NFIB

Not Firing a Poor Performer
03/ 28/ 2002

by Dan Santow

When Pizer decided to leave the family business in 1993 and strike out on his own, he and a partner founded Central Merchandising in Morton Grove, Ill. The company, which has a Web site at www.centralmerchandising.com, is a distributor of supermarket equipment and supplies. They furnish everything one sees in a grocery store, from the tongs the butchers use to shopping carts to the doilies under the bakery cakes. Everything, that is, but the food.

Since then, they've created a successful small business, with several million dollars in annual sales and 14 employees.

But it hasn't always been smooth sailing. Some of the rough waters have stemmed from Pizer's desire to create a warm, family-style business (like the one he came from) with people who weren't really family.

For instance, when it came time to consider terminating an employee who was no longer meeting her performance goals, he did what anyone might do with a family member: he hemmed and hawed and finally convinced himself that firing her would be the wrong thing to do. As a practical matter, he rationalized that his unemployment insurance rate would increase if he got rid of her.

The employee, a woman who had worked at his uncle's company, too, knew "not only the vendors but a lot of information about them," says Pizer.

But that was then. After several years of generally good performance, more and more she was making careless and costly mistakes. As Pizer says, she was doing her job fine 85 percent of the time, "but it was the other 15 percent that was killing us. It's that one order that got misplaced, or that one item that was misquoted," which, says Pizer, "cuts a salesman off at the knees. That drives everyone insane." Each time there was a mistake he'd talk to her and each time she'd apologize. But sooner rather than later, there would be a repeat situation.

It became clear that there was a real problem, and her increasingly unreliable performance was starting to affect the rest of the company. In fact, another person threatened to quit if something wasn't done. Pizer looked around and "saw the drip, drip, drip of all the problems that were caused by this person and well, it hit me like an anvil. I knew what I had to do."

Pizer realized that he misunderstood how his unemployment insurance rates are calculated. Rates, he learned, are based on a combination of factors, including the number of terminations a company has and overall payroll, among other things.

"You should neither hire nor fire lightly because of unemployment," he says, "but we hadn't really done enough homework on it to know that in fact the increase to us would be nominal."

Pizer terminated the employee and was able to hire and train her replacement quickly. It took a while, he admits, but the lesson learned was invaluable.

"If somebody is not working out, in the end it's a good bet for the money that you should make the change, and not worry about extraneous factors like your unemployment rates," he says. "Because ultimately your business suffers and you create ill will with your employees."

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This article originally appeared in the September/October 2001 issue of MyBusiness Magazine, NFIB's member magazine.

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