You Always Fire an Executive Too Late

I’ve posted here several times on paradox in planning. This morning I’m fascinated by what Marc Andreessen calls the paradox of deciding to fire an executive.

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. It takes time for her to build and manage her organization to generate output. Therefore, it takes longer to evaluate the performance of an executive than a normal employee.

But, an executive can cause far more damage than a normal employee. A normal employee doesn’t work out, fine, replace him. An executive doesn’t work out, it can — worst case — permanently cripple her function and sometimes the entire company. Therefore, it is far more important to fire a bad executive as fast as possible, versus a normal employee.

Solution?  There isn’t one.  It’s a permanent problem.

He continues with a quote from Andy Grove, co-founder of Intel, who noted that you always fire an executive too late. “If you did it fast enough that it wasn’t too late, you wouldn’t have enough data, and you’d risk being viewed as arbitrary and capricious by the rest of the organization.”

I’ve cited Marc Andreessen’s posts on startups several times in recent months, cataloging it in my mind, and somewhat on this blog, as an excellent take on the high-end elite startup that is a prime candidate for venture capital. His latest in that series, however, part eight on Hiring, managing, promoting, and firing executives, applies quite well to all business, across the range. It applies equally to the growing and healthy established small business, and, for that matter, the larger enterprise as well.

While you can find a lot of good advice on how to find an executive, how to recruit, and how to select, there’s not so much on how to fire an executive.  I had an attorney who used to say that the time to fire a person was “as soon as you start asking yourself that question.” Andreessen’s is better: when you start asking the question, start gathering data.

In this post he also talks about how to manage an executive. It certainly hits home for me when he points out that you don’t just build the team, you also have to manage.

“While respecting someone’s experience and skills, you should nevertheless manage every executive as if she were a normal employee. This means weekly 1:1’s, performance reviews, written objectives, career development plans, the whole nine yards. Skimp on this and it is very easy for both your relationship with her and her effectiveness in the company to skew sideways.

“This even holds if you’re 22 and she’s 40, or 50, or 60!  Don’t be shy, that will just scare her — and justifiably so.”

This is the eighth in Marc’s series on start-ups — perhaps the best yet.

–Tim

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