On Severance(rrwhite.com)
rrwhite.com
On Severance
http://rrwhite.com/on-severance
71 comments
It's not an either or thing. It does both.
Paying months or years of salary to an incompetent employee also penalizes an incompetent employer pretty effectively.
The author might as well be a sociopath. The only reason he pays severance is because if he doesn't, then society will realize he is a dick. Most people have empathy for the people they fire, and that is reason enough to provide severance.
Not necessarily. He says "the thought of paying someone I was forced to fire because he (or she) is incompetent burns me up inside."
It's more the thought of paying someone more than you're legally required too when you know they don't deserve it.
It's more the thought of paying someone more than you're legally required too when you know they don't deserve it.
He does not even hint that the firing could be due to management and hiring process failures. Does he fire the people who approved the hire of a person who winds up not working out? They failed, too, and you don't want a company built upon the wood of a poisoned tree.
I did not mean to imply that all firings are the result of employee incompetence or poor performance. Because that's clearly not true. There are often other factors that lead to a bad "fit".
And yes, the first thing you should do post-firing is examine your hiring process to see if it could have been foreseen and prevented. But in some cases it does come down to someone just not having the experience, the talent or the work ethic to meet the performance required. It's those cases, especially with tech workers, where founders are apt to ask "do I really need to provide severance to HIM (or her)". Writing at $20K check to someone to walk out the door is never an easy thing to do especially at a startup where that $20K could go a long way. That's what I was addressing here.
And yes, the first thing you should do post-firing is examine your hiring process to see if it could have been foreseen and prevented. But in some cases it does come down to someone just not having the experience, the talent or the work ethic to meet the performance required. It's those cases, especially with tech workers, where founders are apt to ask "do I really need to provide severance to HIM (or her)". Writing at $20K check to someone to walk out the door is never an easy thing to do especially at a startup where that $20K could go a long way. That's what I was addressing here.
But in some cases it does come down to someone just not having the experience, the talent or the work ethic to meet the performance required
This is all predictated on "some" cases? "On Severance (in some cases)?" From the way you describe it, some cases are those in which the employee was able to rook the entire hiring process despite their inability to do the job, but how did they get an offer in the first place?
This brings up a secondary point: is "the performance required" something that changed between hiring and the decision to fire, i.e. a leadership issue?
Without having illustrated these scenarios, it sounds more like "Ready, Fire, Aim," sweeping employees to the side when it turns out a little-informed guess was wrong.
This is all predictated on "some" cases? "On Severance (in some cases)?" From the way you describe it, some cases are those in which the employee was able to rook the entire hiring process despite their inability to do the job, but how did they get an offer in the first place?
This brings up a secondary point: is "the performance required" something that changed between hiring and the decision to fire, i.e. a leadership issue?
Without having illustrated these scenarios, it sounds more like "Ready, Fire, Aim," sweeping employees to the side when it turns out a little-informed guess was wrong.
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The productivity does not depend alone on the worker.
How do you know they don't "deserve" it?
There are many reasons an employee could be underperforming. It could just be a bad fit / poor communication prior to starting. If you're hired to do X and you end up doing Y (maybe the company changed directions), the employee may be "incompetent" (another loaded word) at that task, or might not be interested in that work.
I'm incompetent at lots of things. It doesn't mean I am incompetent.
If a business owner lets paying severance "burn [him] up inside", he's going to be pinching pennies to an early grave.
There are many reasons an employee could be underperforming. It could just be a bad fit / poor communication prior to starting. If you're hired to do X and you end up doing Y (maybe the company changed directions), the employee may be "incompetent" (another loaded word) at that task, or might not be interested in that work.
I'm incompetent at lots of things. It doesn't mean I am incompetent.
If a business owner lets paying severance "burn [him] up inside", he's going to be pinching pennies to an early grave.
I think empathy is reserved for people getting laid off (i.e. doing their jobs, but macro events forcing a headcount cut). Getting fired is usually tied up with poor performance or some unethical act, so it's harder to bring empathy into equation here.
90% of the time poor performance is caused by the managers not really taking time to understand what's wrong or to consider their own attitude.
I've been fired for poor performance(or bad attitude as they said because i disagreed with their decisions. No one would disagree with my level of technical ability), only be promoted within 2 months at my next job because I took intuitive and had my own ideas. I've introduced a lot new processes, and ways of doing things. They've liked that here.
What i'm trying to say is another mans bad employee could be a good employee somewhere else. It's very subjective, and depends on what they are expecting. A short order cook to implement the managers vision? Or someone with a vision of his own?
