How to Fire People Ethically & Compassionately

Hi. This is Paul Zellizer, and welcome to the Awarepreneurs podcast. On this show, we dive deep into wisdom from some of the world's leading social entrepreneurs. Our goal is to help increase your positive impact, your profitability, and your quality of life. Before I get into today's topic, I have one request. If you could hit subscribe and do a review on your favorite podcast app, it helps more people learn how to have positive impact through a values based business. Thank you so much. Today, it's time for our monthly solo episode.

With yours truly, my name is Paul Zellizer, the founder of Awarepreneurs, we think the longest running social entrepreneur podcast on the planet, and I have been a business coach focused on social entrepreneurs and climate tech companies for the past eighteen years. Our topic today is how to fire people compassionately and ethically. And let's start this off with two stories to give some context. As I record this episode, we are seeing mass firings of US government employees by the new Trump administration. I'll put a link in the show notes to an article that came out today by Bloomberg Law that states over 30,000 people have been fired to date, And reports are that the goal for this new administration is to fire as many as 200,000 employees of the US government. And this is having pretty significant impact, and it's also sparking a lot of conversation. And recently, I was talking to cofounders of a company that are clients of mine, and they were dealing with some situation. And as we were exploring, we surfaced that in twelve years of doing business, they had never fired a single person.

And due to a combination of inflation and slower than desired growth and economic uncertainty, it was time to get them ready to fire for the first time. And it was bringing up a lot of feelings, and I realized that I had never seen a social entrepreneur podcast episode on how do you fire people ethically and compassionately. So here we are. Welcome to this episode. I would say that firing people is one of the hardest parts of leadership for any kind of leader, at least for many folks, but especially for impact driven leaders. And given the leadership decisions we're seeing, it's true here in The US, but this leadership style, we're seeing more of it around the world, mass firings. We're also seeing increasing talks of tariffs, and that's creating economic uncertainty, which many people I trust, economic experts are saying oftentimes lead to a downturn. It's hard to see steady growth in times of great uncertainty.

So I wanna both acknowledge the emotional difficulty because our listeners care about people deeply, which makes it extra tough to fire people. And I also wanna help you navigate how do you do it when you do need to do it in a way that is compassionate, ethical, and legally sound while also paying attention to the morale of your remaining team. So let's dive in. First of all, let's talk a little bit about why leaders in the social impact space struggle with firing more than many. When you look at our values in this space, when I think of you, our listeners, I know that you care more than the average amount of business leader around things like equity, inclusion, and emotional intelligence. And, therefore, it can feel like firing is almost a having to fire or seriously considering it is like a failure to our mission, our goals as having positive impact in doing business in an ethical way. So what I see is that there's some common patterns among leaders in the impact space, and these include things like over investing and struggling employees for too long. Now that doesn't mean as soon as somebody's struggling, you fire them that day.

That's not at all what this episode is suggesting. But sometimes it goes on for months or even years where somebody's underperforming and they're not quite the right fit, where you need a different skill set than what they have, and you try to work it out and it doesn't really change, but you don't let them go. I also see in this space, sometimes people are afraid to have conversations or avoid conversations about performance. And when you don't have those conversations, then you're paying for somebody. Let's back up for a little bit. Your human capital in most businesses is by far the largest proportion of your budget in most businesses. So if this aspect of your business isn't doing well, it's really significantly impacting the whole business. So avoiding direct conversations about performance and not, you know, giving people the feedback they need or not following up on those conversations, and also letting emotions drive decisions rather than clear metrics.

So I like this person or I'm feeling awkward because they're in a group that is oftentimes excluded or not treated well in the workplace, then that makes it really uncomfortable to talk really honestly. But if we don't have a sense of what are we trying to do, what needles are we trying to move, and somebody's just there and they're not helping move those needles in at all or not in a way that would really help the organization really kinda come alive, then it can not only be bad for the organization, our impact goals, our financial goals, it can also really demoralize the rest of the team somebody who is working really hard sees somebody who's not really moving the needle and that creates dynamics in an organization that we really don't want so let's talk about it when you do need to fire let's talk about two different buckets one is when you need to fire due to performance issues versus, like, structural issues, what's happening in the economy, what's happening in the market. And I would say that you wanna handle those differently. So for a performance based firing, that's when an employee is not meeting expectations, and they're not moving the needle on the goals that you have for that person or that team. And I would say you only want to be thinking of a performance based firing if you've already had conversations and you've documented those conversations. Hey. We've got some challenges here. We'd like to see you working on x, y, and z.

