This here. If someone, even a bad teammate or poor performer, was let go a month before vesting and got nothing I would strongly consider applying to a new place.

It depends how the decision is made.

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.

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.

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.

I wouldn’t consider. I’d be out of there as fast as I reasonably could.

I've been let go 3 times in the month before vesting. No one cared. Let him go.

3 times? that's an awfully high amount.

Depends on the dynamics of the team too.

If the rest of the team also thinks “this guy sucks” and trusts the leadership there could be no impact to trust.

We’re talking about a team of 10 here rather than 1000. It is possible there is a closer than usual relationship/ fair amount of trust compared to random HNers talking about a company they don’t know.

To be honest, it's probably best to just wait it out a few months.

One poor-performing employee isn't worth the risk of destroying the morale and trust of all the others.

Every day a poor performer gets the same salary as you is morale-destroying.

There's no perfect solution to this problem.

10 employees doing the work and wondering "why is this guy getting paid the same as me?" hurts the company too.

Every action has downsides. Every day they're still there demotivates others, possibly making them look for "better" jobs, since clearly their own can be done by a slacker.

But every firing, even of someone clearly underperforming, will cause a bit of fear in even the best performer.

The perfect solution is to let them vest then terminate.

Agree that slackers ruin morale though. Currently going through this at my place. It’s especially difficult when merely being on the same team as slackers makes the external opinion of everyone on that team horrible. Some might know the better members but on average the reputation can be stained.

How do you mean that it is "the perfect solution" if the action has negative morale implications for every other employee?

I'll go with your opinion being that it may be the best solution, but perfect it is not.

The mere fact that I don't even think it's the best solution means that there may very well be employees here who also don't, which means it's not perfect.

There will be employees who will hear "this fired person's stock was taken out of your end of year bonus". Because it kinda was. Especially at a small company where one employee-month plus their stock can be a significant portion of company yearly profits.

They should have changed stuff up well before this point. If you want to question someone’s vestment then do that at least a year before that date and get serious about demanding results from the problematic employee at that point. That way they’ve got 3-6 months to perform and you’ve got time to terminate for lack of performance.

Doing it when the vestment date comes up just reeks of shortsightedness to the point of vindictiveness. Immaturity.

If it’s like the person quit but kept coming to work for the last month before vestment then talk to them and maybe offer to buy them out if they’ve got no good explanations.

> They should have changed stuff up well before this point.

Agreed. We don't have all the facts but management is not without blame.

> Doing it when the vestment date comes up just reeks of shortsightedness to the point of vindictiveness. Immaturity.

I've made my point repeatedly that the gains from paying it out are also shortsigted and may not be worth it, so no need to repeat.

Compensating people who don't deserve it pisses people off. Maybe those people are immature, but they do include your best performers too.

Like I said, no perfect solution. Management (arguably) caused the situation, and there's no perfect fix.

>Every day a poor performer gets the same salary as you is morale-destroying.

not really? if he is unjustly compensated more than he is worth it's kind of funny, but unless you're a child you shouldn't really care about it. this is way different than if you were compensated less than what you are worth.

There will be employees who will hear "this fired person's stock was taken out of your end of year bonus". Because it kinda was. Especially at a small company where one employee-month plus their stock can be a significant portion of company yearly profits.

As I pointed out in another comment that you replied to (though I'm not sure you read it properly, since I've already made this point and did not seem to incorporate it into your reply), while comp is not a zero sum game, it also isn't entirely not a zero sum game.

A useless employee not being fired does not only breed resentment in coworkers, it also erodes trust in management: Other employees will lose their trust that leadership is willing to follow through with hard decisions for the good of the company (speaking from personal experience).

Management being capricious is basically "news at 11", but management being perceived as hesitant/incompetent can be MUCH worse EVEN from the PoV of an employee (=> because that indicates the company has no future)!

It sounds to me like the effects on the rest of the team has already set in. That is, anyone reasonable would already have questions about management / leadership.

Making the change now:

- won't save the situation

- it might, as others have mention actually undermine any trust the rest of the team has left

- invite legal action on the part of the dismissed employee.

All that aside, giving the rogue employee the benefit of the doubt, it feels like it might be health / mental health related issue. Random time off being the tell.

Sucks for the team. But dismissing someone who needs help is a tough call.

It’s not about cutting the employee. It’s about vesting and the timing of the firing.

I’d consider firing immediately and granting their vesting as if they stayed through the month as part of the termination package.

The Titanic only hit one iceberg. One bad employee on a team can sink your entire mission.

I would assume they could work out severance where the employee still gets vested but is no longer coming in to work.

> Letting someone go right before they vest will likely create distrust on the rest of the team.

Conversely, letting them vest will send a message that this behavior is tolerated.

And yes, firing + giving some percentage of what they would get from vesting corresponding to the time they made an effort sounds not unreasonable.

