I have never fired anyone too early.
How many founders have been in the position of hiring a senior executive — having gone through all the interviews, reference checks, board approvals, and negotiations — only to have doubts creep in all too soon after they start? Your hire doesn’t seem to be delivering on the promises they made in interviews. Or, they aren’t able to bring in the hires they promised so boldly from their network. Heck, they don’t seem to be gelling with the team. Or you might just feel they behave in a way that’s not consistent with the values you worked so hard to create.
After a while of trying and challenging them directly to step up you’ve realized that what sounded like their “experience” in the interview and even confirmed in reference checks, turns out to be things they observed but they didn’t really drive (or truly understood from within) and therefore can’t replicate. When you try to question them, they deftly respond to any objections or concerns in vague terms, or in some cases they seem to avoid meetings where they might be held accountable. Each issue drains your energy — and that’s something you can’t afford in the role as CEO of a startup, where you’re already overstretched.
So what do you do when you start getting this pit in your stomach that the senior executive you had so much hope for — that was going to take your darling, ambitious, visionary startup to the next level — might not be doing, well, exactly that?
You fire them.
Increase your NPV of success
To be provocative: No one ever fired someone too soon. This is a seasoned refrain I hear a lot amongst experienced founders and CEOs, and I have never heard anyone disagree with it. Think of it as success-NPV, or the “net present value of success” — not for financial plan considerations but for outcomes on talent: the longer you leave firing, the lower the NPV will be. Not firing someone means not moving ahead with the right person that much earlier, you’ve now started the clock of underperformance, and the longer you wait, the longer that clock of lost opportunity is ticking. The longer you wait to fire them, the more compounded success is lost.
This is counter to the prevailing wisdom about working with someone to help them do their job well: developing a training program, a system of accountability, perhaps professional development. But in the world of startups, it’s important to make a quick decision, and fire fast. It’s one of those rare instances where appealing to the “angels of our better nature” might in fact be the very thing that kills your company. I can’t tell you how many times I’ve spoken with a CEO who knows he’s having trouble with a direct report; when pressed as to how they are handling it, the CEO will more often than not respond something like this: “I just wanna give them one more minute/ hour/ month/ quarter” and so on… until it becomes a year or several years. In almost every company of any size, there’s someone in a role who’s limping along like this. But in a startup that’s a luxury no one can afford. Especially when it comes to executives.
Don’t worry about what people will think — they already KNOW!
By the time the CEO or founder is having these doubts, you can be sure that the junior employees already do. In fact: I bet you, the CEO, might be the last one to realize the person should have been fired while you spent all that time wondering about it in the back of your mind. Meanwhile, those people who work below your underperforming executive — they knew long before you do. This applies to both new executives you hire, and executives who have been with you for a while where you don’t catch that they’re not keeping up.
The whole organization is waiting for the person to be fired. And every time there’s another major presentation, an important sales call, or a major launch, your employees are watching you to see what you’re going to let this executive get away with. You’re guaranteed to lose outstanding colleagues who won’t put up with your indecision. These people want to work for your company, but not if you don’t hold the quality bar high enough. It makes them look bad too. It makes them not trust your leadership.
I never lost talented rockstar employees because we didn’t let them work on sexy tech, or because the business ran out of potential; I lost my first top performer when I didn’t remove their boss, who I knew wasn’t performing as well as could be expected. The top performers came to me and told me they were leaving, I was stunned and asked what was so much more interesting that they wanted to leave? Answer: I had left the executive in place for too long.
Don’t trigger the decay model of trust — why is management tolerating this shit?!
Using the NPV analogy, every minute you’re not doing something, you are compounding the negative growth (not just money, not just time), because people are losing faith in you as a leader. In fact that’s a higher cost than any of the other losses because it becomes a systemic, organization-wide problem: the company that employees no longer trust, that no longer demands or values their highest performance.
“What kind of a company am I in where they tolerate this shit?” (haven’t we all thought that before at some point?) Or: “These people are getting paid the big bucks, and I’m over here doing all the work!” Then “I don’t wanna work here, I wanna go home early.” And finally: “Let me go find someone I can work with.” Once you kick off the decay model of trust, you’re already losing because it gets very hard to stop the spiral downwards.
