How to Fire an Employee in a Startup: Fast and Fair
Letting go of an employee who isn’t meeting expectations is a fundamental skill every founder should master in a startup. Yet I’m constantly frustrated by how many founders and CEOs still wrestle with
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Firing someone is never easy, especially in a startup where the team is small, roles are fluid, and everyone is expected to be all-in. It’s uncomfortable, it’s awkward, and it can feel personal. But it’s absolutely essential for the survival and growth of your business.
Why Founders Struggle to Fire Quickly
One of the most common mistakes is delay. Founders often drag their feet, waiting for the “right moment” or hoping things will turn around, yet this hesitation only stalls growth and blocks progress.
A16z nailed it in their article, “It’s Never Too Early to Fire” The title says it all—no beating around the bush.
What holds founders back?
Fear they won’t find someone better. With talent shortages being a real concern, many founders settle, hoping for improvement rather than actively seeking a replacement. But in key roles, compromising quality is a risk that impacts the entire business.
Worry over team reaction. Founders sometimes feel held hostage by their team, fearing that any personnel change will upset valued employees. But a startup led by a founder who’s afraid to act decisively is one that won’t thrive.
Convincing themselves “it’s not that bad.” This happens when founders haven’t set concrete performance goals. Without clear objectives, it’s easy to overlook underperformance and delay tough decisions.
Thinking hiring takes too much time. Yes, hiring is time-consuming, but it’s also one of the founder’s primary responsibilities. Founder-led recruiting is as crucial as fundraising; neglecting it only leads to setbacks.
Attachment to early team members. Loyalty to those who’ve been there from the start is natural, but clinging to the “bro culture” can hold back growth. Startups must eventually move beyond the early team phase to bring in specialized talent as the organization scales.
While these arguments sometimes might feel valid, they often come from a place of fear rather than logic. In most cases, improvement plans don’t fit well in startups. The pace is too fast, and the need for the right person—right now—is too strong.
How to Make It Fair
Create a Transparent Process Everyone Knows. Establish a clear approach that’s visible across the company. An excellent idea is the “culture heat map” from the OpenOrg community. Including “how we fire” as part of this culture map clarifies for everyone indoor company what happens when performance doesn’t meet expectations.
Set Clear Performance Standards. This doesn’t mean formal reviews—if anything, I’m skeptical about traditional performance reviews—but it does mean defining clear, concrete goals. When expectations are transparent, it’s easier for both employee and manager to gauge if the collaboration is working.
No Surprises in the Final Conversation. Give employees a real chance to improve with straightforward feedback, but don’t rely on formal improvement plans—they tend to be better suited for larger, slower organizations.
Keep Emotions in Check. If things didn’t work out, there’s no need to undermine the employee’s confidence. Approach their exit with balance and respect.
Be Transparent and Take Ownership as the Founder. Use this as a chance to affirm your standards, whether around quality or culture fit. Be open about the reasons for the departure, setting an example that communicates your values directly.
Basic rule: the direct manager—not HR—delivers the news. It’s on you as a leader to take this step, as it’s foundational to team trust and culture.
Sources that can help
Firing isn’t overly complicated, but it’s a sensitive area when it comes to organizational culture. Here are some resources that can help make the process smoother. Even if they only boost a manager’s confidence, they can make a big difference in execution.
Joel Peterson on Compassionate Firing. Joel Peterson, a management expert, speaks often about “firing with compassion.” His short video, “How to Fire with Compassion” is invaluable for anyone who needs a confidence boost before taking action.
Offboarding Processes. If your organization has an offboarding process, this step becomes much simpler and prevents emotions from boiling over. AIHR’s article on offboarding offers a solid summary, but the main point is to have a plan, even if it’s basic.
Guides for Conducting the Talk. For a straightforward but effective approach to handling tough conversations, Reboot.io’s “The Exit Strategy” offers a quick and actionable read.
Advice for the Undecided. If you’re still on the fence, “Thinking about Firing Someone? CEOs Share Advice forFraming Your Decision” brings together various CEO perspectives on approaching this decision.
Final Thoughts
Letting someone go is one of the toughest calls you’ll make as a founder, but it’s also one of the most important for shaping your company’s future. In a startup, every team member has a significant impact on momentum, morale, and culture. By handling exits decisively, transparently, and respectfully, you not only create space for the right talent but also build trust within your team. Set clear expectations, stay consistent with your values, and never shy away from making the hard decisions. Your startup’s success depends on a team that’s aligned, adaptable, and all-in.