385: Firing People Too Slow Will Kill Your Startup
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In today’s episode of The Startup Chat, Steli and Hiten talk about holding on to people who aren’t working out too long.
One of the biggest mistakes founders make is holding on to a non-performing team member for too long. Doing so can be bad for the business, the team and for the non-performing team member as well. So it’s important to let people go if it’s not working out and do it at the right time.
In this episode, Steli and Hiten talk about why hanging on to a non-performing team member is a bad idea, when the right time is to let them go, consequences of hanging on to a non-performing team member and much more.
Time Stamped Show Notes:
00:00 About today’s topic.
00:39 Why this topic was chosen.
02:36 What made Hiten tweet about this topic.
02:46 Why it’s bad to wait too long to let go of a team member.
03:04 How Hiten started the tweetstorm.
03:17 Consequences of hanging on to a non performing team member.
04:48 Why you should speak to team members about issues.
05:07 Why it’s bad for the non-performing team member.
06:34 About giving people second chances.
07:36 How to handle non-performing team members.
08:00 Why it’s important that the non-performing team members knows the situation.
3 Key Points:
- Sometimes we keep hoping that someone who’s not working out is gonna work out
- Your company sucks more for it.
- If you’re basically talking shit about a team member and they’re not in the room, get them in the room.
Steli Efti: Hey, everybody. This is Steli Efti.
Hiten Shah: And this is Hiten Shah. Today on The Startup Chat, we’re going to talk about a tweetstorm that I did, I guess, right?
Steli Efti: Yes, yes, a tweetstorm that I think every entrepreneur, every founder should read, every person that works in a startup. I retweeted it telling everybody to fucking read it, but I’m like, not everybody’s following us on Twitter. This is such an important topic, I thought we needed to touch on this on the podcast. It’s the topic of one of the biggest mistakes companies make are holding on to people that aren’t working out too long, which means you have made the determination or you’re seeing that this person isn’t working out. They’re not successful within the company. They’re not performing the way that you expected them to. The moment you realize that, you’re not taking action instantly. You do what I would say almost every founder and every person that has hiring and firing power does. You postpone that. You try to rationalize things. You kick the can down the road, think, “Well, maybe if we give this one more month, maybe if I help them with more training, maybe I change my management style, maybe with this new campaign, it’s a fresh start and they can show themselves now.” Your just keep postponing, trying to rationalize, trying to give people more and more chances. Then once you make the decision, there’s all kinds of other reasons for not firing them. “Oh, it’s the Christmas season. It’s New Years. We have this big project. This would be bad news and would be bad for morale.” There’s all these reasons why to keep postponing that. I just ran through a shit ton of them really quickly. Now I want to pass on the ball to you, Hiten, which is why is it so bad to do this? Why giving people a bit more chances is bad. Why maybe waiting for the perfect time to part ways or fire somebody is that bad. Why is postponing letting go of somebody that isn’t’ working out, why is that such a bad thing? What triggered you to even tweet about this in a little tweetstorm?
Hiten Shah: I don’t know. I think it’s just one of the things that people keep doing over, and over, and over, and over again. They keep basically hoping that someone who’s not working out is going to work out. I wish it was more complicated. I wish I had more to say, that, “Oh, it’s okay. You should let people stay in your company even though they’re not working out.” I know it sounds literally ridiculous. The way I started the tweetstorm was basically by saying one of the worst recurring problems that companies of all sizes have is keeping people around who aren’t working out. Yeah.
Steli Efti: Yeah, go ahead. I just wanted to ask, what are the consequences of this? What is the real cost implied with keeping somebody around that isn’t quite working out?
Hiten Shah: Honestly, your company just sucks more for it. This is stuff I can’t stay on Twitter, but I can say it to you on a podcast. Your company sucks more because of it. The thing I learned, I’ve done a few of these tweetstorms, is if I’m writing something, and it’s a tweetstorm, and it’s one where I can just keep going like this one, I’m angry about it. I’m just angry about it. Not at myself, not at anybody else. It’s just out of literally why do we keep doing this to ourself. I think that it makes your company suck. Your company sucks if you keep people who just aren’t working out because it sucks for everybody. It sucks for your team because they get invested in this person, or they keep seeing that this person sucks for your team and it’s not working out. It sucks for that person because they’re probably not going to be there at some point. They can move on to a place that’s better for them than where you’re at. It sucks for you if you’re the manager of this person because you’re sitting there talking about this person all the time. Think about how much time you’re wasting. The thing is, this is one I forgot in the tweetstorm, and it’s one of my best tips. I learned I the hard way multiple times. What it is is if you’re basically talking shit about somebody in the company between two people or three people and they’re not in the room, get them in the room. I think we’ve given this advice before at some point. Get them in the room and just figure it out. It’s not worth anyone’s time to go work in an environment that they’re not appreciated, and it’s not worth your time to work in an environment where someone’s there that you don’t appreciate.
