2010. I was four years into my tenure as CEO at Reward Gateway with about 100 staff. Over coffee, a more experienced CEO at a competitor gave me a brilliant piece of advice.
He told me that soon the day would come when, I’d have to look a trusted member of my team in the eye and say: “This is as far as we go together.”
He told me:
“This will be really tough because you’ll have been in the trenches with them working side by side. But don’t shirk this part of your job, it’s the most important thing you will do.”
Despite this counsel being over a decade old, it’s as relevant for CEOs today as it was then. Because, no matter how good the team you start with, your business will grow and change. And some of the people who are the perfect fit for you when you are 40 or 50 staff won’t be able to do what you need when you’re 150.
CEO = Chief Editing Officer
As a CEO, your job simple, at least in theory : Agree and deliver your business plan against all the obstacles that get in the way. Your tools are the strategic direction you take and your people. So having the right team is essential to success.
But hiring the best talent is only the start. The most successful CEOs constantly assess whether the team they have today is fit for tomorrow.
Because, when one of your people occupies a role they’re no longer right for, it not only destroys that team’s performance but it affects the company’s performance too.
The more senior somebody is, the worse the problem becomes. At the C-suite level, the wrong person can mean strategy is not directed or actioned their whole department. Which will result in part of your business being led in the wrong direction, letting the whole company down.
Beyond business performance, poor fit also creates a miserable environment for that person.
Everyone deserves to be in a challenging, stretching job that they enjoy and they’re successful at. Of course, there will be hard days, but when you’re in a stretching, challenging but achievable role, you feel great because you know you’re doing good work.
However, if you leave someone in a job that is changing and you know they can’t do what is needed in the future, you’re consigning them to a miserable existence. This makes it essential that you act for the sake of your company, the team around that person and the individual themselves.
Doing this with people who have been on the team for a long time, maybe from the start is really tough. That’s why a lot of CEO’s avoid it and can get themselves into real trouble. Sometimes they tend to wait until performance is really dire before acting and that can drag whole products, teams even divisions down with them.
How to curate your team and prevent problems
As Chief Editing Officer, you need to proactively edit your team by predicting challenges 18 months ahead and assessing each individual’s ability to deal with them.
To remain on the front foot, you’ve got to continually ask:
- How are we delivering in this quarter?
- Where am I taking the business next?
- Which medium-term problems I can see?
- What are the medium-term actions for this person’s department or division?
- Are they really the person I would choose to do this if they weren’t already here?
Being able to answer these questions relies on knowing the individuals on your team really well. And this is another factor that could mean you’ll falter.
Nothing worth doing ever comes easy
I know from experience that firing someone who’s been by your side for a long time is miserable. What makes matters worse is that proactively editing your team can mean firing someone who has done nothing wrong. Just because you can foresee that their performance will not continue.
In fact, the person who’s about to go can be someone who’s done a fantastic job right up until the day of your conversation. But you know the business must take a direction that’s not right for them.
Although proactively editing is much harder than firing someone who’s doing a bad job, it’s really essential. If it sounds like you’re playing God, well yes you are. You’re the CEO and you wanted the job right?
Fortunately, there are several learnable steps you can take to make the best of a difficult situation.
Don’t trump up a disciplinary for the sake of it
In terms of exit mechanisms don’t create a disciplinary process out of thin air to deal with it. Formal disciplinary processes are a painful, lengthy ordeal to comply with the law that are equally horrible for everyone. They almost always end in bitterness and resentment on one or both sides.
Instead, I always offer a really generous compromise agreement. Do this because :
- You’re PE backed so EBITDA measured and you can shove your one off staff exit costs below the line so they don’t count in your valuation. Magic!
- The person you’re firing will still be around, telling people about their experience. And you want them to say they had a really great time working with you.
- It will help you sleep at night feeling you’re not a bad person. And that’s essential because you’re going to need to do this often and not procrastinate on it.
No matter how well you lay the groundwork for an exit conversation, it’s never nice.
The truth is, if you’re meeting someone to tell them that you’re taking their job away unexpectedly, it’s not a good meeting for them. And you can’t make it into one.
So I always start with the same line: “This is not a good news meeting. We’ve gone as far as we can together. I’m sorry I know that won’t be what you wanted to hear and I know you’ll be dissapointed. Let me explain why.”
It’s crucially important that you make it clear that your mind is made up – this is not a discussion. So don’t go all wishy-washy and use a thousand words to get there. Get straight to the point.
Don’t get involved in a discussion and don’t trade points if the person wants to argue. Listen to them sympathetically and then just repeat “I’m sorry, I know it’s not what you want, but this is what I have decided. Let’s talk about what happens next.”
As soon as you say those words, the person usually goes deaf. So that makes the next step really important.
The biggest mistake you can make is to let the legal or HR department write the letter because it tends to be devoid of any humanity.
It’s the last letter your colleague is going to get from you – and it’s the letter they’ll take home to their partner – so make as nice as possible by:
- thanking them for everything they’ve done
- highlighting where they’ve moved the business forward
- saying that you know they’ll be disappointed
- admitting that you know it’s not what they would have chosen right now
This will set the tone for your communications with the rest of your team.
Be open with your internal communications
We’ve all seen employee communications that say: “John has left the business today to seek new opportunities.” We all know it’s not true.
If you choose to take someone’s job away, presenting it as their choice is not a nice thing to do. It’s disingenuous and everyone’s going to see straight through it.
Keep your employees up to date by saying: “I’m writing to let you all know that John is leaving the business this week. He’s been a fantastic Sales Director for the past 13 years but together we agreed that we need a different sort of leadership to take us into the future. Obviously John’s disappointed because he wasn’t sure it was the right time to go. But this is what we’ve decided to do …”
This level of honesty generates trust and also provides you with a really good opportunity to focus employees on where the business is going.
It’s never easy to fire someone, particularly when they’re a trusted lieutenant or someone who’s been with you from the start. But by looking at the bigger picture, you’ll focus on the benefits that editing your team will bring. Creating a brighter future for your business and your wider team and freeing the person being fired to find the right role for them.
PS. The person that gave me the advice was Michael Whitfield, then CEO of Thomsons Online Benefits now investor in HR Tech. I owe him a great debt for that piece of advice that really helped me build a better company.