Watch out for these signs
All startup CEOs have doubts; the very nature of this work is riddled with uncertainty. So how do you tease apart those general doubts from the doubts you might be having related to your executives? What are the signs to watch out for — the thin cracks of ice that, when you put your foot down, begin to splinter out and shatter the surface?
Broken trust. I learned this one thanks to a prod and encouragement from legendary businessman and coach Bill Campbell. We were once in a little breakfast meeting with five CEOs getting his advice. When one of them asked, “What if there’s people on your team you don’t trust? How do you handle them?”, Campbell looked straight at me and belted out with a laugh, “Lars, you answer that one.” So I told my truth: “You don’t have people in your team you don’t trust.” Bill smiled, nodded, and said “next question”. If you don’t fully trust someone, that’s the first sign.
Avoidance, false bravado, and political posturing. Is your executive avoiding one-on-one meetings? Do they seem to resist participating in meetings or discussions where they might be held accountable? Or are they an “objection-handling” machine? Sometimes, when a senior exec in your organization responds with the cliched, “Well, I told that manager that if they don’t do that, I’ll do it myself”, what I’m hearing you say is that not only did you not hire the right people, you’re telling me that this person is not good enough, and you’re not acting on it. Finally, you’re talking about them in a very disparaging way to elevate yourself, instead of supporting and enabling them. Triple whammy.
Lack of investment or enthusiasm in their projects. I once saw an exec asked by the board, “We are struggling massively in this area, the person running it seems unable to do the job for you, is this the best person you could bring to the company in this role?” Not, “Is there someone out there that you know is better but didn’t wanna join?” No. “Is it the best you can bring?” And the person, without blinking, said, “No.” That’s such a massive indicator that this exec is not all in. Why wasn’t it their best? Why wasn’t he or she using her full effort to bring in the right people?
If any one of these signs are there, this needs to be addressed immediately. No waiting around for one more meeting, one more quarter, one more sales call. No more excuses and no more idealizing the situation. Because even if someone is just not doing good *enough*, there’s an iceberg ahead… and it’s an iceberg of shit.
Understand your own psychology and motives, too
The many reasons why we don’t fire soon enough are not only understandable, they’re part of what makes us human. We are all scared of the failure of those we rely on to do the things we can’t do ourselves: Not only does it mean we have failed in trusting them, it means we then have to figure out how to do their jobs ourselves (or start the process all over again, slowing everything down enormously). You might be afraid that you’ll be seen as not being able to do the job as a first-time entrepreneur because you hire and quickly fire again.
You cannot afford, you tell yourself, the time it would take to start over from scratch: the hunt, the false starts, the reference checks, the interviews, the meetings, the negotiations, the onboarding, etc. In a startup, time is everything. Better, you tell yourself, to make do with the situation you have — it isn’t that bad. They’re making some good decisions. They are nice. They are competent perhaps in other areas (just not this one). Surely I can help teach them how to do a better job?
Our companies are our “babies”. Part of the psychology is that we entrepreneurs believe “our” companies are reflections of ourselves, sometimes nearly as important as our children — and we handle them the way we often do our children: we idealize them. We want them to win with every fiber of our being, and we are willing to make endless sacrifices to help them win. When I found myself being interviewed for my daughter’s preschool application, I laughed on reflection at how enthusiastically I was telling the interviewer how great my kid is — of course she is, in my mind! All our babies are perfect, and we don’t want to admit when they aren’t, or when something might be wrong. And we do this to our companies, too.
Dreaded conversations with “big execs”. A big part of the psychology is that we’re simply dreading a difficult conversation even when you do know, deep in your bones, that you should fire someone, that it isn’t working out. The other night after a dinner where this issue came up, a CEO struggling with this question asked me, “But how do I fire this big exec?” It was more about the act of doing it than knowing he had to do it.
Facing the fear of the moment (“bad breath is not better than no breath”). A huge part of this is just facing up to the fear of that moment. It’s not going to get any easier. In fact, it’s only going to get worse. There’s an old saying that bad breath is better than no breath. But in this case it’s not. Because the company just might stop breathing with the wrong execs in charge who are not up to the tasks.
