How to Fire Family Member With Dignity, Respect
TEC Worldwide is an international organization of more than 7,000 business owners, company presidents and chief executives. TEC members meet in small peer groups to share their business experiences and help one another solve problems. The following questions and answers are based on discussions at recent TEC meetings in Southern California.
Question: My controller, human resources person and sales manager have been with me since I founded the company five years ago. Lately, it has become increasingly obvious the company has outgrown their ability to do their jobs. I feel a sense of loyalty toward them, but I also know that they’re holding back the growth of my business. The biggest problem? My sales manager is my brother-in-law. He quit another job to come work for me, and I promised my wife he would always have a job with us. Is there a way to gracefully move him into a position with less responsibility or should I just bite the bullet and let him go? Also, if I treat him differently than the other two, will it look bad to my employees?
Answer: Welcome to the world of family business ownership, where seemingly every decision comes in a thousand shades of gray.
Although the situation appears equal for all three employees, in reality you have not one, but two, separate problems. One involves your brother-in-law, the other involves the controller and HR person. Like it or not, you can’t treat all three the same.
“Family issues always complicate things,” said Michael Stoddard, managing director for Trade Source International in Pasadena. “To resolve the situation with the controller and HR person, simply answer the question, ‘What’s best for the business?’ Handling your brother-in-law is a bit more complicated because what’s best for the business may cause turmoil within the family. If you decide to ease him out of the company can you live with the repercussions? Or, will you be an outlaw because you cut a family member? Any decision regarding your brother-in-law must take these things into account.”
When it comes to underperforming employees, you basically have three options: coach and train for improved performance, relocate them to another position in the company or let them go.
Before choosing any course of action, Bob Conley, a principal in the Pasadena firm of Conley Commercial Real Estate, recommends bringing in an outside consultant to conduct an organizational audit. This would do several things.
“First, it would evaluate the accounting, HR and sales functions as well as the people in them, which would specify exactly where these functions are falling short,” he said. “Second, the hard data the audit provides can serve as an opening to initiate the performance conversation with each of these people. Finally, having an unbiased outside opinion takes you out of the bad guy role and puts you in the position of concerned business owner doing what’s best for the company.”
According to Donald Huffsmith, a partner in the Glendale-based accountancy firm of Lee, Sperling & Hisamune, the audit also should help you determine the proper course of action for each individual.
“You may find out that you absolutely have the wrong people in the wrong jobs,” he said. “On the other hand, it may turn out that with the right coaching and a program of ongoing education, these individuals could grow and develop into the level of performer you need at these critical positions. In that case, the issue is whether they can do it quickly enough to meet the needs of the business.”
Another way to escape the bad guy role is to create an organizational chart for what you want the company to look like two to five years out. Then sit down with each person and say, “Here’s where we are now and here’s where we’re going. This is the job that needs to be done. Do you see yourself doing that?”
“This approach puts the decision in the employee’s lap,” said Ann Marie Michael, president of Integrated Data Systems in Calabasas. “If the person shares your vision for the company and the position, you can mutually craft a development plan to help them attain the necessary skills. If not, the person will likely see the writing on the wall and may opt to leave the company.”
Depending on how you position it, you might be able to bring in someone over these people while allowing them to keep their title. For example, hire a CFO over the controller or a vice president of sales over the sales manager.
Here, the question is whether you can afford both roles and how well each person would take to the notion of reporting to someone else above them.
If none of these options appear viable, you may have no choice but to terminate. Keep in mind that how you handle the termination will have a huge impact on the culture of your company going forward. Some employees may feel threatened and wonder whether their heads will be next to roll. Others might see it as opening up opportunities within the company.
There is no right or wrong answer, and you can’t control how your people will react. The key is to recognize the outgoing employees for their service to the company and handle their departure with dignity and respect.
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If there is a business issue you would like addressed in this column, contact TEC at (800) 274-2367, Ext. 3177. To learn more about TEC, visit https://www.teconline.com.
