Letting an Employee Go

Letting an Employee Go with Compassion and Clarity

Of all the responsibilities that fall on the shoulders of a founder, there is one that is, without a doubt, the most emotionally taxing, the most dreaded, and the most profoundly lonely. It’s a conversation that can keep you up for nights on end, replaying it in your mind, questioning every decision that led to this moment.

I’m talking about letting someone go.

In my four decades in business, I have had to have this conversation more times than I care to remember. And I can tell you, it never gets easy. It shouldn't. The moment it becomes easy is the moment you have lost a piece of your humanity as a leader. To hold someone's livelihood in your hands is a heavy and sacred responsibility.

But I have also learned a fundamental and often overlooked truth. The decision to let an employee go, when done for the right reasons and in the right way, is not just about one person's departure. It is a critical act of leadership that defines the health, the performance, and the psychological safety of your entire organisation.

When you avoid this hard conversation, you are not being kind. You are being unfair to your high-performers who are carrying the extra weight. You are being unclear about the standards of excellence your business stands for. And you are, in a strange way, being unfair to the underperforming individual by allowing them to stay in a role where they are not set up to succeed.

So, how do you navigate this minefield? How do you treat people with dignity and respect while making the tough, necessary decisions for the business? This is my definitive, no-bulldust guide to having the hardest conversation in business.

The "Pre-Mortem": How to Know When It's Really Time

The actual termination meeting should never be a surprise. If it is, it is a sign of a massive failure in your leadership and your performance management systems. The decision to let someone go is the final step in a long, clear, and well-documented process. Before you ever get to that point, you must have done the hard work of giving that person every possible chance to succeed.

1. The Foundation of Clarity: Did They Know What 'Good' Looked Like?
This starts on day one. A great performance management system begins with a crystal-clear job description and a set of measurable Key Performance Indicators (KPIs). Your team members must know, without any ambiguity, what is expected of them and how their success will be measured. If you cannot clearly articulate what "winning" looks like in their role, you have no right to tell them they are losing.

2. The Performance Improvement Plan (PIP): A Tool for Support, Not a Ticking Clock
When performance starts to slip, the first step is a formal PIP. But we must reframe our thinking on this. A PIP should not be a box-ticking, "managing them out" exercise. It should be a genuine, good-faith effort to help the person improve.

• Be Specific: The PIP must contain specific, measurable, achievable, relevant, and time-bound (SMART) goals. Vague statements like "improve your attitude" are useless. "For the next 30 days, we need you to ensure all client reports are submitted by the 5 p.m. deadline with an error rate of less than 2%" is clear and measurable.
• Identify the Root Cause: Is it a skills gap (they don't know how to do the job)? If so, the solution is training and coaching. Is it a will gap (they have the skill but lack the motivation)? If so, the conversation is about engagement and their personal connection to the role. Or is it a values mismatch (their personal values and behaviours are not aligned with the company culture)? This last one is often the hardest to fix and the most critical to address. On Shark Tank, I always invested in founders who were fanatical about their culture, because they knew a single values-misaligned person could poison the well.
• Provide Support: What resources, training, or mentorship will you provide to help them achieve the goals in the PIP? This proves your commitment to their success.

You have done enough when you can honestly say that you have given them all the clarity and support a reasonable person would need to succeed in the role, and they still haven't met the standard.

The Conversation Itself: A Step-by-Step Framework for a Humane Exit

The meeting itself should be brief, direct, and compassionate. Your goal is not to debate the decision—the decision is final. Your goal is to deliver the message with clarity and dignity.

Preparation is Everything

• Documentation: Have everything prepared. This includes their final pay calculation, any relevant termination letters, and information about their entitlements.
• Logistics: Choose a private, neutral space. A meeting room is better than your office. Have a box of tissues. If you have an HR person, they should be in the room as a witness and a support. If not, consider having another senior leader present.
• Timing: The old advice of "Friday afternoon" is outdated and, I think, a bit cowardly. It can leave the person feeling isolated all weekend. A Tuesday or Wednesday morning is often better, as it allows them to immediately start the process of moving forward. Never do it right before a major holiday.
• Script Your Opening: This is not the time to "wing it." You will be nervous, and your adrenaline will be pumping. Write down and rehearse your first two sentences. This ensures you deliver the message clearly and don't waffle.

