Should You Fire a Friend?

Hello. If you’re just joining the recording. Now we are talking on the complete entrepreneur out of fire, a friend. Hello, Jeff. Uh, I just going over a couple of episodes before people join us here now. Uh, if you haven’t already done so go to startup.club. Uh, we have so many recordings of the complete entrepreneur, this show, but also we have recordings of shows from other, um, series that we run on a weekly basis.

Um, if you go to the website right now, startup.club, you’ll see that we have the legend himself, Jeffrey Moore, who wrote crossing the chasm. And he was speaking on serial entrepreneur, which we run every Friday at two o’clock. It is now five o’clock. Michael is our host. I made a pass it to you, Michael, to kill.

Hey, Colin and Jeff, it’s so good to be here. I must admit, uh, I always say this is my favorite time of the week is doing the complete entrepreneur and not just hearing from your soul calling in Jeff. Um, but hearing from people in the audience, what their journey of, of being an entrepreneur has all been about.

And, uh, I must admit, I find it’s a privilege to be hosting this show and to hear from other people. But, um, I know you shared a few things then calling a bad startup, not Claude, but what what’s going on moving forward that what’s happening. Yeah, I do that when I start a room, uh, I open a room you’ll often know when you listen to the replay.

There’s about 60 seconds before people start coming in the room. And I just wanted to give people an opportunity to hear about startup club during that, that time frame. Um, but there are so many things going on. I mean, we were almost hitting, uh, 800,000. Uh, tomorrow, if you, by the way, if you want to learn how to start an e-commerce business, I have norm Farrar joining us at two o’clock Eastern tomorrow.

Uh, he runs the podcasts, uh, the rise of the micro brands, lunch with norm, and he’s actually coming on tomorrow and he’s gonna help, uh, help us figure out how to build an e-commerce business. And I know Jeff has a lot of experience in this area. I have a lot of experience in this area and norm for our, the podcaster has as well.

And he’s coming on tomorrow at two o’clock Eastern on the serial entrepreneur club. Our, that particular episode is also now a podcast. You can go to apple and you can type in serial entrepreneur club and you can listen to up to, I think, 25 episodes right now, but we’re closing in on our 50th episode, uh, which is also available in recordings@startup.club.

Michael, I don’t like this topic. This is like, I didn’t want to do this session. You’re talking about firing people. You’re talking about firing your. Pete friends, people, you know, people you’ve worked with for years, this is such an uncomfortable topic to, to have on club. It is, it is, it’s a very uncomfortable topic.

And it’s one that I think most entrepreneurs need actually go through. It don’t end up going through. And, uh, it’s really difficult. Um, I know personally I’ve gone through it in my various businesses is, um, uh, is having to fire a friend or, or to break up a partnership because it’s just not working any longer is a really difficult thing to do.

And it’s something that requires a lot of wisdom and, and also it’s something which requires a lot of compassionate. And so it’s wisdom and compassion. It’s very few entrepreneurs have been in the business a long time. Um, it’s like running startups one after the other, very few of them have not had to fire someone.

They really cared about very few of them. And, uh, it’s a topic which, um, I was debating about when I first came out with, I was debating about, shall I actually deal with this? Don’t we don’t want to talk about all the wonderful things, what it means to be an entrepreneur and I’ll let your staff, but yeah, there’s some, there’s some dirty rotten secrets as such.

I’ve been an entrepreneur, Colin, and it just, it’s just something which, um, I think it needs to be discussed. Like, how do you deal with this? Because it could be that it’s not the person’s fault at all. It’s just, their skillset is no longer with the business requires moving forward. And I don’t think it’s just higher.

Like, I don’t think it’s just your friendship. I think it’s actually like when you’re in a small business, when you’re a star. You know, almost everybody’s your friends, you’re connected these people, you’re living in the trenches with these people day in, day out for sometimes years. And you have to, you know, you have to make adjustments.

You have to either it’s a budget reason, or there’s a personality, or you need to change that position out for somebody who’s, uh, who’s got better qualifications for the size of the company, for whatever reason, these aren’t just your friends. Like I think everyone who works in a small business recognizes that, you know, firing anyone is, is extremely challenging and emotionally it’s very hard.

And it’s one thing, Michael, you know, I was thinking a lot about this when I saw the topic. It’s one thing when you have to fire someone who is either just not right for the position anymore, or not really living up to expectations, or maybe even with a startup often, what happens is, you know, people are people, the company outgrows, the people that are in the roles, they were originally in as the company grows, not everyone can grow with the company that’s challenging.

But I also thought in my career, I’ve had three instances that I can think of. It’s three different companies, where I was put in the position of having to fire someone who is doing a fantastic job, who was, uh, one of our best employees and always doing a great job, but they did something that was so, um, stupid and agregious that I had no choice, but to fire them.

And that was a difficult situation because here it wasn’t someone, not only were they. But it was someone who was doing a great job, but they just crossed the line that couldn’t be uncrossed mostly through poor judgment, uh, and, and just may, you know, making a bad choice. Um, so that was a difficult situation to, in three times, I’ve encountered that three different companies that’s related to the core values of the company.

Right. And I, and I know who you’re talking about, and I think we’re still friends with that person today. The reality is you have a set of core values that you established within your organization. Your company ends, ultimately the test of those core values is whether you hire someone based on them or whether you fire someone based on them.

Yeah. And that w that was true in one case, you know, of the three cases. And in another case, we just, someone did something really, really dumb that they thought would be funny, but it was a company-wide. And it was impersonating the CEO of the company. And this was a large company with, with, you know, almost 80 employees.

And, um, they thought it was a joke, but it was something that was just at that point that there was no turning back and I had no choice, but to let them go. And they were one of our early employees at the startup, they were one of those people that you can count on to get the job done, no matter what, but this was just a line that was crossed that, that, um, you know, we couldn’t couldn’t ignore unfortunate.

