Valuewalk

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Managing a startup is like a roller coaster with many ups and downs. With critical decisions being made on what feels like a daily basis, uncertainty is the queen. The team you build to go on this roller coaster with you is, of course, incredibly important. This is why building the right team is the founder’s first and most impactful mission.

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Q2 2021 hedge fund letters, conferences and more

This Event-Driven Fund Won In August With The Largest U.S. Cannabis REITDG Value Partners II Class C was up 9.05% for August, bringing its year-to-date return to 44.82%. The S&P 500 was up 3.04% for August, with a year-to-date return of 21.58%, while the HFRI index is up 10.31% for the first eight months of the year. Q2 2021 hedge fund letters, conferences and more DG Read More
In a startup, every individual team member counts, since our teams are small and each one of us can make a difference. The company’s performance depends on every single person, with little room for mistakes. In every startup, the clock is ticking. It’s us against time as we work to scale quickly.
Just as founders live by the mantra of “fail fast” when your model isn’t working, you need to “fire fast” if you realize that someone isn’t a fit. This might feel cold to some but it’s critical, given the time required to recruit and train replacements. Furthermore, and of equal importance, a person who is not a good fit inevitably disrupts culture and morale. When someone does not meet the expectations of the company or its values, the whole team feels it. You don’t always fire people because they don’t succeed, or because they are not great people. Sometimes, it’s just not a match.
When building a team, you connect with people, forging team bonds in a special way. As an Israeli founder, it feels very similar to the bonds I formed serving in the military. Firing talented people that are part of the founding team involves a lot of emotional aspects. When you run into a scenario where you have to get rid of a “good” employee that you personally like, it’s that much harder and comes with strong feelings of grief. You grieve the relationship you are losing, similar to going through a relationship break up.

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Tips To Keep In Mind Before Firing A “Good” Employee
There are a number of steps I learned in my time in the military and as a founder that have helped me overcome the grief of having to get rid of an employee that I like. It’s critical to be honest, transparent and generous in the process. Founder should keep in mind these lessons when firing a “good” employee:

Communicate With Your Team

Share your thoughts and feelings with your co-founders, management team, partners and investors. This provides critical opportunities to not only update key members of your team about your decision but to also gather advice from people who may have gone through similar experiences. After sharing your feelings with multiple people, you’ll not only feel better but you’ll be armed with good insights to share with your team. I’ve been able to develop a great relationship with one of our investors who I always go to first for advice about team members. I tend to give colleagues who are not a good fit more credit than they are due but this investor, who is looking at things from more of a distance, helps me cut to the chase and evaluate colleagues without the additional credit.
It’s also critical to communicate about the decision with your full team. I’ve found this is best done during all-hands meetings when you can encourage questions and feedback. Communication is a two-way street at a startup and you need to embrace that.

Don’t Be Afraid To Be Honest

When dealing with the colleague who you are considering letting go, being clear and honest and providing feedback is always key. Despite the discomfort it may cause in the moment, honesty is key so your team members always know when they are not meeting expectations. If you’re brutally honest with colleagues, both in the good times and also the bad, it’s not a surprise if a decision is made to let a team member go.
As you’re providing feedback to your team, keep in mind that you might not like to give “negative” feedback but studies have shown that employees actually want to hear it so they know how to improve. I recently saw this where I provided clear feedback to a team member who is not comfortable with numbers, which means he tends to describe things vaguely and without specifics or data. I sat with him and practiced how to present numbers, directly, telling him it is a big issue and an opportunity for him. He has since embraced that and quickly found ways to improve.

Be Transparent

Be transparent about the reason you’re making your decision when you speak with the person you’re letting go. Be clear about why they are not a fit but also give them advice about how to improve in the future. They already lost their job, don’t let them lose the opportunity to learn a lesson.

Be Generous

Just because the person is not a good fit doesn’t mean you have to leave them to the wolves. It’s important to be empathetic and put yourself in their shoes. Providing a generous severance package that allows them time to find their feet will make a bitter experience a bit sweeter.
When I had to make the difficult decision to let go of a talented employee who simply was not a fit for the role we needed, I made a point of ensuring we provided a generous goodbye package. The employee was incredibly grateful, thankful and we continue to have a positive relationship to this day.

Consider Legal Ramifications

I’ve learned that if you follow the steps above, you’re not only being fair to the person you are letting (and your full team) but you are also protecting yourself from the legal or HR considerations. But that doesn’t mean you should throw any legal concerns by the wayside. The most important thing to consider is that you are following all of your own policies. Make sure you closely follow the employee handbook, if you have one, and document the specific performance issues, if any, for the employee.
Conclusion
There are many lessons that a startup founder needs to learn on the fly. Business is a jungle and leading and growing a new company can be a cutthroat experience. When it comes to dealing with people though, leaders need to slow down and remember their humanity. Grief, loss and sorrow are feelings that leaders and their employees will have to cope with on their startup journey and dealing with those feelings correctly is critical. If they do, there will be many successes and joys to celebrate along the way.

About the Author
Irad Eichler has built a successful career that is based on helping others. Irad is the CEO and co-founder of Circles, an online platform helping everyone overcome life’s most difficult challenges by providing emotional support in group settings. He founded Circles after his mother was diagnosed with cancer and found comfort connecting with other cancer patients. Irad previously founded the Shekulo Tov Group in 2004, a nonprofit that has been recognized by the U.N. & the World Economic Forum for supporting people with mental health issues or developmental disabilities. 
Updated on Sep 10, 2021, 12:00 pm