Saturday, Aug 30, 2014
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Letting poorly performing workers go

Business beat
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The number one question entrepreneurs ask me is, “What do I need to do to be successful in running my small business?” You might imagine a million ways to answer this question, but there is one thing every small business owner must have in order to be successful. This is a great staff.

Staffing is fundamental to every business and having a great one allows your firm to blossom and succeed. Every entrepreneur must devote a considerable about of time to finding the right people and work constantly at maintaining a great staff. This is not an easy process, particularly for small business owners.

Too often I see small businesses with mediocre staff simply because the owners lack the energy or willingness to change or train new staff. This is a classic mistake – one that can be fixed, but it requires effort and a renewed commitment to success.

Keeping mediocre workers is analogous to having a fruit tree in your orchard that is producing 50 percent of what it is capable of bearing. You can replace the tree, but it will require some work and additional funds. In the end, however, replacing the tree with a higher-producing one will generate a significant amount of profit.

This seems like an obvious and easy solution, but it is so difficult for many small business owners. Why? Because in small businesses, the staff is usually very close. Letting one of these workers go is more like going through a painful divorce. Most small business owners want to avoid this experience as long as possible.

One entrepreneur I was helping had an office manager who had worked for him for more than 10 years. She even watched his house when he went on vacation. However, she was totally ineffective as the office manager. The entrepreneur was fully aware of this fact, but he felt that he would lose a part of his family if he let her go.

I worked very hard trying to encourage this entrepreneur to take action for the good of his business, but every time he got close to letting her go, he reneged at the last minute.

I finally go so exasperated with him that I enlisted the help of his wife. The two of us double-teamed him and were finally able to convince him this employee was poison to the firm. He finally admitted he had to let the office manager go, but it was so hard for him.

It has been two years since he let this employee go, and the owner now tells me over and over that he does not know why it took him so long to make this necessary decision. I just smile as he says, “It just took me a while to understand the damage this employee was inflicting on my business.”

I think most entrepreneurs understand which employees are liabilities to their company, but letting them go requires much strength and courage. At the end of the day, if you would not rehire a worker, than you should let them go. It is easy enough to say that, but finding the right time to deal with a problem or ineffective employee is the tough part.

Most entrepreneurs hate to fire employees because they know how losing their jobs will affect the workers and their families. There is also the uncertainty of how the employee will react during the termination discussion.

What I have found works best is to ask the entrepreneur what type of aberrant behavior they are willing to tolerate and for how long. Sometimes I just have to be brutal and ask if avoiding an unpleasant situation is worth the cost of keeping a mediocre employee in place. This often does the trick as they are forced to face the cost of carrying an ineffective worker.

All businesses have unproductive workers. Go out, take a look at your staff and identify yours. Then analyze the economics of keeping them. If you decide to keep them, ask yourself what psychological fear is keeping you from letting them go. Typically, this allows the real fear to surface so you are able to make a non-emotional decision.

You can do this!


Jerry Osteryoung is a consultant to businesses - he has directly assisted over 3,000 firms. He is the Jim Moran Professor of Entrepreneurship (Emeritus) and Professor of Finance (Emeritus) at Florida State University. He was the founding Executive Director of The Jim Moran Institute and served in that position from 1995 through 2008. His newest book co-authored with Tim O'Brien, "If You Have Employees, You Really Need This Book," is a bestseller on Amazon.com. He can be reached by e-mail at jerry.osteryoung@gmail.com.

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