Why it's hard to issue an employee termination when an employee is failing

by on June 1, 2009 · 0 Comment POSTED IN: HR Info Center

Understand the psychological traps to make better employee termination decisions

Letting go can be hard, whether the connection is personal or business-related. But there’s a big downside in hanging on to a failing relationship with an employee whose performance just isn’t going to get better.

Why is it so tough to cut the cord in cases like these, and what can you do about it?

Consultants at McKinsey & Co. recently studied the psychology of companies that delay going through with an employee termination. Their findings contain important insights for HR people, too, faced with an employee termination for someone who may have had decent years with the company but are now on an irreversible downslope.

4 Delusions to avoid
Four irrational factors are at work when management puts off the inevitable employee termination, the McKinsey folks say:

  • Confirmation bias. This means that people tend to look for evidence confirming what they would like to believe. If you want to think an employee is salvageable, you may grasp at straws of evidence that his performance isn’t really so awful.
  • Sunk-cost fallacy. You’ve spent a lot training and compensating the employee – surely it’s worthwhile hanging in with her a little longer! (Except often it isn’t.)
  • Escalation of commitment. Related to the sunk-cost fallacy, this is what makes managers throw good money after bad. You don’t just hope the failing employee will improve – you spend significant management time and resources trying to rescue him from the brink.
  • Anchoring. This is when you overestimate the employee’s current value to the company by recollecting what she was worth at her best.

When deciding what to do about a failing employee, you can avoid these traps by remembering that they’re there – and that these biases are deeply rooted in the psyche even of the most objective managers wrestling with the notion of employee termination.

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