Podcast Summary

Second in Command with Cameron Herold

Episode 511: Tough Decisions – Firing for Values and Financial Health
Release Date: September 18, 2025

Episode Overview

In this episode, Cameron Herold and a roundtable of COOs dive into one of the most difficult dilemmas for any business leader: choosing to part ways with distributors or team members who breach company values and contracts, even when it means risking significant revenue. The discussion focuses on enforcing standards, the balancing act between financial health and integrity, and how making these tough calls can impact team morale and company reputation.

Key Discussion Points & Insights

1. The Dilemma of Firing High-Revenue Distributors

• Nick introduces the central challenge: firing two major distributors who make up 14-15% of overall company revenue but are violating contracts and racing to the bottom on pricing.

• The anxiety stems from the potential revenue gap and the uncertainty of finding suitable replacements quickly.

  Nick [01:37]: “We have started the talks of firing a couple of our distributors for not matching our values as a business and it’s a huge piece of revenue. That gives me a little bit of anxiety... Has anybody done this in the past?”

• Cameron presses for hard numbers and asks about the true margin at risk. The gross margin is significant, with an estimated $1 million "at risk" if these distributors are cut.

  Cameron [04:26]: “How much gross margin's at stake?”
  Lacy [05:09]: “I would say probably close to it.”

2. Distributor Breaches: Pricing and Contractual Violations

• The distributorships in question are engaging in prohibited activities: offering competitor products and undercutting prices, going against exclusive agreements.

  Nick [02:59]: “They're racing to the bottom with pricing... they're using other competitors, and it's against their contract with us.”

• While the distributors claim their actions were strategic and necessary for their business, Nick admits some company operational failures did play a part, but also notes strong corrective actions have been made.

  Nick [03:53]: “We've... made large efforts as a supplier to correct our mistakes. And I don't think that they're willing to open their eyes to the changes we've made.”

3. Developing Contingency Plans

• Cameron urges the team to think ahead: if the distributors left by their own choice, how would the company recover revenue/gross margin? Lacy notes multiple contingency plans are already being mapped out.

  Cameron [05:10]: “What would you do if they just told you tomorrow morning they're leaving and you've got to recover?... I would get started on that.” Lacy [05:31]: “We have... so many different plans in regards to that. You can do a lot of fun stuff. Shady, unshady, just part of it.”

4. Upholding Company Values to Set the Standard

• The group agrees that acting decisively on value breaches sends a strong message to the wider team and partners—encouraging compliance and protecting company culture and reputation.

  Lacy [06:55]: “I can't allow the rest of the distributors to think it goes unseen... I have to prove to everyone else, this is the way we do business. If we don’t, we have, we lose all respect and we start losing our market share, which would be worse.”

5. Shared Experiences: Firing for Values

• Kathy draws a parallel with firing an executive team member for poor cultural fit, despite his likability and short-term value, because “the standard has to be held to.” She points out how it improved team morale and clarified company expectations.

  Kathy [07:47]: “What I found is the team's number one rallying... to your point, that raises the bar for everybody else... it's hard decisions... but in the long run, it's the right decision.”

• Cameron illustrates with a story from his franchising days: sometimes you have to “find a reason” to exit problematic partners due to legal or reputational concerns, but the main thing is upholding values and protecting the team.

  Cameron [09:05]: “It also sends a very clear shot across the bow that scares everybody else back into shape a little bit... I’m super protective of my team. And so if that happened to any team member, they’d be out. I wouldn’t worry about the consequences.”

  Cameron [10:56]: “The cost to the wrong person is 15 salary.”

Notable Quotes & Memorable Moments

• Nick [01:37]: "That's... gives me a little bit of anxiety... Has anybody done this in the past?"
• Lacy [06:55]: “I can't allow the rest of the distributors to think it goes unseen. We have to prove to everyone else, this is the way we do business.”
• Kathy [07:47]: “It’s setting that standard... it raises the bar for everybody else.”
• Cameron [09:05]: “It sends a very clear shot across the bow that scares everybody else back into shape.”
• Cameron [10:56]: “The cost to the wrong person is 15 salary.”

Timestamps for Key Segments

• [01:05] – Setting the scene: Why firing for values matters
• [01:37] – The risk and anxiety of firing major revenue sources for value misalignment
• [02:59] – Details of distributor breaches and contract violations
• [04:26] – What’s really at financial risk? Calculating gross margin and needed replacements
• [05:10] – Contingency planning: What if they leave tomorrow?
• [06:55] – How acting decisively protects standards, reputation, and morale
• [07:47] – Kathy’s experience: Firing for values and the positive internal impact
• [09:05] – Cameron’s franchise story: Walking the talk on values and protecting the team

Takeaways

• The hardest decisions—letting go of high-revenue partners/team members for breaches of values—are essential to protect company culture, morale, and long-term market position.
• Having contingency plans isn’t optional; you must plan for sudden change.
• Actions speak louder than words; enforcing standards sets the tone for the entire ecosystem of employees, partners, and customers.
• There are gray areas and practical realities (legal, financial), but clarity and adherence to company values must guide all big decisions.

For more practical COO strategies and leadership insights, visit COOAlliance.com.