That’s a very interesting subject. And this is something where I’m a bit dumbfounded because the amount of stress that comes with an underperforming person that we want to manage out and the potential to have the company go to court on this is really quite crippling when managing people in or out should just be business as usual in a sense.
In France, getting people out is not so big a deal and we even have a “contractual dismissal” where every one agrees that the experience has “failed” somehow and the employee is allowed to go and still retain his rights to unemployment benefits. I know we are burdening the social system with contributions to the welfare state in France but somehow, when it comes to laying off people, this is just another day in business life. And in a sense, when you think at how ridiculously stressful such an occurrence can be, it sometimes looks like we are more liberal than over here.
So how do you manage this? probably data will tell you that for 3-4 intake (assumption here), there may be one that will have to be managed out within a short to medium or even longer timeframe. That’s 25% of the wage cost. You also know that the courts are allowing at most 3 months worth of income to the departing employee on average or if there’s substantial evidence then probably more but that will be rather exceptional. So you start building up a fund to cover 5-6 months of 25% of the wage cost to cover the cheque, the cost associated in making up for errors and bonus for the remaining employees that will need to bridge until a suitable replacement is found.
if this happens, then you front it with the knowledge that your cash flow can support it. You take care of a situation before it becomes a threat to the overall organisation. Your clients are happy, your team is happy because you are protecting them by doing that and you are happy because you have a choice… and there is no stress.
So essentially, you are making up for the wellfare state so you can take your decisions and go through with it in a business like manner, and you get to enjoy a glass of wine for the last day of this employee… sometimes I think the French have some stuff all figured out ahahah