Steli Efti: It’s so important and beautiful even if it’s hard because the truth of the matter is that they also know. Consciously or subconsciously, they know that they probably are not performing that well, that they’re not killing it, that they’re not delivering the results that you are looking for. Even if you’re not saying anything, they will be able to sense it in your energy, in the way that you talk to them, that you are disapproving, that you are worried about them, that you have conflicting thoughts and emotions about them. They will know, so it’s going to build up internally in them as well. They are going to be unhappy, and they’re going to be uncomfortable, and they’re going to be stressed out. You’re not doing anybody any favors. If they don’t, if they think that they’re killing it, it’s even worse. The problem is even worse where they’re living in such a different reality than you that that is bad for them and bad for you now. What about the argument, Hiten, because I know some people will think about this. Some founders now that are listening to us are just going to go, “Shit, they’re right,” and they’ll have a person in mind, and they’ll know exactly what we’re talking about. In their hearts they’ll know, “Shit, I need to talk to this person, and I need to part ways with this person ASAP. I’ve been postponing it because I feel bad about it. But listening to Hiten and Steli, yes, I know I should.” There are some other people that might listen to us and go, “Well, but what about giving people second chances? What is somebody isn’t working out, but it’s still early? I don’t know if with more training, or more time, or putting them in a different project, if I’m going to be able to make them work out.” How do I differentiate when something …
Hiten Shah: Okay, cool.
Steli Efti: … Isn’t going to work out versus it is going to work out?
Hiten Shah: Good, I got a tweet on that.
Steli Efti: Ooh.
Hiten Shah: I got two, actually.
Steli Efti: Shit.
Hiten Shah: This is what I wrote. I’m just going to read it, and I want your opinion. I basically said if you’re regularly speaking unfavorably about an individual on a team, it’s time to rethink their involvement in the company. The first time this happens, talk to the person directly. If the second time occurs, talk to them again. Don’t wait for things to magically improve. Then I say, look, the energy spent trying to fix someone that isn’t working out should be finite. Be direct with them. Give them clear and concrete examples of your observations. Make sure they understand what you expect from them. Set a timeline for improvements. Schedule the followup. Look, they call this PIPs, performance improvement plans, when it comes to larger organizations. I think startups have taken that on to some extent as they’ve grown. At the end of the day, that’s what I’m talking about, too. The thing is, if you have to go as far as to get someone on a performance improvement plan, they’re already out the door. What you’re doing is you’re documenting why they need to go. It doesn’t matter if you’re a smaller company. That’s important because you want the person to understand why it didn’t work out, just out of human decency. The thing is, don’t waste your time. To me, I want the person to understand why it’s not working out. I want to person to know that. That being said, I want that to happen as fast as possible.
Steli Efti: I love it. I think that’s it. We’ll wrap this episode up. It’s tough. We’ve both been in this situation multiple times where it took us too long to part ways, hence why we’re speaking about this both with such, I think, empathy but also with conviction of this is just a terrible thing. Just get over it.
Hiten Shah: That’s where the anger comes from, right?
Steli Efti: Yeah.
Hiten Shah: It’s like, “Oh, crap. What are we doing?”
Steli Efti: Why is this happening again, and again, and again?
Hiten Shah: There you go.
Steli Efti: It’s such a costly mistake. The reason why it’s happening mostly is because it’s emotionally hard to do. We don’t like conflict. We don’t like letting go somebody. Oftentimes it takes such incredible effort to hire somebody in a position. Most likely if you are hiring, you are under pressure, you need all the help you can get. Now you’ve got somebody, and then you figure out it’s not working out. It sucks. It’s bad for morale. It’s bad for everything. It’s emotionally just the hardest thing to do as an entrepreneur is to let somebody go. You’re going to have the natural inclination to postpone it, to wait way too long, and to make the problem way bigger than it needs to be. Learning to act quickly is going to pay massive dividends even if it’s unpleasant. Dude, thank you so much for the tweetstorm. I think the entrepreneurial community owes you a big thank you. If just one founder out there is pulling through the decision quicker based on this episode, we made the world a better place. Thank you, everybody, for listening, and we’ll hear you very soon.
Hiten Shah: See you.