Outgrown: When Good People No Longer Fit Your Evolving Business
Hey, we need to talk about something that most business owners dread more than a root canal – letting go of team members who just aren't the right fit anymore.
A few years ago, my friend Amy and I were on a Zoom call when she confessed something that was clearly eating at her. Her business had a team of about 15 people. They were "like family" (yes, those dreaded words we've talked about before).
But here's the truth bomb I had to drop: Amy's business simply didn't have the revenue to justify a team that large.
"Amy," I said, looking her straight in the eyes, "your business is its own thing. A living and breathing entity. It cannot support team members that aren't truly pulling their weight or are only still there because they're 'family' and you feel guilty."
It was hard for her to hear, but she listened. During our conversation, she identified a few team members she really didn't need but had been keeping on payroll because they'd been with her for so long. They just didn't serve the business anymore.
We role-played the conversation she was going to have, did some deep breathing exercises, and she made the call.
Afterward, she called me in tears. She did it. It was hard, it was awful, but the funny thing? Both she and the person felt better, lighter. Amy has continued to keep this perspective in mind as she has changed and grown her business.
Recognizing When It's Time
How do you know when a team member no longer fits your growing business? Here are the signs I've learned to watch for:
The Skills Gap
When your business evolves, sometimes the skills that were perfect in the early days no longer match what you need now. This isn't about blame – it's about fit.
Signs to watch for:
They're struggling with new tools or processes
They resist learning updated systems
They keep reverting to "how we've always done it"
Their work requires constant correction
The Culture Mismatch
As your business matures, your culture becomes more defined. Sometimes early employees who were a great fit initially don't align with where you're heading.
Watch for:
Increasing tension with other team members
Resistance to company values or direction
Negative attitudes toward growth or change
Creating divisions within the team
The Role Has Outgrown Them
Sometimes a business scales faster than a person's capabilities can grow.
This looks like:
Missing deadlines more frequently
Becoming overwhelmed by increasing responsibilities
Requiring more supervision than peers
Struggling with decision-making appropriate to their role
Attempts to Bridge the Gap
Before jumping to termination, there are steps you should take to see if the situation is salvageable:
Clear Communication
Have you been crystal clear about expectations and where they're falling short? Many issues stem from assumptions rather than explicit conversations.
Additional Training
Have you offered resources to help them level up? Sometimes all that's needed is targeted skill development.
Performance Improvement Plan
A structured PIP with clear milestones and timelines gives both of you clarity about what success looks like. (TBH when you get to this point the writing is on the wall. I have seen very few people stay at a company after a PIP has been put in place.)
The Conversation Framework
When you've tried the above and it's still not working, it's time for that difficult conversation. Here's a framework I've found helpful:
1. Prepare Thoroughly
Document specific examples of issues
Review any legal considerations
Plan the conversation for a private setting
Schedule it at the end of the day (for their dignity)
2. Be Direct but Compassionate
Start with something like: "I've asked to speak with you today because we need to make a change. The business has evolved in a direction that requires different skills/approach/capabilities than what you're currently bringing to the role."
3. Stick to Facts, Not Feelings
Focus on specific performance issues or business needs
Avoid making it personal
Don't drag out the conversation with excessive justification
Be prepared for emotional responses, but don't get pulled in
4. Address the Practical Matters
Be ready with information about:
Final paycheck details
Benefits continuation
Return of company property
References policy
5. End with Dignity
"I want to thank you for everything you've contributed. The work you did on X project was valuable to getting us where we are today."
Legal and Ethical Considerations
Always remember:
Document everything leading up to termination
Follow your state's employment laws precisely
Consider offering a severance package when possible
Never make it about age, gender, race, or other protected characteristics
Have another person present as a witness if appropriate
Consult with an HR professional or employment attorney before acting
After the Conversation
Something Amy shared that really stuck with me: the relief she felt afterward wasn't just about the business numbers improving. It was about integrity. She was finally being honest – with herself, her team member, and her business.
The team member had known things weren't working too. The elephant had been in the room for both of them, growing larger by the day.
How you handle these situations speaks volumes about your company culture. The remaining team will watch closely how you treat people on their way out. Do it with compassion and professionalism, and you'll strengthen trust rather than damage it.
Your Action Plan
This Week: Honestly assess if there are team members who no longer fit your growing business
If Needed: Schedule a planning session to document specific concerns and create a bridging plan
Within 30 Days: Have necessary conversations – either improvement plans or transitions
Afterward: Check in with your remaining team and reinforce your vision and values
Remember: Your business is a separate entity with its own needs. Treating it that way isn't cold – it's responsible leadership that ultimately serves everyone better.
Drop a comment below: Have you ever had to have this difficult conversation? What made it easier or harder than you expected?
xx, Heather
P.S. This same advice can be used with contract labor especially if you have worked together for a long time.