We have a loyal department head who was with us from day one, but their capability has plateaued and they are holding the department back. How do we balance our personal loyalty to them with our objective need for a capable leader?

Question

Tyler Smith · Accepted Answer

This is one of the hardest situations an owner will face, but you must decouple personal loyalty from seat capability. As your business scales and prepares for an exit, the requirements for every seat on your Accountability Chart will change. A person who was perfect for a five-million-dollar company is often the wrong fit for a twenty-million-dollar company.

Evaluate this person objectively using the GWC™ tool. Do they get, want, and have the capacity to do the job at this new scale? If the answer to capacity is no, you have a structural issue. Keeping them in a seat they cannot handle is actually disloyal to them. It sets them up to fail, burns them out, and frustrates the team members reporting to them.

You have two realistic options. The first is to restructure your Accountability Chart to create a new, specialized seat that fits their actual capacity and expertise. This allows you to retain their institutional knowledge and loyalty without bottlenecking the department. The second option is to have an honest, compassionate transition conversation. Explain that the company has grown, the seat has evolved, and they are no longer the right fit for this specific role.

Do not let emotional debt compromise the health of your leadership team. A sophisticated buyer will immediately spot a weak link on your executive team during due diligence, which can severely damage your valuation. Address the issue directly, handle it with respect, and put the health of the organization first.