truth, which can open the door to a lawsuit.

Experts will tell you that the key to a solid termination case is to prepare yourself ahead of time. Document the employee’s performance and your actions, including counseling and recommendations for improvement. During the termination conversation, keep to the topic at hand. Don’t allow the employee to steer it to an airing of grievances or defense of his or her record. Have a witness in the room. And when informing the employee of the reasons for termination, keep it simple. Don’t try to over-explain, and don’t offer additional evidence. Simply state the reason, say the relationship didn’t work out and offer next steps.

Legal disclaimer:
The contents of this article are intended for general information purposes only, and should not be relied upon as a substitute for obtaining professional legal advice applicable to your situation.

Even the best hiring processes don’t always result in perfect hires. Hiring managers may carefully screen applications and resumes, interview the most promising candidates and check references. They narrow the choice down to a few possible hires and conduct all of the necessary employee screening checks. The best candidate passes with flying colors, and everyone agrees to make an offer.

But it doesn’t always work out. Employees don’t meet expectations, or are unable or unwilling to improve their performance. Some break company policies—or even the law. For whatever reason, every employer at some point faces the unpleasant task of letting employees go. But it’s not easy.

Because termination is an expensive process, with the potential for legal problems, experts recommend going through a standard process to protect the company from legal issues and retaliation.

• A solid paper trail of documentation will help. It can start with the hire: give all employees an offer letter or include in your employee manual that employment is at will and may be terminated at any time. Do be aware of employment laws. Not every offense is a terminable one.
• Employee manuals should be given to each employee, with clear policies and the consequences of breaking them.
• Performance evaluations or appraisals are a must, especially for new employees. Conduct them at 30, 60 and 90 days, to keep track of discussions and warnings regarding employee performance.
• Base your termination decision on performance, unless the employee has policy infractions serious enough to warrant termination, such as theft, failing a drug test, or on-the-job alcohol or drug use.
• When the decision is made, act quickly. When it’s time to tell the employee, be prepared. Gather all the necessary documentation, including any required forms for the employee to sign. Have a witness with you.
• Prepare what you’ll say, and keep it professional. If there is any severance pay, let the employee know. Keep the conversation short and don’t argue. Allow the employee to vent if necessary. This is not the time for your feelings or emotions to come in. Try not to apologize or over explain the reasons, which could cause confusion.

Of course, if you have questions about terminating employees, consult your legal advisor.

We’ve been talking lately about employee theft, and how it affects employers of all kinds. In this third article in our series, we look at what to do when you’re faced with this unfortunate situation.

The most sophisticated video camera systems won’t stop an employee from stealing. And unfortunately, the evidence they contain won’t always protect you from an unlawful termination suit. Even the most blatant thieves may try to protect themselves by bringing a lawsuit—and even if you win, you’ll still have to expend a great deal of time and effort.

You cannot avoid all the unpleasantries of terminating an employee, but if someone is stealing, you cannot let it continue, either. If you fear that employees are stealing from your business, keep the following dos and don’ts in mind:

• Before you take action, take the time to do a thorough investigation. Accusing an employee is a serious charge, and you’ll need to thoroughly document your case. So don’t fire someone in the heat of the moment.
• Do have at least two people involved in the investigation to avoid false accusations by the employee of framing for retaliation or bullying.
• When conducting your investigation, don’t resort to crime-movie tactics. By law, you cannot go through an employee’s personal belongings, or use a baby monitor to listen to their private conversations.
• Be careful of what you say. Stating a fact, such as “Steven stole $600 worth of merchandise,” can subject you to accusations of slander. Do state things in terms of opinion: “We have reason to believe that Steven may have taken the merchandise.” Even if it’s true that Steven stole the merchandise, you could still be sued.
• Be sure you can prove the reasons for termination. Do terminate for performance or failing to follow company procedures, instead of for theft that could possibly be explained by the employee—however weak the explanation may be.
• If an employee admits to theft, don’t terminate until you have obtained a written statement in his or her handwriting. If the employee wishes, do allow this to happen in private, to avoid any accusation of coercion.

Legal disclaimer:

The contents of this article are intended for general information only, and should not be relied upon as a substitute for obtaining professional legal advice applicable to your situation.

Up in the Air, the multi-Oscar-nominated 2009 film, features George Clooney as corporate “hit man” Ryan Bingham, whose purpose is to travel around the country and fire people.  Employers hire his company to do the dirty work of letting employees go.

