“I think it’s time we part ways.” Breaking up with early employees is possibly one of the most gut wrenching, difficult actions to take as a founder. The employee was with you from the beginning and might have helped lay the groundwork to get the company where it is today.
So how you do you know that it’s time to part ways? Here are some signs that separating might be the best outcome for you as a founder, for the company, and possibly for the employee (if you are really good at convincing them).
He or she doesn’t want to shift with your new organizational structure. When it’s time to implement a more formal organizational structure, it is often necessary to “demote” an early employee to reserve senior titles to attract more experienced hires. If an early employee is resistant about reporting to a newer hire, chances are they will be continue being unhappy. This can quickly create tension in the organization. It might be time for the early employee to go.
The early employee lacks confidence in your leadership. This one is key. New employees look up to early employees, so in a way these early hires hold some authority. If he or she constantly undermines you and/or your vision, other employees will also start having doubts. Remove doubt if you want to create a strong, unified culture in your organization.
They don’t have what it takes to help take your company to the next stage. There’s a lot of press around founders being replaced by VC firms after a company reaches a certain stage. More often than not, this is because the founder doesn’t have the right skill set to scale the company. The same holds true for employees. If your early employees do not have the right attributes to help the company grow in their current position, then maybe it’s time to either relocate them within the company or simply part ways.
Be bold and do what is best for your company. If you ultimately decide to fire an early employee, try to be as gentle and helpful as possible. You don’t want them to walk away infuriated and vengeful – there are consequences to that. Early employees carry a lot of institutional memory, so it is valuable to have them help with transitioning their position.
Chances are the employee holds an equity position in the company, so convince them that to ensure the future growth and success of the company, it is better for him or her to pass the torch to another employee. There are many different ways to approach this conversation, just be sure to plan ahead! The planning can prevent or help alleviate an emotionally heated conversation.