Yeah, look, that’s a really interesting thing that you guys bring up is that there was a line crossed or there was a gates to the values of the company and that sort of stuff. So what are these lines? They get crossed by the way, just while we’re at it. If you’re in the audience, you’re saying, look, boy, I’ve got some stories to tell you, um, um, the share with the community here about how I’ve had to fire someone, uh, that I really cared about or something like that, that please stick your hand up.

We’d love to hear from your stories of how you actually wrestled through this thing, not just from the mechanics of trying to get of getting rid of them, but how did you wrestle through that emotionally yourself and how did you deal with that? But just, well, just while people stick their hand up and everything like that, and we can have them on the stage here with us.

So what is that line? Like? You talk about that longevity and Collin, what is that line that gets crossed, which causes you to go, that you’re done. You just got.

Well, I think, you know, there’s different things. I mean, as Colin mentioned, one line is core values, right? Core values are very important. And, and if someone just can’t adhere to certain values that the company holds high, that means they’re not going to be a good fit. And even if there’s someone who’s getting their job done, or even if there’s someone who is a friend, you know, they may have to be terminated for that reason.

Other lines have to do with obviously things that are, you know, illegal things that, that are hurtful to other people. I mean, there’s a lot of lines that are pretty obvious and sometimes the lines are a little bit gray and that makes the decision harder. Hopefully that’s helpful, Michael. Yeah, absolutely.

Jeff. So, so here’s a question, Ken, should you fire someone because of there’s lots of. Or do you fire someone? Because I have the fire. In other words, I’ve got the facts on this situation. They need to be gone or you fire person on, uh, on the smoke. But it seems to me like in the current business environment, um, we’ve seen it like in the, even in the media, the people get fired or they lose their careers because back is not because necessarily proof.

Like we had an example of a, um, a very famous actor, um, Jeffrey Rush, who was accused of whole lot of things in the end, it went to court and there was a pew, uh, it was approved that he wasn’t actually guilty of the things that was, he was accused of, but his career just did a nosedive because of that. And so as an entrepreneur, what should we do?

Should we, should we take it like be brief preemptive almost and say, okay, Um, straight, straight away, even if there is smoke or did we wait for the fire to start raging in the, in, in the back room? Like what should we do call them? Yeah. I don’t know exactly, you know, that particular question, but it’s something similar to that because we as startups, you know, we as entrepreneurs, we more often than not, don’t communicate to our employees, what we actually want from them.

And if they’re falling down, I don’t believe we give them enough information because again, these are small environments and they are, um, you know, you’re in a, in a work environment where you’re very close with people. And I think sometimes we should look internally at ourselves and say, well, you know what?

We need to set the parameters. We need to set the metrics. We need to set the tone. We need to set exactly what we want and what our expectations. For this employee, but we don’t do that because we’re, we’re, we’re too comfortable. We’re in a, you know, we’re in an environment where we’re just, we all get along and just expect people to do certain things.

But I think that more often than not that the entrepreneur needs to set that tone and, and those metrics and KPIs, whatever it is and say to that employee, like you need to deliver the following results and that employee will know if they failed to deliver that upon agreeing to it. I, you know, obviously being reasonable here, but that employee will know if they failed to deliver those results.

They may even self-select and move on to another company. Or, um, you know, at least you have something to approach them with when you do decide to terminate them. But I, I will put that out there that more often than not, the entrepreneur does not set the right expectation. For the employee. It’s interesting.

Collin, you mentioned that and it almost ties back to last week’s, um, serial entrepreneur hour where we had coaching was the topic. And we had a business coach who, and Patrick, Finn, who both you and I have worked with, um, and part of that whole discussion and why we feel it’s important for startup. To involve coaching and strategy planning early on is that’ll help.

You potentially avoid having to fire a friend as you just alluded to Colin, because if you have a structured process to set goals, um, not just for the company, but for all the team members, so that everyone’s accountable, then they’re much less likely to get into that position. So it’s interesting because that kind of coaching and strategy sessions and goal setting actually ties right into the question of hiring and firing.

Because if you have the accountability, if you have a culture of accountability, then people know what’s expected of them. And they know when they’re on track or off track, which will avoid getting it to the point where you have to fire someone. Yeah. Yup. You, and this is the series that to the complete entrepreneur, how do you at least in serial entrepreneur, but you’re listening to the complete entrepreneur, seen a really difficult topic that entrepreneurs have to face at some point I can almost guarantee it and there’s how to fire a frame.

And we’re taking a look at this, this topic. So, um, if you’re in the audience, you said, yeah, I’ve got a really good story. Please stick your hand up. Don’t just let the three Amigos the top here, go along and rule the roost. Come out on the stage. We’d love to hear from you and your stories. And if you’ve got some questions, like how do I actually let a good friend go?

Uh, what’s the process I need to go through then stick your hand up as well. So Katie, I have questions because this is where we’re learning from me. But anyway, it’s an interesting thing. I find Colin and Jeff, you talked about things like goals. I have someone we need to be very clear with our staff and electro stuff that these are the goals.

This is the expectations of you and all that extra stuff. And I think that that’s absolutely so true. We do need to do that. Um, but at the same time, are there a whole bunch of unspoken expectations such as B? True. You need to be truthful. And if you’re not, if you’re not truthful to the business or truthful to clients and things like that you’re done is that, is that more of a value?

And we talked about that as a minute ago, which is there a series of values which need to be active for the staff. And, uh, is there something we need to be doing as well as the expectations of, I haven’t got these quarterly goals, we got to meet them and that sort of stuff. Is that something that we need to be specific about or is that not the basis of society is that we hold these things self-evident is that something that we looking at, like ambiguity is our enemy and when it comes to core values, I mean, you talk about being honest.

Um, often that line can be crossed in many different ways, especially in sales. And, um, if the owner wants to operate a company in a particular way, And the salespeople are not doing that because they’re being dishonest or they’re, they’re, they’re skirting an issue or whatever it is. I truly believe the owner needs to establish what are the core values?

What are the guardrails? What are the things that we need to do and how we need to operate? I keep coming back to like, it’s the entrepreneur, it’s the startup it’s, you know, of course you’re going to have bad employees. Of course, we’re going to hire bad employees. But I actually think that we have to be cognizant of that.

