Episode #275: When Should You Let Someone Go?

Are Guenther’s days numbered?

COMPETENT LEADERS MANAGE INDIVIDUAL PERFORMANCE

One of the most common questions I field, from both our podcast audience and our clients is, "Marty, how much time should I give someone when they're not performing, before I make the decision to let them go?".

I was given pause for thought last weekend, as I watched the final race of the Formula One (F1) motor racing season.

This year's F1 season was pretty boring at the top of the championship points table, because Max Verstappen and the Red Bull team completely dominated the competition. They romped home with the title (with daylight second)! But the bottom of the table was as intriguing, as the top of the table was boring.

Eight years after joining the F1 competition, perennial cellar dwellers, the Haas F1 Team, took the wooden spoon for last place… and the man who has led that team from the start, Guenther Steiner, is still at the helm of the team. So I found myself wondering, “How does Guenther still have a job?” But, more on this shortly.

Like most questions in business, the answer to the question, “When is it time for someone to go?” is, “It depends…” Your job as a leader is to work out what it depends upon, and then to make a decisive judgment call.

I begin today’s LinkedIn Newsletter with Guenther Steiner and the Haas F1 team. I'm then going to cover off on some of the considerations you'll have to mull over when you're trying to decide how to treat an under-performer.

I'm also going to give you an invaluable resource: my 6-point decision-making framework, which you can use in any situation to help you make difficult decisions about under-performing individuals.

THE (NOT SO?) CUTTHROAT WORLD OF F1 RACING

I was never really into motorsports until I came across the Netflix documentary series, Drive to Survive, when it was first released in 2019. I found the whole F1 business model quite intriguing. For a start, it's the elite, pointy end of motor sport. There are only 10 teams, with two drivers per team—20 cars in each race, battling it out for individual and team points in a season that spans 23 races.

Massive capital investment is required from team owners—it's a relatively expensive sport. Let's face it, these teams don't spring up from GoFundMe campaigns.

Then, there's the coordination and teamwork required end-to-end throughout the organization: from car design through to engineering, data analysis, pit crews and, of course the glamor boys—the drivers.

I was also fascinated by the decisions that needed to be made by the team owners, principals, and CEOs under extreme pressure and in an incredibly cutthroat, competitive environment.

I released a podcast episode a couple of years ago examining the culture and competitive dynamics of F1, Ep. 79: Survival of the Fittest, which you may enjoy re-listening to. After following several F1 seasons now, I formed a few conclusions:

• Decision-making is fairly swift, but it's not really brutal or impulsive. It's not unreasonable, in what's clearly a performance-based culture.

• From the team principals down to the drivers, the culture supports the view that you can either perform, or you can make way for someone who can perform.We've seen the departure of team principals: Claire Williams at Williams Racing, Mattia Binotto at Ferrari and, this year the Alpine team did a comprehensive mid-season cleanout.Drivers seem to come and go regularly, but there's also a bit of a revolving door culture, where drivers move between teams. Just since I've been watching the sport, Aussie Daniel Ricciardo has gone from the Red Bull team, to Renault, to McLaren and now, to Alpha Tauri.

Through all of this though, I'm left with one mystifying question: “How on earth does Guenther Steiner still have a job?”

MORE TO IT THAN MEETS THE EYE?

Steiner has been team principal of Haas Racing since its inception in 2014. In the eight years that Haas has been competing in F1, it has under-performed miserably. The team peaked in 2018, its third season in the competition, when it took fifth place out of 10 in the Constructors’ Championship.

But since 2018, its results have been underwhelming to say the least: 9th, 9th, 10th, 8th and, in the season just completed, 10th. Still, Steiner remains team principal of Haas Racing.

The team owner Gene Haas, is an American success story. He started Haas Automation in the early 1980s. His company peaked at US $1bn of sales in 2014, the same year he started the Haas F1 team. Who knows why Gene Haas continues to back Steiner? They seem to have a good relationship, and Steiner is undoubtedly loyal, having reportedly knocked back several offers from other teams.

But why does Gene Haas put up with the lack of results from Steiner? Where does the buck actually stop? There could be many reasons for the poor results.

For a start, Haas Racing doesn't have the same level of funding as other teams. It probably has around a third of the budget of top teams like Mercedes, Red Bull, and Ferrari. It's pretty hard to compete effectively under these circumstances. Of course, this type of investment differential was the basis of Michael Lewis's classic book, Moneyball, which explored how the disparities in funding play out in Major League Baseball.

Secondly, from the documentary Drive to Survive, it's clear that Steiner has established a relationship with Gene Haas that sees him simultaneously taking responsibility for failures, while seeming incredibly contrite and frustrated, and somehow promising to do better. To be honest, that would've worn thin on me by now. Every time I hear one of Steiner's post-race conversations with Gene Haas, the only thing going through my head is "Gene, the dog ate my homework again."

