How To Manage Problems With Employee Side Hustles
If you have capable and confident employees, they will be growing their skills and be in high demand to be involved in other things. They will get a steady stream of opportunities to participate in side hustles over the course of their careers with you. The fact that they are talented and have the skills they do, makes them believe they can juggle it.
This can happen to even the best long-term employees. Nobody intends for a side hustle to turn into a problem. They underestimate the commitment involved and the fact that their personal approach to work doesn’t allow for half-assed effort to be given to anything.
Here’s how a Threads focused manager handles the 4 types of side hustle situations, including:
An existing side hustle when hiring someone
An employee brings a side hustle they are considering to you for feedback
An employee’s side hustle is turning into a problem for your team
When you need to let someone go over their side hustle
What Is A Side Hustle?
Side hustles are anything for gain, outside of your primary thing.
The side hustle could be a legitimate hobby or part-time job that adds to the person’s life and their contribution to your team. An employee’s side hustle that grows out of control also has the potential to upend your entire team.
That Escalated Quickly
I’ve seen plenty of examples of side hustles that haven’t been a problem:
“We make homemade salsa and sell it at the farmer’s market on the weekends.”
“I help my father-in-law on the farm during planting and harvest.”
“I provide freelance design work to help a few non-profits market their annual events.”
“I watch the grandkids when they are sick and can’t go to daycare or school.”
… and plenty that have resulted in real problems for managers, employees and companies.
“I’m going to be the general contractor for the new house we are building!”
“I’m selling these new life changing supplements!”
“I’m helping a friend out with a marketing strategy for their start-up. It’s just this one project. They aren’t big enough for a full-time marketing person.”
Side hustles become a leadership problem that must be addressed when you end up providing full-time pay/benefits for substandard work. If you and your team are consistently creating work arounds to finance a person’s start-up, passion, joy or fun, then it’s past time for you as a leader to do something about it.
The Four Types Of Side Hustles
Here is how to manage through every type of side hustle situation you will face within your team.
(1) The Existing Side Hustle When Hiring
You can avoid some issues with side hustles by proactively communicating expectations before they become a problem. When appropriate, you should include language in offer letters and handbooks that acknowledge your expectations on side hustles.
This will give you an opportunity to discuss any existing side hustles the person may have in place before becoming a full-time hire. If it is a problem before Day 1, you and the potential employee will know in advance, avoiding a situation that isn’t going to work out well for anyone.
If you think the side hustle is going to be a problem, it’s best to trust your instincts. If changes can’t be agreed to that work for both parties, don’t make the hire.
Here is an example of offer language to proactively address side hustles in the hiring process:
Free Lance / Consulting - Any freelance or outside consulting work needs the prior approval of organization leadership
(2) When The Employee Brings the Side Hustle To You
Sometimes an employee will bring a side hustle opportunity to you for feedback. In this case, it’s important to identify where the employee is in the side hustle process to handle it correctly.
Ask Clarifying Questions.
What is really going on here? Not what they are telling you is going on, but what is really going on. The employee isn’t bringing this up to you at the spur of the moment. It will happen after they do a lot of thinking. They have weighed the opportunity forward, backward and upside down. Often they are already 10 miles down an 11 mile road… their decision is likely already made and they are looking for your approval. The best policy: Always start with questions.
Listen Intently: Advice or Justification?
You need to find out why they are bringing this side hustle idea to you for discussion. There is a chance they want your honest feedback on it, but remember, most often the person will frame the side hustle in a way to justify the outcome they want. Their decision may already be made.
In that case, the goal of the conversation is to convince you that this side hustle won’t be an issue. When they are done, they might even have you wondering if it might even be good for the company. Are they asking you for your honest opinion, or is it a presentation of the narrative and outcome they want to achieve?
Either way the employee isn’t likely trying to deliberately mislead or lie to you. Think of the kid from A Christmas Story trying to convince his parents to get him the Red Ryder BB Gun.
If you are being sold on an idea vs. being asked, the employee already senses the risk. This side hustle has a high percentage of turning into a problem and they know it. Pay close attention. You need to understand what is really going on, so you can be honest.
