If you haven't yet, document asuch as you can stand about 1) your expectations of him and 2) how he's not meeting those expectations.

Additionally, it would probably be worth trying a performance improvement plan. Your ideal is not to fire him, but to get what you expect out of him. Give him a chance to explicitly try to meet that.

I support offering a PIP. It worked for me: https://news.ycombinator.com/item?id=13061160

If you simply cannot afford him, don't bother with wasting 6 months on a PIP. Give him an extremely generous severance (at least 6 months). If possible also offer him some kind of training course options on exit to assist him as these can be tax favourable and $1K to $2K may be chump change for your company but it will be extremely valuable for him. More importantly it will give him some sense of a goal to occupy his time. Career-wise, it also allows him to sell a story to the next employer about leaving you "to further training".

Having managed senior employees before who go through difficult times either through family commitments or health issues, I would say try to think about it on a human level. Not everyone is a 10x fresh grad and I can guarantee you will one day go through the same experiences. I say this as a top school grad who used to be very arrogant in my early 20s but now discovering life's challenges can take a toll on your performance and mental state.

>> But his cost is high and doesn't justify his output.

I read this as the cost is affordable to the company but not worth his output.

>> He's hardworking but simply not able to perform up to the expected standard.

May be he is not assigned the correct role/responsibility. Not every employee is going to be proactive to ensure the correct fit. If that is not an issue, then obviously PIP is the more humane way to go and combine it with a cut in his salary and revert it back when he meets the expected standards.

Suggesting a cut for the duration of PIP will also tell you how much he values the job, agrees with the areas of improvement and is willing to the work on it. If he is not willing to take a cut, then may be he knows he is not producing the expected output.

or maybe hes just not willing to do the same job for less money.

> He's hardworking but simply not able to perform up to the expected standard.

Does he understand your standards? Has the quantity/quality of output been clearly articulated?

It's relatively easy to fire someone. Confronting a direct report, managing/measuring work performance, and motivating individuals is hard. This stuff can be very personal, first try bringing him into your world, explain your thinking. A candid conversation might surprise you.

Finding new hardworking employees is difficult.

If he's hardworking and senior he probably deserves a performance improvement plan to improve output and meet goals.

Sometimes employees need a refresher on what their goals are in this case they have probably changed/increased over time.

So meet with him and lay out some goals, expectations. Document them and have a monthly meeting to go over them stress it's important to increase productivity to keep his position.

Good luck.

Its a little obvious, but how well do you know him and how happy do you think he is in this job?

There isn't enough detail here, but usually one person not performing could be a lot to do with his manager.

Standard UK procedure is to engage HR and get their advice, which would be you documenting everything and lengthy PIP.

There's some good stuff about this in Ben Horowitz's book "The Hard Thing About Hard Things." I definitely recommend reading it for advice on this, and many other topics.

What is a little senior? Does he now he is not performing enough?

If your not willing to meet with him and let him have the opportunity to try to meet your requirements. I suggest that you offer him a genorous severance package to avoid a claim against your company as from your message it seems he is unaware that his performance is below your requirements.