Let's face it, Steiner's pretty popular. He's definitely one of the most colorful characters in the documentary, and it could well be the case that he's good for the Haas brand and the overall Haas business, beyond the competitive world of Formula One. He’s certainly brought a higher profile to the Haas team that many of the other team principals don't enjoy. This, in and of itself, may be creating value for Gene Haas.

Whatever the reason, it’s clear that Haas is considering more than just the on-track performance in making the decision to stick with Steiner as his team principal. Steiner's popularity is surely a key part of this equation, and there will always be complexities that outsiders (in this case, me!) can't actually see.

But just as is the case with my question, “How on earth does Guenther still have a job”, everyone will have an opinion about how you are handling any underperformance in your team… and it's never as straightforward as it seems from the outside!

CONSIDER MANY FACTORS… BUT DON’T MAKE EXCUSES!

Getting back to the original question, “How do you know when it's time to let someone go?”, there are many factors to consider.

Importantly, is the effort and commitment there? In the absence of effort, your decision-making becomes easier, and the timelines become shorter (more on this in a minute). You probably know my overriding principle, it's a lot easier to rein in a stallion than it is to flog a donkey. People at least have to want to improve. Sometimes they're going to disguise the fact that they don't, and you might well think it's something you're doing wrong… it's not!

But, let's assume for the moment that the individual is actually trying. You need to think about how big the gap is between the current performance and the minimum acceptable standard. If the gap is huge, it may take a really long time to get them to reach that performance bar, and the question you've got to ask yourself is, "Can I afford the time, the distraction, the interim performance deficit, and the drain on my own personal resources to see this through?"

Then I guess you have to ask:

• “What's the root cause of the problem?”

• “Does this person lack specific training?”

• “Are they new to the role, the company or even the industry?”

• “Is there something else about the context that means it's going to take them more or less time to meet your expectations?”

If you understand the root cause, it's going to be easier to come up with a prognosis.

You have to think about how complex the learning curve is that they're being asked to climb. For example, when I hired executives who were new to the company, I would generally give them six months to become independent performers, operating above that minimum acceptable standard. Even though I set a pretty high bar, I still gave them plenty of time to get there. It was a complex and difficult environment that they had to contend with.

To give you some contrast for this, though, a CEO I know who runs a very successful global company told me that when his business hires entry-level accountants, if they aren't fully productive within two weeks, they're sacked. This is based on the premise that, if they understood the things they were supposed to have mastered in their formal qualifications, then they would be able to do that entry-level work without difficulty.

There are also individual factors. Not everyone's the same. Some people are less capable and mature than others. I really like applying the Situational Leadership Theory model here: you should lead your people using different styles depending on their level of maturity and capability. This can become a little tricky because it means, by definition, that you have to put more time into your less productive, less capable, and less effective people… time that would be no doubt better spent trying to leverage the capability of your high performers.

The key thing about Situational Leadership Theory that people don't tend to talk about is that you have to be able to see consistent, appropriate improvement in those who are at the lower end of the capability and maturity scale.

Trend is your friend: if you don't see a trend of improvement at an appropriate pace, then you have a performance issue that you need to deal with. In these cases, your indulgence shouldn't be limitless.

We all want to be compassionate; we want to give people the benefit of the doubt; we want to be liked; we want to be seen as caring, humanistic leaders. So, our power of rationalization kicks in, and we construct 1,000 reasons why the person isn't really an underperformer after all.

Excuses like:

• "She gets on really well with everyone," or

• "He's an innovative thinker," or

• "I'm short-staffed, and it's better than having no one," or

• "I know he hasn't performed to date, but I think he'll be better under my leadership."

All of these are dangerous, emotional crutches to support your own personal comfort, to lull you into a false sense of security, and to seduce you into inaction… and, there goes your culture!

My 6-STEP DECISION-MAKING FRAMEWORK

Every situation is different, so I can't give you a specific answer to the question, “When should you let someone go?”

What I can do is give you a framework for thinking through these complexities when you need to make a decision about an under-performer. One of the most powerful free resources I've ever created is available for you on this: It's my six-point PDF checklist that you can use as a companion to help you through the process.

There are no hard-and-fast rules, but if you go through this process, apply your knowledge of the situation, and you use your judgment, you'll find it much easier to arrive at an answer that you're comfortable with.

1. Start at the bottom of the deck.

Deal with your worst performers first, even if they are the more difficult or daunting cases. These ones are often the trickiest: your predecessors may have neglected them, because they're too hard to deal with. If this is the case, then over time these people may have become entrenched and emboldened.

But if you don't start here, you're unlikely to start anywhere. Remember, the quality of your team isn't set by your strongest performer, it's set by your weakest performer. The other people on your team won't show you what they're capable of until you demonstrate that you're serious about setting and enforcing a minimum acceptable standard for both behavior and performance.

So, act decisively with your worst performer, and then you’ll see what everyone else chooses to do as a result.

2. Make an assessment of the individual's intent.

Is this person trying to do the right thing? Are they on board with your leadership approach, and at least putting in the effort to achieve the required results?

