Here’s the problem. The team that gets you to your first $1 million may not be able to get your business to $10 million. And the team that gets you to $10 million may not be able to get you to $50 million. Those are different business models, with different demands and different skills required to run them.  For example, the $1 million business needs attention to every detail by the founders.  A $50 million business needs leaders who can train and delegate. 

As founders, we resist parting ways with OG team members.  It’s hard because the people who helped you build the company are likely big-hearted, loyal and extraordinarily hard-working. They took the risks with you. They put in the hours. You probably know their families. Maybe you're friends. This is a very personal decision.  

I think the hardest CEO decisions are about people. There's always a backstory. You bring in a friend as a senior executive. Years later, you realize that person is no longer right for the job. You may be ending the working relationship, but you may end up damaging the friendship at the same time. That's brutal.

Ultimately, this is a balance between preserving a single relationship, leading a bigger team to deliver more value, and creating the future of the business. 

To help you make this decision, ask yourself these questions:

• What does this role need to accomplish over the next two or three years, and is this person equipped to do it?
• If the person doesn’t have the skills to accomplish what is needed, can they learn those skills?
• Is there another role where this person could genuinely contribute, or would that just be postponing the decision?
• What happens to the business and the rest of the team if nothing changes?

You owe a loyal contributor an honest assessment and a respectful conversation. You don't owe them a role that no longer makes sense for them or the company.

From over 30 years as an entrepreneur, here’s my advice:

• Don’t wait to have the hard conversation.  Have the conversation as soon as you start to see that skills are missing, and start with the common ground you share.  Try this opening statement: “We both want the business to grow, and I’m noticing some behaviors that I’d like to discuss with you that may be holding us back.”

• Pinpoint the behavior, don’t label the person.  A description an objective observation, such as “you required Sally to give you three versions before you approved the document.”  A label is a statement about the person’s qualities, such as “you are too hard on people.”  This opens the door to figure out if there are ways for the person to develop the skills they need without defensiveness.

• Set a timetable for improvement.  “We need to see a behavior change within 30 days, move you to a different role, or work out a way to go forward separately.”  This prepares the person for what is to come.

• Be clear about your decision when you reach the final conversation.  The first time I did a restructuring, I asked my HR partner for advice.  He said, “Be clear and be fast.”  You start the sentence with “Unfortunately, we haven’t seen a change and we now need to part ways.” Don’t use a euphemism such as “We’ve decided to go in another direction.”  That’s just confusing and disrespectful, in my opinion.  And be prepared for the obvious responses.  A common one is some variation of “I have made a change in this area.”  In that case, you say, “I realize you’ve been working at this and I appreciate that.  However, we have decided to part ways.”

• Have the terms of the separation worked out in advance, as well as knowing which aspects are negotiable.  This can be as simple as “We’ll pay you through December 1 and I’ll give you all the help I can finding a role that works for you.”

• Be kind.  The individual made a big contribution to your business at one point, and this is a difficult decision to swallow.  You may want to work together in the future, and there is no need to be drawn into an argument.  

Chris's Lesson: You Can Appreciate Someone and Still Have to Let Them Go

I've dealt with this in every business I've run, and it never gets any easier.

Someone who was absolutely essential to your success five years ago may not be the right person to help you grow over the next five years.

That doesn't erase what they've accomplished.

My advice is to look carefully at what the company needs, give the person a fair opportunity to grow into the role and consider whether there's another position that makes sense.

But if the answer is no, don't keep putting off the decision because you feel guilty about it. The conversation may be unpleasant. You may lose a friendship.

That's incredibly hard, but you've got a business to run and a lot of other people counting on you to run it well.

You can be grateful for everything someone has done for your company and still recognize that it's time to part ways.

On we go. Want to explore this topic? Let’s Start a Conversation.