SurePayroll Insights Survey: Business Owners Share Opinions and Advice on Firing People

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SurePayroll's survey of small business owners finds that 61% of business owners find it difficult to terminate employees.

My advice to business owners is that they need to be slow to hire and quick to fire. Don't procrastinate terminating an employee.

Donald Trump may find it easy to tell people "You're fired!" but most small business owners don't enjoy having to terminate employees, according to results from a recent survey by online payroll service SurePayroll.

61% of surveyed business owners find it tough to fire an employee. The survey also finds that this isn't something that necessarily gets easier over time. In fact, 60% of respondents indicated that firing employees doesn't get easier over time. As part of the survey, small business owners offered a variety of tips to their fellow entrepreneurs on how to approach firing an employee.

SurePayroll surveyed business owners on human resources (HR) issues in conjunction with its recent introduction of SureAdvisor, an add-on service to SurePayroll's payroll outsourcing service that provides small business owners with in-depth advice on complex human resources challenges.

SureAdvisor allows business owners to download HR compliance posters at no charge. It also provides instant access to many how-to guides and HR best practices, including information on recruiting, motivating employees and termination. SureAdvisor is a premium service, offered in addition to SurePayroll's regular payroll processing, and is available to all SurePayroll customers at no charge for three months.

"The survey confirms our belief that small business owners struggle with many HR issues and would prefer to focus instead on growing their businesses," notes SurePayroll President Michael Alter. "Firing employees is particularly difficult for business owners."

  • Many Business Owners Regret Not Firing Soon Enough

78% of survey respondents acknowledged that they had kept an employee on staff longer than they should have.

Reasons for not firing the employee sooner included not being able to find an adequate replacement candidate, giving the employee a chance to improve, fear of employee retaliation, fear of hurting the employee's feelings, fear of a lawsuit, not wanting to deal with the stress of firing an employee, concern regarding office morale and empathy for the employee's personal situation.

"None of these is a good reason to avoid firing an employee if you really don't think they can improve," notes Alter. "My advice to business owners is that they need to be slow to hire and quick to fire. Don't procrastinate terminating an employee."

  • Biggest Reason for Termination: No Will to Perform

The primary reason for which a business owner terminates an employee is related to Performance (66%), meaning the employee doesn't have the will or desire to perform. Other reasons for termination cited by surveyed business owners, in order of frequency, included Attitude Problems, Inadequate Skills and Attendance Issues.

  • When Fired, Employees' Primary Reaction Is Sadness

When asked about the typical reaction of a fired employee upon receiving notice of termination, most small business owners listed sadness (26%) as the primary reaction. Anger (22%) was the second most common reaction, and Empathy / Understanding (21%) took third place. Other reactions that commonly occur during firing are Surprise (14%) and Relief (7%).

  • Advice on Terminating Employees

SurePayroll's survey indicates that many businesses need to address their termination practices. Of the surveyed businesses, the majority (53%) have no formal termination process in place.

"Not having a formal termination policy in place is a big mistake," notes Alter. "If there's no rule book on terminating employees, everything is ambiguous. That can lead to a failure to fire employees who ought to be terminated and can even lead to legal issues if terminations are viewed by employees as being unfair."

Alter offers the following tips on firing employees, many of which are available via SurePayroll's SureAdvisor service:

  • Don't Let Termination Come as a Surprise - Business owners need to let employees know     what's expected of them and when they are not meeting expectations. Giving regular feedback to employees will allow you to terminate them without losing sleep if they fail to improve.
  • Offer COBRA Coverage - Don't forget to offer health care continuation coverage as required by the federal Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).
  • Conduct Exit Interviews - Conducting an exit interview with a terminated employee allows you to gather information that can be used to improve an organization's work procedures, supervisory practices and training efforts.

Surveyed business owners also offered tips to fellow entrepreneurs regarding termination of employees. Advice offered by businesses owners included the following:

  • "When you realize there is an issue address it immediately before it becomes more of an issue. If you feel your employee is no longer an asset to your company don't delay. Terminate immediately."
  • "Find good people at the start so you don't have to terminate."
  • "A bad attitude is contagious. Don't keep employees who have a bad attitude."
  • "Be objective. Don't get emotional. It's not personal, it's business."
  • "Keep detailed reports on every employee's performance."
  • "It's not fun but it has to be done. Cut your losses early."

About SurePayroll

Privately held SurePayroll is America's fifth largest full-service payroll provider and the nation's largest online full-service payroll provider. SurePayroll is passionate about small businesses and their payroll. They are dedicated to providing an extremely friendly and simple payroll experience -- at a price small business owners can afford.

In addition to providing payroll services directly to small business, SurePayroll also provides a private-label payroll service that allows SurePayroll's numerous partners to offer payroll processing to their small business clients. Business partners include ABN AMRO, Pitney Bowes, and MasterCard. SurePayroll processed nearly $3 billion in employee and contractor payroll payments in 2006. For more information, visit http://www.surepayroll.com.

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KEN GAEBLER
SurePayroll
(312) 543-0654
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