> Conversely, letting them vest will send a message that this behavior is tolerated.

These are colleagues not children. Using threats will not have a good effect.

Also OP seems to have been tolerating their behavior, which sends the message that behavior will be tolerated. This is the right message to send as well.

We (and possible OP) don't know what the employee was going through, giving them lots of slack and support shows to the other employees that they will be supported. As well as just being a good thing to do, it will improve employee retention, effort, buy in to the company etc.

> These are colleagues not children. Using threats will not have a good effect.

It's not a threat to fire someone when you pay them money and they don't work as expected. It's setting a standard.

> We (and possible OP) don't know what the employee was going through

That's a very fair point.

But is it unreasonable to request insight into why the person shifted?

Accountability comes at a cost.

> I don't know what your company's situation is, but this likely doesn't have to be an "all vesting" or "no vesting" situation.

Anything else may be hard to communicate to the team though (depending on the country/culture you are operating in of course).

I agree. You have to focus on the company, not those who are NOT going to be a part of it. It might seem like a dick move, but it is far less of a dick move than not making an effort.

I'm sure that there will be negative consequences. And you will feel bad. Nothing I/we can say will change that. But I think you'll just have to accept that and do what's right for the company and the people who will continue on.

(Of course, there will be two sides to any story, but you are asking what we would do in your stead, so I think it is okay to base this on your subjective point of view)

This is the best solution. Shows you’re “extra generous” instead of just letting someone walk with their equity. Shows “the company will take care of me.”

I also like it.

Agree with above points. It sounds like it should have been dealt with a long time ago. Being this close to vesting is the cost of inaction. The equity issue feels like a sunk cost at this point.

Would initiate a conversation around performance to set expectations that performance needs to improve or their position is at risk.

Be the hero of the story: treat the employee fairly and raise performance expectations. Hopefully, the equity is a small price to pay.

On the flip side i bet the team knows this person is terrible.

And letting them vest means you're telling them slacking off is fine, and you'll give them a piece of the company that could have gone to the people who actually work.

Sure, they'll be fired, so the others will see it's not acceptable. But still.

It'll be resentment either way.

It's going to depend on whether the team agrees that the person is terrible though.

In recent years our management let go of two people because of "bad performance". In one case that was probably a fair assessment. The other guy just got stuck with an impossible project with absent leadership and management blamed him when nothing was finished on time.

And here we're only hearing one side of the story.

IMO it does not send that message. The vesting is compensation for work done and time spent in the role. That is in the past. The "punishment" is losing the job, and that message is clear enough.

If I worked at a place where a coworker has clearly been underperforming, but getting stocks on their way out, then that would demotivate me.

> The vesting is compensation for work done and time spent in the role.

We don't know all the facts, and definitely not both sides, but it sounds like it could be overcompensating for work done. OP said this employee "has been an issue for quite a while".

Especially since I have worked for startups that gave me the "we've set the bonus/salary bump/stock budget for this year, so who do you think should get less if you get more?". This guy! This guy should get less! (is what I'd want to say in this situation)

Employers, especially startups, commonly present comp as a zero sum game. Even if this company doesn't, don't expect all employees to believe you if you say it's not the case here. Because they've been lied to before when it comes to money.

And frankly company leadership has an eventual profitability requirement, and even if they say it's not zero sum, it's not totally independent either.

Having spoken to corp lawyers a lot I also recognize this as a legal liability. It sets a precedent, and opens you up to discrimination suits for future firings.

If the company wants to encourage "above and beyond" performance, they should do that through a bonus. In all scenarios I'm familiar with, shares vesting are tied to duration at the firm, i.e. loyalty and "toughing it out". The employee forfeits the right to those shares either by leaving the firm early, or being bad enough at their job that they get fired. This is of course the latter, but the timing is the problem. Had they fired this employee five months ago, it would have appeared less like yanking the rug from under them. But as you show, perceptions differ

>If I worked at a place where a coworker has clearly been underperforming, but getting stocks on their way out, then that would demotivate me.

That's a completely fucked up attitude. How does someone else lucking out with more than what they technically deserve influence you in any negative way?

Because you, as coworker, bear a part of the cost of their slacking?

Every dollar wasted on useless coworkers might cost you your future workplace (because the company goes bust).

In a 10 person company this may affect whether the company is profitable or not.

Which may affect if the whole company gets a year end bonus or not.

It's also insulting in salary negotiations. The company would rather piss away cash than give me what the market would pay me?

Reasons like these are why high performers leave.

> Letting someone go right before they vest will likely create distrust on the rest of the team.

I kind of doubt it'll even occur to the rest of the team, but even if it did I can't imagine that they wouldn't feel it's justifiable given this employee has been such a consistent issue.

IMO the time to fire someone is as soon as you've decided you're going to fire them.

