Then you have employees who engage in illegal or unethical behavior, like showing up to work intoxicated. Employees like this must be dealt with immediately. You cannot keep an employee who endangers your customers and other employees’ health or overall well-being.
You can’t address what you don’t know. But if you provide regular feedback and performance reviews, performance issues won’t surprise you.
Watch and listen to how your employees interact with each other and their customers. Do employees tend to shy away from working with the same employee?
Don’t just hope that difficult employees will resolve their own issues without outside management. According to employee management consultant Erika Andersen, “Most managers will spend months, even years, complaining about poor employees… and not ever give them actual feedback about what they need to be doing differently.”
Don’t be that manager.
Now that you’ve identified a problematic employee, it’s time to act. Start by listening to them. Don’t assume that you’re aware of the entire context for their behavior.
Instead, ask them how they feel about any recent changes to their routine. How do they feel about using the new medical billing codes? How has the teamwork been with the new subcontractors? Does the new waitress feel overwhelmed by the size of her station?
Listening is especially essential if the problematic behavior is out of character. Is your ordinarily cheery employee short-tempered lately because her child is having school problems? You won’t know if you don’t ask.
You may find that showing empathy is all the employee needs to get back on track.
A thorough understanding of the employee’s problem allows you to be more precise about where they’re missing the mark. Don’t personalize your comments. Something like “You have a bad attitude” isn’t helpful and will only put your employee on the defensive.
Instead, you might say: “I noticed you often refuse to bus tables when we’re busy, or “I overheard you making unkind comments about [patients/customers/coworkers, etc.].”
Be specific about which goals or tasks aren’t being executed to your company’s standards. As long as you frame it right, employees will value your feedback. They just want to do a good job!
Then, involve the employee in designing their own solution. Ask them if they feel they need additional resources or support. Can they identify specific aspects of their own behavior that would help them change?
Employees will often recognize when challenging behavior comes from a personal problem. That’s good news. It means it’s entirely within their power to resolve the issue.
Now that you’ve talked about what needs to be done, it’s time to document the plan you’ve created together. This plan should explain:
The plan must also be time-sensitive. Remember our overwhelmed waitress? If the idea is to give her a smaller station, define precisely which new tables will be added and when. What’s the final date by which she should be handling a full station?
Next, outline the consequences if the behaviors aren’t changed, and new goals aren’t met. Let’s say an employee is consistently late. Their plan might specify that they’ll be terminated if they’re late two more times over the next month without good reason.
No one wants this to happen. But remember when I mentioned that ignoring bad behavior is no way to deal with difficult employees? Well, letting it go on after you’ve worked to fix the situation falls into this category.
Is the employee refusing to acknowledge that they need change? Or that there’s even a problem? Did they agree to the change plan, but didn’t make any actual changes? If so, this just might not be the position for them.
Your change plan clarified the conditions that would result in dismissal. Hence, no one should feel surprised when it arrives. The truth is, some situations just can’t be fixed.
In this case, let the employee go respectfully. Then, use this as a learning experience when searching for your next hires.
Boosting productivity and efficiency is much easier with an appropriately-sized team. More and more business leaders realize that assigning particular responsibilities to 1099 workers instead of full-time W2 employees makes more sense.
The former option is often much cheaper and puts fewer legal obligations on the employer. This is just one of the many differences between the two types of employees. And like other important business decisions, the cheaper option isn’t always best.
This section will explain the differences between 1099/W2 employees and which positions suit each type of employee.
1099 workers are also known as independent contractors because they are technically self-employed. The name “1099” comes from the form they receive from their employer to report income on their personal tax returns. Tax deductions do not come out of the employee’s paycheck, saving the employer from paying payroll taxes. 1099 workers must, therefore, put money away and pay taxes themselves.
The lack of deductions makes 1099 workers ineligible for employee health insurance and other fringe benefits like retirement plans. In most cases, employers enlist independent contractors to work for a defined period. That time frame, along with several other conditions, makes up the employee’s contract, hence the name “contractor.”
This includes the conditions for termination. Since independent contractors usually fulfill specific tasks, the only grounds for termination are failing to meet their outlined obligations.
Independent contractors can work on one or multiple projects at a time. Some of them continuously work for the same or a select few employers because they have a mutual arrangement that both parties enjoy. The employer can renew the employee’s contract as many times as he or she likes.
Common examples of independent contractors are freelancers who are not sole proprietors. To clarify, that means any freelance copywriter, graphic designer, consultant, etc. who doesn’t have their own business.
A W2 employee is a typical employee when it comes to salary, taxes, and benefits. While 1099 workers are technically self-employed, W2 employees work for your company and are therefore eligible for employee benefits. Most individuals who work for companies are W2 employees.
Payroll taxes are deducted from W2 employee paychecks, which is just one reason W2 employees are the more expensive option. Employers must also supply the required equipment for W2 employees, whereas independent contractors must provide their own equipment. When a W2 employee acquires a work-related expense, he or she is usually reimbursed by the employer. Since independent contractors are their own bosses, their employers typically do not reimburse them for business expenses, though their contract terms can say otherwise.
Unlike independent contractors, W2 employees can be fired for virtually any work-related, non-discriminatory reason. An employer can fire a W2 employee even if he or she is performing well.
You’ve just hired a new employee or have finished assembling your initial team. It’s now up to you to decide whether your employees are independent contractors or W2 employees. For many business owners, this is not a simple decision. The line between the two options can get blurry very quickly.
But it is a critical decision, as the penalties for misclassifying workers can be quite severe. Let’s say the IRS finds out that someone who should have been classified as a W2 employee was instead classified as an independent contractor. You’d have to pay a portion of the income taxes that should have been deducted from the worker’s paychecks, in addition to interest, penalties, and your share of FICA and unemployment taxes. If the IRS deems your misclassification as “willful,” you’d have to pay the full amount of the unpaid income taxes.
To help employers classify employees correctly, the IRS lists three main factors to consider:
If you’re still unsure whether an employee is 1099 or W2, you can file a Form SS-8 with the IRS. The IRS will then consider the circumstances of the position and conclude classification. It can take at least six months for the IRS to issue their decision, but the form is highly recommended for employers who plan on hiring more individuals for the same unclassified position. The sooner you file the form, the sooner you can hire more employees.
The differences between the two types of employees make it easier to deduce each option’s pros and cons. This section will go over the most significant advantages and disadvantages of independent contractors and W2 employees.
Sometimes, a particular aspect of the position you are looking to fill makes it very easy to decide between an independent contractor or W2 employee. Here are a few scenarios in which the nature of the position requires one option over the other:
As you can see, independent contractors are often the better choice when the job is less conventional. W2 employees are the better choice when you need help with ongoing, time-consuming tasks. Knowing when to choose either option will take a lot of stress off your shoulders because amid your many other cash flow issues, at least you can say you aren’t overpaying for labor.
There is always more you can do to get the most out of your employees. Smaller businesses must take exceptional care of their teams because each individual has a major impact on its success. With the right management style, your team’s size will not stop you from achieving your most precious goals. All the world’s money and resources cannot match a truly loyal and dedicated team’s potential.
Which management tactics did you use to build employee loyalty? Share any tips or resources on our contact page!
