HR Management, Leadership

Should Companies Ever Terminate GOOD Employees? Here’s Why …


I skate to where the puck is going to be, not where it’s been.” — Wayne Gretzky

One of the most difficult actions management has is terminating an employee who performs well, is a team player, is committed to the company, and, is highly engaged. But it happens — mostly when start-ups begin to grow rapidly.

It’s an unfortunate fact that as a start-up begins to grow — and grow fast — new skills are needed from employees. And some employees don’t have them to give. The company has “outgrown” them.

When the company outgrows the employee

Skills the company needs when it has 50 employees are not the same ones the company needs when it has 500 employees, and the same goes if you’re talking about an organization with sales of $1 million versus $10 million.

Usually the employees that have been outgrown are in top level positions. Why? Because the skills needed to propel rapid growth and change usually fall to those in strategic and decision-making positions.

As a start-up starts growing it moves into another business stage and companies need experienced executives who have “been there, done that” at bigger companies to help them “scale” to the next level. These are the people that can LEAD the growth charge.

Let’s be clear: “Scaling” doesn’t mean bringing in more experienced talent. It means adding people who’ve “been there, done that.” The company doesn’t want to experience all the pain of doing something the first time without their guidance. It means hiring executives that have skills that are overkill now but will be invaluable in the next several years. Instead of the company growing them, they will grow the company.

What are the possible fixes?

  1. The employee realizes that they are not the right fit for the future. They makes the hard choice to step down from their role and let the company president replace them.
  2. Training is provided to the employee for the new role. This is fine if the company has the time, but unfortunately as fast-paced as most start-ups are, it is rare that there’s enough time to train a person all they need to know in the necessary time frame. But even if the employee learns the necessary new skills, the company really needs someone that has already been through the process of growing a company.
  3. The employee thinks they can handle the new role. As a test, give them an assignment that requires they use the kind of skills needed in the new role and not what they currently have. When they can’t perform the task, help them to see that the company needs a different kind of expertise.

In all these cases, the employee may be willing to take a lesser role where their skills will be welcomed. That is the best possible scenario.

But, some employees just won’t be able to remain with the company in a lesser role. Their pride will not let them. It is easier for them to leave. It may be tough, but given the deep feelings involved, it may be best for all involved. And it is their decision to make.

Breaking up is hard to do

I will never forget having to participate in the termination of a company Controller. The company had outgrown him. He was offered a position of Accounting Manager, but his pride was badly damaged and he didn’t feel he could stay.

Here was an employee that worked his tail off for the company — a company cheerleader with a great attitude. But he could not take the company to the next stage(s). And, his pride would not let him stay in a lesser role.

If this sounds cruel, remember: A leader’s primary responsibility is to the company, not the employee. But compassionate leaders try to preserve the employee’s dignity and pride during the process.

Frankly, having an employee leave the company makes everyone feel badly. Needless to say, the termination needs to be handled with a ton of understanding and empathy.

To rephrase Wayne Gretzky’s quote to make it applicable to this: “Don’t hire for what you need today. Hire for what you need tomorrow.”