Quality of Hire is the priority for most companies currently, and is hailed as the top metric to watch for success. However, when employees must be let go, it’s Quality of Fire that counts.

Ultimately, leaders need to be aware that how and who they fired in the past can have a direct impact on the company’s financial success in the near future. 

If a layoff is not handled well, whether that be due to issues with communication or the treatment of exiting employees, the impact on team morale or even company sentiment can have significant repercussions. Goodwill - or lack of it - can influence worker productivity right away, as well as negatively affect hiring in the future.   

If you’ve neglected your quality of fire, then the negative experiences of your past employees will cripple your effectiveness in attracting quality candidates. Who you fire should not be a quick decision based on arbitrary or isolated data points, particularly tenure. 

In fact, last-in, first-out (LIFO) policies, according to Crosschq Data Labs’ findings from the Quality of Hire “Q” Report, can lead to disastrous results. 

There have been cases when the Quality of Hire of employees terminated was 15% higher than those retained. Although money was immediately saved from salaries cut, by dismissing the wrong people, ROI  of the remaining workforce could tank quickly.

There have been cases when the Quality of Hire of employees
terminated was 15% higher than those retained.

Understanding why you should fire employees, when to let them go, and how you should break the news are all pivotal decisions — but the most important of all is knowing who you are firing. 

Here at Crosschq, we’ve influenced more than 25 million hiring decisions. The data we’ve gathered makes it perfectly clear: the culture of firing in the United States ranges from simply uninformed to‌ toxic, and it could be harming your company culture, your organization's brand and your bottom line.

Forward-thinking leaders need to stop firing employees without using (the right) data and reevaluate the entire concept of firing as a whole.

Why Are You Firing People? And Why “Cost Savings” Is Not A Good Reason

The reason why companies fire or let go employees can vary. 

A decrease in demand for a product or service, or even the market,  can cause a sharp drop in the need for a standing workforce, leading to difficult layoff decisions. 

If your business has seasonal highs and lows, you may already be adjusting annually by hiring part-time, temporary, or contract workers to bolster employee ranks for a few months each year, on the understanding that the role isn’t permanent.

If your company is experiencing a downturn in business (as many did during the COVID-19 pandemic, and many now are anticipating in the face of a looming recession), layoff of longer-term employees may be required to stay solvent. This can be much more difficult to navigate.

In the latter case, there may be ways to avoid having to permanently lay off good employees; some companies have successfully worked with their entire workforces to negotiate reduced pay, reduced hours, or both for a set period of time in anticipation of market recovery.

If you’re firing en masse when your company is making record profits,
you could be digging your organization’s grave.

Tech companies are currently claiming they made “over-hiring” errors and are “recalibrating”. But is that what’s really happening? The Facebooks and Googles of the world are currently bringing in tens of billions in revenue every year; do they really need to fire 10K people at a shot?  

Firing people — especially when you know you’re going to be rehiring at some point - is expensive as well as a reputation killer. A head of TA at a major tech company told our team that the average cost it took to fire someone (all expenses included) was about $80,000. Multiply that by a few thousand and you’ll see that mass firings don’t necessarily make sense.

The average cost it took to fire someone
(all expenses included) was about $80,000.

In many cases, what’s really happening is that mass firings are a fast way to make a company look better on paper for an end-of-quarter fiscal review. It can boost stock artificially in a dire moment. However, ‌employees who have been treated as disposable will be talking about their experience.

More executives should take a page from Eric Yuan of Zoom. "I am reducing my salary for the coming fiscal year by 98% and foregoing my FY23 corporate bonus."

Keeping employees on in the face of corporate adversity, or finding creative alternatives to a sudden mass layoff, shows a commitment similar to what you expect in loyalty from your workforce, and can be worth more than millions spent on advertising.

You’re Firing Your Best Performers and You Don’t Even Know It   

None of the above advice will have much meaning over the long-term for your company if you are firing all the wrong people.  Tenure bias, also known as the "last in, first out" approach, can lead to negative results across your organization, eroding productivity, morale, and revenues. 

Firing and retaining based on how long an employee has
worked at a company is inefficient and potentially disastrous.

The previously mentioned Crosschq Data Labs’ findings from our Quality of Hire “Q” Report, clearly highlighted cases when the Quality of Hire of employees terminated was 15% higher than those retained. 

The results of indiscriminate firing based on tenure can cause high-value employees remaining in your organization to be forced into picking up slack, leading to their attrition as well. This can have a domino effect, decimating your workforce far beyond planned termination levels. Instead try:

• Evaluating employees based on the Crosschq Quality of Hire Scorecard can help you figure out who is really pulling their weight in your company and who is just punching the clock, and base your firing decisions accordingly.
  
