How should a CEO prepare to fire an executive the right way?

A snap of the fingers and you’re gone / Fired in the middle of the day

As a CEO, you will convince someone to leave a competitor for your company. Then, someday, if the move doesn’t work out, you may have to let that same person go. It happens. Welcome to the CEO circle of life. It’s hard to have these two conversations.

What’s harder is doing the thing the right way, so you don’t have to fire another leader soon.

The process below takes longer than a single conversation, but it is your best bet to remove a manager in a way that is fair to the executive and helps the company. To make it easier, follow these four steps.

The Root Cause of Their Failure

Some executives are just plain bad, but they are few and far between. For one thing, most companies are careful about their hiring at that level. And assuming the company hired well, laziness and inability won’t be issues either. Your head of marketing didn’t fail because they never did real marketing before, or because they are lazy or incompetent or bailed early on you.

Too often, CEOs take the easy way out and blame the exec for underperforming or not living up to expectations. But before you fire someone, remember that you hired them. What was the root cause of their failure - something they did wrong, or a flaw in your integration system? Odds are that there was a gap in your interview process, or someone knew but didn’t speak up, or someone spoke up but you ignored them. Before you do anything else, figure out why.

But take heart: there are several common pitfalls that you can fix to make future hires successful.

If you can’t write a clear description of what an executive’s job should be, and a specific set of expectations around that job, you’ll never get the right person. Hiring for culture fit without a real picture of who you need makes it easy to over-emphasize charm, and miss that the candidate has never managed teams.

You don’t want to hire a weakness, especially a glaring one. But when hiring committees vet candidates, it’s easy to flag weaknesses while you under-value strengths. The result is that a candidate with no glaring flaws and mediocre skills usually wins over a candidate with glaring flaws and critical skills. Without world-class strengths, you can’t be world-class.

CEOs listen to VCs and recruiters who think everyone should hire a “head” of everything and ignore the needs of the specific business. A lot of times, people tell you to hire for the next three or five years, like you should bring in a director or vice president early in your company. But usually, you really need a manager for 18 months. A vice president can’t do the hands-on work you need right now, so you keep doing it, and they feel useless. In the end, the rest of your employees will view that executive’s options package as a waste. That seed of bitterness will persist and probably one day end the relationship. I can’t blame the recruiters and VCs, who were just doing what they knew worked for big companies. The problem is that, for startups, their rules don’t apply.

A lot of CEOs end up hiring for an idealized generic title. They’ll ask themselves, “What does a VP of marketing look like?” “What does a CTO look like?” The answer, as they often picture it, looks like someone from Microsoft or Facebook. There’s no such thing as a universally great VP of marketing or CTO, or any other role. You’re not making a film. You don’t get to cast a stereotype. The only question is, who is great for your business over the next 12 to 24 months?

If your exec cares more about their role than about how the business performs, they’re the wrong person. An executive with the right experience and fit for your business may be rejected by your current team, who will resist reporting to them.

Integrating a new executive takes a lot of attention. You need to create a thoughtful onboarding process for all new employees, but especially for senior hires, since their positions are complicated, their impact is outsized, and your staff is likely to be skeptical about them. Maybe you handed the new hire a vague role and they thought their task was to get to know everybody. The ideal time to revisit your onboarding plan is right after you let someone go.

The skill sets at one scale are much different than those at another. The head of sales who was terrific with 25 reps and hands-on all the time might find she is miserable in the more managerial job of a 200-person global sales team. Growth is like a ladder where everyone has to climb up a level or fall off. Everyone, including the CEO, has to re-qualify for their jobs when everything around them changes. This is brutal, but inevitable. This is not a failure of the executive or your hiring process. By delaying, you keep the exec stuck, unhappy, and low-functioning. The team around them suffers.

If you have product-market fit, you have the most important thing. Now you need to put the gas down to lock in your market position, and that is a completely different challenge. When you need to grow rapidly, you want a leader who has had that experience. Be wary of anyone who says they helped grow a big company, without being clear about when they joined. Helping ride a rocketship and steering one require different skill sets. Hire these executives when it’s time, with the budget for them to build a team. Trust your fast-growth executive to define their team and mission, and give them what they need to succeed.

Once you understand why the executive failed, you can be a lot more honest, fair, and straight with them about the situation.

Only a few situations can make this harder.

If you have fired half a dozen executives, it’s time to wonder why.

If you have let go of two people from the same role, you’re probably wrong about the position and your company’s needs.

And if a board member sold you on a flashy hire who you ended up needing to fire, the board gave you a sucker’s bet.

In these cases, you’ll have to alarm your board. When you can’t fire an executive, they slowly rot their whole department. That failure to act and the problem spreading is far more frightening to the board than a single conversation. If that conversation doesn’t happen, your board will find out eventually.

Communication with the board is hard, but you only have three goals.

The board’s first question is always, Why did you hire this person? They will want to understand how this happened, and how you’re going to make sure you don’t do it again. Say what you did wrong, and explain how you will do better next time, because you are in charge, and next time it’s on you.

Severance packages for executives are significantly more generous than packages for lower-level employees, because the job search is usually much longer and more difficult. This means that you will need to get the board’s approval on the package, which means, ideally, having their input before you come up with the exact terms.

Your third goal is to protect the departing executive’s reputation. No matter what anyone tells you, the firing was a shared failure. A smart, mature CEO won’t speak ill of a former report, since it always reflects badly on them. If you act gracefully and maturely, your board will be confident you are treating the situation well. That, and it’s the decent thing to do.

It’s better to call directors one by one to set up a board meeting where you’ll handle the firing, than to spring it on the board as a surprise. If a director referred the executive, that’s the call you want to do first. Offer them the chance to ask you questions.

The Firing

If you wait, you’re pushing a very difficult moment into an even more stressful time. You owe yourself a script, so you don’t misspeak in the emotion of the moment. They will remember this conversation for years, so you want to be clear and tactful.

Be sure, before the meeting starts, that you have a consistent story, since she will expect to hear the same things she read in past written reviews. Look those over before you meet, to make sure you have internal consistency.

In the meeting, you have three jobs.

First, state plainly the reason, or reasons, why you can’t continue in your current arrangement. Don’t over-explain, or try to soften them. Hedge and you sound scared. Sugar-coat and you do her a disservice, because she’ll never understand what went wrong.

If you leave any opening, you do everyone a disservice. They’ll try to talk you out of it, stall, bargain, or just plain beg. It’s a firing, not a performance review. “I have decided,” not “I am considering.” Do not say you think.

Handle as much of the mechanics of the firing as possible beforehand. Have a severance package approved before you start the conversation, and have it ready. Her work shifts from the company to her family and her future.

Most executives are proud of the work they have done, and care about what others think. Figure out how she would like to tell her team and the company the news.

As soon as you can, let her direct reports know. No matter how rushed, you owe it to them to explain. The most senior team next, so they can answer questions from their reports, who will inevitably hear the news. Finally, the whole company, before the rest of the industry. The ideal is to do all of this on the same day. Have a plan for who her direct reports report to in the interim, but don’t signal that as a permanent change. Have a plan for what you’re going to do next, whether a search, a reorg, or a promotion, though it’s fine to say that you haven’t decided. Ideally, the CEO steps in and does the job, staff meetings and one-on-ones.

Every time you make a change that spooks people, they will imagine the worse versions of events. Be straight with your employees. You’ll be surprised at how adult they can be.

Every CEO will tell you that they’re building a great company. When it comes to firing an executive, you find out if that’s really true. It’s one of the hardest, but also most important, tests you’ll face as a leader.