We have a legacy director who has been loyal to us for ten years, but as we look to scale and prepare for an exit, they clearly lack the capability to lead their department to the next level. How do we address this loyalty versus capability gap without looking ungrateful or destroying company morale?

Question

Tyler Smith · Accepted Answer

This is one of the hardest challenges a business owner faces, but you must separate loyalty from capability. As you prepare your company for a clean exit, your leadership team must consist of people who completely GWC their seats. A buyer will evaluate the strength of your leadership team, and a weak department head represents a major risk that lowers your valuation.

First, you must have an honest, compassionate conversation with this legacy director. Use the People Analyzer to evaluate them objectively. They are likely a perfect core values fit, but they simply lack the capacity to handle the increased complexity of their seat at your current scale. Do not just fire them. Instead, look for a different seat on the Accountability Chart where they can succeed and bring value to the organization. This might mean creating a specialist role or a junior management position that fits their current capacity.

If there is no appropriate seat available, or if they refuse to step down from the leadership team, you must make the tough decision to transition them out of the company. Keeping someone in a seat they cannot perform hurts the business, frustrates the individual, and signals to the rest of the team that performance does not matter. True loyalty means doing what is right for the company and the individual, even when it is incredibly difficult.