It didn’t take long for Envato co-founders Collis and Cyan Ta’eed to realise they needed to fire their first employee.
It was way back in 2005, pre-Envato days where the two were running a small graphic design agency. Business had picked up, so they made the decision to hire another full-time graphic designer to help with the workload.
The employee sat opposite the two founders, and coincidentally behind him was a large mirror that gave them a clear view of his computer monitor.
“He clearly didn’t realise the mirror was behind him, because he spent all his time at work playing the video game Second Life,” laughs Cyan.
Despite being shocked by the blantantness of the employee’s actions, Ta’eed says she and Collis didn’t have the guts to say anything about it at first. Eventually it reached breaking point.
“I honestly don’t think we would have done anything about it if he hadn’t been so blatant about how he was using his time at work. We were a small business at the time, and cash flow was a huge issue,” she says.
“In the end we just had to do it.”
It took a few days to terminate the employee, and it was clumsy and awkward, but in the end it was essential, and Cyan and Collis would take their learnings from that small graphic design company to go on to launch one of Australia’s most successful startups.
But their awkward situation is one that thousands of Aussie business owners and startup founders have gone through. Firing your first employee is never easy, and recent research from SmartCompany and Performia shows one in three Australian businesses do not feel confident making decisions around termination.
Plus, most businesses won’t have the luxury of being able to see the employee so blatantly wasting time before their eyes like the Ta’eeds could, and issues with employees can often be more obscure, gradual, and harder to pinpoint.
“It’s not a nice thing to do”
Adore Beauty founder Kate Morris views herself as lucky in the firing department, having hired only good fits for the first few years of building her multimillion online beauty store. But around 10 years ago, the founder had to bite the bullet and make some changes.
“There were maybe two or three in a short space of time, a mixture of poor performance and also poor cultural fit. It was an awkward stage where we realised that we had outgrown our hiring and management systems,” she says.
“We also hadn’t clearly enunciated and enforced our company’s cultural values, so we really hadn’t set the expectations around how we wanted people to behave.”
Acknowledging that firing someone is “not a nice thing to do”, Morris says each time she received advice from human resources consulting firms and workplace lawyers to ensure everything was done by the book.
It was a similar story for the founder of Business Chicks Emma Isaacs, who says she’s had to make the call “precious few” times over the course of running Business Chicks, but when she has, it was due to poor cultural fits or employees who were having a negative effect on other workers.
One such time, during a small restructure of the company, Isaacs decided to fly back from an overseas trip to ensure she was “in the trenches” and on the front foot, something she advises other business owners should always strive to do.
“During any letting of staff go, it’s so important that you’re visible, that you communicate really well, that you reiterate why culture and performance is so important to you, and that you ultimately lead,” she tells SmartCompany.
Nevertheless, the experience was daunting and scary for the seasoned business operator, who admits there were times she questioned if it would just be easier to keep the “bad egg” employed. But Isaacs persisted, and after the restructure, she sat down and explained to her team why it had to happen, and how they were planning to fortify the business moving forward.
Ta’eed agrees that the firing process is never easy, but warns business owners that settling for the alternate route of taking no action at all can send a negative message to the rest of your team around the sort of attitudes you accept in the workplace.
“But you are making a really impactful and difficult decision, so I totally understand why a lot of business owners will choose not to do it,” she says.
Reluctance hurting Aussie businesses
Morris has “no doubt” many business owners in Australia have at least one person still working for them who they wouldn’t hire again given the chance. This is backed up by further stats from the SmartCompany and Performia research that show 74% of businesses with between six and 50 employees have one or more “unproductive” employees.
She believes the reason for this is in part a fear of upsetting someone, and in part a fear of repercussions.
“It’s really not easy to fire a permanent employee in Australia and it can take a long time to do things properly, and even if you’ve done everything right you can still find yourself in a Fair Work case,” she says.
Isaacs has also seen a reticence for businesses owners to keep someone on board compared to letting them go, but she views it the role of as leaders to take a stand and say when enough’s enough.
“There’s no harder role in business than having to be a leader and make the unpopular tough calls. As Steve Jobs once famously said though, ‘If you want to be liked, don’t be a leader. Sell ice cream’,” she says.
Straighten up and fire right
A resounding piece of advice from Ta’eed, Morris and Isaacs is for founders to ensure their staff know exactly what’s expected of them at all times, and to not be scared to provide feedback when things aren’t going right.
Ta’eed believes a performance review should never come as a surprise for employees, as business owners should constantly be providing feedback.
“They should always know exactly where they stand, and there should be a constant and steady stream of feedback going both ways. If someone gets told they’re being let go, it shouldn’t be any surprise to them, as there should have been multiple warnings and conversations prior,” she says.
“Also have clear performance expectations and KPIs, and be really transparent about what success looks like in your business. And remember, unless someone does something really bad, they deserve time and support to help them see if they can do the role.”
Another way to avoid firing people is hiring right in the first place, with Isaacs adhering to the adage of “hire slow and fire fast”. Morris says business owners should know their company values, and make sure every new hire strictly matches those values.
Finally, she recommends using trial periods, and monitoring performance “relentlessly” during those times.
“Interviews are not a great indicator of on-the-job performance so you need to use their first few months in the job to make your final decision as to whether this person is the right fit.”
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