If:
a) other employees did not think the fired person performed poorly
b) the decision of firing without compensation just before the vesting period is made by the founder only
then this will be a nightmare for the founder.
If however the contrary is true, ie that most people think the performance of the person being fired was poor, and if the founder discusses compensation options with others who will also be vesting at some point, then it signals that the founder actually cares about and trusts their employees enough to associate them meaningfully to the decision process. It also shows not just a wish but an active effort to ensure fairness for all, both the person being fired, and the others staying on who would be that bit more diluted in the cap table if somebody who shouldn't have vested is allowed to.
Good on you, dear founder, to be seeking advice and to be trying to do the right thing. You don't have to be alone thinking about that decision or making it, and you don't have to be alone living with it afterwards. Allowing your employees to be stakeholders in this is really key.
There’s both a logical and an emotional component to this. Logically the team would understand why the employee was terminated right before vest. Emotionally however it will gnaw at them, wondering if that could happen to them.
In my opinion I’d make it clear that the termination and the equity decisions are separate, that it was a bad fit but that you are building a culture of doing right by people. That doesn’t mean eliminating vesting, it means that you approach these exceptions on a case by case basis. I’d say 6 months vest would be fair, given the performance management issues - and it strikes the right balance showing you won’t be pushed around and that low performers will not be treated the same way as high performers.
Making the rest of the employees complicit in getting someone fired a month before vesting is a pretty shitty thing to do. A manager should be able to take responsibility for their decisions and not foist them onto the team. It works, as the Romans would attest to, but it sets a pretty crappy culture imho.
It depends on if you’re a manager or a leader. A leader would, in fact, consider the whole team because they operate on trust. A manager wouldn’t give a fuck.
There is a big difference between considering the whole team and making them complicit in a decision that hurts someone. Framing escaping responsibility as the mark of a true leader is I feel a pretty crappy way to define a leader.
Leading your team to a decision that works for them, and the team member who should have been fired but wasn’t is the mark of a true team. Dude needs to get his head out of his ass and if he needs his team to pull it out, so be it. But yes, a leader will involve a team in a decision that affects the entire team, the won’t unilaterally make a decision.
I couldn't agree more. Most of the members of the team here will most likely vest as well, and the way employee performance can affect vesting is very much a relevant question to them.
To go back one step, saying a manager must decide alone otherwise it's an escape from responsibility is quite a bizarre claim to make. Making a decision without consulting your team, when your goal is to establish trust, will 100% backfire. It will come back to haunt you EVEN if people agreed with the decision, simply because that decision was taken arbitrarily. That such important decisions could be arbitrary, without meaningful involvement of the team, signals to the team that they are all at the mercy of such future arbitrary decisions. Finally, consulting the team does not mean that the decision is carried by everyone. A consensus should be sought, and the founder would be foolish to make such a decision against his team, but ultimately, the founder is in charge of the final decision and will bear the responsibility for it.
If: a) other employees did not think the fired person performed poorly b) the decision of firing without compensation just before the vesting period is made by the founder only
then this will be a nightmare for the founder.
If however the contrary is true, ie that most people think the performance of the person being fired was poor, and if the founder discusses compensation options with others who will also be vesting at some point, then it signals that the founder actually cares about and trusts their employees enough to associate them meaningfully to the decision process. It also shows not just a wish but an active effort to ensure fairness for all, both the person being fired, and the others staying on who would be that bit more diluted in the cap table if somebody who shouldn't have vested is allowed to.
Good on you, dear founder, to be seeking advice and to be trying to do the right thing. You don't have to be alone thinking about that decision or making it, and you don't have to be alone living with it afterwards. Allowing your employees to be stakeholders in this is really key.