The Hidden Cost of Your Firing Decisions
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The Hidden Cost of Your Firing Decisions
You're about to fire someone on your team.
The decision feels justified. They're not performing. The fit isn't right. The situation has dragged on too long.
But here's the uncomfortable truth nobody wants to face:
The real failure isn't theirs. It's yours.
If you're regularly firing people from your team, you're not solving a performance problem. You're covering up a leadership problem.
This isn't about making you feel guilty. It's about recognizing a pattern that's costing you more than you realize – in team morale, company culture, lost productivity, and wasted resources.
Let me show you why constant firing is a symptom of deeper issues, how it's affecting your entire organization, and what to do instead.
The Ownership Paradox
The firing problem begins with a contradiction in how leaders approach responsibility.
Most founders and CEOs pride themselves on taking ownership.
Revenue down? "That's on me." Product delayed? "I'll take responsibility." Customer unhappy? "Let me make it right."
But when it comes to team performance, this ownership mindset often disappears.
Suddenly it's: "They weren't the right fit." "They couldn't handle the pace." "They didn't have what it takes."
This selective ownership isn't just inconsistent – it's costing your business.
Reed Hastings learned this the hard way during Netflix's early years. After the dot-com crash forced the company to lay off a third of its staff, Hastings had a realization that transformed his approach to building teams.
"The people we laid off were not the right people for the future we were building," he later recalled. "But whose fault was that? It was mine. I had hired them or allowed them to be hired. I had set the priorities. I had created the culture that led to these mismatches."
This insight led to Netflix's famous "keeper test" approach to hiring and development – focusing on finding the right people upfront rather than firing underperformers later.
The paradox is simple: The moment you hire someone, you own their performance – good or bad.
When you fire that person, you're not fixing their failure. You're admitting your own.
The Three Failures Before The Fourth
When you examine a termination, you'll typically find at least three distinct failures that preceded it:
Every firing represents not one failure, but four:
Failure #1: Poor profiling
You didn't clearly define what success in the role actually looks like. You didn't identify the precise skills, attributes, and values needed. You settled for vague job descriptions and gut feelings during interviews.
Failure #2: Inadequate onboarding
You didn't set clear expectations from day one. You didn't provide the tools, resources, and context needed for success. You expected them to "figure it out" without proper guidance.
Failure #3: Insufficient feedback and support
You didn't have regular, candid conversations about performance. You avoided uncomfortable topics until they became unavoidable. You didn't offer the coaching, training, or mentorship needed to bridge the gap.
Failure #4: The firing itself
Only after these three failures do you reach the fourth – the termination that seems inevitable but was actually preventable.
Ray Dalio recognized this pattern at Bridgewater Associates and developed what he calls "the dot collector" – a systematic approach to understanding people's strengths, weaknesses, and values before hiring them, then tracking their performance transparently to prevent surprise terminations.
"When someone fails in their job," Dalio writes in Principles, "it's usually because they don't have the right qualities for that job. Whose fault is that? The managers for not figuring that out up front."
This doesn't mean you should never fire anyone. It means that if you're regularly firing people, there's something broken in how you hire, develop, and manage your team.
The Ripple Effect You're Ignoring
When you fire someone, you're not just affecting that one person – you're sending signals to everyone else on your team. Most leaders completely miss these ripple effects.
I once consulted for a tech company that had developed a habit of quarterly "performance reviews" that inevitably led to firings. The CEO thought this created a high-performance culture. What it actually created was a culture of fear and self-preservation.
During confidential interviews, team members told me:
"I avoid suggesting risky ideas because if they fail, I might be next." "I spend more time documenting my contributions than actually contributing." "I'm actively job hunting because I never know if I'm on the chopping block."
This isn't what a high-performance culture looks like. It's what a fearful one looks like.
Consider these ripple effects:
Fear replaces innovation
When team members see people getting fired regularly, they start playing it safe. Instead of taking smart risks and driving innovation, they focus on avoiding mistakes and staying off your radar.
Trust quietly disappears
Every time someone gets fired, everyone else wonders, "Could that happen to me?" Without addressing why people are really getting fired, the answer becomes "Yes," and that kills the psychological safety your team needs to do great work.
Knowledge walks out the door
When someone leaves, they take more than just their skills. They take relationships, context, and know-how that you can never fully document or replace.
The damage spreads beyond your company
Ex-employees talk about their experience. In the age of Glassdoor and LinkedIn, their stories shape how future candidates see your company.
The message firing sends isn't just "we have high standards" – it's also "we don't invest in helping people grow" and "we don't take responsibility for our hiring mistakes."
The Real Cost Beyond The Severance Check
Firing creates costs far greater than most leaders calculate:
The Society for Human Resource Management estimates that replacing an employee costs, on average, 6 to 9 months of their salary. But even this misses the deeper costs:
Opportunity cost
Projects stall. Initiatives falter. Momentum gets lost while the position sits empty or while someone new gets up to speed.
Team productivity hit
The rest of your team has to pick up the slack. They spend time covering extra responsibilities and dealing with yet another team change.
Culture and morale damage
People start doubting your judgment. Anxiety spreads about job security. Cynicism grows with each person who leaves.
Recruitment reputation takes a hit
Word gets around. It gets harder to attract good people. You have to pay more to overcome negative hiring stories.
I've seen this play out repeatedly with founders who think firing fast is always the right move. One tech startup I advised cycled through three CMOs in 18 months. Each transition cost them approximately four months of momentum – two months of declining performance before the firing, and two months of ramping up the new hire. That's a full year of lost marketing momentum in an 18-month period.