Let's get back together in such and such a time frame and see how we're doing. How can we address these challenges in performance? And if you're doing that several times and you're documenting and things aren't changing or they're not changing enough to warrant keeping this person on, that would be called a performance based firing. Then there's a structural layoff, which is, hey, just this is the reality of the economy. Sometimes businesses need to cut back. It isn't so much a personal thing, it's not based on your performance, but this is what's happening and here's how we need to take care of the business so that it can continue to stay afloat and in the long term thrive rather than, you know, over investing in our people when we're in a challenging environment. These two situations are very different and you really wanna handle them accordingly, especially for performance based firings. This is where a large number of HR situations arise and legal situations. You wanna make sure, a, you have good legal frameworks and an understanding.

You want to have clear documentation. You want to have really good history of giving feedback so that the person's not surprised, and you want to be as compassionate as you can in those contexts. So overall no matter whether you're layering laying somebody out for performance issues or a structural issue, you want to be honest. You wanna be as compassionate as you can. You wanna think about how you might be able to help them in this transition that they're finding themselves in. All of that's gonna differ depending whether it's a performance issue or whether it's a structural, in other words, an economic issue. Okay. Let's talk a little bit about ethical and DEI considerations because these are very specific to our listeners.

Like, many kind business leaders would struggle with some of this. But very particular to you, our listener and audience, is you care about impact and things like equity and inclusion much more. Just we're pretty high, pretty far in that end of the continuum. If it's a zero to 10, maybe we're at 27 and a 20, you know, 17 average in terms of our listeners. So there are some very specific ethical and DEI considerations when you're firing that I think is important for us to address as impact leaders. First of all, we wanna be mindful that implicit bias doesn't play a role when we're letting somebody go. So in other words, be mindful of who gets extra chances and who doesn't when somebody's underperforming or who might if we weren't paying attention to DEI, who would be the first on the chopping block? And let's just be honest about that and pay attention that, you know, somebody's quite different than the rest of our team. Historically, that person would be first to go.

So if you have a team full of mostly men and the women are the more recent hires and it's all about the economy not about performance, it would be most common to see the women let go more often in that example. So let's just pay attention to that history and see if there's ways that you can do things differently. When there are some concerns about improvement, try to be consistent and provide opportunities for that change that you're looking for. And be honest, if you're getting close to the time where you're feeling like you need to let somebody go, have you given them really good chance to make adjustments and to give them opportunities to show you that they can change? If the answer is no, then maybe it's not time to fire yet. If the answer is yes, then okay. You've done your best and let's not be those leaders I was talking about in twelve years of running a business with the substantial team. They never fired anybody and they realized some of the people that they had concerns about, it was their reluctance to let them go. It was the only reason they were still there.

When you do let somebody go, let's think about fair severance in any kind of transition support where possible. So if they've been there for a while and if your company is in a position to do some sort of severance package, that would be wonderful. Not all businesses are. But, certainly, to the extent you can, some sort of transition support where you can. So for example, that could just look like proactively if the person wasn't a unethical or completely, you know, spiraling into can't perform in any aspect of their job, but just there were certain aspects that you needed and they couldn't do it, maybe you could proactively make an offer to do a recommendation. You know, I know it didn't work here, and we are needing to let you go. But, you know, there were some things you were doing while you were here that have been super helpful. And if you're applying for a job that fits your strengths, I would be happy to be a reference.

So we might be able to support you in getting into a position that's a better fit. There's always a way when you are needing to let somebody go to do it in an ethical way. And to be as supportive as the situation allows, well, let's just acknowledge this is hard. It's really, really hard. When we come back, I wanna talk about how to fire compassionately. I also wanna talk about the the team that remains. How do you keep morale? And, also, where do you get good help to look at the HR and legal considerations of making these decisions? Before we do that, I just wanna take a quick break and hear a word from our sponsor. Are you passionate about making a difference but feeling stuck on how to take your mission driven business to the next level? You don't need a lengthy coaching program.

