Knowing When to Move On: The Art of Letting an Employee Go

Confrontation with a poor performer is never fun. But the longer you wait, the more damage that bad employee will do to your business.

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Letting go of an employee is never easy, and there’s no way to avoid it. For entrepreneurs, the question is not whether you will have to do it, but when.

You invest significant time and effort in recruiting the ideal candidate, believing you’ve found the perfect fit—until reality sets in. The candidate who impressed you during the interview may not perform as well in practice, whether due to subpar performance or a negative attitude that impacts the rest of the team.

This is where many entrepreneurs stall: they recognize the need to part ways, yet they delay the decision. Concerns about the effort required to hire and train a replacement, or fear of confrontation, often fuel the hesitation. However, the longer you wait, the greater the potential harm to your organization.

Ripping Off the Band-Aid

Time and again, I’ve observed entrepreneurs holding onto employees far longer than is advisable. It’s understandable—considering the challenge of bringing a new person up to speed and the investment required to train them to replace an underperforming team member. The familiar saying “better the devil you know than the devil you don’t” often keeps us in our comfort zone, but true success requires stepping beyond it.

We sometimes convince ourselves that removing toxic employees quickly is impractical due to existing systems, processes, and client relationships. It may seem that termination would cause more harm than keeping them, so we endure the situation. Yet, problematic employees generate a cascade of issues that affect the entire organization. Removing toxic individuals is almost always the correct course of action, and once the decision is made, even those who have to absorb the former employee’s responsibilities often welcome the change. The internal damage caused by toxic employees can be extensive.

Many individuals have a strong aversion to conflict and will avoid direct conversations with underperforming employees to prevent stirring emotions. The risk of not addressing problematic behavior early is that the employee becomes accustomed to expressing themselves inappropriately, believing there are no consequences.

When you finally confront the issues, the employee’s response can be unexpectedly defensive—much like trying to bathe a cat. In such cases, there is a heightened risk of the employee filing a wrongful termination claim, particularly if feedback was not delivered clearly and directly.

To Fire or Not to Fire

“Litigation is a reality for many businesses: it’s not a matter of if you get sued, but when.”

Entrepreneurs and business owners frequently hear this phrase, and unfortunately, it holds true.

We frequently are asked about the legal requirements for maintaining employment. Fortunately, forty‑nine of the fifty states operate under at‑will employment, meaning that, aside from Montana, you can terminate an employee at any time for any lawful reason. In those forty‑nine states, if an employee becomes problematic, you can dismiss them promptly.

However, you cannot target any reason that could be considered discriminatory or illegal. Below is a straightforward outline of lawful and unlawful grounds for termination. If you encounter a situation that seems ambiguous, consult an attorney promptly.

To reiterate, while the operational aspects of a business can be straightforward, managing people is inherently challenging—arguably the most difficult aspect of entrepreneurship. People are inherently complex: they can be irritable, gracious, or unsettling. Whether you address performance issues through a performance improvement plan or decide to part ways, you will inevitably learn and grow from the experience.

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