When is it time to fire?

August 9, 2010

I recently met a CEO of a start-up. He was describing his business to me and that even though he had hired a Sales leader, he was being dragged into every sales deal in order to close it. His sales leader had been hired to find & close deals, create & grow a sales force and free the CEO's time for other critical tasks. The CEO was frustrated because sales were not happening without his daily involvement.

I asked, "how long the sales leader had been in the job?". Answer was almost a year.  I asked, "how much has he sold?". Then the dance started.

"Well, do you mean how many sales situations that he has been involved in?"
"No , how much has he sold?"
"Do you mean how many new prospects he has found?"
"No, how much has he sold?"
 

The conversation continued like this for a few minutes, but ultimately the answer was zero.  I asked, "what is the severance provision in their employment contract?" The answer was 4 weeks.  I then told the CEO to return to his office that afternoon and let the sales leader go. The response was "but he is a good person and now understands the company, shouldn't we find him another role in the company?". In the end, two days later, the sales leader was let go.

Firing people is the hardest thing a manager has to do and most managers, especially new managers, wait too long. They blame themselves for the employee not being successful. They look for good in the employee and try to justify a reason not to fire them. They try to justify preserving their investment in training the person and find a new role for them.

In a start-up, resources are scarce. In a 20 person company, one non-performer (especially in a critical role like sales) is a minimum 5% hit on company productivity, and more likely a significantly bigger impact than that. Taking one year to decide if an employee is working out is too long. Start-ups are a survival business. Dealing with people issues can not be anything less. Not dealing with one poor performer puts the livelihood of the other 19 at risk.

So, should leaders deal this the "firing" challenge?

First, don't make bad hires. This sounds glib but take the case above. When I am hiring critical sales talent for a software company, I look for 3 things on the resume. The candidate must have a successful track record selling software; must have domain expertise in the application being sold; and they must have experience and a rolodex for the industries being sold to. If they don't have two out of three, I push the resume to the side. By the way, the sales leader above, meet zero of my three criteria. When hiring, don't try and do it all yourself.  Get outside help in interviewing. Use your Board members or other advisors to meet the candidates. Check references, and not just the ones the candidate provided. Talk to past customers and find out why they bought from the candidate and would they buy again.

Second, fire quickly. When your gut tells you the person  isn't going to make it, trust your gut and act immediately. If you are unsure, ask your Board or advisors for their opinion. Have solid employment contracts with severance provisions. Remember, an employment contract is a CONTRACT. You offer employment in return for them performing to the expectation discussed during the interview process. If they are not delivering results, they have broken the contract. You do not owe an employee a job. You owe the employee fair treatment as specified by their employment contract. This isn't personal, it is business.


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