I've been fired for poor performance(or bad attitude as they said because i disagreed with their decisions. No one would disagree with my level of technical ability), only be promoted within 2 months at my next job because I took intuitive and had my own ideas. I've introduced a lot new processes, and ways of doing things. They've liked that here.
What i'm trying to say is another mans bad employee could be a good employee somewhere else. It's very subjective, and depends on what they are expecting. A short order cook to implement the managers vision? Or someone with a vision of his own?
>90% of the time poor performance is caused by the managers not really taking time to understand what's wrong or to consider their own attitude.
Oh phew. Some random person on the internet said a vast percentage of poor performance is the fault of managers and provided no context, information or stats to back it up. Glad we can finally put that debate to rest.
Oh phew. Some random person on the internet said a vast percentage of poor performance is the fault of managers and provided no context, information or stats to back it up. Glad we can finally put that debate to rest.
Well technically its 100% because they hired them.
I have never fired someone for poor performance and have not felt bad about it. I even helped one person with their Cobra payments out of my own pocket.
Remember everyone. 10, 50, 100 years from now, none of this work is really going to matter. How you treat people? That's what matters.
Remember everyone. 10, 50, 100 years from now, none of this work is really going to matter. How you treat people? That's what matters.
Actually, that's not going to matter either, because both you and the other person will be dead.
"Macro events" like leadership failure and business non-development? Few responsible for those eventualities resign.
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Have you met Richard? What you're saying is so far off the mark it's not even offensive, it's just funny. :D
I think he's just making an effective argument. If Richard's position is "you should always pay severance" and he wants to convince everyone of that, he needs to beat the other side's best argument. That best argument is something like "Capital is scarce in a startup and this employee was fired because they were incompetent. You're telling me that some of that capital should go towards paying a severance for someone I regret hiring in the first place?"
He's trying to convince everyone, not just "most people" who "have empathy for the people they fire." Those folks don't need much convincing, if any, and even they might have a hard time paying severance when they fire someone who made their blood boil.
If you ought to pay severance in the worst scenario imaginable then you ought to pay severance in every scenario. Case closed.
I think he's just making an effective argument. If Richard's position is "you should always pay severance" and he wants to convince everyone of that, he needs to beat the other side's best argument. That best argument is something like "Capital is scarce in a startup and this employee was fired because they were incompetent. You're telling me that some of that capital should go towards paying a severance for someone I regret hiring in the first place?"
He's trying to convince everyone, not just "most people" who "have empathy for the people they fire." Those folks don't need much convincing, if any, and even they might have a hard time paying severance when they fire someone who made their blood boil.
If you ought to pay severance in the worst scenario imaginable then you ought to pay severance in every scenario. Case closed.
Eh, I can see where you get that, but the level of support for that conclusion does not rise to "effective argument."
I see no evidence to the contrary, either. As long as we're drawing conclusions about the author's personality and intentions, why not be charitable?
Otherwise, we should just keep our commentary to the argument as written rather than what's going on in the author's head.
Otherwise, we should just keep our commentary to the argument as written rather than what's going on in the author's head.
I see no evidence to the contrary
Which would be proving a negative. Charitability has nothing to do with an effective argument, which depends on actual words engaging the actual subject at hand. If you have to clarify by saying "I was only talking about some people," it wasn't an effective argument, because you left out the entire scope of the subject you're describing.
Which would be proving a negative. Charitability has nothing to do with an effective argument, which depends on actual words engaging the actual subject at hand. If you have to clarify by saying "I was only talking about some people," it wasn't an effective argument, because you left out the entire scope of the subject you're describing.
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Yeah, on second thought, you're right. The author is probably just a dick. Screw him.
Right, because the only two options are to accept his argument or think he's a dick.
I was responding to the original commenter's claim that Richard was a sociopath by painting a plausible alternative. I was not trying to muster a case for that alternative, except to point out one would just as justified in jumping to my "effective argument" conclusion as one would be in jumping to the "sociopath" conclusion. And, hey, as long as we're jumping to conclusions, why not give the author the benefit of the doubt?
If you misunderstood what I was doing, well, c'est la vie. I'm not actually interested in convincing you so much as not having a friend of mine called a sociopath in public without sticking up for him. ;)
If you misunderstood what I was doing, well, c'est la vie. I'm not actually interested in convincing you so much as not having a friend of mine called a sociopath in public without sticking up for him. ;)
I agree he sounds like a sociopath, but that's the nature of his job. I have a friend (company founder) who once told me about learning to use people as tools. It's something he had to consciously learn, because he previously disdained that way of thinking.
