Are you saying that this guy should fall on his sword because he messed up once (and learned from it)? Or that, having messed up once, he's obviously not qualified to make firing decisions? I'm failing to find a charitable interpretation here that makes any sense at all.

Bad employees fail often, never try anything outside their comfort zone, and don't learn from their mistakes or take responsibility for anything. He didn't give an in-depth version of what he considered a bad employee to be, but it's fairly obviously implied by "not pulling their weight" to the degree that they eventually demotivate the rest of the team.