So it’s ambiguity is our enemy, and I think that with first refers to culture, but I also think that refers to performance and there’s a system called topgrading and topgrading and Google it on the internet. There’s this company that set it up and they designed a system around this. But basically the essence of it is this is that when you hire a new employee, that you set those expectations right on the offer.

So when the next night and there they’re specific and measurable goals. So in the next 90 days, you’re going to deliver, um, you know, a hundred new leads, uh, 10 meetings, three closes.dot dot. And then at the end of the 90 days, you can review ambiguity is our enemy and our employees don’t deserve that.

I agree with you on that. Um, it is, we need to do, you need to be very, very. Um, and very transparent, um, with your staff. Um, but it’s more than your staff. I think it goes beyond that in fact with partners and things like that, to be very transparent with them. Um, it’s, it’s interesting. I mean, numbers of years ago now, uh, uh, went along and, um, hired a new sales guy and this sales guy, um, it came back to me after being with us for a few weeks and he said, oh look, we’ve we really messed up this particular client.

And I said, yes. Okay. I said, and he said, we we’ve let them down and all that sort of stuff. And, um, it, it’s not looking good as it’s going to cost, uh, a bit of money to sort the situation out, but you know what? I can, I can spin it. And I said, well, what are you spinning? He said, well, if I just say this little lie here, uh, that will be good.

We don’t have to pay out any money. And I said, but then you can have to remember that you told them that lie, and let’s imagine you meet them at a conference and you’re standing with a group of people and the issue gets brought up. You’re going to have to go long at work at how are you going to deal with that point of time?

Isn’t it just better to get a little, tell them the truth and have the business deal with the issue, pay compensation or whatever like that. As interesting as his reaction was, he came to me, said you were the first companies I’ve ever worked for. They put their money behind their. And I said it, yes, we may be doing that.

But at the same time, it’s more a case of, it’s just easier to do business when you have the clear values. And one of them was just tell the client the truth, apologize profusely and make amends. And it’s, it’s a challenging, it’s challenging, particularly, as you mentioned, Colin there in the sales environment where it’s, it’s so tempting to secure that sale is to go along and tell half-truths, or don’t tell the whole truth, or you may not be deliberately lying, but you’re not deliberately telling the full situation.

So what do you do with a salesperson that does that? It’s fine. When the situation I was in, they came to me and said, Glues the scenario of what they could do, but what, what do you do with someone who has gone along and told a bunch of fees, as we say, here in Australia and ha and they happened to be a close friend of yours, you just like, okay, you’ve crossed that value line or, and you’re gone, or how do you deal with that situation?

Well, that it is that simple. Michael, I mean, you do establish the core values of your organization. You know, one of ours is integrity over money and we’ve had a situation where a few situations, but we’ve had situations similar to what you’re describing. And we were able to feel, I feel comfort knowing that these are our core values and we laid these core values out and we knew that going forward, this individual would not be able to function in this company based on the actions that the individual had done, even though they made profit for the.

I mean you, every, every entrepreneur has to choose. I mean, we have to choose, we have to decide what are our core values. And I think that’s, to me, it’s, it’s fairly black and white. How you execute on, you know, a firing or a layoff or, um, repositioning a, uh, an employee into a new organization. That’s a different conversation which we should have today as well.

That should be definitely covered. Look, I want to make another pitch for you. If you’re in the audience, Chris, Rob diamond, all of you in the audience were, we’re just having a, uh, a fun conversation on stage. Come on up. Let’s talk about an experience you had when you fired someone. Raise your hand. If this is all about a community and talking, it really isn’t about the three of us.

If you, and I know it’s an uncomfortable topic, I started off the session by saying, yeah, this is an uncomfortable topic. We, no one wants to talk about this, but you’re in the audience. Raise your hand, come join us on stage. You’ll you’ll really have a fun, fun time doing it. All right. Yeah, I concur with you on that call.

And, uh, I, I, one of the reasons why I host this show is to hear from other people in the audience, because I think it’s true. It’s the value of everyone’s experience that we can all learn, which, which is fantastic. So here’s a question then just as hopefully some people will put their hands up, which would be great.

Here’s a question. So you’re bet to launch a business and, and you’re thinking, oh, that friend over there, they’d just be ideal. Should you hire a friend? Should you really hire a friend? Or should you say, well, they’re just, they’re a friend. I’ll leave them as. And once you’ve hired them, how do you separate out the, um, the friendship, uh, and their social sort of times versus the work times and how do you separate those two businesses?

There’s sort of relationships out. And is that being difficult? Have you done that in the past? Jeff, we call him. Um, and when you pod the friend sewage of hard. Oh no, I shouldn’t have done that. Uh, it’s a big situations like that for you guys? Well, I don’t know. We’re all human beings, right. But Jeff, I mean, we have friends, Jeff and I are friends.

We worked together, uh, and we launched projects and we launched.club together, um, with Michelle as well. Um, we’re all human beings and I, I don’t know, but this idea, I know people will often say, no, you can’t be too friendly with your staff, your people around you. Well, I don’t know. I don’t know. I don’t know if that’s really.

You know, we, we’re not robots, you know, we’re, we’re, we’re humans and we want to make connections and we want to have fun with the people around us and we want them to do well. And we, we understand and we empathize with our, with the people that work around us and we want, you know, we want to help solve their problems.

We want to help improve their life. We want to help them with their career. Uh, I, what do you think, Jeff? Yeah, so the caveat, I would say, well, first of all, it’s not a binary situation, Michael, because every relationship is different. You know, just like some people get divorced and they can never speak to each other.

Again, they can’t even be in the same room and some people get divorced and they remain very friendly. They’re just not in the kind of relationship they were in when they were married. So every relationship is going to be different. I think the caveat is you should never hire a friend because they’re afraid.