If The Employee Side Hustle Isn’t A Problem Say This
By this point, you should have a pretty good lay of the landscape. If you feel good about the potential side hustle, the conversation can end pretty quickly with the following:
“From what you are describing, this seems like it would have a minimal impact on your role here and the team. Let me know if something changes. Please keep in mind that I am accustomed to your current level of performance. So is the team around you. Your compensation is based on those things. I will keep an eye on it and let you know if it becomes a concern for me.”
Thank them for letting you know… AND ACTUALLY KEEP AN EYE ON IT!
If You Have Concerns, Ask This Question
Wait until the end of the employee’s side hustle presentation and ask this question: “What do you want from me today?” Their response will be somewhat taken aback, usually replying with a “what do you mean?”
I would then reply with this: “Are you seeking my approval?” After they answer, do not reply to the employee at that moment. Tell them, “I need to take some time to honestly think about it. Let’s sit back down and talk about it.” Then schedule a meeting with them a couple days out to sit back down. Taking this time will serve two purposes:
This allows you to consider possible outcomes using your experience as someone who knows them, their role and what it takes to be successful on your team.
It gives the employee time to consider what they have asked you to approve.
Do not underestimate the value of this second purpose. If you have concerns, state them clearly in the follow-up meeting. Look beyond this employee and their side hustle, considering their co-workers and your team. Advocate for the people who will likely be dealing with their change in performance.
But If I Say It’s A Bad Idea, I’ll Risk Losing Them!
You will be tempted to tell them what they want to hear vs. what they need to hear. Here is how you will rationalize it, and the top three answers are on the board:
This person is a great employee. Even a reduced performance is still pretty good.
This person is highly responsible. If they have a problem, they will make an adjustment.
As an entrepreneur or manager myself, how can I say no?
Actually, none of those answers should be on the board. The simple idea here is: Don’t rationalize and tell the truth.
Still not convinced? Get your courage up by taking a moment and imagine a future where their side hustle has spun out of control. You have to tell them you are letting them go, because their performance isn’t where it needs to be. How would you feel looking at this person, in that moment, knowing you never gave them honest feedback?
Keep Notes Of The Conversation
You should keep detailed notes of what was said or promised in this initial conversation in your manager notebook or a feedback software system. If the side hustle does turn into a problem, you will need these details to keep it fact based. If you aren’t currently in the practice of keeping manager notes throughout the year, read up now on why you should start.
(3) When The Side Hustle Becomes A Problem
The third case is when an employee side hustle has already developed into a problem situation.
You know the side hustle has become a problem and you need to take action when you first start hearing complaints about the side hustle or seeing it is negatively affecting others on your team.
If you are hearing about or noticing a decline in performance, effort and communication. Then imagine what it is like working with the person day-to-day. Things are already much worse than it appears from your position 1 or two steps removed as a manager
With a problematic side hustle, you can’t just wait for the situation to play itself out. As the team feels that this individual is focused more on their own personal side hustle than the team, the negative effects will start to spread like wildfire.
It’s possible this was something you gave the employee approval on or it could be something you were not aware was developing. In either case, your leadership path out of the problem will follow the same framework.
Conversation Must Be Fact Based
Your intervention with this person must be based in fact, nothing touchy feely. An “I feel like you are spending too much time on this…” conversation will not go well. If you took notes from a previous conversation about the side hustle expectations or specific details on how their performance has slipped, re-read those notes prior to the meeting. This will refresh your memory and keep feelings from clouding the conversation.
It’s The Performance Change, Not The Side Hustle
You have to make sure your conversation is performance based. What has changed for this person? At this point, you have a theory, but you really don’t know for sure. The objective is to not attack the side hustle or make assumptions about the impact of what they are doing on the side. The reason for their performance suffering is irrelevant. Try something like this:
“I’m talking about where you were as an employee, your own expectations based on how you have always performed for us in the past. I’m just trying to find out what the problem is. I don’t know if the extra stuff you have going on is really playing a role or not, but I do know your performance isn’t where it used to be. My question for you is “What’s changed?”
