Hire Higher: Letting Go to Grow
Terminating an employee in the Built World is rarely a pleasant task—some might compare it to pulling off a stubborn Band-Aid or admitting that pineapple does, in fact, belong on a pizza (a controversial take, we know!) Yet, when handled correctly and fairly, letting go of underperforming employees can actually strengthen the fabric of your team, making room for those who are excelling to prosper and simultaneously making room for new hires who may better fit your culture and business objectives. This principle, often called “Up or Out,” has long been embraced by top consultancies, law firms, and other organizations aiming to optimize performance. In the specialized world of Title Insurance, Escrow, and Real Estate Finance, this strategy can be a useful approach to ensure you’re operating with the best people in the right positions.
In this article, we’ll explore why the Up or Out method might benefit your organization, the best practices for saying goodbye to employees who aren’t quite making the cut, and how a specialized third-party recruiting partner can help you rebuild and reinforce your dream team.
The Case for “Up or Out”
Up or Out essentially means that employees either move forward in the organization—by meeting performance benchmarks and demonstrating strong cultural alignment—or move out, making room for new talent that can better serve the company’s goals. Sounds simple in theory, right? Yet, many companies hesitate to adopt this model at least partly because of the dreaded confrontation aspect often associated with terminations.
- Creating Space for Top Performers
Just like a professional sports team might trade players to strengthen its roster, terminating employees who are chronically underperforming frees up the “roster spots” for people who will excel. This is especially critical in niche sectors such as Title Insurance or Real Estate Finance, where specialized skills and cultural fit are often paramount. - Encouraging a High-Performance Culture
When your team knows that subpar performance has consequences, many will feel motivated to step up their game, ensuring they consistently perform at a higher level. Moreover, top performers appreciate being surrounded by colleagues who share their dedication, rather than those who slip through performance cracks. - Elevating Team Morale
Surprisingly, removing an employee who isn’t pulling their weight can boost overall morale. It’s demoralizing for strong contributors to watch their efforts diluted by someone who isn’t committed—or even worse, is damaging customer relationships or internal processes. Once these issues are addressed, the team often breathes a collective sigh of relief.
Best Practices for Proper Employee Termination
No matter how certain you are that someone isn’t a great fit, terminations must absolutely be handled with fairness, empathy, and strict adherence to legal guidelines. Below are some essential steps drawn from well-known experts and reputable sources.
- Document, Document, Document
Before you even think about termination, ensure that you have documented the employee’s performance issues, communications about these issues, and any attempts at corrective action. According to Indeed, thorough documentation can protect your organization from wrongful termination claims and provide clarity on where the employee fell short. - Give Clear Warnings and Coaching
If you’ve identified an issue, communicate it clearly to the employee. Provide coaching, resources, and a timeline for improvement. Business News Daily recommends offering performance improvement plans (PIPs) to help employees rectify their shortcomings. If the employee still fails to meet expectations after the PIP, you have a well-documented reason to proceed with termination. - Review Legal and Contractual Obligations
Consult with legal counsel or qualified HR professionals to ensure compliance with labor laws specific to your state or region (and especially relevant for organizations in highly regulated sectors like Title Insurance and Settlement). The National Law Review highlights the importance of following both federal and state guidelines, as wrongful termination suits can be expensive, time-consuming, and detrimental to your reputation. - Maintain Empathy and Professionalism
The conversation about termination should be firm but empathetic. Using phrases like, “We appreciate your contributions, but it seems this role isn’t the right fit for you,” can soften the blow. Remember that the employee is also a person with goals, aspirations, and possibly a family. Forbes highlights how showing genuine respect can go a long way in preventing a nasty exit scenario. - Manage the Exit Gracefully
Ensure final paychecks, benefits, and any severance agreements are handled promptly. advises that offering outplacement services or job-hunting resources can make the transition smoother for the departing employee in addition to demonstrating your organization’s integrity.
The “Up or Out” Method in Action
Many organizations view Up or Out more as a systematic tool rather than a one-time fix. Here’s how you can implement it strategically:
- Annual or Semi-Annual Performance Reviews
Tie employee progression to these formal reviews. For example, if your Underwriter hasn’t met specific benchmarks or your Escrow Officer repeatedly struggles with compliance or customer service, these sessions provide a structured timeframe to address concerns. - Defined Career Ladders
Let employees know what “up” looks like. Clearly outline the path to promotion, higher compensation, or greater responsibility. If someone isn’t hitting milestones, the next step is clear: a new PIP, additional coaching, or, as a last resort, a respectful termination. - Cultural Check
Skills can be taught; cultural alignment, not so much. For instance, if your firm values proactive communication and collaboration, but you have an employee who consistently works in isolation and resists team collaboration and coaching, an Up or Out strategy forces the conversation about whether they truly belong for the long-haul.
How a Specialized Recruiting Partner Could Help
Now, here comes the subtle wink-wink, nudge-nudge part: terminating underperformers is only half of the equation. The other half is finding top talent—people who not only have the right experience and qualifications within the Built World, Title Insurance, Settlement or Real Estate space but also align nicely with your firm’s values. That’s where a specialized recruiting partner (like us) can make a world of difference. Here’s how:
- Industry Expertise
A specialized recruiting partner speaks your language. They understand the certifications, regulations, and nuances that define Title Insurance, Settlement, and Real Estate Finance roles. - Cultural Alignment
A good recruiting partner shouldn’t just shuffle resumes and throw them at you; rather, they should take the time to learn about your organizational culture—what drives it, what fosters success, and what type of personalities thrive in your environment. - Speed and Efficiency
Conducting a thorough candidate search while you’re juggling regular business operations can feel like doing a tango on a tightrope. A good recruiting partner should streamline that process by using their network, screening tools, and insider knowledge to quickly but responsibly present you with the cream of the crop. - Long-Term Retention
The goal isn’t just to place people in jobs; it’s to foster long-term matches. The Up or Out model works best when you consistently bring in high-caliber candidates who have strong growth potential, ensuring that your talent pool remains robust and your performance bar remains high.
Final Thoughts
Terminating employees who aren’t a good fit is never fun—no one grows up dreaming of delivering pink slips for a living. However, the Up or Out approach can be a powerful strategy for maintaining a high-performance culture and ensuring that your organization thrives in a competitive market. By following best practices outlined by reputable sources and by consulting with legal counsel or experienced HR professionals, you can minimize the discomfort and maximize the benefits of the process.
Remember that this isn’t just about removing the weak links; it’s about uplifting and supporting the strong ones and creating an environment where top talent can develop and flourish. When it comes to rebuilding your team or making strategic additions in the Built World, Title Insurance, Settlement, and Real Estate Finance sectors, experienced based partners can be your best ally.
So, the next time you find yourself struggling with that tough decision, create or stick to you process and think of it as an opportunity to strengthen your team. Also, you don’t have to go it alone. If you need a hand (and maybe some ice cream to soothe the sting), we’re here to help.
Anderson|Biro is a full-service, Executive Search firm dedicated nationally to the Financial Services sector. We source talent to service all aspects of the Built World, including the Land Title Insurance, Settlement and Appraisal industries. We have forged successful partnerships with leading Homebuilders, iBuyers, Fintech, Servicers, Law Firms, Real Estate Brokerages, Private Equity and Lenders with direct or indirect stakes around the real estate closing table. We offer quality solutions for clients in these primary fields and beyond. Our candidates are screened for specific industry experience, outstanding track records, and values that complement your mission and culture.