(In that role, you may come to classify some as founder-type people like you, while others are meant to be used.)
To build a successful corporation, it can be helpful to be able to see (and act) as an ideal, rational sociopath. (That is, having that as one perspective.)
And programmers have it easy. Consider people in food service (or even adjunct profs or something). Their bosses often cheat and screw them bluntly. No need to actually be a sociopath. Their bosses merely have to latch onto some half-baked reason to justify their behavior. In this sense, sociopaths are less pathetic.
(In that role, you may come to classify some as founder-type people like you, while others are meant to be used.)
To build a successful corporation, it can be helpful to be able to see (and act) as an ideal, rational sociopath. (That is, having that as one perspective.)
And programmers have it easy. Consider people in food service (or even adjunct profs or something). Their bosses often cheat and screw them bluntly. No need to actually be a sociopath. Their bosses merely have to latch onto some half-baked reason to justify their behavior. In this sense, sociopaths are less pathetic.
Why would not paying an optional severance imply a lack of empathy, let alone sociopathy? You could just as easily call me a sociopath for not giving an optional donation to some charity.
1. What's wrong with being a sociopath? As long as you follow the rules, why does it matter whether it's because you feel bad about not following them vs because bad things will happen to you if you don't?
2. How does not liking to pay off people who trick him into hiring them, make him a dick?
2. How does not liking to pay off people who trick him into hiring them, make him a dick?
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Wow... just wow. A sociopath? Hyperbole much?
So not paying someone a severance he's not contractually obligated to provide is sociopathy? That's like saying not tipping the contractor who installed his cabinets is sociopathy because you think it's a nice convention to tip people, regardless of the contract both parties agreed upon beforehand. Skipping on severance isn't sociopathy. Cutting people's throats because you enjoy the look of panic on their face is. Get a grip.
So not paying someone a severance he's not contractually obligated to provide is sociopathy? That's like saying not tipping the contractor who installed his cabinets is sociopathy because you think it's a nice convention to tip people, regardless of the contract both parties agreed upon beforehand. Skipping on severance isn't sociopathy. Cutting people's throats because you enjoy the look of panic on their face is. Get a grip.
True. I was being a bit hyperbolic. I just didn't detect one shred of empathy in the post.
My guess is he is actually a fine guy with fine character, but was making an argument on a mailing list along the lines of, "even if you totally lack empathy, it is still rational to pay severance".
"I hate severance. Hate it." - Assuming he is of good character, it is more likely that he was also hyperbolic. Surely helping someone land on their feet provides him some emotional satisfaction.
My guess is he is actually a fine guy with fine character, but was making an argument on a mailing list along the lines of, "even if you totally lack empathy, it is still rational to pay severance".
"I hate severance. Hate it." - Assuming he is of good character, it is more likely that he was also hyperbolic. Surely helping someone land on their feet provides him some emotional satisfaction.
The flip side of severance is the two week notice. Quitting is often the moral equivalent of "firing your employer". Giving another two weeks to an employer who drives you out the door with their own poor performance is frustrating, but again necessary for your reputation.
Which is why employers would usually pay you for your notice period but tell you not to come to work, or at least that's the standard practice in the UK.
To my mind, notice periods are good for both sides - the employer gets peace of mind that if you choose to leave you'll still have a period of time for handover and winding your job down and the employee knows that they've got a bit of a safety net if they're let go. There are generally clauses that allow notice not to be paid in specific circumstances as well, generally for gross misconduct.
To my mind, notice periods are good for both sides - the employer gets peace of mind that if you choose to leave you'll still have a period of time for handover and winding your job down and the employee knows that they've got a bit of a safety net if they're let go. There are generally clauses that allow notice not to be paid in specific circumstances as well, generally for gross misconduct.
I think that's tough on everyone involved. The soon to be gone employee won't want to stay. Especially after hearing - "hey you're a poor performer so leave in 2 weeks."
Employers should give formal warnings. Employees need hard metrics on where they are flailing.
Employers should give formal warnings. Employees need hard metrics on where they are flailing.
2-weeks notice is a system where an employee tells their employer "I am going to be leaving your company in 2 weeks." It's not the employer telling the employee "I want you gone in 2 weeks." Usually when someone is fired, they're swiftly removed from a company to keep sabotage at a minimum (I presume).
I know a couple of companies that have a policy with IT employees, that regardless of the 2 week notice[1], the IT employee is escorted out of the building upon giving notice. They worry more about security than hand-over. Doesn't matter if the company loves the employee or not.