You should hire them because they can get the job done that needs to get done. Whether they actually are qualified for the role you’re trying to fill. And yes, all things being equal. If you have a friend who’s qualified for that job, then that’s fine. But, but the mistake is when you hire someone simply because they’re a friend and then they can’t hold their weight and they can’t get the job done.

And that’s going to put you in an awkward situation, which could eventually, you know, end the friendship, you know, when you have to end the business relationship. So, you know, and, and you just have to know the quality of your friend and the quality of the relationship as to whether it could withstand a business breakup, because there’s a 50, 50 chance.

It won’t work just like in marriage. Uh, you know, but, but first and foremost, you should only bring people into the company who are going to move the ball forward and, and get the job done. If they happened to be a relative or they happened to be. That’s fantastic because you’re spending so much time. You want to be around people that you like and that you enjoy being around.

So friendship is important in business, but more important is, is putting the right people on the right side of the bus. As Jim Collins would say, and building a team that’s going to be effective in accomplishing your goals. Now more often than not though, in a startup, you know, you don’t have the money to hire anybody, but your friend only your friend would work for you only Wazniak and Steve jobs would come together as friends to found apple.

So there are situations hang out, you know, was it by accident or was it by design? It’s okay. Guy to do what I need to do to achieve success.

Yeah, it just broke up from, I said, did you, do you think these guys would do what they need to do? Do you think this Wazniak guy would do what he needs to do to help me achieve success? Was he diabolical like that or his, it just friends to coming together to launch apple. Hey Michael, thank you for joining.

We we’d love to have you on stage. I’m throwing you on. I just pinged Michael and he’s a, he just wrote a book best-selling book about hiring people. So I was hoping we could get Michael in on this conversation as well. That’d be great having him on RPO and stateless, senior interesting questions. Like if you look at Wazniak and jobs, yeah.

They were actually friends, um, beforehand, but, but that wasn’t the act. And th th th the, um, as Jeff was saying, would that the skills of was Nick and jobs you would never have had. You actually had to have them both come together. And it’s a really interesting story and look at the way that, uh, those two worked and particularly the things I remember being at a conference I saw asleep was Nick speak.

And the thing that struck me about him was his ability to cope with the personality of a jobs and to be able to still do his path for the company to grow it forward and things like that. Um, it was a, it was a really, it was really interesting, uh, just to see that, but you know, like it’s hiring friends is one thing, but then going into partnership with friends is quite another.

I remember, uh, quite some time ago where I was there’s one particular individual. He was my employee, he was my friend. And in another business, he was a business. And I must admit, I found that was too difficult to manage, um, because my head was getting screwed up and how I’m dealing with this situation.

And so I had to go along and close down the business, the business relationship. So he is my friend and my employee, and that was okay. I could, I can manage that moving forward, but it having all the different sort of emotional, um, relationships with your friends and things like that, it is a challenge that being said, as you said before, Colin, is that you count the people you work with as your friends.

And so. So you should like, I, I remember starting pack logic, um, w with my co-founder David in the night, and, uh, we brought different people on board and things like that. And yes, I brought some, I brought some friends, a friend on board, and also my brother-in-law for that matter came on board. And they’re both still with us, uh, 15 years later, and other people came on board, but that time as well, and I didn’t know them.

And I count them as my friends now, and I have an enormous amount of respect, and it’s been a great, uh, growing relationship across an extended period of time. And, uh, and I find that as a entrepreneur, it’s one of the biggest privileges is to be able to get to know people and really get to know them, you know, who work with you and build to understand the way they tick and that sort of stuff.

And I find sort of enormous privilege. Uh, as an entrepreneur and to be able to help them out. So anyway, so Michael, it’s great to have you on the stage. It’s fabulous to have you here on the complete entrepreneur. We’d love to get your thoughts on this topic on hiring and firing friends and things like that.

Well, thank you for having me, uh, nice to meet everyone, Collin. Good to talk to you again. Really grateful to be here. Uh, I had around 50 employees and truly I loved them and I became part of their lives. They become became part of my life. And in fact, 15, 20 years later when I got married, uh, one of them flew down to Florida.

I’m from New Jersey and attended my wedding. She’s still a dear, dear friend. Many of them are we’re connected on social media. Uh, I am very, very empathetic and it would be, it would kill them. To fire her friend. I mean, I would need therapy if I did that. So I’d probably have someone else do it. Uh, but I think what’s important.

Like anything else is setting expectations. And I think they were clear. I didn’t that they, they were clearer on what the expectations were for their job, uh, how we want to take care of our customers, what our vision, our value in our standards were. And they knew the type of work ethics and everything surrounding their position and what I expected in order to overachieve our goals for our clients.

And because of that, they knew that that was very important to me. And I was serious about that. And as long as they did that, uh, then everything would be great. And, uh, our relationship grew not only professionally, but personally with, uh, birth of babies and weddings and, and, uh, and, and parties, you know, Christmas parties, et cetera.

So I really think. It’s like anything else, what you do upfront. And, and certainly when you develop those friendships, those bonds, it’s like, people don’t care how much, you know, until they know how much you care. That’s not only with clients. I think it’s with employees as well. When you show you really care and take a personal interest in their life, I think you get that extra 10 or 20% in effort and vice versa.

So I really think it’s setting the expectations were dead serious. This is what our company’s about, you know, our standards, our values, our vision. Did you have to do this? If you want to be part of the company and let’s. Let’s move forward and, and deepen and sprint and our relationship to make it even where one and one equals three.

I think it’s funny, Michael, how, you know, I basically said the same thing about 10 minutes ago he came on and, uh, no, it’s so interesting. Like I think it’s it validates cause neither of us had heard each other talking about that setting expectations and whatnot, but, but let’s, let’s, let’s go, let’s go to the, the meat of it here.

Uh, you actually do have to fire someone and I know Michael, you, you, uh, manage and train sales teams and whatnot. And that’s probably an area where there’s a lot of, there’s a lot of hiring, a lot of firing. Um, you know, you have a relationship with someone you just described it and you have to terminate them.