At times, watching the film is painful. The director used real, recently-laid off people to portray Bingham’s victims—and their disappointment, sense of loss, anger, and disbelief are as palpable as Bingham’s cool detachment. He doesn’t know the people whose world he just rocked. Their responses to the news, like “I’ve given this company everything,” “What am I supposed to do now?” or “How can I go home and tell my wife I’ve been fired?” appear to have absolutely no affect on him.

Most employers occasionally have to let employees go. And most do it themselves. The full-scale layoffs depicted in Up in the Air are global corporations, shutting down entire divisions—not small businesses firing a single employee. While it might seem attractive to turn this unpleasant job over to a professional hatchet man, it’s just not possible for most employers.

Most supervisors and business owners say that firing people is one of the worst aspects of their job. So, how does an employer fire someone while treating them well and protecting the company from liability?

Here are some ideas you might consider:

1. Don’t go it alone. A witness is necessary to protect your company from possible discrimination claims.  Have them document what happens.
2. Allow enough time to gather all the necessary paperwork, such as evaluations, warnings and any company separation forms the employee will need to complete. Don’t make the employee squirm while you shuffle through a folder looking for something you need.
3. Be completely professional. This means not getting personal. Don’t say “I’m sorry,” since that can confuse the issue. Your feelings and opinions should not come into the conversation. Keep your voice even, especially if the employee becomes agitated or raises his. And no matter what, don’t argue.
4. Make it quick. Remember the advice about removing a bandage—the quicker, the better? It’s the same when telling an employee she’s laid off or fired. Just give her the bad news, stay calm, and listen to her reaction. Don’t place the blame on “the boss” or “corporate.” It’s easier to assuage your guilt by blaming others, but it’s confusing to the recipient.

Until your company is large enough to hire a professional, be prepared and be kind—but be professional—when laying off or firing your employees. Done correctly, it can have little effect on the organization. Done badly, it can be devastating to both employee and employer!

Firing employees is not easy. For most employers, it’s not something done lightly, either—termination can have many consequences, from a decline in morale to litigation. While the tips presented here should not be considered legal advice, general knowledge and awareness is important, too. For dealing with a specific situation, a human resources professional or employment attorney can always be consulted for expert advice.

If you’re an employer faced with the unpleasant task of terminating a worker, consider the following ideas and tips to make the process a little easier on everyone:

1. Don’t do it alone: have a witness in the room. Whether it’s the HR director, the employee’s supervisor, or a non-management staff member—a corroborating witness will be handy if the employee decides to sue. A witness also discourages any allegations of misconduct, and can help keep anger in check.

2. Don’t fire anyone on their birthday: chances are slim that it would be, but it happens—and nothing makes an employer look more impersonal. During your due diligence and preparation phase prior to terminating, check the employee’s file and avoid the week around their birthday, if at all possible.

3. Compile the paperwork ahead of time: Pull together any agreements or waivers the person will need to sign. Have their final paycheck, or severance pay ready—or a document showing when it will be direct deposited to the employee’s account. Any written warnings or job performance evaluations should be handy, as well—in case you need to refer to them for specific reasons the termination is happening.

4. Be ready to give specific reasons for the termination, listing work performance issues—not personality or personal problems. And, be sure the employee knows for certain that they are being terminated. Then, listen patiently and answer questions. Don’t let the conversation go on for long, or over-explain or debate the issue. Let the employee know that the decision is final. Repeat the reasons you have prepared, if necessary.

5. Have an exit strategy: Disbelief and anger are natural. Some employees are embarrassed, and some become emotional. Allow the employee to vent or cry—and then give them time to pull themselves together. If the employee’s anger becomes unmanageable, have someone ready to step in and remove him or her from the room.

6. Don’t allow the employee to disrupt other workers: let him or her know they have a set amount of time to collect personal items, return company property, and leave. Keep an eye out for any trouble, but don’t feel that you must escort them from the building. It’s fine to end the termination on a pleasant note, if possible, by wishing the employee luck.

7. Inform remaining staff: While it is important to maintain the terminated employee’s privacy, his or her fellow workers need to be told about the situation. Just keep the details to a minimum; if the termination affects any remaining staff, let them know how; and if there is a replacement plan, share it. Don’t allow personal questions regarding the employee or the circumstances surrounding the termination.

No one likes to terminate employees. When it is necessary to do so, make it a little less painful by following these steps—and check with an HR professional for legal advice.