1) they do pay for the two weeks
1) they do pay for the two weeks
> necessary for your reputation.
Nope, no severance, no advance notice. Simple as that. If you need something after I am gone, we can negotiate the terms at that time.
Nope, no severance, no advance notice. Simple as that. If you need something after I am gone, we can negotiate the terms at that time.
Do you announce your "no advance notice" policy to potential employers before you're hired?
Hopefully, you don't word it like that. It doesn't come off well.
Hopefully, you don't word it like that. It doesn't come off well.
Well, you smile a lot when you're selling yourself, but yes. Currently I work under annual contracts, so notice sort of goes both ways. Basically, notice is negotiated for at the beginning of the contract, (if you want it). But, if the other party were to violate the terms of a contract in a meaningful way and I had another opportunity ready, I might very well leave on little or no notice. The closest I have ever actually done in practice was only after calling several meetings with company officials to address specific issues over a period of months. The issues were not addressed to my satisfaction so I found work elsewhere. I got my open projects organized for them and ended up giving four days notice. Oddly enough, they later paid me to interview my successor. I even did some more work for them a couple years later.
As a company you always have to temper playing the long term game vs the short term game. The temptation will always to play the short game, so you will probably want to over-emphasize the long term game.
If you have $15k left - and that employee needs $15k in severance - it may be a good idea to explain to them that you really want to help them out but cant.
If you are still at $1M and the employee needs $15k in severance - then that it is obvious that you should give it to them.
Anywhere in between - use your gut, but lean on the long term game.
If you have $15k left - and that employee needs $15k in severance - it may be a good idea to explain to them that you really want to help them out but cant.
If you are still at $1M and the employee needs $15k in severance - then that it is obvious that you should give it to them.
Anywhere in between - use your gut, but lean on the long term game.
$15K left? That's well short of even a "short game." The company is less than one pay period from bankruptcy at all but the tiniest ramen startups. You should give up the $15K as an apology for failing the entire company if things are that dire.
15k left is obviously hyperbolic. It is an extreme used to make a point.
Not every employee who loses their job does because they performed poorly. There are lots of situations (especially at startups that are evolving rapidly) where you might hire someone to do a job that is no longer necessary, or has been made obsolete as your operation evolves.
Also, paying severance isn't just about doing the right thing for the departing employee. It's also about ensuring that your other employees feel good about their own jobs and don't have to worry that one day, they might be left in the cold with no cushion to help cover the search for a job (which will likely take far longer than the severance covers.)
Also, paying severance isn't just about doing the right thing for the departing employee. It's also about ensuring that your other employees feel good about their own jobs and don't have to worry that one day, they might be left in the cold with no cushion to help cover the search for a job (which will likely take far longer than the severance covers.)
In this context the original discussion revolved around someone being fired for cause (extremely poor performance). That someone was a knowledge worker and fairly well compensated. There was also little reason to believe that person wouldn't have a new job by the time they walked out the door (job market being what it is).
Thus my goal was to argue for a reason why you should always pay severance even when none of those conditions you mentioned apply. Otherwise I agree with everything you wrote.
Thus my goal was to argue for a reason why you should always pay severance even when none of those conditions you mentioned apply. Otherwise I agree with everything you wrote.
Even poor performance is the fault of both the company and the employee to some degree... unless something changed, the company hired them for something they weren't suited to do, or failed to develop them properly. And generally, other employees don't know exactly how much someone underperformed, so it's moot from their standpoint.
The fact they were "fairly well compensated" is irrelevant, by the way. Severance isn't paid because people were underpaid.
The fact they were "fairly well compensated" is irrelevant, by the way. Severance isn't paid because people were underpaid.
Severance serves an important purpose for senior-level employees and executives: it makes it more painful to fire them. This frees a good employee to take more risks, hopefully for the employer's long-term best interest, because they have greater job security.
Would it not also free them to stop caring about their job performance?
No, because even a relatively large severance package is still worth far less than the expected value of ongoing employment. Especially for senior executives, who will generally have to spend longer searching for the next job than a more junior employee. Getting 3 months severance then being out of work for 6 months is not a good trade.
Severance is NOT generally paid for sacking incompetent employees, that process is called Termination For Cause.
Consider the following:
1. A company lays off a thousand employees as it outsources a division, or combines with another firm (management decision).