Can you just tell us a story without obviously mentioning names of, you know, how you did that, how it went and you know, when did that, what ended up happening after the fact? Yeah, I’m trying to think back to when I, uh, when I actually fired the. Uh, I would, you know, I had the chain of command in my company.

I had a, uh, a vice-president of sales. I had a general manager and I think, you know, I’m trying to think, I don’t know. It would always be Friday, did hate to come to my office. So I know I’ve done it because I’ve invited people in my office Friday afternoon and they said, oh boy, that’s not going to end well.

And I’m trying to think back. It was a while ago, maybe it’s because I only like to think of positive memories. I’m trying to think back who I fired that I had, uh, I had no problem. Well, I didn’t even fire the receptionist who was unwilling to change the tone when she answered the phone. I don’t actually remember.

Yeah. The spot there like that. Right. But, um, so let’s maybe Jeff let’s, let’s hear from Jeffrey, Michael, you know, or, or anyone in the audience too. I know. Hey George, nice to see you as her as well. I mean, if you’re in the audience and you’ve had to fire someone before, we want to hear about your story, come on stage.

W w we really want to hear that. Yeah, I think, you know, one of the things that, that I try to, uh, emphasize, um, especially when it’s, when it’s with a friend, but in my experience, you know, change almost always is, ends up being good, even if it doesn’t seem so at the time. And almost always, if someone is, is let go, because it’s not a good fit for the business.

Um, almost invariably the business is really not a good fit for them either because if they’re not excelling, if they’re not able to meet their goals and objectives within your organization, you know, that’s not satisfying for them either. So even though it’s painful to be, let go, and it’s painful to being be the one, letting someone go, I try to reassure them that, that, you know, when the dust settles and time, you know, time heals all wounds and you move forward.

You’ll a little bit, look back on this as actually a positive experience and a positive step in your career because you’re gonna learn from it. And there’ll be new opportunities and, and you’re going to grow. And, and in, in 99% of the cases, I’ve seen that to be true. And even in the ones, you know, the colon and I have referred to where someone did something that was against core values or in the case, I mentioned someone did something that was just so dumb and over the line that, that they had left us with no choice, but to terminate them, even in those cases, they ended up being learning experiences for those people.

And they’ve gone on to do great things and be better because of having had that experience. So I try to, to express that, understanding that it’s really hard for people to see that at the time, but hopefully when they look back on it, they’ll find that, you know, not only was it the right choice for the company, but ultimately it was the right choice for them as well.

It definitely, I want to tie into that by the way. I have a good friend who wrote a book change is good.

I did want to say, you know, one of the things that, that helped us a lot on dealing with, okay, we’re a family. And if you have to let someone go was we gave reviews, like most people that have companies give reviews and reviews are a great opportunity to share with the employee. Listen, these are the areas you were excelling in, but these are the areas that you need to really improve your performance.

And it’s important that you do that and you establish again and clarify expectations and timelines. And I think when you do that and you know, this is why it’s important, this is the impact it’s going to make on our business. You understand that it’s a collaborative conversation kind of thing. And, and, and, and team off on what you said, that, that, you know, It’s going to help them and help you.

They understand what they need to do differently and better in order to continue to be part of the enterprise. And I think when you have that conversation and it’s open, it’s genuine. It’s real. I think that again, sets the proper expectations that if they don’t do that, they agree. You’re setting it up.

You agree that you understand why this is important. Yes, I do. Okay. Let’s we’re, we’re behind you a hundred percent. Let’s make it happen. And you realize if you don’t then probably this is not the right fit for you and you kind of set it up like that and you give them the opportunity to make it or break it.

Yeah. I actually really agree with you guys. It’s about sitting the expectations and things like that for pit crew staff. And these are the expectations. This is what we’re expecting as a company and so forth like that. And it’d be very upfront with people, but what happens if you go to business that, um, Like you think of, but the number of restaurants out there as an example, um, they’re going to down to Andrew, to COVID, it’s not their fault that they’ve had, I’ve had a downturn, but they’ve got to lay off staff.

Um, uh, restaurants were easy, I guess, in some ways, because you can just blame it on COVID, but yeah, every business will have its high times. It’s low times we’ll have businesses continuing to grow. Um, and, and people are meeting targets only. So that’s great. But what happens they’re meeting targets, but you still have to let them go.

What do you do? The person like that and what happens if they’re a close friend of yours? Uh, they’ve been with the business since day one, but you got no choice. You’ve got to let them go. How do you deal with that? Not just as a, uh, the mechanics of dealing with it. How do you deal with it emotionally? Um, that situation where if they’re not.

You’re not at fault. It’s just circumstances in many respects are fault rushed you into this situation. And as an entrepreneur, as we said before, we’re a human and we want, and we love having the friendships and everything like that. But what happens if you’re going to have to get a divorce, a networking relationship when no one is at fault, but the business needs to move forward.

Okay, Michael? Yeah. Yeah. Thank you, Michael D I think great point. And certainly with COVID, uh, recently we’ve all had to deal with that. In fact, I just wrote a book called, uh, during the time COVID cause I speak or spoke all over the world and obviously there wasn’t a lot of speaking. So I wrote a book and it was called get hired land, your dream job.

And what I realized was when people lose their job in many days, That it wasn’t just a job. They lost, they lost their self-esteem. They lost the ability to provide for their family. They lost, uh, they may lose a house that they saved their whole life for. So it’s so much deeper and more important. And then you have to you’re, you know, as an owner of a company, a president of a company, and you have to let someone go, that’s given their, their blood, sweat, and tears to your business.

You know that it’s not just a job they’re losing. If there’s things beneath the surface that are showing. More significant than that. And that’s what really compelled me to write this book to be a, not a game-changer, but a life changer. Uh, so what, this is what I have a good friend who is a very, very high up executive at Marriott and friends with, with bill Marriott.

And, uh, they had to let, during this crisis go just like restaurants. I, I forget the number, let’s call it 20, 30,000 people. And Marianne is a family and a fine organization. And when they let family members, people devoted to the company just to stay afloat because they were losing so much money. How do you do that?

