When asked what the biggest lesson I learned about managing people in an entrepreneurial company, my standard answer is “Hire Slow, Fire Fast.” Too often, entrepreneurial companies don’t hire until a resource is absolutely needed and then scramble to get someone in quickly to meet a customer or project demand. Likewise, when someone is not performing, it can often take too the entrepreneur long to get rid of them. I came across an article in Business Week a week ago which gave me reason to adjust my thoughts on this matter. Let me explain.

The article, Fear of Firing, cites the growing challenges of companies in firing employees for fear of a lawsuit. Many business owners I talk with don’t even give it a thought – I’ll treat my employees so well they would never dream of suing me. Dream on. It isn’t about you, it is about what people can get. Even a lawsuit that has no basis can cost you money. Is there any way to prevent it? Outside of being able to predict a litigious personality in a job candidate without discrimination, it is tough. But you can increase your chances of success by making sure you have the right HR processes in place. This includes job descriptions, performance reviews, and a policy manual. Seem like overkill for a small company? Hardly. Think of it as cheap insurance.

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