In my experience, you give these people a long leash and lots of help to try and find a role where they can make some sort of positive impact, but if they are truly incompetent at everything you have to let them go.
Two reasons:
1. At least in some cases they know they're not doing a good job and they likely have anxiety about when they're going to get let go. Ripping the bandaid off and firing them is kind of putting them out of their misery.
2. Probably the more common scenario is that the Nice Guy's incompetence starts to affect the people around them. If Nice Guy is so incompetent that other people have to pick up their slack and fix their mistakes people end up getting upset that they have to do extra work to address Nice Guy's shortcomings. If you remove Nice Guy from anything meaningful and only give them work with no deadlines or consequences for failure, other people eventually start to resent the fact that Nice Guy gets all the easy work.
Two reasons:
1. At least in some cases they know they're not doing a good job and they likely have anxiety about when they're going to get let go. Ripping the bandaid off and firing them is kind of putting them out of their misery.
2. Probably the more common scenario is that the Nice Guy's incompetence starts to affect the people around them. If Nice Guy is so incompetent that other people have to pick up their slack and fix their mistakes people end up getting upset that they have to do extra work to address Nice Guy's shortcomings. If you remove Nice Guy from anything meaningful and only give them work with no deadlines or consequences for failure, other people eventually start to resent the fact that Nice Guy gets all the easy work.