By Diane M. Calabrese / Published October 2021
Ebb and flow are the poetic reflection of firing and hiring. The churn in economic activity, the pulses in sales at a business, and the choices employees make require owners to be prepared to subtract or add to the roster.
Hiring should not be difficult. Find someone who wants a job and meets the qualifications for a position, and make an offer. What could go wrong? For starters, acting in haste.
Suppose there’s a severe need for another forklift driver on the loading dock. A skilled and certified individual appears who can begin work immediately. Given the need, a quick hire seems like a good decision.
“When hiring, it is easy to overlook subtle issues in the hopes the new employee will be a great fit and will solve labor issues right away,” says Michael Hinderliter, president of Steamaway Inc. in Fort Worth, TX. “This often comes back to create bigger problems in the future.”
For instance, many dimensions of an employee’s qualifications will determine how good the match is. “Does the applicant fit well with the team?” is one aspect that Hinderliter advises must be considered.
Ideally, applicants for positions should meet not only with the hiring manager but also with other team members. In doing so, the applicant will get a good idea of what the work environment is like.
A forklift driver who worked autonomously at a food warehouse during overnight hours, unloading and sorting boxes from long-haul trailers, may not be as happy with varied duties at a manufacturing plant. Anything a hiring manager or owner can do to help a prospective employee understand the scope of a position will serve the company well.
The best endorsement for taking enough time to hire is that it reduces the probability an employee will have to be discharged. Firing is a tricky business, complicated by regulations from multiple federal (and state) entities. (See the last section.)
“Try to fire for cause,” says Hinderliter. “Employees will talk, and if other employees perceive that management is unfair, it can affect morale.”
It does not mean the employer is unfair. It is truly about perception. Without clarity, anecdotes can take hold that are not correct. Since an employer cannot discuss why employees are dismissed, any incorrect statements by a person let go cannot be righted.
Again, a measured approach is best. “Take the time to counsel employees to give them the opportunity to improve and/or take corrective action,” says Hinderliter. “It can be a pleasant surprise to see how some employees will take accountability and step up to the expectations.”
The stepping up is the ideal resolution of counseling. The employer keeps an employee, and the employee keeps a job.
If counseling does not work, of course, an employee may have to be discharged. In that instance, it’s important for an employer to be able to demonstrate that proper procedure has been followed.
Documentation and counseling must never be neglected, explains Hinderliter.
Employees want to be engaged and comfortable at their jobs. But it’s worth reemphasizing that their contributions to a company depend upon more than their qualifications.
What is the most important issue to consider when hiring? Whether the person is a good fit.
“Making sure the applicant not only has the qualifications but will fit in with your company’s culture and the people they will be working with the most,” is a must, says Becky Voth, PHR, SHRM-CP, CIC, human resources manager at Chappell Supply and Equipment in Oklahoma City, OK.
The best way to gauge fit is to give the applicant the opportunity to self-assess. There’s nothing wrong with trying to ascertain fit, but it must be done with scrupulous attention to labor regulations (again, see last section).
Good documentation begins with hiring. “It is important to provide an offer letter which the applicant can sign to accept the position,” says Voth.
And the nature of the letter? “It should outline the applicant’s regular pay and commission structure, if they are to receive commission pay,” says Voth.
“Also, the letter should state whether or not the position will be considered exempt from overtime or nonexempt,” explains Voth. “Further, if you are in an at-will state, it is important to note that language in the letter.”
There are many practical dimensions to both hiring and firing, such as what the Internal Revenue Service (IRS) requires on the frontside in terms of documentation and verification of ability to work in the United States. There are also in-house issues.
“Make sure all passwords are reset before or at the time you are terminating an employee to ensure pertinent information is not deleted,” says Voth. (An employer must expect the best of everyone but prepare for the worst.)
Circumspection improves outcomes for the employer and the employee discharged. Sometimes things just don’t work out at a particular time and in a particular place.
If firing becomes necessary, “remember that it is best not to talk too much,” says Voth. “Notify the employee that the decision has been made to terminate the employee’s employment effective immediately. You could say, for example, the decision was based on their past performance as indicated in the last two or three disciplinary writeups.
“Or, if the reason for the termination was for attendance, for example, you could say the decision was based on their attendance record,” continues Voth. “If pressed, just say the decision has been made and it is a final decision.”
Terminating an employee is not an easy decision or an easy process. Yet an employer must put the needs of the business first, and sometimes that means letting go of a team member who cannot meet the expectations of the position or, sadly, is simply not needed because of an economic downturn.
“You should always have two people with the employee being terminated, one to facilitate and the other to witness but not say anything,” say Voth. “The less said, the better.”
From a structural standpoint, hiring is easier than firing. There’s plenty of line-by-line assistance available from the IRS of what must be done in terms of documentation for a new hire (e.g., responsibility of employee to complete W-4 form). Entities such as the U.S. Small Business Administration (SBA) have tutorials on the process.
Two issues beyond the mechanics can be vexing, though. The first stems from determining whether or not hiring is the best option for a business.
The SBA puts the cost of adding an employee to the payroll at 1.25 to 1.4 times the salary the employee is paid. If the employee is replacing someone who has departed the company, the appraisal is different.
Still, sometimes a vacancy at a company provides a good time to consider whether the responsibilities of remaining team members might be reconfigured without overworking anyone and with gains in efficiency.
Costs beyond hourly or salaried pay for an employee derive from the employer’s share of FICA, federal unemployment tax (FUTA) per employee, worker’s compensation premiums (varies by state), health insurance (mandated contribution or penalty for employers with 50 or more employees), etc. Retirement savings plans, such as 401(k), are not yet mandatory, but they may soon be, and many prospective employees welcome them as a workplace incentive.
Federal regulators such as the U.S. Equal Employment Opportunity Commission (EEOC) increasingly use the evaluative tool of disparate impact to determine whether prospective employees and employees are being treated the same irrespective of any Title VII-protected characteristic, such as color, sex, and religion.
That’s where it becomes com-plicated. An employer can check criminal records, but if applicants rejected for employment over a period of time all happen to belong to the same religion, for example, it would fall into the category of disparate impact.
In other words, let’s say an imaginary cluster of practicing Buddhists with criminal records applied for jobs over a short period of time. All had criminal records. All were rejected because of their individual records. Yet a company could land in Title VII trouble because of the disparate impact that rejecting those with criminal records had on Buddhists.
The complexity of hiring and firing issues demands that employers keep pace with changes in federal, state, and local laws. Larger companies employ human resource directors who keep pace with and handle the heavy lift of compliance. Smaller companies can stay current with employment regulations by aligning with professional organizations and colleagues and subscribing to electronic alerts from the IRS, SBA, and EEOC.
Employers want every new hire to add a spark to a company, igniting productivity and sales. Taking the requisite time to find a new employee helps assure that outcome.