Well, there’s companies. And I actually forget what they’re called that come in and help find them placement elsewhere and give them coaching and, and tools they need. So I can answer your question. You can’t produce something out of thin air, if there’s no work and money’s not coming in, they kind of see that, but you can offer them assistance in other areas with coaching, with tools, with introductions, to help them get back on their feet.

Maybe not. How they were in the past, but maybe they use their skills, talents, and abilities and redirect them in another, uh, another industry or another type of a job. Yeah. I’m going to be interesting here, Jeff story here on this one. Um, but I know back in 2000 sound familiar, uh, the.com crash. Uh, we had sold one of our companies to another company and, uh, the division that I ran, it was about 40 employees.

I called them all into a room one December afternoon and announced that the company failed to, um, obtain financing to continue going forward. And if everyone in this room is being laid off, including myself. And I think that that, that, that moment was very hard on them and it was hard on me. Emotionally, it was very difficult.

Um, I think people understood, but I will say this is the fact that I was able to understand their plight. Um, of course I had my own issues. You know what I mean? I was 28 years old, the.com crash. I lost a lot of money on paper, maybe too much money to even talk about, but these people were losing their jobs and their livelihoods.

And I was still walking away with a livelihood that I, you know, I could still make ends meet. And, uh, I think empathy is, is probably underrated, but authentic empathy of being authentic. But the individual that you’re talking to at the time of that firing, I think that is important. Um, you know, I think, I think that’s th that’s part of the, the recipe, the equation, the formula, but I hate to use those words.

’cause, I don’t know if that’s authentic, but really understanding that individual’s plight and talking them through that, you know, through the process of that it’s challenging that moment, that time that you have to do it is very challenging. Jeff, I know you went through some big, you know, issues with companies as well, similar to myself.

I don’t know if you can share anything with us. Well, certainly, you know, the older you are, the more you’re experiencing. So I’ve been in business for over 40 years. So I’ve had to live through a number of downturns for a variety of reasons and sometimes several downturns within the same company. So with one company, I co-founded, we had to live through the NASDAQ crash in 2000 and then nine 11 in 2001.

Um, and both had significant impacts on our business. And at the time after nine 11, You know, we had to downsize the company and this was a publicly traded company. We had to downsize from 81 employees to about 20. Um, and you know, it was, it was really hard, but I think that the key learnings from that for me were, you know, certainly you need to be transparent and include everyone in the thinking behind the decisions.

So you need to, at least for us, we were very transparent. Of course it was a public company. So our financials Republic anyway, but we were very transparent about the impact that had hit us. You know, the business, we lost how much money we had, how long that would last, that our current overhead. Um, you know, we, we were very clear about all the reasons why we had to downsize.

So everyone knew we also. Leveraged the money. We did have to make sure we gave people the best opportunity, um, to transition successfully. So we didn’t spring this on everyone at the last minute, because you could see it coming so we could figure out when we were going to have to do that. So we gave people about 30 days notice that this was coming.

So people knew and they still had their job for 30 days while they could, you know, start lining things up. Understanding we gave, you know, as much severance as we could afford to give. We did have, as Michael suggested, you know, we had, uh, at the time, even though they were also going to be laid off before the layoffs, our HR department was still intact and they agreed to work through a transition period where they would stay on a few weeks longer than the people laid off before they were laid off to work with everyone and try to help them have a smooth transition.

So it really was a pretty big project to try to downsize the company as, as. As warmly or empathically as Colin would say, as we could, um, to, to give everyone the best chance to have a smooth transition, um, to whatever was, was next. And by doing it that way, it was remarkable. And I’ll always remember this, you know, people were supportive, even the people who were losing their jobs, you know, supported the whole process because they felt like they were a part of it and they understood all the reasoning behind it and they had time.

It wasn’t just dumping them on a Friday afternoon unexpectedly. And you know, it’s, it’s not always possible to do it like that. We were fortunate, I guess, in hindsight, because the writing was on the wall. We did have enough. Not to survive at the level we were at, but enough money to do this kind of an organized, um, downsizing over a period of time and giving everyone the severance they deserved, et cetera, et cetera.

So it was very difficult, very painful. And needless to say, during that last 30 days, when people were on notice that their end was coming, it was a trying time with a lot of crying, but a lot of laughing too. I mean, you know, people understood and, uh, but it was a very difficult time. Um, and if, but if you have the flexibility to do it that way, that that was a pretty good way versus the recent incident that was all over the news where someone terminated half the company on a zoom call unexpectedly.

So that’s not the way to do it. Yeah. It’s interesting. You know, like if you’re in these stories at 2001, exactly the same similar thing happened to me in 2001, a whole lot of employees and a lecture stuff and nice office. And, uh, the kind of long story short, I ended up in a $1.6 million suddenly, literally from one day to the next wasn’t coming.

And the business model was to drive the cashflow down to zero, meet some targets and let their staff and this Nick Nicola, when he’s meant to come and the I’m standing in front of the employees. And, um, so I was very transparent and share with them the situation. And, uh, and I said, as soon as I’ve got more information, I’ll let you know.

And a few days later the sound have to be made, but to let a whole lot of people go and what sort of stuff. And it was probably one of the most difficult things I’ve had to do in my life because one of those people, um, happened to be a guide known since I was like 11 years old. And I remember sitting across the desk from him and I said, y’all got to let you.

Um, and I knew the ramifications of this for his life and, uh, and on you, it was like completely out of left field for him and all extra stuff. And, uh, it was, it was, it was going to be really difficult to dare say. Um, we’re both in tears. We both in fear for a number of reasons why it’s a sad situation, but also when tears, because we’re not going to be working together, um, moving forward.

And, um, I did whatever I could to help him out from references to all those sorts of things you can possibly do to help people out of this situation. And to this day though, he’s my friend. Yeah. And I think one of the key things I think came up a few, it said, this was, you need to show empathy. You don’t show empathy because it’s an easy solution and this is a strategy you need to show.