You need targeted advice from someone who understands the unique challenges that social entrepreneurs face. With my strategy session package, we'll focus on your most pressing decisions, whether it's clarifying your value proposition, optimizing your marketing strategy, launching a new product or service, or adjusting your pricing to align with your mission. These sessions are perfect when you know the direction you wanna go, but you need someone with the experience to help you get there. If you're ready to unlock your potential and amplify your impact, book your strategy session now. The link is in the show notes. Welcome back, everybody. Today is our solo episode, and we are talking about how to fire people compassionately and ethically. Not the easiest topic, but a very important one.

Right before the break, we were talking about how to pay attention to ethical and DEI considerations. Now I wanna give you some pointers about how can you bake in as much compassion into a difficult process as possible. And three suggestions I have. Number one is what you do before you prepare before. Number two, what you can you do during the conversation itself? And number three, after you have this hard conversation. So let's dive into that. First of all, try to be prepared. You're leading a challenging conversation, and it's almost like if you went to a surgeon, you wouldn't want them kinda messing around.

You want them to be surgical. Right? To make an incision, to make it clearly, to not do any more cutting than they have to, not to leave you on the table for, you know, while they dilly dallyed around and hemmed and hot. Right? Like, this is hard. Let's be prepared, and let's know what you're aiming to do and be ready to do it in a as efficient while still very kind kind of a way. If you're ambivalent and using wording that's very vague and taking a long time, you're making it worse. So part of compassion is to be prepared. That can look like consulting with HR or legal if you need to. If you haven't done a lot of this, I would highly encourage you to make sure you're on strong legal ground and you're paying attention to all sorts of HR policies, your own, and also what the laws are about employment in your jurisdiction.

Have documentation ready. Know what you're gonna need and have it all set printed up. If there's things to sign make sure they're all ready. And also have a clear short and respectful conversation have everything you need ready for that. Again I'm using that image of the surgeon. We want surgeons to be very crisp and to get it. If you do need to go to surgery, the best thing that surgeon can do is be ready, have all the tools they need, and have everybody on their team knowing what needs to happen and do it as efficiently as possible. That's the flavor of what wants to happen here.

During the conversation, let's be direct but kind. It's not working and we need to let you go. Right? Also, acknowledge their contributions. Rarely is it gonna be a case where somebody's been only a net negative to your company. There's probably almost in the large majority of situations, there's gonna be net positive things that that person has done, and to let them know that you see and appreciate those is part of compassion. If it just is like, you're not fitting our needs, goodbye. That's cold and not as compassionate as possible. Hey, you've done something to really appreciate and this isn't working.

It might be that and in the economy isn't allowing us to allow you to continue to work here. We just can't afford it or we have to go in a different direction, but you've done some great things. That's an example of a compassionate hard conversation. And as mentioned before, try to offer transition support where possible. I use the example of stating your willingness to be a reference if you can do that in good faith. And lastly, after the conversation, give space, but don't disappear. Don't, like, pretend they're not still there getting their things ready or finishing up the projects that you've agreed that they're gonna fit finish. So see their humanity even in this moment of challenge where they're wrapping up and finishing out whatever the agreed upon terms are.

In addition to being mindful from an emotional intelligence perspective of the person you just let go, we also wanna pay very significant attention to your team and how do you keep morale and trust intact. There's quite a bit of research that when we fire people, if we do that in an unskillful way, particularly if like in the US government, the federal government right now is firing lots of people. If that's done unskillfully, the effect on morale and sense of trust can be profound. So one of the most important things is to not leave your team wondering. Be transparent in your communication. We, you know, some of you might have heard we needed to let so and so go and just wanted to acknowledge that. Some of you may be saying, well, you know, how big are the cuts? Am I gonna get fired? You know? What's what's gonna happen to my team? So as much as you can be ready for that and to give quality information, you know, at this point, we've let everybody go. Who's gonna be let go? Those of you who are still here, we really appreciate you being here.

