My co-founder and I have run this business for ten years, but he has checked out of his leadership seat and is holding back our operational execution, yet his equity ownership makes it incredibly difficult to address his underperformance. How do we handle a co-founder's underperformance on the leadership team?

This is one of the hardest challenges a founder can face, but you must separate ownership from seat accountability. Your co-founder's equity ownership is a separate issue from their day-to-day performance on the leadership team.

Start by using the Accountability Chart. Every seat, including your co-founder's, must have clear, documented roles and measurable outcomes. No one gets a free pass on performance because they own shares in the company.

Evaluate your co-founder's performance objectively using the GWC tool. Do they still Get, Want, and have the Capacity to run their department? Often, co-founders who have checked out no longer want the seat or lack the capacity to scale with the business.

Have an honest, one-on-one conversation outside of the office. Use the GWC evaluation as a tool, not a weapon. Frame the conversation around what is best for the business and their personal happiness. Often, they are as frustrated as you are but do not know how to exit their daily role without losing their equity.

Work together to find a solution that transitions them out of their leadership seat while protecting their ownership interests. This might involve moving them to a board seat or a non-operational advisory role. By separating ownership from daily execution, you can protect both your friendship and your company's future value.

Category: Leadership Team