Keep It Focused On Them, No Comparisons To Others
When a good employee knows they are doing less than they should, they will usually start comparing themselves to others. They know they are in the wrong in this case and often will try to defend themselves using examples from other people on the team. Make sure you keep the conversation focused on the comparison to their previous self and leave others out of it. For example:
“Right now I’m just looking at your performance today vs. where it used to be in the past. I’m not comparing you to others, only what I know you are capable of and what you’ve shown all of us in the past.”
Show Them Some Empathy
Realize that if their performance is unraveling at work because of a side hustle that’s grown out of control, then it probably is negatively affecting their home life and other areas as well. They didn’t intend on the side hustle taking over their life. They may feel that they already are fighting a war on two fronts and your conversation is opening a third. Your goal here is to make sure they know how important they are to the company, the team and you. I would tell them:
“It sounds like you are in a really difficult situation. We need you and the team needs you to get back to where we know you can be.”
Keep Notes and Follow Up
The employee will likely promise things will get better after a specific date or after an upcoming event happens that will ease the time commitment and stress of the side hustle. You will likely see at least a short-term performance improvement as the employee gives a temporary boost in effort to try and put out this fire or stop it from spreading.
Unless the underlying dynamics of the side hustle change, that boost in effort will be temporary as the employee will still be stretched too thin. A follow-up conversation would have a similar format. You will need the notes to reference the previous conversation and continue to keep it fact based.
If the employee is able to make the necessary changes, you will have successfully navigated out of a very challenging situation. After performance has improved, make sure to follow-up with this employee and let them know that you have noticed, “It’s nice to have you back!”
(4) When The Side Hustle Needs To Become Their Full-Time Job
In this case, you have already had a conversation or two with the employee about the performance change. You have seen short-term improvements as their focus shifts temporarily back to their “primary thing”, yet the dynamics of their side-hustle keep pulling them away.
As a leader, how do you know when you need to let them go make their side hustle their new full-time job?
Will It Improve? Do Your Own Analysis
The employee will still honestly believe that improvement with the side hustle problem is always just around the corner. “It will get better as soon as ________ happens.” No it won’t. That is what they need to believe in their situation to keep going. Don’t take their word for when it will get better. Do your own assessment.
Do your best to honestly separate yourself from the emotions of the situation and look at it objectively. Ask yourself these questions about this employee and the side hustle:
How easy is it for this employee to unwind or disentangle from the side hustle… could they get out even if they wanted to?
What is the size of the money and time investment is the side hustle relative to their position with your team?
Running a back of the envelope calculation, how much more time and money are needed until the side hustle is done or the employee knows it will be successful?
What will happen to your team’s dynamics during this time?
If there is no resolution to the side hustle in sight and/or your team will be rubbed raw from covering for this person’s side hustle, then unfortunately it is probably time to part ways.
What To Say… Why It’s Good For You And Good For Them
If you are going to be your own boss and have your own business, there is no way you will ultimately be successful unless you are 100% focused. In these cases, you have to push them out there and they need to find a way to be fully committed to the side hustle. If they are unwilling to choose a workable path for themselves, you are going to have to do it for them. What do they have at stake? Everything. Here’s an example of what you should tell them:
“It takes 100% commitment to make a business successful and be an entrepreneur. What I’m going to tell you is going to be tough to hear, but what I’m telling you is what you need to hear. As we have discussed in the past, my respect for entrepreneurs is unmatched. It takes a huge commitment to be successful. It also takes a huge commitment from everyone here to be successful in this business too. At this point the effort you are giving here is not working for me, or for our team and we are going to have to let you go. No animosity. No hard feelings. Nothing but respect. I hope you go out there and become the biggest success you can be.”
Beware of the Side Hustle
The next time you hear someone on your team talking about a new side hustle with all consuming excitement, pay attention. Reference this chapter and be proactive. If a leader starts to handle this type of problematic side hustle situation well up-front, the options you have to manage through it down the road are almost unlimited. The longer you decide to look the other way and hope for the best, the termination of the employee becomes more and more likely.