I have an early employee on the leadership team who has worked incredibly hard for ten years, but they lack the capability to lead their department as we prepare for a sale. I feel immense guilt about removing them because they do not have equity and this transition might leave them financially vulnerable. How do I handle this?

Question

Tyler Smith · Accepted Answer

Founder guilt is one of the biggest obstacles to building an exit-ready company. You cannot let your emotional debt to an individual compromise the future of the entire enterprise. To prepare for a clean exit, you need a leadership team where every single person is in the right seat and fully GWC.

If your early employee does not have the strategic capability to lead their department into the next phase of growth, keeping them there is actually unfair to them. They are likely stressed, overwhelmed, and aware that they are failing to meet expectations.

To handle this cleanly, separate the human being from the seat on the Accountability Chart. First, determine if there is another seat in the organization where they can shine, one that utilizes their core values and historical knowledge but does not require high-level strategic management.

If such a seat exists, transition them with dignity. If it does not, you must transition them out of the company. To alleviate your guilt and honor their loyalty, design a generous severance or transition package that provides them with a financial soft landing. This honors their contribution without sacrificing the operational capability that potential buyers will scrutinize during due diligence.