2. A company decides that a product isn't cutting it and lays off the entire product team.
3. My own experience: I was asked to leave a senior position to join a brand new division of a >billion revenue organization - with the expectation that a new business unit would be formed. Four months in, the parent organization was facing external pressures and decided to stop the whole venture - and yes I had pre-negotiated a severance deal for just this eventuality. According to the author, that decision by the parent company was somehow my fault? Was I incompetent? Should I have skulked away in shame, with no payment at all for the risk I took?
This article is business advice as dispensed by a grade schooler.
Consider the following:
1. A company lays off a thousand employees as it outsources a division, or combines with another firm (management decision).
2. A company decides that a product isn't cutting it and lays off the entire product team.
3. My own experience: I was asked to leave a senior position to join a brand new division of a >billion revenue organization - with the expectation that a new business unit would be formed. Four months in, the parent organization was facing external pressures and decided to stop the whole venture - and yes I had pre-negotiated a severance deal for just this eventuality. According to the author, that decision by the parent company was somehow my fault? Was I incompetent? Should I have skulked away in shame, with no payment at all for the risk I took?
This article is business advice as dispensed by a grade schooler.
First, the author is talking about startups, not companies which might have reason to lay off thousands of workers or whole teams.
Second, in a startup, it's probably worth getting an employee to sign a separation agreement even if they were terminated for cause. Part of that separation agreement will include a release of claims, making it impossible for the former employee to return after the fact and dispute the cause of his termination.
This makes it possible to say "There are no former employees who might come out of the woodwork a sue us for wrongful termination.", e.g., while fundraising.
Second, in a startup, it's probably worth getting an employee to sign a separation agreement even if they were terminated for cause. Part of that separation agreement will include a release of claims, making it impossible for the former employee to return after the fact and dispute the cause of his termination.
This makes it possible to say "There are no former employees who might come out of the woodwork a sue us for wrongful termination.", e.g., while fundraising.
"The thought of paying someone I was forced to fire because he (or she) is incompetent burns me up inside."
I think we all hate working with incompetents, but if someone working for you is just simply not competent for the job they were hired for, that's more your fault for hiring them in the first place than their fault, IMO.
And if you're running a company and you hire enough incompetents for this to be an ongoing issue of frustration for you, that would seem to point to you being incompetent yourself.
I think we all hate working with incompetents, but if someone working for you is just simply not competent for the job they were hired for, that's more your fault for hiring them in the first place than their fault, IMO.
And if you're running a company and you hire enough incompetents for this to be an ongoing issue of frustration for you, that would seem to point to you being incompetent yourself.
My assertion is that you should provide severance in all cases. I chose to attack the most contentious case (poor performance) where one might think not to provide it to prove that point.
I didn't mean this to imply that it's a regular issue I have to deal with :)
PS Priority #1 post any firing is a careful review of the hiring process that got you there.
I didn't mean this to imply that it's a regular issue I have to deal with :)
PS Priority #1 post any firing is a careful review of the hiring process that got you there.
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Is severance essentially the expected value of firing an employee? The way I've seen it used is what you pay an employee in exchange for them not suing you for wrongful dismissal. Once it hits a certain threshold an employee will take the money and shut up. If it's not enough or they believe they can get more they will retain a lawyer and sue.
I'm curious if anyone's had experience negotiating a severance package up front? The kind we all bitch about executives having. I've never relocated for a job, or made a particularly sacrifice to start a job, but I always thought that if I did I'd want some agreement, as I'd be investing a great deal in that job change, and I've seen a few people get really hosed. Usually when they jump into a position that is more political than they realized.
>I'm curious if anyone's had experience negotiating a severance package up front?
Nope, it isn't popular here in Texas. I tried to negotiate for severance when working with a company who had previously surprise-fired me. They were determined not to agree to any future severance or anything named severance. I ended up baking it into a higher hourly rate. In the end they paid my severance wishes many times over, in advance.
Nope, it isn't popular here in Texas. I tried to negotiate for severance when working with a company who had previously surprise-fired me. They were determined not to agree to any future severance or anything named severance. I ended up baking it into a higher hourly rate. In the end they paid my severance wishes many times over, in advance.
They generally pay you severance and ask you to sign an agreement not to poach people for 1 year.
> I always require a departing employee sign separation agreements.
How is it possible to require that?
How is it possible to require that?
Because they don't get the money if they don't sign. It's not absolutely literal, but I can almost guarantee everyone will sign.
Worry if the employee won't sign, you will probably have trouble coming and it may not be something you know about.
Ok. I get it. You hate paying severance, and I understand how unpleasant it must feel. Tell me, how do you feel about staff members leaving your employ without notice?
What's normal severance at a startup?
Writing too many severance checks? Figure out how to improve your hiring process.