When to let people go and why
Dr Jana Matthews | 4 minute read | When to let people go and why.
I spent a day working with the leadership team of a freshly merged company. The decisions that the new CEO had to make were really no different from the ones every business owner needs to make every day of every year. Which people to keep and which to let go? What products to offer which customers? Which marketing strategies to use for which brands? What infrastructure is required to support the business? Not to mention, which strategy to use to achieve aggressive growth goals?
Address people’s gaps
The planning process resulted in a plan. But the process gave the CEO insights. Whether senior team members understood strategy. Did they agree which projects were critical? Did they know how to assess risks, and could establish realistic timelines for achieving goals? It became clear to him that some members of his team had gaps. In their knowledge, management skills, overall leadership capability. And a couple were not a good fit with the culture. By the end of the day, he realised he needed to:
- Talk specifically about the values and culture he wanted to define the company.
- Review everyone’s roles and responsibilities and clarify his expectations for each person
- Determine what each person needed in order to fill the performance or values gaps
- Decide whether the gap was so great that he needed to move them out and recruit someone new, who shared the company’s values and could perform the required functional tasks.
When a company is growing rapidly, the business owner, Managing Director or CEO needs to surround themselves with people who share the company’s values, know what to do, and can help move the organisation at the speed of growth. Some people are a perfect fit with the values and performance requirements of the company. Others have potential but need time to learn their roles or modify their behaviour. Others have the knowledge and skills required to do the job, but are just not compatible with the company’s culture and values.
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Act; don’t wait to let people go
When deciding what to do about senior leaders who have potential, but are not performing or behaving as required, ask yourself:
- Does this person share the company’s values?
- Do they have the capacity to do this job and the potential to grow into new roles?
- Are they willing to learn – or make the necessary changes in their behaviour?
- Can the company afford the time for them to learn – or make behaviour changes – in order to become a valuable senior leader?
As my mother once said.
“Life is a series of trade-offs: you trade one set of problems and opportunities for another set that you think will be more manageable at the time.”
One of the most important factors for a growth company is time, because time is our only non-renewable resource.
So, is it better to spend time clarifying expectations and working through a performance improvement plan in the hopes that the person will change? Or should you spend that time searching for a new person? With the hope that you will find someone who is a better fit with the culture and the job requirements? Behavioural economists tell us that our fear of loss is twice as strong as the pleasure of gain. So tell yourself:
“Change could make things better, so it’s worth investing in this ‘change process’ to achieve the outcomes we need.”
Plan for your future needs
All companies, but especially growth companies, need to identify their future needs and continually recruit for them. It’s the responsibility of the CEO and executive team to look ahead. Identify the knowledge and skills needed for the next stage of growth. Decide which employees need to learn what. And recruit new people with appropriate knowledge, skills, and values – so the organisation has the right set of people to enable it to grow to the next level.
In the meantime, what about people who have potential, but are under-performing or are not a good fit with the company’s culture and values? When a company is growing rapidly, the company needs people NOW who understand what to do. So, the CEO and executives need to take a hard look at the organisation and identify those who are not performing or behaving as expected. Decide how much time and effort is needed for the person to understand what’s required. And then change work habits, attitude, or behavioural responses. Prepare for some difficult conversations, because you only have two options. CHANGE the people or change the PEOPLE.
As your company grows, you will be adding functions, people, and reorganising. When you recruit people, be sure to look for those who match your values, can perform at the level you need now. And have the capacity to grow at least two levels. Finally, make sure that every person in the organisation has a professional development plan to prepare them for the exciting growth opportunities that lie ahead for your company.