Firing top guns: why CEOs hate axing their execs — and often foul it up - Management

Chief Executive, The, April, 2003 by Meryl Davids Landau

Ask CEOs which part of their job they dread most and the answer isn't making their numbers or keeping Wall Street happy. It's firing their top executives, or even just mulling the idea.

Of course, there are some Chainsaw Als out there for whom slashing high-level bodies is an article of faith. But, more commonly, chief executives fare poorly at it. "If I got a yearly written evaluation, I would get failing marks in firing; I am just terrible at it," concedes Ron Shaw, president and CEO of Pilot Pen in Trumbull, Conn. "The pressure of struggling with sales or profits is nothing compared to having to let a person go."

Firing senior staff isn't a skill executives learn in business school, and it isn't one they have to master to move up the ranks. Many, therefore, Find that even though they may have terminated dozens, if not hundreds, of people by they time they reach the corner office, they still haven't perfected the art.

In many ways, the skill is counterintuitive, suggests Stephen G. Payne, president and CEO of Leadership Strategies, an executive coaching firm based in Princeton, N.J. Most people view it as the end of a relationship, but it should be seen as a transformation. "The relationship will survive, just in a different way," says Payne, author of Greater by Far: The Journey of a Total Leader. "In firing the person, your mission is to ensure that the future relationship is a good one."

A key mistake many CEOs say they make is putting off the inevitable. At one company Payne worked with, the COO was performing so poorly that it greatly hurt the company's finances, yet the CEO gave him nine months to improve. "Many CEOs harbor this unfounded belief that miracles can happen-- that people not endowed with certain capabilities will somehow spontaneously acquire them," says Payne.

Shaw of Pilot Pen says he began warning one high-ranking vice president that his work was under par four years before he finally gave him the ax, and subsequently discovered many costly errors made during that time. "I always think the person can be turned around," says Shaw, who concedes that rarely happens.

Shaw's reluctance to pink-slip executives is understandable, given his personal history. Earlier in his career, at Bic Corp., he fired a salesman who had written anti-Semitic letters to top management. Several days later, the man shot himself. Shaw agonized for months before he finally stopped blaming himself for the suicide.

Several years later, Shaw himself was fired. While serving as national sales manager at Bic, he was abruptly replaced by the founder's son, even though, he says, the company's sales were at an all-time high. Nearly 30 years later, he still recalls his feelings that day: anger, despair and a sense that his whole identity and ability to provide for his wife and three children had been stripped away.

But postponing the inevitable can drag down an entire senior management team. "It is like having an enormous dead moose rotting on the table but nobody can talk about it," says Payne. Executives may start to question their CEO's judgment if they feel he or she can't make a decision that seems obvious.

Of course, it's easier to determine that a person must go when business performance is the yardstick. The decision is much tougher when the problem is the executive's personal style or fit with the company. Gary Giles, CEO of Solution Builders, an information-technology consulting firm in Atlanta, recalls a case in which a vice president with a proven track record joined a company and immediately began to irritate other, more team-oriented executives with his lone-cowboy style. Although the decision to fire him agonized Giles, eventually he realized he would never be able to turn the vice president into a team player.

First of all, hire well

Savvy executives say the first step to getting better at firing is hiring the right people in the first place. "Years ago, I had more of an attitude of let's give this person a shot when hiring them, and every third or fourth time I would get someone who did not really have the capacity to do the job," says Tom Rotherham, CEO of RSM McGladrey in Minneapolis, the nation's seventh largest accounting firm.

Now, Rotherham is much more careful in his hiring, and his need to fire people is greatly reduced. (His firm has retained a business psychologist to evaluate each prospect's ability to do the job. The psychologist also works with managers on their own issues, including conflict avoidance, so they will be better able to fire people.)

Rotherham's firm also has instituted a formal process for getting an underperforming executive up to snuff: The person is told exactly how he needs to change and is given four to six months to do it. Improvement is reviewed on a monthly basis. Only one in 10 such executives changes enough to keep his or her job (and about 60 percent never even start to change).

Some CEOs find it helps to have an outside sounding board before they make the decision. At Solution Builders, Giles turns for advice to a group of fellow CEOs he has relied on for years. "As outsiders, maybe they can help me see some bias coloring my perception," he plains. "Several times they have gotten me to adjust my management style and give the person another chance."