The Ethics of Terminating Employees

Keeping ethics top of mind will ensure your decision to terminate is for the right reasons.

One of the most difficult experiences you are likely to have as a leader in the professional realm is terminating an employee. It can be life-altering for the person being terminated, their family members, and even their colleagues. A termination can impact the morale within your organization and the workloads of your remaining employees. When emotion inevitably creeps into an event like termination, it is important to keep ethical considerations top of mind, allowing you to make clear, conscious decisions while also caring for the people involved.

WHY SHOULD YOU TERMINATE SOMEONE?

Many employers are at-will, meaning they reserve the right to terminate employees without cause. However, just because an employer can legally terminate someone at any time does not mean they should. Rather, there should be a strategic imperative.

Leadership consultant Simon Sinek spoke about the relationship of trust versus performance in employees during a keynote presentation at the AICPA’s 2019 ENGAGE conference. His four-quadrant chart helps to define the level of trust and performance an employee brings to their organization, and therefore further helps to identify which employees are moving the organization in the right direction, toward its defined performance objectives and toward a culture of high trust and performance where employees exhibit strong personal character.



Let’s examine the employees in each of Sinek’s quadrants:

High Performance, High Trust: Ideally, we want most employees to fit into this quadrant. They are the work product superstars who also demonstrate high emotional intelligence and character. These are the employees you want to continue giving work they enjoy and encourage them to serve as coaches and mentors to others within the organization.

Low Performance, High Trust: These are the likable employees that fit into the culture well but require extra coaching on work performance. Giving them opportunities to share their emotional intelligence behaviors with others can benefit the company, but you will have to determine why their work performance is not strong, figure out the root cause, and work on an action plan. Perhaps there is a lack of motivation, skills deficiency, or personal distraction. Whatever the case, you will need to determine the course of action best for the employee and the organization.

Low Performance, Low Trust: These employees do not perform well and consistently do not exhibit high emotional intelligence. Employees in this quadrant take the most work to remediate. Coaching for performance and behavioral skills may be possible, but is it worth it? Employees in this category tend to be terminated more often than those in any other group.

High Performance, Low Trust: These employees are some of the toughest to manage. The organization values their high performance, but people do not generally enjoy working with them. Sinek defines these people as “toxic” team members. They tend to stay in companies longer than Low Performance, Low Trust employees because their work product is strong, and finding and training replacement talent is often difficult and costly. Sinek suggests attempting to coach these employees on emotional behaviors first, but if they prove to be uncoachable, terminating them to protect the overall cultural health and morale of the company is in your best interest.

From a leadership perspective, you cannot afford to be impulsive with termination decisions. When emotions are running high, it is tempting to terminate someone who is difficult to work with, but consider the remediation steps above. If remediation does not seem to be working, consider involving a few people in making the termination decision. However, you should also consider that immediate action may be appropriate under certain circumstances, like if an employee demonstrates destructive behavior, such as threatening an employee verbally or physically, viewing illegal material on their work devices, using drugs at work, or damaging company property.

HOW DO YOU PREVENT THE NEED TO TERMINATE EMPLOYEES?

Assessing existing employees in the trust/performance quadrants above gives you a starting point for how to coach employees on improving performance and meeting your organization’s cultural values. However, reducing the number of terminations could stem from implementing robust hiring practices first. Consider implementing skills-testing, assessing values, and involving several people within the organization in the interviewing and hiring process. Take all the time needed to hire the right person as opposed to rushing to fill a vacancy or immediate work product need. If you require a fast resource hire, consider bringing in help on a contract or a part-time basis to give you more time to decide if a person is a good long-term fit.

Reduced turnover and terminations could also stem from better understanding employee satisfaction. Think about issuing anonymous quarterly surveys. When employees feel both anonymous and heard, they are more likely to share useful feedback, which will help you determine if there are performance or trust issues within your organization that need to be addressed.

In addition to periodic surveys, a strong show of ethical consideration would be implementing a whistleblower program where employees can provide anonymous real-time feedback on issues they feel are significant to their work experience or the organization overall. Ensure whistleblowers cannot be targeted or dismissed, which would dampen culture and could violate whistleblower protection laws.

WHAT ARE THE RIGHT WAYS TO TERMINATE EMPLOYEES?

Know the rules. Even if your organization operates as an at-will company, you still need to ensure you are not terminating someone for the wrong reasons. Further, even if you terminate someone for what you believe to be the right reasons, a terminated employee may still bring a wrongful termination claim against your organization. Wrongful termination situations include if a company is discriminating against an employee, retaliating for something an employee reported or refused to do, or the company is frustrated with the refusal of an employee to take a lie detector test. Discrimination is one of the most common categories employees report as a reason for wrongful termination. The Equal Employment Opportunity Commission enforces several laws against discrimination, including the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, Title I of the Americans with Disabilities Act of 1990, and the Pregnancy Discrimination Act of 1978.

The lesson here is that it is important to document the reasons for termination of an employee and to offer terminated employees benefits conditioned on them signing a claims release form. Benefits might include severance pay, COBRA premiums, and job placement services paid for by the company. Additionally, you must provide enough time for terminated employees to review the claims release form with enough time allotted by federal law. For example, for a release to be compliant for age discrimination claims (employees who are 40 or older), the release must include specific language, a 21-day consideration period, and a 7-day revocation period.

Severance offerings should also be consistent based on similar termination situations. Many organizations do not publish severance policies to their employees, but they should still follow a basic structure. For example, perhaps an organization offers two weeks per year of service. Therefore, if an employee worked for four years and received eight weeks, another employee who worked four years should receive similar severance pay. Organizations can deviate from policy, but they need to document the reasons for the change. For example, perhaps an employee came into the company with a termination provision for severance, or perhaps they negotiated more severance as part of their termination. Consult an employment attorney to ensure you are terminating employees for the right reasons and with the correct termination paperwork in place.

Terminating an employee is likely to be one of your most difficult experiences as a business leader, but by sticking to a strong ethical framework, you can take comfort in knowing that you are doing it for the right reasons and in the right way.