It can be terrifying to hire your first employee, you may not sleep a wink that night. All of the sudden, you’re responsible for another person’s livelihood and while you do get used to it, needing to deprive them of it never wears lightly. There’s lots of advice on the internet but most of it doesn’t apply to smaller companies who may be firing a service provider (like a sewing contractor) who may even be a friend or someone they like -such as a consultant. In this post I’ll try to help you decide whether you should fire someone (knowing when to cut your losses), how to do it and most importantly, how to keep yourself from getting boxed into a situation where you’re afraid to fire them because they have your stuff.

How to know if you should fire someone
If you’re asking yourself this question or polling your friends, there’s a 99% chance you should fire that person. But let’s do the perfunctory first; lists are great, make one. Then I want you to do something else. I want you to imagine you’ve fired this person, that you’ve had the conversation. Really feel that, the ugly part is over. At this point, an enormous sense of relief should wash over you. Your gates are lowered…what are you thinking now? I have ten bucks that says your intuition moves to the forefront with a big sign listing all the reasons they were a bad choice for you, things you really didn’t see clearly before. Once you feel relief, you will discover there are other justifiable reasons for the firing that you couldn’t articulate. Call it justification after the fact, it works. It’ll help you decide now.

If you really aren’t sure and being the fair person you are, try to re-frame the problem without getting lost in it again. Assume stupidity or incompetence, not malice is the root of the problem. How does it play then? If you’ve made it clear your expectations haven’t been met, whether by malice or incompetence, you have to move on. Or not. You can’t resent that person for a decision you are responsible for. But more on that at close.

Cutting your losses
Kahneman (better known in the context of his work with Tversky) is the only psychologist in history to have won the Nobel Prize in economics for describing the behaviors of people who throw good money after bad. He says it’s an issue of framing and rationality. When it comes to personal matters (and firing is one, it affects you personally and emotionally), most people aren’t very rational. People will usually spend more money to recoup a loss than to get another gain. What’s spent is spent. It’s gone forever. It’s irrational to think or hope that you can spend more money to get back your original investment. You can’t get to gain if you’re still spending it on lost causes.

If you’ve made it clear your expectations were not being met and the potential of losing your work didn’t improve their performance, the situation will only get worse, not better. If they’ve already been using you as an ATM and getting money for nothing, why would they start working for it? It’s easier to do even less since they know you’re going to dump them. They’ll spend the time savings to concentrate on finding another you to fall in love with them. How could you possibly salvage anything by giving them yet more money?

How to fire someone -and when
As traumatic as it is, it is kindest to be direct, don’t waffle, say it right away, don’t ease into it, don’t lie and keep it short. In the case of a contractor, simply state your expectations were not met (this is not the time to explain what those were). It’s tempting to say the numbers aren’t working out but when they find you’ve hired someone else (and they will), they may trash talk and say you’re cheap or on the skids. If it truly is a matter of money, you feel bad but not guilty and wouldn’t even be debating this internally.

Write a script with bulleted points. Rehearse it out loud a couple of times. You need to hear yourself saying these words beforehand so they don’t surprise you. Speak with confidence and compassion. This way you won’t be waylaid in the conversation over points neither party can resolve. Don’t lend the impression this is a negotiation, your mind is made up. With a script, you can move onto points when you hit an impasse. Above all, don’t blame.

The time to do it is now, as soon as you know. If it’s really about them -and it is- you make it worse for everyone by waiting.  If you really cared about their perhaps precarious financial situation, they need to know sooner not later. If you waffle and debate internally, this means it’s really about you and you should feel guilty about that, the delay, the not doing. You could prevent a situation from worsening. I’m eternally grateful to a previous employer who fired me quickly. I’d planned to sign a contract to buy a house later that day and wouldn’t have been able to sell it out in the middle of nowhere as it was and with no other employment prospects.

They have your stuff:
When you find the “perfect” contractor, it’s a honeymoon. You love them and forgive their every transgression. While you must be flexible, certain things should never be. Those are accountability and deliverables. By accountability, it means you should document any difficulties that arise as they occur. This doesn’t have to be blame focused or accusatory but it should be direct. An eventual firing should never be a complete surprise to the other party. I’ve been fired once and “fired” once. Both times were a complete surprise. It should never be. This will assuage your later guilt.

A lot of designers hesitate to fire a pattern maker who doesn’t work out because they haven’t gotten their patterns back. You should always get your deliverables as you pay for them. Don’t pay new invoices until you’ve gotten your patterns or whatever for earlier work. I don’t care how close you are to them. Don’t get caught in the bind of deciding to use another service if you’ve never gotten so much as a digital file of what you’ve paid for. Otherwise, you risk becoming their ATM.

If you’re over a barrel because they have your stuff, a face to face meeting is required. After you’ve read the rest of this, arrange a meeting. Bring a friend, a truck and your checkbook so you can pay them any monies owed. If this isn’t going to work out for whatever reason, review the section about cutting your losses.

Firing someone you like -your consultant
This can be tricky, the person is usually very close to you, they know the most intimate details of your business. What’s the problem here? Is it performance and value or have you outgrown the terms of the relationship? Maybe you need another kind of relationship. Look at is this way. How many of you left your parent’s home in a huff, just left one day and never came back. Maybe it was justified but years later, relations improve but you never need them in the same way. The conflict is often a sham; it’s nature’s way of getting the offspring out in the world to breed anew. The alternative is to inform mom and dad one day that it’s time to move out but that feels like betrayal. It’s easier to assuage your guilt by getting mad and leaving. Or through attrition, like going off to college or getting married. If it’s like that with your consultant, be upfront about it. No need to get mad or cook up infractions to introduce conflict. Keep the door open.

If the issue is value and performance, that’s another story. I do a lot of consulting. What I don’t like is that it can be so open ended, I avoid those arrangements because it’s hard to define objectives and benchmarks for completion. I prefer fixed projects with deliverables even if the only investment is defined as 15 minutes of talking. I bill $25 for it and move on, no retainer involved. A sales rep is a kind of consultant but their value (deliverable) is easy to define, namely sales. A PR person is harder to define, you throw a bunch of money out there and hope more comes back but that is the nature of that industry. You know that going in. With a business consultant, you need to expect hard deliverables, not soft ones. This isn’t PR. If they’re not suggesting solutions appropriate to your business, I don’t think it’s a good match for you. If you’re not ready to sever ties, I suggest modifying the structure of the relationship to something more casual. If it’s a question of value and you’re feeling like an ATM, well, you should know what to do by now.

Deciding to not fire someone
A lot of company owners fail to fire someone they should have. Years later, this person is still mucking about. If you decide to keep this person on, own the decision and forever relinquish the fantasy they will change. Very often, this person is the first or nearly first person hired, it’s an emotional attachment, a testament or tribute to the owner and where they came from. The owner feels a sense of debt or gratitude toward that employee. They are invested in that person. When I go into a plant, one of the first things I do is find this person, the one I call the investment employee. That tells me a lot about the operation. If this person is in a position of responsibility, they are usually the one dragging down that whole section and there’s nothing anyone can do about it. It’s a horrible situation with lousy morale that will never improve. If you want to keep your investment employee, I suggest transferring them to a position where they can do as little damage as possible.