On Severance

I recently observed a heated startup mailing list discussion about whether a to give severance to an employee of a early stage (but funded) startup. Most of the discussion focused on what was legally required and whether or not to couple severance with a separation agreement. This was my response:

I hate severance. Hate it. The thought of paying someone I was forced to fire because he (or she) is incompetent burns me up inside.

However. I always provide severance and I always require a departing employee sign separation agreements. For everyone from an executive to the janitor.

Why? Because it’s a small town and current and future employees will notice how you take care (or don’t take care) of people on their way out.

Other employees won’t always know why a former employee was fired, but they will know that you fired them with little notice* and no severance. It just looks bad and makes people worry about working for you.

Cash isn’t king. Your reputation is.

But then again. I’ve been told I’m a bit old school.


Now read this

An Entrepreneurship Tale

From lowly dev to funded founder and the missteps and lessons along the way. view slides Of all the talks I’ve given this one, on my journey from being a developer to being a founder to being a non-starving founder, was the one I loved... Continue →