When To Fire An Executive Before It's Too Late: 5 Red Flags

Greg Marsh - 22 Jan 2021
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When To Fire An Executive Before It's Too Late: 5 Red Flags

Written by Greg Marsh, former CEO of Onefinestay

Greg Marsh is a former investor at Index Ventures and founded Onefinestay in 2009, grew his company from 0 to 700 people and sold it for more than $250M to Accor Hotels.

Hiring an executive

There are certain challenges when it comes to hiring and managing executives. What do I mean by an executive? An executive owns an entire domain of output of your business, they manage your managers.

Executives are assessed not on their own qualities, but on how well they build and scale a function.

You will need them, and they will change your life when they’re good. But ‘good’ is context-dependent, and it’s almost impossible to know in advance whether they will succeed or not. Founders radically under-estimate how hard this is to get right, and how often they will get it wrong. So, be very humble, and expect to fail a lot.

It’s unbelievably hard to hire executives well. About 1/3rd of the time you will screw it up, if you’re good. When you get it wrong, it takes ages to spot it and fix it. And you’ll do serious damage to an entire piece of your organization. There’s nothing you can do about this; it’s just how it is. The challenge here is to hire slow and fire fast.

Classic pitfalls when you’re hiring an executive is that you:

  • Hire someone who is too senior,
  • Promote someone too fast and breaking them, although this seems like a paradox: promoting a bit too quickly is the only way to keep the very best people.
  • Hiring ‘big company’ executives,
  • Deferring too much to them,
  • And lastly, not managing them enough after they join the company. Just like any employee, they need context, clear objectives and practical support.

Firing an executive

So, when do you fire an executive?

This is particularly tough for less experienced founders as they’ve often had to ‘sell’ the hire to their board, the rest of the team and to themselves. Marc Andreessen, the co-founder and general partner of Silicon Valley venture capital firm Andreessen Horowitz, says it’s a paradox:

“It takes time to gather data to evaluate an executive's performance. You can't evaluate an executive based on her own output, like a normal employee. You have to evaluate her based on the output of her organization.

But, an executive can cause far more damage. In the worst case, it can permanently cripple her function. Therefore, it is far more important to fire a bad executive as fast as possible, versus a normal employee.”

Here are a few other insights about when to hire and fire an executive, thanks to Marc Andreessen:

Red Flag 1: Gut feeling

First, before you hire an executive, the minute you have a bad feeling in your gut, start gathering data to validate your feeling or prove it wrong.

Red flag 2: Are they hiring?

Second, if the executive is already working at your company, ask yourself:

“Is the executive hiring?”

If there are open headcount slots and nobody's coming in the door, you have a problem. Just as bad is when the new hires aren't very good, when they are bringing down the average quality of the organization.

Red flag 3: Are they training?

Third, ask yourself:

“Is the executive training and developing her people?”

Often in a startup, an executive is hired to take over a function that's already been started, at least in rudimentary form.

The people in that function should be noticeably better at their jobs, and highly respectful of the executive's skills, within the first several months at the very least. If not, you have a problem.”

Red flag 4: What do others think?

Fourth, ask yourself:

“What do the other executives think?” Great executives are often imperfect but their peers always respect them. If your other executives are sceptical of a new executive after the first few months, you also have a problem.

Red flag 5: Is the interaction painful?

And lastly:

“Is it painful for you to interact with the executive?”

Do you try to avoid or cancel your one-on-ones? Does talking to her give you a headache? Do you often not understand what point she's trying to make or why she's focused on such an odd issue? If the answer to any of these questions is yes, you have a problem.”

You learned about the challenges and pitfalls when it comes to hiring and managing executives. By asking yourself the right questions you will be able to detect whether you need to fire an executive quickly or not.

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