But Do I Have to Fire Them?

Terminating an employee is an uneasy decision. Obviously, it negatively affects the employee, it’s stressful for everyone involved, and it can lower morale (thus affecting productivity) of other employees. Clearly, this is a situation we’d all prefer to avoid.

Thankfully, sometimes there are alternatives to termination—even when things aren’t working out with an employee. Let’s take a look at some of the most common options to consider.

Note: Of course, it should go without saying that in some cases, termination will be the only reasonable course of action. We are not talking about these types of cases. This list highlights options for when it’s not a good fit for various reasons, and there may be ways to keep an employee on board. We’re also covering alternate ways to reduce costs when terminations are being considered as a labor cost reduction.

Termination Alternatives

Termination may be considered when it seems that an employee is not a good fit with the organization. Perhaps he or she is not meeting his or her goals. Or, perhaps there have been disciplinary problems. Termination may also be an option under consideration when an organization needs to reduce labor costs. We’ll look at these two scenarios and outline some alternatives below.

Alternatives for behavior-related termination:

• Additional training. In some cases, employee problems are the result of insufficient knowledge or experience for the role. In an ideal world, we wouldn’t have this issue, since we’d make perfect hiring decisions every time. But in the real world, sometimes we hire someone and discover later that they’re not the perfect fit we needed. But, if that person has the right personality and attitude and is a good fit with the organization overall, there may be an argument for providing that person with additional training to help him or her gain the necessary skills to do the job better rather than letting that person go after it’s determined they’re not quite up to the part.
• Transfer to a different department or different role. In some cases, a good person is simply in the wrong job. Perhaps that person would be better suited for a completely different role in the organization—one that either plays to his or her strengths or one that can accommodate his or her needs in a better way, thus eliminating frustrations on both sides.
• Mentoring/counseling or disciplinary action. If the issue is behavioral but isn’t a deal-breaker, consider providing additional support in the form of mentoring or counseling the employee to address behavioral concerns. In some cases, an employee may not realize the extent to which his or her actions are causing a problem, and a counseling program can help the person see the issues and take remedial steps. Alternatively, consider implementing disciplinary procedures if this has not yet been considered. Either way, the goal is to change behavior rather than resorting to termination.

Alternatives for finance-related termination:

• Demotions or salary decreases. In the case of terminations that are unrelated to employee performance or behavior but that are instead related to the need to reduce labor costs, one option may be to allow voluntary reductions in pay that allow employees to stay onboard at a reduced rate. While obviously less than ideal, when presented well, this option can be a good alternative to terminating groups of employees during rough times or slow periods. Consider whether you’ll be implementing this as a temporary measure (with a specified end date) or as an indefinite change.
• Change in status (full time to part time) or hours worked. A simple way to reduce costs and possibly eliminate the need to terminate employees would be to reduce how many hours every employee works, either by changing some employees to part-time status or by reducing everyone’s hours. Of course, this point comes with a lot of caveats—especially because it may be complicated to administer for employers that tie benefits to full-time status, for example. And, it won’t be an option for workforces made primarily of salaried workers.
• Early retirement programs. Much like the last two points, if the key is to reduce costs (and not to fix behavioral problems), there may be another option to reduce costs without involuntary terminations: early retirement programs. An early retirement program can allow some employees to voluntarily leave the workforce, thus reducing costs for the employer without the need for involuntary terminations.

What alternative options have you implemented in your organization in lieu of firing an employee? How did it work out?