The most expensive hiring decision isn't bringing on the wrong person – it's bringing on the right person and setting them up to fail through poor leadership.
Investing in finding the right people – and helping them succeed – costs much less than the cycle of hiring, firing, and replacing.
The Three Mindset Shifts That Change Everything
To reduce firings without sacrificing performance, you need to change how you think about leadership:
If constant firing is the symptom, what's the cure? It starts with three fundamental mindset shifts:
1. From blame to ownership
The moment someone joins your team, their success becomes your job. This isn't about taking away their accountability – it's about recognizing your role in setting them up to win or fail.
When Bill Walsh took over the struggling San Francisco 49ers in 1979, he didn't just fire underperforming players. He developed what he called the "Standard of Performance" – a system that clearly defined what excellence looked like in every position and how the organization would help players achieve it.
"In essence, I had to determine how I would measure success," Walsh wrote. "I had to think about what kind of organization I wanted to run, what kind of coaching culture I wanted to establish."
This ownership mindset transformed one of the worst teams in football into a dynasty.
2. From firing to finding fit
When someone isn't thriving in their current role, don't jump straight to "Should we fire them?" Ask instead, "Is there a better spot for their talents?"
Laszlo Bock, former SVP of People Operations at Google, implemented a system that allowed underperforming employees to find new roles within the company rather than being terminated.
"The goal is to help that person succeed, not to document their failure," Bock explained in Work Rules!. "Sometimes the right answer is to find them a different role."
This approach not only saved recruitment costs but built tremendous loyalty and attracted better talent who knew they wouldn't be discarded at the first sign of struggle.
3. From individual failure to system improvement
Every time you fire someone, don't just plan to replace them. Ask what broke in your hiring, onboarding, or feedback process. How can you fix it so this doesn't happen again?
When Alan Mulally took over as CEO of Ford in 2006, the company was on the brink of bankruptcy with a culture of blame and frequent executive turnover. Rather than continuing the firing pattern, Mulally implemented a management system focused on transparency and problem-solving.
His famous "traffic light" system (red, yellow, green) for project status created a culture where issues could be identified and addressed before they became firing offenses.
"You can't manage a secret," Mulally often said. "We needed a process where people could be open about the challenges they were facing."
These shifts don't mean you'll never fire anyone. But they make firing a rare last resort, not your default solution.
The Better Way Forward
Here's how to turn these mindset shifts into practical systems:
So what does this look like in practice? How do you build a system that reduces the need for firing while still maintaining high standards?
1. Define success before you hire
Most hiring problems start with vague job descriptions and fuzzy expectations. Before posting a job, answer:
What exactly will this person accomplish in their first 30, 90, and 180 days?
What skills and traits are must-haves versus nice-to-haves?
How will we measure if they're doing well?
2. Hire for growth potential, not just experience
Past performance predicts future results – but only in similar situations. Instead of just looking at what they've done, assess:
How quickly do they pick up new skills?
How do they handle feedback?
How have they grown in their career?
What challenges have they overcome?
3. Create a solid onboarding process
The first 90 days make or break most new hires. Build an onboarding plan that includes:
Clear expectations and success markers
Regular check-ins for feedback
Access to the people and tools they need
Cultural integration beyond just the job tasks
4. Give regular, honest feedback
Don't wait for annual reviews to tell people how they're doing. Create a culture where feedback happens naturally:
Weekly one-on-ones focused on growth, not just status updates
Peer feedback sessions
Clear improvement plans when problems show up
Recognition when they make progress
5. When someone struggles, ask better questions
Before you start thinking about firing someone, ask:
Is this person in the right role for what they're good at?
Have we given them the training and tools they need?
Are there outside factors affecting their work?
Would they do better under different leadership or in another team?
Daniel Pink, in his book Drive, points out that most performance issues stem from a misalignment of autonomy, mastery, and purpose. "Before concluding that someone's a slacker or incompetent," he suggests, "see if they're in a role that leverages their natural strengths and connects to what matters to them."
When you build these systems, firing becomes a rare exception, not a regular tool.
The Responsibility You Cannot Delegate
Even with these systems in place, one truth remains: you own the outcomes of every hiring decision.
The ultimate responsibility for who joins and leaves your team is yours.
You can delegate the hiring. You can delegate the training. You can even delegate the firing conversation.
But you can't delegate the responsibility.
Everyone on your team reflects your choices – who you brought in, what systems you created, what culture you built, what standards you set.
When you fire someone, you're not just ending their chapter with your company. You're making a statement about what kind of leader you are and what kind of organization you're building.
I once asked a mentor – the CEO of a company known for extraordinary retention – how he thought about firing. His answer changed my approach forever:
"I never think about firing people. I think about whether I've given them the clarity, tools, feedback, and environment to succeed. If I haven't, that's on me to fix. If I have, and they're still struggling, then I need to help them find a place where they can be successful – which might be outside our company. But I never frame it as 'firing.' I frame it as 'I failed to create the right match, and now I need to help fix that.'"
This mindset doesn't make the hard decisions easier. But it does make them rarer. And when they do become necessary, they happen with more dignity, clarity, and learning.
Remember these three truths about firing:
It's always the manager's fault – that the person was hired, that it went on as long as it did, what happens next.
You're not just ending someone's job – you're helping them find a place where they can be successful.
And every decision you make affects everyone else who's still on your team.
The next time you're thinking about firing someone, pause and ask yourself: "What could I have done differently to avoid getting here? And what will I change so I don't end up here again?"
The answer to that question is worth way more than any short-term relief you get from firing your way out of a problem.
Thank you for reading.
– Scott