  
• Using Quality of Hire metrics when deciding which employees to lay off can help HR professionals make more informed, data-driven decisions. To effectively leverage these metrics,  HR professionals should consider the following steps:
  
  
  • Define Quality of Hire metrics: Start by defining the metrics that will be used to measure the quality of employees. These can include factors like job performance, cultural fit, engagement, retention, and the achievement of performance goals.
    
    
  • Collect data and calculate Quality of Hire score: Gather data on employees' performance, skill sets, and contributions to the organization. This can be done through performance reviews, feedback from managers, and other sources like engagement surveys.
    
    
  • Analyze the data: Analyze the collected data to identify trends and patterns in the performance and contributions of employees. Use this analysis to create a comprehensive picture of each employee's overall quality and value to the organization.
    
    
  • Prioritize employees: Based on the analyzed data, rank employees according to their Quality of Hire metrics. This will help identify the top performers, who should be retained, as well as the lower-performing employees, who may be considered for layoffs.
    
    
  • Consider other factors: It's important to also take into account other factors, such as legal and ethical considerations, diversity and inclusion, and the potential impact of layoffs on team dynamics and morale.
    
    
  • Make decisions: Use the insights gained from the Quality of Hire analysis, along with other relevant factors, to make informed decisions about which employees to lay off. Be sure to communicate these decisions with transparency and empathy, providing support and resources for those affected.
    
    
  • Monitor and adjust: Continuously monitor the impact of the layoffs on the organization and remaining employees. Be prepared to adjust plans and strategies as needed to ensure long-term success and a healthy work environment.
    
    

Data Shows the Way Most Companies Fire is Wrong

Ideally, letting any employee or group of employees go will be a process that follows internal best practices, with the decision being made collaboratively if possible and the employee being led gently but firmly through the off-boarding process. 

Regardless of legalities, how you fire can have an enormous impact on what outgoing employees say about your company and on how retained employees deal with the exodus. Whenever possible, find ways to keep employees on, whether that means cross-training, retraining, reducing hours, or shifting employees to contractor status.

In cases of unavoidable layoffs, opinions are split. Some say minimal notice is best, citing potential lowered production from outgoing employees post-notification. However, sudden firings can cause severe resentment among both leaving and remaining employees as well as poor public perception of the organization.

“Stealth” firing is probably the very worst thing
you can do in today’s employee-sensitive climate.

Many former employees of big-name companies have reported mass emails going out in the early hours of the morning, or simply waking up one day and finding themselves locked out of all work and communications systems.

These types of stealth and surprise tactics around firing are monumentally bad for morale, and creates a culture of fear and anxiety. A well thought-out, well-communicated, and well-executed approach to layoffs can not only stave off such adverse reactions, but prevent retained employees from suffering “survivor’s guilt”  in the wake of an exodus.

According to one study of employees who "survived" a corporate layoff: 

• 74% said their own productivity at work declined post-layoff
• 69% said the quality of their company's product or service declined post-layoff
• 87% said they were less likely to recommend their company as great to work for
  
  

Harvard Business Review notes that a robust communications plan that is put into effect well in advance of the official announcement of a reduction in force can be key to maintaining both employee morale and productivity.

Providing Soft Landings: Taking Care of Your Exiting Employees

Providing a soft landing for off-boarding employees can make a tremendous difference for both outgoing workers and those remaining, as well as for your organization’s reputation. Look for things you can do to soften the blow of a termination, such as providing laid off employees with a bridge to their next career move.

Compassionate firing isn’t just the moral thing to do,
it’s better for public perception and internal morale.

Supporting former employees and giving them resources to help them land securely in a new position is one of the best things you can do both as an employer and as a public facing company. 

Crosschq Assist allows you to provide terminated workers with the opportunity to opt into a high-value talent network and gain instant exposure to thousands of employers.

Making this move shifts perception of your organization from “uncaring” to “compassionate”, and can also lay the groundwork for re-hiring high-value employees if the opportunity presents itself in the future.

Bottom Line: Data is King When It Comes to Quality of Fire

Leaders who fire without reviewing all of the data risk the stability, productivity, future, and reputation of their organizations. Use data to:

• Figure out who you can get out of firing by shifting their role/responsibilities
• Understand how many people you really have to fire to make things work
• Identify the high-value people you shouldn’t fire, no matter what
• Determine accurate headcount so retained employees aren’t overworked
• Support your remaining workforce before, during, and after a layoff
• Create opportunities for outbound employees to slide smoothly into a new position
• Score and save all leaving employees’ data for potential rehiring in the future

At the end of the day, firing employees is an unpleasant task. To learn more about how Crosschq can make it less unpleasant for all parties involved, contact us for a free demo today.