You're doing great work, and we really wanna support this team in continuing to do the really important work that you're doing. Try to reaffirm the company's mission and your culture. Explain how this decision aligns with the whole organizational mission and health. So we need you know, the economy is a little uncertain or we were investing in one direction. And when we looked at the long term goals, you know, we had three or four things going, but the two most mission critical were, you know, part a and part b, and we needed to take something that was less mission critical and reallocate those resources. And those of you who are still here, you are doing the mission critical work, and we're super glad you're here. And that's how we came to this decision, and that's why we can say we're confident that if you're doing good work on these teams, you have a job. We're not gonna be letting anybody from these teams go who's performing well.

Also, try to think about workloads and next steps. So try to, again, be proactive. Hey. You know, some of what was happening might need to be redistributed to the people who are still here. Let's try to do this in fair ways, and let's have a conversation about how's everybody's workloads, you know, which parts can happen in the near term, which parts might we need to, you know, push pause on. Let's have really honest conversation. And, again, the research tells us that if we're proactive about that, then team morale can stay high. And in some cases, even like, okay.

Let's come together. The economy is challenging, and we're still doing really important work. And with these changes, we're a financially healthy company or organization, and we're really clear that these one or two or three things are our high priorities. And we now have the resources to really lean in here and to support everybody who's doing this. So, you know, let's go team. Right? Maybe as opposed to feeling like, you know, I don't know what's happening, and there isn't good communication, and then I'm wondering whether I'm next. We don't want that in a moment where you're having to make tough choices about firing people. Let the people know who are still there as much as you can about what's going on and why you made this decision and what it means for them.

So the last main point I wanna have is where to get good HR legal help, and it's kinda two buckets there. Think about some kind of HR consultants. So if you're in New Mexico, many of our listeners shout out to our New Mexico listeners, or even in the Southwestern US. I did an episode interview with Rose Velasquez from Hiringhub, and they're a great HR resource. That interview was more focused on their second chances hiring program, but they also do great HR work. And check out Hiringhub, that's one in New Mexico. But there are organizations like that and consultants like that all over the world, so you need to get to know your local ecosystem, maybe reach out to colleagues, reach out to chambers you trust. This is very important.

You don't wanna go into a conversation where you're firing somebody, particularly if it's a performance issue, but anytime without understanding the HR laws and policies of your jurisdiction. So HR consultant and or an employment law attorney. You don't want to kinda take on legal risk when you're going into this kind of terrain. This is one of the most common forms of legal conflict in business is around hiring and firing, particularly firing. So make sure you're standing on solid ground, get the help you need, either an HR consultant and or an employment law attorney. Don't be short sighted there and make big changes in your team without talking to people who know more about this than you do. So to wrap up, this is hard. It's not why we got into the impact space.

It's not why most of us became a leader, but avoiding it makes you a worse leader, not a better leader, and it makes your impact go down, not up. Handling these challenging situations well is very important particularly when the economy is more uncertain or is on a downturn. We're certainly in uncertainty In those situations, many businesses, if not most, are gonna have to look at their people and at least ask the question, are there changes we need to be making? And to do them ethically and compassionately is something I feel very, very passionate about. Three last ideas I would suggest is try to avoid surprises. So try to give feedback early and often so that if you get into a situation, somebody's not like, well, this is the first time I'm hearing it, and you're telling me that I'm fired before you even told me that you don't like some aspects of my work. Don't do that. Be really direct but compassionate. Again, hemming and hawing and using fuzzy language or not, you know, addressing the why to the extent that the legal framework you're standing on allows, that's less compassionate.

So try to be really honest and really direct. And lastly, try to protect your company's values and its future. If you go to somebody and you, you know, are unskillful in this situation, it can affect your reputation. It can bring on legal challenges. Those are very expensive and can be very time consuming. So make sure you're getting the help you need to think well about the values of what you're doing and also the impact of your decision to let somebody go. So I'd love to hear your thoughts on this topic. Have you ever had to fire somebody? What was that like? Any suggestions or thoughts you have, please send them on in.

Also, speaking of getting a hold of us, we love listeners suggested topics and guests. If you have an idea for a show, please go to the Awarepreneur's website. And on our contact page, we have our simple guidelines. We try to be really transparent about who we invite onto the show. And lastly, I wanna say thank you so much for listening. Please take really good care in these intense times, and thank you for all the positive impact that you're working for in our world.