How to fire
So how to handle it? The big goal, in my mind, is to switch into their perspective, step into their shoes. You are the one who’s making their life tough, and it’s your job to do it with decency, compassion, and clarity while also paying attention to their feelings and acknowledging your role in the failed partnership. Then help them find a path to a better situation. No matter how bitter they were on their exit, most people who have been fired reflect back on how good that was for them in retrospect. In the long run, they will be happier in a job that’s right for them.
1. Learn to trust your instincts. If you’re wavering, you already know. An action is required.
2. Get into the details of the issues. That’s a Silicon Valley cliche, but it all comes down to the concrete goals, expectations, tasks. Make it practical. Ask questions about those gaps, and ask what’s been done to address them: who have you hired that might fix this? Keep asking. Don’t let someone become an objection-handling machine.
3. Do (and don’t) ask around. You cannot, and should not, ask anyone else in the company about your executive’s role. Don’t invite watercooler conversations into the assessment. But you can ask open-ended, positive questions where people might be able to get at the existing issues without naming names. Don’t be rude to the hire or about the hire to others.
4. Have the conversations. No email, no text blow ups, no venting. Sit down and ask your (practical, concrete) questions. Be crisp and clear but not emotional or confrontational. “This isn’t working for me” and “I’m troubled by not getting answers here” are totally OK things to say. Be honest and share the implications of what you’re seeing: “I’m not seeing any improvement and I haven’t seen the organization get lifted up from you being here.”
5. Keep it from getting personal. Remember it is entirely possible that someone’s style and ability was very successful at another company — but not at this one. It’s just the reality that somebody can go on and become a total super star in the company, and then fall, and then rise again. People work so hard at founding a new company, and things get emotional and derogatory too often. Think of them and frame them as an accomplished person (they got the job after all), but in the wrong context, just not as a fit here. And it’s your job to explain why to this person.
How long should you give people a chance?
Of course I’m being a bit provocative to open this post with, “I have never fired anyone too early.” I have almost always given people a chance to correct course, and suggest you do too. The best comment I’ve inherited from Jack Welch is that if somebody gets fired, it shouldn’t be a surprise to them — that is, they have had opportunities to hear and respond to feedback.
So the big question that follows is, how long do you wait to allow someone to correct course? This depends, of course, on the role, and the scope, the numbers, and many other factors. But the key is to decrease the timing of the correction and increase the person’s response to the intervention.
You’ll get a ton of information just from their immediate response to any feedback or intervention. The best case is the person didn’t know what they were (or more likely, were not) doing: “Wow I haven’t been thinking about that. I didn’t understand that that was your view.” Anything more vague, less positive, more blaming, or more obfuscating than along the lines of the first reaction is a confirmation that the wavering should end, and both of you should move on. Most of this you will be able to tell in two weeks, because you see them either hit the ground running or not. It’s not necessarily about achieving every single goal immediately but about their performance and behavior in trying to.
This is not to say that you don’t want reports who disagree with you, who are controversial, who push your buttons. No good CEO is looking for yes-bobbleheads. What you don’t want is an executive who begins to erode trust in themselves, their reports, and the entire company around them. No matter what the personality type, if you find you have hired someone who is not collaborative, who is not giving more than they are taking, and who doesn’t respond quickly to corrective measures, they need to go, and quickly.
Let’s face it, most of the executives we are talking about here won’t have trouble finding jobs; they are attractive to other companies. They might even feel duty-bound to the job against their own desire; I know execs who have held onto jobs they were unhappy in because they thought the CEO wanted or needed them to stay. But people don’t do their best work when they’re not appreciated or feel they fit. Things inevitably get better when you are around people who want you, who have good energy that motivates you to excel, and let you be more yourself than you were in the constrained environment where you were living on borrowed time.
* * *
Ultimately, firing is something that happens to us all. I left my first job after Stanford Business School after 9 months — only to return at the founders’ request to the CEO that he bring me back, which he did… and then fired me one month later. Even though I know it was a broken relationship, I was crushed, and as I walking with the CEO in the streets of Palo Alto, I cried.
But then I went on to found and be CEO of SuccessFactors, where we built a culture that still lives inside of me and thousands of others as one of the best things we created in our lives. Ten years after that initial firing, we sold SuccessFactors for $3.7B to SAP. A little over a year later, the company I had been fired sold for $105M. My firing not only created a better financial outcome me and my colleagues … it also liberated my heart to do the thing it loved.