Often if you are trying to bring culture change, you'll find strong, passive-aggressive resistance from the old guard, because you're effectively disrupting their power base. Often, these people are long-standing employees who are respected by their peers for their knowledge. Don't be fooled by this: if they don't want to play ball, you need to confiscate their bat.

Even though that might sound brutal and, of course, a lot of new age, touchy-feely consultants will tell you that you have to support these people to change, that's bullsh!t... You don't!

If you have someone who has no intention of getting on the bus, you have to get them off. Fast. If you can't get someone to meet you halfway, err on the side of speed (within the appropriate processes of course).

To get the lowdown on this, have a listen to Ep.56: Dealing with Change Resistance. Let's assume, though, that you have someone with the right intent who's actually trying to meet the standard: you can move on to step three.

3. Make sure they have the empowerment and the autonomy that they need to be successful.

Are your expectations realistic?... Does this person have clarity of objectives?... Do they have appropriate resourcing?... Have you been available to support them?... Have you supported the decision-making rights that keep their accountability rock solid?... Have you protected them from internal politics and the ever-shifting work demands that come from above?

If not, implement and strengthen anything that's missing. If you don't have the confidence that you've done your job as a leader, you're going to find it really hard to make decisions on someone else's performance under that leadership.

4. Think about any recent underperformance in the context of the individual's historical performance.

Sometimes, you’ll have a person who's always been a decent performer, but whose performance has just nose-dived recently. So, ask yourself the question, "What's changed?"

Sometimes, there's going to be an answer in the work environment that you can point to and rectify: a new team, a new project, a difficult peer, resourcing challenges.

Other times, there might be something going on in their personal lives that's causing a lack of focus: health issues, dying parents, an out-of-control teenager, a new baby, relationship breakups.

In these cases, be compassionate and tolerant. Work out a way to help them through, while not just accepting a new lower performance standard from them.

Some of the trickiest issues here are around mental health. If you're in this situation, have a listen to Ep.185: The Mental Health Minefield: it's a must listen. If you help someone and support them while they solve their personal issues, you will have built an extremely loyal, committed employee. Then, you just have to make sure they're meeting the minimum acceptable standard.

5. Set and communicate clear targets for improvement.

When do you expect the individual to reach the expected performance milestones? For example:

• “I need to see this level of improvement by the end of the month”, or

• “I need to see work of this quality by date X”, or

• “I've had to step in this time to correct your work, but next time I need to see you making better fist of it, without my intervention”, or

• “I need you to be able to make these decisions independently by date X.”

This is going to ensure that they're given clarity of objectives, and you can frame your ongoing dialogue with them along those lines.

6. Make an assessment on the speed of improvement.

Think about these factors:

• “Is this individual actually getting better, or do they continue to make the same mistakes over and over?”

• “Do they take one step forward and two steps back?”

• “Do they perform to standard when I'm looking, then revert as soon as I turn away from them?”

Your objective is to ensure that everyone can perform their role independently, without the need for your constant intervention.

Here's a good test to bear in mind as you support individual improvement with your concentrated personal time and effort: if someone demonstrates their ability to perform to the standard consistently for just a few weeks in a row, then they already have the capability. If they drop below the mark after that, that's not a capability issue… that’s a choice!

MAKE TWO DECISIONS, NOT ONE!

Ironically, if you are asking how you'd know when it's time to let someone go, you probably already know the answer: In all likelihood, you're just bargaining about how far down the road you can kick the can to avoid the pain of executing your inevitable decision.

I've always found it's better for everyone, including the individual, to rip the Band-Aid off quickly.

Here's the perfect remedy to stop you from procrastinating:

You have to turn every one of these cases into a two-part decision:

1. Do they need to go?

2. If so, what's the best way to execute that decision?

You’re much more likely to make the right decision if you don't focus on the complexities of executing that decision. You'll save yourself from all sorts of rationalizations, which would otherwise stop you from making the right decision at the right time.

Rationalizations like:

• "What if they go out on stress leave," or

• "I just don't have the time to go through the performance management process right now," or

• "How will we manage their accounts without disrupting our customers?" or

• "What if I can't find a replacement for that role?"

So, make the call first, then work out how to execute it later. That gives you time to minimize risk; to create a solid plan to move forward with; and to work out the most compassionate way to exit the individual. Don't let the complexities of execution cloud what would otherwise be a really straightforward decision.

IT’S TOUGH… BUT THAT’S WHAT IT MEANS TO LEAD FOR PERFORMANCE!

It's never easy to decide to let someone go, but if you stick your head in the sand when you are confronted with an under-performer, your team will inevitably become mediocre. Your poor performers are going to stay, and anyone decent who wants to be on a winning team is going to find other alternatives.

Dealing with your under-performers, in a way that's both decisive and compassionate, will ensure that over time, everyone understands what they need to do to meet the standard that you are trying to set. And, who knows? One day, even Guenther might have to look for a new job!

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