You show empathy because we’re human. You show empathy should really care about these people. I have not met. In fact to this day, I’ve met an entrepreneur, who’s running a copy. It doesn’t really care about their employees. Um, and that in times like this, when you’re sitting across a desk and you have to let someone go, that empathy needs to come at and needs to be visible, but you don’t call him.

So I want to also add in here that, because you were used the word respect, and I think that when an employee or anyone leaves a company, they want to keep their head held up high. They want to walk out of that room out of that company, maybe not a hero, but at least respectfully and, and more often than not, um, you know, we have type a personalities in this room.

We’re all startups and. You know, it’s fight or flight and more often than not. I see in real life, I see examples where entrepreneurs often get into arguments and fights with people and eventually terminate them because they don’t have the social EEQ or they haven’t thought it through that. You know, that this person does need to leave, but they need to leave respectfully.

And I think if they can do that, that means more than severance. Of course, it’s nice to be able to provide if your company can financially afford to do so, provide a severance agreement for that employee, but that does give them an adjustment period time to figure it out, to, um, connect with the new company.

But how do you fire them and have them leave respectfully with their head held high? And that’s a challenge that really is, but if you can deliver that, it will make all the difference for that employee. Yeah, I agree with you. They’re calling and that that’s a key thing is respect. They need to go leave respectfully.

Um, but at the same time as entrepreneurs, we also need to appreciate is when we let some people go, some of those people are going to go down to the bank and they’re going to go and to all the friends and people ran there around them in the lecture. So they’ll bitch about you. They will, um, they’ll, they’ll go along and complain and moan and groan and lecture stuff that it was my company.

I would have been doing so much better. I, this one guy did this and I counted him as a real real friend. And it come, it always comes back. It always comes back to you, um, that he was, um, really angry and all this sort of stuff. And I’d look, I let Tom good. Uh, with that guy was pretty disappointed. Like you do you get hurt in that process.

You think you’ve done everything you possibly can and impossible circumstances. And this is what this guy’s doing, and you can get bitter about it, or you can just let con goodbye. I didn’t reach that to him. And we ended up getting together for coffee. Um, and, and I said, look, I just wanna let you know, I heard these things, but I understand, I understand that you are hurting and you need to get things off your chest.

I just want to let you know that I’d be a no grudges. We’re now great friends once again. And he apologized and all that sort of stuff as well. And during these high pressure time, As entrepreneurs, we need to remember that the person we’re speaking to is going through massive emotional turmoil. And they’ll say some things they regret, and they’ll say some things they, they actually don’t mean and all that sort of stuff.

And don’t take those things to heart. And if you do you’ll, you can end up getting bitter and then you’ll become cynical. And then those staff they’re still there and things like that, or future hires and everything, not that, um, you’ll end up becoming cynical towards that. So don’t let that happen.

Realizing that humans will be humans. And, you know, at times they’re gonna say some stupid, dumb things and I’ll come back to you and everyone will want you to go along and say some horrible things about them. Don’t don’t say anything, treat them with. Take the high moral ground. The such. Yeah, because you know what, down the track, they may become a friend, a great friend.

Like this guy is with me. He’s a great friend of mine now. And, um, he actually is running his own businesses and he said, I never realized that the challenges you faced in those times, because he went through something similar and the lack of control you actually have is staggering. Michael, the challenges.

I mean, there’s so many challenges around this issue and really dilemmas as an entrepreneur. You know, we face so many dilemmas, uh, around hiring and firing and, and there’s no, oftentimes there’s, there are situations where there’s no right answer. I’ll give you an example. And I’ve lived through both sides of this equation.

So your company has to downsize, you’re limited. You have a certain amount of cash. You can afford an overhead of. Right. So let’s say you have 20 employees, I’m just making it up. And you know, the overhead of X really only pay for 10 employees at their current salaries. So one side of the coin says, well, let’s just cut everyone’s salary.

So we don’t want to fire anyone. We don’t want to let anyone go. Let’s just give everyone a pay cut. And if it’s done, right, typically at least when I was involved in, in those situations, you know, senior executives who were paid more, it took a higher pay cut than other, uh, employees. So let’s say every employee got a 10% pay cut and senior executives got a 20% pay cut.

And that managed us to cut everyone off at the knees, but keep all 20 employees. That’s one approach. The other approach is instead of having all of your employees suffer, we just need to lay off 10 people. And then everyone else who remains can remain. At their full salary. Um, and, and it’s a really tough situation.

And like I said, I’ve been with a company that did it one way when faced with it. And I’ve been with a company that did it the other way, and I’m not sure there’s a right answer because in one instance, everyone saves their job, but many people are unhappy, you know, for the rest of the duration, because they’re not making what they were making before.

And maybe they’re unhappy versus if you’re laid off and get a new job, you might be able to maintain your pay. So it’s a very competent, I’m just curious what, what you guys think of that dilemma and if you’ve ever experienced anything like that or had to make such decisions. Yeah. I’ve had to do exactly that.

Um, in the past, um, I was, uh, on the board of an association and we kept the Trop, the CEO salary quite concerned. Um, well, we got the financial at the finances on back level and that sort of stuff. And the other staff we had let go and things. Um, and, uh, in the end, uh, I was on the finance committee. We got the finances around again, and, uh, we ended up giving this a year, a great big bonus when it was appropriate to make up for those times, um, took a reduction, big reduction in salary.

And, uh, I think it’s a two way street for those sort of things, Jeff, um, and it’s a discussion. Some people, you know, what, you cut their salary by 20 bucks a week or something like that. And they suddenly can’t make mortgage payments and they self-select the matter of the CA sells out of the company. So that’s a discussion.

You didn’t have anybody calling you gonna say. Well, yeah, I mean, um, I don’t want to sound like I’ve, um, I, it might be, uh, the Dr. Kevorkian of this room today calling a Kevorkian. Okay. So, Michael, you don’t know who that is, but, um, I guess I have terminated a lot of people. Uh, 2011, we got hit really hard at Hostopia.

