Given that most major issues and failures of businesses stem back to people problems, ensuring that a strong, competent, functional executive team is in place is typically considered THE most important responsibility of a board or business owner of a growing enterprise.

To quote Jim Collins of ‘Good to Great’ fame, “the single biggest constraint on the success of any organization is the ability to get and to hang on to enough of the right people.”

And too often for emerging businesses there comes a day when you wake up to find that the team that ‘got you here’ isn’t the one to ‘get you there’. It can be an uncomfortable realisation.

Employees who were once central to the team’s success are now out of their depth. A new strategic horizon beckons – one which is insurmountable without additional strategic insight, leadership capability, functional expertise, processes, discipline and structure.

And in our game, we’ve seen these transitions on multiple occasions. In fact, it’s often the reason we are called in to help companies in the first place, where the recognition of this situation occurs too late.

There’s a common misconception that it’s better to have someone doing an ok job (or even worse – a terrible job!) than to have no-one doing the job at all. In almost all cases this is simply not the case. An underperforming employee is a cancer in your company, at any level. You owe it to yourself, shareholders and the rest of the team to have high performers in all key roles.

Here are the warning signs that may suggest it is about time to replace a key executive:

1. Fires burning everywhere

When an executive is out of their depth, things catch fire. Reports are late, objectives are missed. Work hours might go up, but the important stuff doesn’t seem to get done. Excuses abound. Whilst the speed of change in most scale-ups can lead to the occasional spot-fire – it’s the fires that spark from an inability to take risks, roll with the punches and an unwillingness to be open to new ideas that can really hurt your business.

2. Chaos and conflict

Confidence and teamwork gives way to chaos and conflict. The more ‘drama’ an executive contributes to the workplace, the clearer the message that he or she may no longer be a fit.

In fact, if you find yourself talking or thinking about the poor performance of one of your team members for more than 10 minutes a day… it’s a sure sign it’s time for them to go.

3. Poor powers of prediction

Despite the fact that there are fires burning left, right and centre, your executive can’t put their finger on exactly why that might be, what they are going to do to fix it and when they anticipate a resolution. Many of the excuses they offer up point to the failings of others (but rarely back at themselves). Typically executives in this position have a hard time taking blame or ownership for the situation – and will rarely admit to having made a mistake.

4. Team engagement and turnover

Often direct reports or colleagues will see the signs before business owners or leaders. A lack of employee engagement and/or higher than usual team turnover may indicate you have a problem. A lack of capability – either leadership capability of relevant functional capability – will suck the life, energy and motivation straight out of team members… if not have them jumping the fence to join the competition.

5. From best self to shadow

The shift is noticeable: your star performer has gone from ‘in the zone’ – to reacting to triggers left, right and centre. The smallest perceived slight will set them off. They’re not their ‘usual selves’ and find it difficult to bounce back from setbacks. You get a sense that they would almost be ‘relieved’ if you were to relieve them of their post (if their ego would let them be).

So, what can you do?

Whilst in the steady-state organisations of old, these employees could be shuffled into a more suitable role in another department (read: moving the problem elsewhere), in a fast growing company you don’t have that luxury.

By the time you start to see the warning signs listed above, any chances at ‘developing them’ is likely to be ‘too little, too late’. You are experiencing the impact of underinvestment in years gone by to keep them ‘ahead of the curve’. It’s usually time for an honest conversation to discuss the changes that the company is going through in its journey as a scale-up, clearly articulating your company’s objectives and what you need from the role.

This is a conversation that Netflix is known for having with its team members (at all levels) on a regular basis. In the “Culture” section on its website, Netflix states that it keeps “only our highly effective people.” The site goes on to say: “succeeding on a dream team is about being effective, not about working hard. Sustained ‘B’ performance, despite an ‘A’ for effort, gets a respectful generous severance package.”

In the majority of situations that we have observed, executives who are genuinely out of their depth are actually relieved to have these conversations. The stress of not performing (especially for those who have been high performers in the past) can be quite significant.

And how do you proactively tackle these issues so that you don’t have to repeatedly deliver the ‘Netflix’ conversation every 3 years?

1. Get crystal-clear on your company’s strategic objectives for the next financial year and the coming quarter.
2. Build a workforce plan that contains key objectives for each function and conduct an honest assessment of what your company needs to do to achieve those key objectives. Take individual executives’ names out of the equation, so that you can create a plan of the necessary functions at your company, not the people filling those seats.
3. Conduct a gap analysis and develop a clear picture of the leadership team you need, versus the one you have — and then start filling those gaps.

Following this simple process on a regular basis will ensure that the team you’ve got is the one to ‘get you there’.