One of our department heads is a minority shareholder but is clearly the wrong person in the wrong seat on our Accountability Chart. How do we handle this right-person-right-seat call when equity is involved?

Question

Tyler Smith · Accepted Answer

Separating equity ownership from operational accountability is one of the most critical steps in professionalizing a business. On your Accountability Chart, there is no seat for shareholder or owner. The chart only reflects the functional roles required to run the business.

To handle this right-person-right-seat call, you must address the operational performance entirely separately from their equity status. Evaluate the minority shareholder using the GWC™ framework and your core values. If they do not fit the core values or do not GWC their seat, they must be removed from that seat on the Accountability Chart.

You cannot allow a failing leader to remain in a seat just because they own a piece of the company. Have a direct, honest conversation. Explain that while their ownership stake is unchanged, the business requires a different leader in that seat to scale and maximize value for all shareholders, including them.

Resolving this issue before an exit is essential. Buyers will discount your valuation heavily if they see a non-performing, protected shareholder occupying a critical seat.