Build with Leila Hormozi: Episode 216 – When To Fire & When To Coach

Host: Leila Hormozi
Episode Title: When To Fire & When To Coach
Release Date: December 9, 2024

Introduction

In Episode 216 of "Build with Leila Hormozi," Leila delves into one of the most challenging aspects of leadership: making decisions about when to fire employees versus when to invest in coaching them. Drawing from her extensive experience in scaling businesses and managing a billion-dollar portfolio through acquisition.com, Leila provides an in-depth exploration of the emotional and strategic facets involved in these critical decisions.

The Emotional Toll of Firing

Leila begins by addressing the inherent difficulty in letting employees go. Despite her composed demeanor, she confesses that firing individuals profoundly affects her emotionally.

Leila [01:30]: "I have to make these decisions quite frequently, whether it's from my company or another company... I hate it just as much as anybody else most of the time."

She recounts her personal experiences, including firing nearly a hundred people over a decade, highlighting the emotional distress that accompanies each decision.

Leila [03:45]: "My heart is going to jump out of my body before I do it. I have a stomach ache the days before, and I feel terrible."

Leila emphasizes that her deep care for her team members intensifies the pain of making such tough choices, yet she remains steadfast in prioritizing the business's long-term health over short-term emotional discomfort.

Balancing Empathy with Business Necessities

Leila discusses the delicate balance between empathy and business imperatives. She underscores that while personal considerations about an employee's circumstances are valid, they should not overshadow the broader impact on the team and company.

Leila [06:15]: "If I make a decision that's just best for that one person in the short term, I make the wrong decision for the rest of the team in the long term."

Using the analogy of a basketball team, Leila illustrates how retaining a misaligned team member can jeopardize overall success.

Leila [07:00]: "If you bring on someone who is not a fit, you're losing games... it makes all of the great players look like medium players because this one person drags down everybody."

This perspective reinforces the notion that difficult decisions, though painful, are necessary to maintain the integrity and performance of the entire organization.

Clarity Between Firing and Coaching

Leila explores the criteria for deciding whether to fire an employee or invest in their development through coaching. She identifies two primary factors: skill deficiencies and lack of will or motivation.

1. Culture Fit vs. Skill Deficit

Leila places significant emphasis on cultural alignment, stating that culture fit takes precedence over mere skill sets.

Leila [15:30]: "Culture is the most important one. If somebody's not a culture fit, it's pretty black and white for me. They're not a culture fit."

She explains that while practical skills can be taught relatively easily, altering someone's cultural alignment or inherent personality traits is substantially more challenging.

Leila [18:45]: "It's really hard to teach somebody to be kind. It's a lot easier to teach somebody how to read a script, how to put on an event, how to build a sales team."

2. Skill Deficits: Addressing and Teaching

When dealing with performance issues related to skill deficits, Leila advocates for a precise and structured approach to coaching.

Leila [22:10]: "If somebody lacks a skill, you really want to figure out, can I really narrow down on what the skill is and then can I give them the tool to improve it?"

She emphasizes the importance of specificity in feedback and the necessity of investing time and resources effectively.

Leila [24:50]: "Is this the best use of me as a resource to spend two hours a week for 18 months teaching this person to be kind?"

3. Lack of Will: Recognizing When Coaching Won't Suffice

Leila identifies a critical distinction between lacking skills and lacking the will to improve. She notes that even with clear guidance and resources, some individuals may not exhibit the necessary motivation to develop.

Leila [28:20]: "If you give someone all the tools, I probably identify what skill they're missing. I tell them and there's no improvement because they're not putting the inputs in."

In such cases, Leila concludes that firing is the more appropriate course of action, as the employee's lack of effort undermines both their growth and the company's progress.

Strategic Considerations in Decision-Making

Leila outlines several strategic questions leaders should consider when deciding between firing and coaching:

1. Is it worth the time?
2. Can the skill be taught effectively?
3. Is this decision in the best interest of the rest of the team?

She highlights the importance of evaluating the investment versus the potential return, especially in rapidly growing companies where time is of the essence.

Leila [30:40]: "The faster that your company grows, the harder it is to wait for somebody to develop. And so it is kind of like, you need to develop or you're out mentality."

Impact on Team Dynamics and Company Culture

Leila discusses the broader implications of firing decisions on team morale and company culture. She warns that prolonged toleration of underperformance or cultural misalignment can erode respect and trust within the team.

Leila [35:15]: "How you handle these situations is what builds the culture of your company. If you tolerate mediocrity for too long, unfortunately other teammates are going to lose respect for you."

Moreover, she points out that maintaining high standards not only preserves team cohesion but also sets a precedent for accountability and excellence.

Practical Approaches to Coaching

When opting to coach an underperforming employee, Leila recommends a structured and transparent methodology:

1. Identify the Specific Skill Deficit:
   • Pinpoint the exact area where the employee is lacking.
   • Example from the podcast: Executive presence.

Leila [40:00]: "You don't speak up for yourself, and you don't advocate. If you added that one skill to your toolkit, of all your other skills, you'd be a weapon."

2. Provide Clear and Actionable Feedback:
   • Offer precise instructions on what needs to change.
   • Example: "On calls, tell people what to do. Start off with, 'These are the five priorities,' and assign responsibilities accordingly."

Leila [42:30]: "Each call I watch and then I say, great job telling people what to do."

3. Assess Commitment and Progress:
   • Evaluate whether the employee is actively working to improve.
   • Determine if continued investment is justified based on their effort and the company's needs.

Final Thoughts and Key Takeaways

Leila concludes the episode by reiterating the paramount importance of making difficult decisions to preserve the health and success of the business. She offers a final piece of wisdom that encapsulates her approach:

Leila [55:00]: "If you don't like somebody in your company, that is also reason enough to not have them there."

Her philosophy centers on fostering a work environment where every team member contributes positively and aligns with the company's values and objectives. By prioritizing both culture fit and skill proficiency, leaders can build resilient and high-performing teams.

Leila [57:15]: "Your number one job is figuring out who needs to be on the bus, but also who needs to be off the bus."

Conclusion

Episode 216 of "Build with Leila Hormozi" offers invaluable insights into the nuanced decision-making process surrounding employee performance and fit. Leila Hormozi's transparent and empathetic approach provides leaders with a comprehensive framework to balance compassion with business acumen. By emphasizing the significance of culture, the feasibility of skill development, and the overarching impact on team dynamics, this episode serves as a crucial guide for CEOs and founders striving to build unshakeable businesses.

Stay Tuned: New episodes are released every Monday and Wednesday. Make sure to subscribe to "Build with Leila Hormozi" for more expert advice on scaling and managing successful businesses.