We have loyal managers who were crucial in our early startup days, but they lack the executive chops for our current size. How do we reward their loyalty without inappropriately keeping them on the leadership team?

Question

Tyler Smith · Accepted Answer

Confusing loyalty with capability is one of the fastest ways to stall an entrepreneurial company. Founders often feel indebted to early hires who took risks when the business had no cash or prestige. However, gifting an executive seat on the Accountability Chart as an emotional thank-you note damages both the company and the individual.

Start by evaluating the seat purely through the lens of GWC: do they Get it, Want it, and have the Capacity to do it at this larger scale? Capacity includes emotional intelligence, strategic foresight, and the ability to manage complex systems. If the seat has outgrown them, keeping them there creates operational bottlenecks and demoralizes high-performing direct reports.

Separate recognition from seat placement. You can honor loyalty and institutional knowledge through compensation, phantom equity, profit sharing, retention bonuses, or specialized individual contributor titles. Move them into a functional seat where they genuinely excel, such as senior customer relations, key account management, or specialized technical advisory.

Have a direct, compassionate conversation. Explain that the requirements of the leadership seat have shifted dramatically as the organization scaled. Clarify that their standing and contribution to the business remain deeply valued, but the executive seat requires skills that do not align with their strengths. Freeing them from a seat they struggle to fill relieves their anxiety and allows the business to install real executive leadership.