Leadership & Management

Human capital management: Secrets of hiring and firing

Human capital management: Secrets of hiring and firing

Learning how to hire the right people and letting the wrong people go quickly

A company’s employees really are its most important asset (and occasionally, admittedly, can be its biggest liability!) and they are not to be treated as disposable assets, with people hired and fired at will. The hiring and firing process calls for some sensitive management skills. Indeed, it is vitally important that due diligence and prudence is given to the job of hiring key employees. In fact, the hiring of employees might be among the most important decisions that any small business owner or investor will make on behalf of the company.

Equally, if a hiring mistake has been made, then it is of the utmost importance that the issue is dealt with swiftly and fairly. This is not intended as a best practise guide in hiring or firing. The aim is simply to advise on stuff that is often overlooked based on personal experience, and the privilege and the opportunity of hiring across different countries, many highly talented folks.

There are common threads and characteristics in hiring that are worth watching out for. Similarly, it is useful to describe how to mitigate against situations that arise, if and when mistakes are made during recruitment. Most countries around the globe have laws that regulate and govern how businesses treat their employees. These need to be adhered to, of course. There are also some easy to use tools, various frameworks and a series of traits that can be identified and applied to ensure that risks are minimized.

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Understanding the value of EPIC-based HR

No matter what job role you are seeking to fill, there are some basic and functional expectations that will be required of a potential candidate. These expectations could range from having a relevant professional degree to a certain number of years of experience doing a relevant job. You would probably add additional expectations like the ability to communicate well, or the willingness to work flexible hours, and so forth. For good measure, you would in all likelihood add the requirement that a candidate is an excellent team player, be flexible, motivated, hardworking and so forth. In addition, for most management roles, you would expect a certain level of functional knowledge and intelligence, as well as analytical skills and demonstrable
creative intelligence.

Of all the attributes that need to be considered during recruitment, it is easiest to miss out on a very important characteristic that will determine whether a potential candidate is going to succeed or not. It’s called the EPIC factor, and it stands for a person who is an Emotionally and Practically Intelligent Candidate.

In the everyday work environment, especially in a challenging small business, emotions have a way of getting in the way of some very important relationships between the owner, a key manager, an employee, a key customer, a supplier or supporting staff. Therefore, it is important that employees possess and can apply
their emotional intelligence – and ability to evaluate, determine and perceive others around them. In most business situations, conflict or disagreement is not generally cover a certain strategic direction or a specific tactic or a task itself, but rather it pivots around the emotion of the moment. Emotional intelligence is often mistaken for a person who is able to control their temperament and does not get overly angry. This is certainly not true.


Nothing we do is more important than hiring and developing people: At the end of the day business runs on its people, not on strategies.”

– unknown

One of the best descriptions of emotional intelligence is to compare it to an orchestra or band playing music to a lyric. The lyric itself is nothing without the music. You will never recall a lyric without the right recall of the accompanying music! In the same way, when a potential candidate interviewing for a job responds to a series of questions, their responses will include his or her cognitive ability to articulate the issue at hand.

It is the emotion of the situation that provides the intonation, the sighs, gasps, gestures and animation. Without emotion, we can expect only a robotic, a matter of fact and boring discussion. In many senses emotion is like a beautiful picture or work of art with no one to admire it; it has instinctual, intellectual and creative aspects to it but there is no emotion. Or, take a house or building that is designed with brilliant architecture, but has no furniture or fittings and no occupants. The building is said to have no emotion.

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Primary characteristics to identify candidates with high emotional

The EPIC-based interview process

So when you are hiring a key recruit, we need to be able to decipher how well the candidates combine their intellectual and creative capabilities to their emotional intelligence. It is a sure way to identify a candidate that can relate to others, versus someone who is drab and ineffective.

As a small business owner or manager, you probably cannot hire expensive human resource consultants to test the power of these EPIC attributes, but each of them can easily be tested with scenarios related to your industry or business situation. Simply keep each of the recommended required attributes in mind and challenge the candidate in various scenarios. The key is to be prepared for the interview and once you have done four or five, it will come naturally to you.

The interview is not just about the functional, creative or intellectual capability of the candidate. These are easily verifiable. It is important to ensure a candidate would likely succeed in the often challenging business environment, and that they would make a real difference to the business! So, as well as the main attributes that we’ve already listed, there are others that will determine the overall emotional intelligence of a candidate. Some of the key ones that should be tested are:

• Does the candidate demonstrate a positive outlook and a sense of optimism?
• Do they show a sense of independence?
• Are they people-oriented?
• Do they demonstrate self-realization of their capabilities (their strengths and weaknesses)?
• Do they have an ability to work under stress?

Always be smart enough to hire people brighter than yourself.”

– John Lincoln, author

Strategies and tactics for fi ring at will and without obstruction

Firing an employee is never easy. It can often be heart-wrenching to say goodbye to an employee, and these emotional feelings can be exacerbated in these trying economic times.

However, it often might mean the survival of your business and so it needs to be planned for. As a small business owner, you do not have the time or the appetite to be caught in a legal tussle with an ex-employee.

It is safest to assume that every termination will or might result in a legal suit against your company, and to mitigate against this there is a need to be mindful of some simple steps that stand as strategies and tactics to minimize the risk of legal action.

It is also important that any termination is labelled appropriately to avoid potential legal action and/or emotional over-reaction from your employee. Words like de-layering (when management is terminated) to right-sizing or reorganization are terms which should NOT be used when having to let employees go.

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There are some specific labels that can rightly be applied to describe different circumstances that trigger termination:

Dismissal – This means that your employee’s performance and/or conduct were deemed unacceptable and unsatisfactory and failed to meet agreed performance objectives set in an appraisal. (In very special circumstances, the suspension might be an alternative, before any decision is made to terminate permanently.)

Resignation – This means that your employee has voluntarily decided to part company with your business.

Retrenchment or lay off – This means that you have to terminate employment because of prevailing economic or trading reasons and that they will be rehired as soon as work is available.

When dealing with the termination of employees, be deliberate and structured. You have no other choice, as the opportunity costs of time, money and morale of your employees are just too high!

Words like de-layering (when management is terminated) to right-sizing or reorganization are terms which should NOT be used when having to let employees go.”

– John Lincoln, author

A checklist for compliance – safe and sensible steps towards fair and legal termination

Documentation – Have a well-documented file for every employee outlining any instance of misconduct, non-performance, breach of contract, harassment or whatever reason you have, prior to terminating the employment of any employee, regardless of the reason.

Confident – Exude confidence when you have to terminate an employee. If you are not confident, this could be misconstrued as unfair dismissal.

Respect – Treat the employee with respect and dignity – even if he or she had stolen from you!

Be fair – Exercise fairness. Your other employees are watching! You need them to succeed in your business after the event.

Compensate fairly – Compensate your employees humanely, within the limits of affordability.

Be transparent – Be open, frank and candid when you have to deal with an employee whom you deem is no longer suitable for your business.

Have a witness – Have witnesses around you, when you are dealing with a termination. You do not want to be accused of harassment or anything worse.

Offer references – If an employee has not been terminated for poor performance, breach of trust, violence or harassment, offer a reference that will help them seek alternative employment. 
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