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How These 6 Entrepreneurs Dealt With Difficult Employee Issues

From firing to rewarding talent, these founders share how they handled tough personnel decisions.
How These 6 Entrepreneurs Dealt With Difficult Employee Issues
Image credit: Tommy Parker
Magazine Contributor
4 min read

This story appears in the September 2018 issue of Entrepreneur. Subscribe »

For entrepreneurs, business is always personal -- which can make tricky staffing changes especially hard to implement. We asked six founders: What’s the toughest personnel decision you’ve made?

1. Firing your first.

“I had to fire my first employee after four years of working together, three of which were just the two of us. She had certain skill sets that were great [when we started], but as we grew, they actually conflicted with where I saw the business growing. It was tough -- there was a sense of loyalty that was hard to get over. But consulting with my advisers and being honest about what I wanted for the future of the company helped me stick to my decision.” -- Denise Lee, founder and CEO, Alala

Related: 7 Challenges That Will Make You More Successful

2. Rewarding talent.

“We preach and practice homegrown development at &pizza. I’ve more than once had to decide between two deserving internal candidates for an open leadership position, and each time, I’ve tried to create a position for both of them -- ones that suit their individual strengths. Instead of sacrificing a deserving talent, we want to create a space for that talent to thrive.” -- Michael Lastoria, co-founder and CEO, &pizza

Related: 6 Ways to Make Hard Decisions Easier as a Leader

3. Breaking up.

“My co-founder and I decided to part ways. Sometimes that can be the end of a company, but we worked hard to make this a transition that would not negatively impact our brand and employees. Rather than shying away from the hard conversations, I dove in to find a resolution within 24 hours. It started with one-on-ones with our entire team. We walked around a nearby park until each person had all their questions and concerns answered. I think I walked 10 miles that day.” -- Shanna Tellerman, founder and CEO, Modsy

4. Anticipating challenges.

“As we grew from just us two owners to a team of employees, we had to set true boundaries and expectations. What happens when an employee is late or doesn’t meet expectations? We didn’t have an HR department, so we created well-crafted handbooks and contracts. If we didn’t fix things while we were small, it would be harder to adjust.” -- Sarah Baucom, co-founder, Girl Tribe

5.  Walking away. 

“Leaving my firstborn -- Rent the Runway, which I co-founded -- to start my new company, Jetblack, was very hard. I’ve always been a serial entrepreneur at heart, but I knew I would carry this decision with me for years. The most important thing was ensuring that the relationships with my team and co-founder would remain intact. Staying involved as a board member, and avid customer, of Rent the Runway has eased the transition.” -- Jenny Fleiss, co-founder and CEO, Jetblack 

Related: How to Overcome Common Challenges and Help Your Small Business Grow

6. Outgrowing partners.

“The manufacturing partners we work with are essentially team members. [As we grew], an early partner couldn’t keep up, and we had to break the news to these guys, who’d been with us since day one, that we were leaving them. It was painful -- there were dozens of people at that facility who touched our products. But now, we’ve scaled well beyond that phase, and we’ve recently gone back to them for prototyping work.” -- Kyle Hoff, co-founder and CEO, Floyd

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