Why You Are Likely Bad At Firing People (And why it matters)
In this series of posts, I ask the question, “If it’s so obvious, why are you not doing it?” I deconstruct a simple concept and discuss what is obvious and what is not obvious about that concept. This post on firing is part two in this series. Click here for part one which covers focus.
For clarity, when I talk about firing, I’m not talking about mass layoffs like those from “Chainsaw” Al Dunlap or “Neutron” Jack Welch. In the long term, both of these CEOs destroyed value through layoffs. I am talking about being intellectually honest about your team and making difficult decisions that only you can make.
What’s obvious about firing?
We’re supposed to fire people who steal, lie, make the workplace unsafe, don’t show up to work, aren’t capable of doing their jobs, or commit any one of a number of bad acts. It’s also obvious that we should fire chronic underperformers. We should fire C and D players and people who consistently miss deadlines, sales goals, and/or budgets. We also are likely aware that for tricky, human resources situations, we should consult an attorney or an HR specialist.
What’s not obvious about firing?
You need to fire your B executives.
One morning during my senior year of college, Princeton heavyweight rowing coach Mike Teti told me he was going to cut a rower who we’ll call Joe. Joe admittedly was not a good rower. He was heavy and slowed down any boats he joined. I wasn’t on Mike’s team (I rowed lightweight), but I told Mike that he was about to make a big mistake. “Joe is a huge culture carrier, Mike. He plans all the team’s events and has an incredibly positive attitude. The team loves Joe! He’s the heart and soul of the team.” Mike gave me a wry smile and said, “Okay Graham, you convinced me. Your impassioned arguments really swayed me. Let’s put him in your boat.” While I’m sure Mike’s rowers missed Joe, I’m also sure they exhaled knowing he wasn’t going to be in their boat slowing it down.
Many leaders know they need to get rid of C and D players and those who commit bad acts, but most of the executives I coach hesitate to fire B executives. We often delay, defer, and make excuses for B executives, often citing that they work hard, are loyal, are good cultural fits, and/or are “good enough.”
But B players are like a slow-growing cancer. You won’t see symptoms at first, but over time they will infect and erode your company. They will be anchors like Joe and will slow progress in your organization.
In 27 years of investing in companies, I’ve never seen an A player report to a B player for any period of time. At Alpine we have tried many times to hire A+ CFOs, chiefs of staff, and VPs of sales to report to B CEOs. I can’t recall a single instance in which it worked. Similarly, talented sales people won’t report to a mediocre VP of sales for long, and A+ controllers won’t work for B CFOs. There is an expression that “As hire As and Bs hire Cs,” and the corollary is that “As retain As while Bs and Cs lose them.” High performers want to be around other high performers and are demotivated by B players.
Recognize that deciding to hold onto a B player is the same as deciding that you don’t need A players in that individual’s department or division. If you want to have an A organization, you can’t tolerate B players in any of your key roles. Read more about the power of focusing on hiring and supporting excellent talent in this post.
[These next two points are lessons I learned from Irv Grousbeck, Lecturer in Management at Stanford GSB.]
Prioritize the needs of the organization first…
In a role I held before starting Alpine, my immediate boss, we’ll call him Jim, was a B player. The CEO of the company recognized that Jim was a B player and made several comments acknowledging that fact. He told me that Jim’s weakness offered me an opportunity to “step up.” But Jim didn’t see it that way. Jim saw me as a threat and did everything he could to keep me from attending important meetings or having exposure to the senior partners. Jim and the CEO golfed together, lived near each other and were friends. In one very candid conversation, the CEO said that he owed it to Jim to let him “retire on his own terms sometime in the next five years.”
I wasn’t planning to report to Jim for five years. I quit, as did the two other vice presidents who worked for Jim. By holding onto Jim, the CEO prioritized his own needs—loyalty to Jim and their friendship—over the needs of the organization—putting A+ players in senior roles.
…then be generous and gracious with the affected parties.
Jim lingered in the organization for several more years. During that time, he didn’t close a single deal. Two more vice presidents in Jim’s group left the organization. When the company leaders finally asked Jim to leave, it was clear to everyone that he was fired, and by then many people at the company resented him.
People equate terminating people with hurting them. They assume letting someone go is mean or heartless. The opposite is true. Keeping an underperformer around is bad for the organization, and it’s also bad for that person. The underperforming employee often goes home daily feeling unsuccessful, stressed, and/or inadequate. The longer we keep them in a role where they’re not performing, the longer we keep them from a role where they can perform.
In the example above, the CEO should have sat down with Jim and worked on a plan to transition him out of the organization. He could have paid Jim a generous severance package, and maybe accelerated the vesting of some of Jim’s equity. He could have allowed Jim to make his own announcement to the firm and to frame his departure on his own terms. Jim could have gone out with his head held high. In short, the CEO should have prioritized the company’s needs first and then been gracious and generous with Jim in his departure.
Listening to your “gut” will lead you astray.
Firing is emotional. When I think about letting someone go, I get a pit in my stomach. I get sad, uncomfortable, and stressed. I often don’t sleep the night before a difficult conversation. Early in my career, because of these emotions, I looked for all the reasons not to terminate the employee. I would see the employee do something right and I would exhale for a few weeks or months and then eventually I would re-litigate the decision all over again. My “gut” nearly always told me not to fire someone. My “gut” led me astray.
Firing is tough. It’s tough because you are human, you care about people, and you want the best for them. Those are great traits. But because we have these traits, we often get very uncomfortable firing someone and we fool ourselves into thinking, “My gut tells me I shouldn’t.” Don’t confuse your gut’s discomfort in making a firing decision with making the right decision for your organization.
Insert the words “In five years…”
Most of the time I observe that people wait too long to make a termination decision or don’t make the decision at all. In the short term, when we let someone go, our life gets worse before it gets better. We have to have a difficult conversation with the person, negotiate severance, make an announcement to the company, find a transition plan, start a search for a new person, interview candidates, etc. It is normal to want to avoid all the time and difficulty that can be involved in letting someone go, particularly if we’re dealing with a B player who is “good enough.”
One of the questions I ask executives is, “Do you see that person at the organization five years from now?” And nearly always, the executive answers the question with an emphatic “no.” My next question is, “So when then is the right time to make a change?” And the executive will typically say, “Now.”
Don’t let the short-term difficulty of removing an underperformer get in the way of making the right long-term decision.
Summary
The single most important job of a leader is to attract and retain a world-class team. The sexy and exciting part of building a team is attracting and hiring that team. The harder part of the job, firing, is what truly separates good leaders from great leaders. Great leaders have the capacity to recognize when they’ve made a hiring mistake or when the organization has outgrown a key executive. While it is natural to want to put your head in the sand and ignore tough decisions about people, recognize that your team is counting on you to make these decisions. Great leaders address underperformers head on. They place the needs of the organization first, make the difficult decisions, and then treat the affected parties with grace and generosity.
Approaching firing the way you approach every other part of people management will set you and your teams on the path to success. So ask yourself, are you a great leader? How are you setting your teams up for long-term success?
There are a few concepts which are disproportionately valuable. They have asymmetric returns. I have come to realize that many of these concepts are generally well known; they’re obvious. And yet, these are the concepts that we have the most difficulty following. They are disproportionately valuable precisely because they are so uncommonly followed. Over the years, I realized there are some not-obvious obstacles in our way.
This post on firing is part 2 in this “What is not Obvious” series. Click here for part 1 which covers focus.