It was a cloud computing platform, VC money market’s dried up. And I had to terminate 25, 30 people. Again, I did it all in one day and, uh, I made the decision, Jeff, that we’re going to terminate this staff members that are really not performing as well. And we’re going to keep the people are really performing and we’re not going to cut their salary.

And I’ll tell you what, after we made this adjustment, after we did this, um, this layoff, the company performed at a much higher level. More efficient and delivered better results. Almost fascinating. Like I really think it’s a mistake to try to just reduce everybody’s salary. I think that’s truly a mistake.

You really do have to cut the people who are the weakest. You know, this is not politically correct. I’m sorry. And this is not nice to say, but you need to cut those people in the organization who are the weakest links. So you can support the rest of the people to thrive and your A-players, they will thrive.

And by the way, perform even better. Cause they, because they no longer are surrounded with C players. Well, that’s what they call it. Oh, sorry. Michael, go ahead. I was going to say, I agree with you calling, having lived through both of those experiences in the case where everyone from top to bottom had their salary cuts, the mood change.

The morale was not, huh? Um, and, and everyone was working a little bit under capacity because everyone had been hurt, um, versus to your point, Colin, when everyone remains whole, but is that they really need to perform, um, it’s more motivational in that respect. And then of course, the people who were laid off have the opportunity to hopefully get another job at the level they were at without having to suffer that pay cut.

So I agree with you calling Michael, you were going to say something. I was just going to say that was, uh, Jack Welsh. Long-time chairman of GE. That was his philosophy. Good times or bad. What was the cut? The bottom 10%.

Yeah, that’s correct. He wrote, it wrote a book on that. Yeah, I think he did. So, I mean, listen, you want to, you know, we’re a business to make money and we want to reward those who are contributing to that the most. And they should be the most stable. And the last one. And the others that aren’t performing, that were told in her evaluations, they need to up their game.

That’s, you know, not being cold and calculating, and it’s just the way business operates and they should know that coming into it. And, uh, I just wanted to touch on things. We talked about, you know, setting expectations, respect and genuine, real empathy. Uh, sometimes when you have that level of empathy and you’re in tears, which has happened with me and my employees, when a situation was not going well, uh, they actually feel they they’re actually patting you on the back saying, don’t worry, it’ll be okay.

So they, you can, you can actually, uh, have them help you in that situation. Cause oftentimes it does hurt us and they, they genuinely see that because it’s a real emotion. And uh, I just think that, you know, all these things that have had to deal with it, it’s kind of reminded me of a divorce. You know, when someone leaves a company, you can have an apical divorce, you could say, listen, the company grew in a different.

And it was, it just isn’t the right match anymore. It wasn’t one time, but it’s not anymore. We can part company be friends and respect each other, but it’s just not, like I said, a fit or a match moving forward.

Yeah. Well, it’s been a great topic and I must admit, even though it’d just be the four of us in the state, it’s something I really enjoyed. And in some ways, going down memory lane and remembering some of those times with gave you gave me scars on my body, a, a business body. Um, it’s, it’s been a challenge.

Yeah. How to fire a friend or just how to fire anyone. And leave them with that sense of respect and empathize with them. And yes, there’s some legal mechanics you need to go through and things like that, but it’s, it’s always a challenge. Uh, it is always a challenge. And, uh, just, just want to thank each of you guys for sharing.

So openly Colin, you want to say Michael, um, and Michael, uh, you know, I think, uh, this is an excellent chapter in your book, the complete entrepreneur, the book, I know it’s not a popular topic. It’s not get rich quick. You know, it’s not one of those, uh, chapters. It really is a skill though that we don’t talk about and we did today and I really think that’s pretty cool.

I wrote down six words to end your chapter, Michael or six, um, setting expectations, empathy, transparency, honesty, communication, and recent. Those six words or those six phrases, whatever you call it, um, to, to finish your book off. And I know Michael got three of them again, Michael, you just keep the other Michael, sorry.

He just keeps jumping out of me on my lines here, but we’re, it sounds like we’re definitely in alignment. All of us. Yeah, absolutely. Look it it’s, it’s, it’s really, it’s been a great topic and one that, uh, I really got a lot at, from you guys. And do you appreciate that? But anyway, so, um, Colin what’s going on or Jeff what’s going on with startup dot?

Yeah. So th it’s it’s really, we’re almost 800,000 members. If you’re not a member of staff club, click on that button. If you haven’t checked out the website, go to the website, www.startup.club. We have a number of speakers coming on the SIRA launch. Uh, including a number of authors, uh, but tomorrow we’re launching an e-commerce business.

Do you want to ever learn about launching an e-commerce a business we’re doing that tomorrow with norm Farrar, uh, the rise of the micro brands, and then we have Michael who’s on stage today. He’s gonna come in and where we’re talking about. I don’t know, we don’t have a date in February book with Michael.

Um, uh, but we’re talking about sales and sales performance, which is so key to scaling your startup. So if you’re interested in that, keep an eye out, sign up for the mailing list, we’ll see you on startup club. Yeah. And, uh, there’s a lot happening with startup luck log. And I must admit next week on the complete entrepreneur, we’re taking a look at the other side of the equation, which is building the right.

Building a high performing team for your businesses. Absolutely critical for its success. We require a lot of your focus. Likewise, you have a team of whom who is even more important. How do you successfully grow the relationships in both your business and your personal life as entrepreneurs? We need both we team home and team business to, how do you actually do that?

How do you manage that moving forward and something? I think it’s going to be a really exciting topic. You’re listening to the complete entrepreneur. It’s for one hour at 5:00 PM Eastern time, every Thursday. And it’s been great having the conversation with everyone here. Thank you. Thank you. Thank you for my fellow moderators from Michael coming and joining us on the stage as well.

And also for you in the audience, do appreciate your time and consideration and make sure you like some of the speakers just up here and, um, follow them, um, and reach out to us. Feel free to reach out to me as well and look forward to seeing you next week. 5:00 PM. Eastern time on the complete entrepreneur.

God bless. Y’all. God bless you. Thanks Michael. Thanks everyone. Thanks Colin. And thanks, Michael. Thank you. Thank you.