Executing the Conversation

1. Get Straight to the Point: Do not start with small talk. It is cruel and creates confusion. Your scripted opening should be immediate and direct. "Thanks for coming in, Sarah. I've asked you here for what is a very difficult conversation. The purpose of this meeting is to let you know that we are ending your employment with us, effective today."
2. State the Reason, Briefly: Connect the decision directly back to the performance management process. "As you know, over the last three months, we've been working through the performance improvement plan regarding [specific issue]. Unfortunately, we haven't seen the sustained improvement we needed in that area, and so we have made the difficult decision that this is not the right role for you long-term."
3. Do Not Get Drawn into a Debate: The person will likely be emotional—shocked, upset, or angry. This is normal. Your job is to listen, to acknowledge their feelings ("I understand this is difficult to hear"), but not to engage in a back-and-forth about the decision. It is final. Re-litigating past events is not productive for anyone.
4. Transition to the Logistics: Quickly move the conversation to the next steps. "I want to walk you through the details of your final pay and the support we can offer." Have the HR person or the senior leader then take over to discuss the practicalities.
5. End with Dignity: End the conversation by genuinely wishing them well for the future.

The entire meeting should ideally take no more than 10-15 minutes. A long, drawn-out meeting is a painful one. Be clear, be compassionate, and be concise.

The Aftermath: Leading the Survivors and Protecting Your Culture

Your work is not done when the person has left the building. In fact, one of your most important leadership moments has just begun. The way you handle the aftermath will send a powerful signal to your remaining team about your character and the culture of your company.

• Communicate with the Team: You must communicate the departure to the rest of the team as quickly as possible. Rumours and gossip move at the speed of light and are incredibly destructive.
• Be Honest but Respectful: Your communication should be simple, direct, and respectful of the departing employee's privacy. You might say, "Team, I wanted to let you know that Sarah is no longer with the company. We are grateful for her contributions during her time here and we wish her all the very best in her future endeavours."
• Do Not Share the Details: The team does not need to know the specific reasons for the termination. Doing so is unprofessional and a breach of trust. If they press for details, your response should be, "Out of respect for Sarah's privacy, the details of her departure will remain confidential, as they would for any of us."
• Address the "What Now?": The team's immediate concern will be about the workload. Be prepared to immediately address this. "I know this will create some questions about how we'll be managing her projects. We'll be having a separate meeting this afternoon to discuss the plan and reallocate responsibilities in the short term." This shows you are on top of the situation and value their workload.

This is a moment that tests your leadership. Your team is watching. They are looking to see if you will lead with integrity, with transparency, and with a clear plan.

The Legal Realities in Australia: A Necessary Word of Caution

Now, I must be absolutely crystal clear on this point: I am not an employment lawyer. The information I have provided is a leadership framework, not legal advice. The Australian employment law landscape is complex and can be a minefield for the unprepared.

Before you make any decision to terminate an employee, you must seek professional advice from an HR specialist or an employment lawyer. They will guide you through the specifics of Australian law, including concepts like:

• Unfair Dismissal: The rules and regulations that protect employees from being dismissed in a harsh, unjust, or unreasonable manner.
• Redundancy vs. Termination: Understanding the legal difference between making a role redundant and terminating for performance.
• Notice Periods and Final Pay: Ensuring you are meeting all your legal obligations.

Investing in professional advice is not an optional extra; it is an absolute necessity to protect your business and ensure you are treating your employees in a legally compliant and ethical way. Do not skip this step.

The Mark of a True Leader

Having to let someone go is one of the toughest and most unpleasant parts of the founder's journey. It is a moment that will test your resolve, your empathy, and your courage.

But how you handle these difficult moments is what truly defines you as a leader. It's about having the clarity to set high standards, the commitment to support your people to meet them, and the courage to make the hard call when those standards are not met.

It is a process that must be navigated not just with a clear head, but with a good heart. When you can do that, you are not just building a high-performing business; you are building a culture of excellence, accountability, and profound respect.

What has been your own experience with this difficult conversation, either as a leader or as an employee?