That said, offering nice severance perks is a nice thing to do.

It will absolutely come up. And people will remember it. It will absolutely be perceived as "cheap ass founder didn't want to pay worker for their time."

And effectively they didn't, if that vest is a good portion of the pay

However paying them will be remembered too. It will be perceived as "why are you giving away profitability of the company (and thus my equity and/or end of year bonus) to someone you should have fired a long time ago?".

The answer to that is “they worked 50 out of the 52 weeks; it was a leadership mistake earlier to not hold everyone to the high bar we expect, but we still act ethically towards all of our stakeholders, even when doing so is inconvenient.”

Yeah, sounds best. I'd still run it past the lawyers to make sure it's fine to "badmouth" a former employee in your jurisdiction.

It means taking ownership of the mistake, even if it does mean that you're effectively apologizing for devaluing the company to the other stockholders and other stakeholders.

Still, there's a little bit of "oh, so when I leave I can expect management to talk shit about my performance", which wouldn't do wonders for my impostor syndrome.

The problem is the onlookers don’t know why you’ve fired someone; they’re free to assume whatever they want.

And anyone remotely suspicious of your good will should be mighty suspicious that anything you’ve said was just justification to deny compensation — when is my vesting date again..?

> The problem is the onlookers don’t know why you’ve fired someone; they’re free to assume whatever they want.

You can and should address this. It would be insane to fire someone and not explain why.

Really? I think it’s generally considered bad business etiquette to publicly speak about why someone was fired, beyond something very generic such as “performance-related reasons”. Once someone has left the company there is very little point in making critical comments about them, as it’s too late to change anything.

Yes but it gives the remaining people a mark on what is acceptable or not acceptable. If you fired someone for bad performance they now know that bad performance will not be tolerated (or at least not forever). If you fired them for being unprofessional or for bad behaviour the rest now know that there is a consequence for such behaviour.

They know that what you perceive as bad performance will not be tolerated. And that’s if they assume that you’re telling the truth.

If your team at a startup of <=10 people assumes you are lying or that you have no idea how someone performs (to the point of firing a good performer for bad performance) you've got much bigger problems than that employee.

I don't think so. There can be good reasons not to tell the whole truth about why someone was fired, and it's normal for managers to have only a rough idea of how well people are performing, even in a small company.

If you're the boss then "what you perceive" as poor performance and "what is" poor performance are effectively the same thing. Companies aren't democracies were the team decides on what the bar is. The role of the lead / manager / owner is to set that bar and help the team to reach it.

It's certainly possible for the boss to base their evaluation on mistaken beliefs. For example, they might think Employee A is largely responsible for a delay in releasing Feature X when in fact it was Employee B.

I have to say though, this whole discussion is a fascinating insight into what appears to be the thought process of many managers and/or founders.

Who was responsible for a delay isn't what's being asked at all. What's being asked is: "I have an employee who isn't producing the outputs requested of them in a timely manner, what should I do?" This has nothing to do with Feature X or Feature Y. They also highlighted behavioural issues. These are all within the scope of a leader to determine.

I understand that. The point is just that a boss isn't infallible in evaluating the performance of their employees. I wasn't expecting that to be a controversial statement, but you seemed to be challenging it. As to whether or not the person who asked the question is right, it's obviously impossible for us to know.

My response was in the context of "what your team members perceive" to be performance. My response was quite simply: "you get what you measure." Your team will respond to your perception by focusing on improving in areas that you perceive to be markers of good performance.

That certainly can happen. However, it depends on at least the following assumptions:

* Your perception of your employees' performance is consistent and predictable over time. Not all bosses evaluate based on consistent and predictable criteria.

* Your perception isn't significantly distorted by false beliefs about who has done (or not done) what.

(Needless to say, that's generic 'you', not you specifically.)

If you want, you can say "I hereby define 'good performance' to be any performance that I, the boss, think is good" – but that's just a semantic game.

None of that is relevant to my point.

"I hereby define 'good performance' to be any performance that I, the boss, think is good"

At its most basic level, that's _exactly_ what we as leadership do. All you're now saying is "some bosses suck." Well... yes, news at 11.

I wouldn't explain why in detail/ be critical, but I would have a meeting to address what happened. Having been in this position when someone gets fired people get nervous - they ask "are we doing OK on money?" and things like that, which you can address.

>> The problem is the onlookers don’t know why you’ve fired someone; they’re free to assume whatever they want.

> You can and should address this.

Except that you can't address this. You can say whatever you want, but it won't result in onlookers knowing why you did what you did. You were probably lying.

I think it's very rare to give reasons for firing someone.

If someone was a bad performer, they team knows it's because of bad performance, but reasons given will be "cost cutting", "personal matters", or "they've moved to a better project."

If someone was fired right before vesting, and the reason given was "bad performance", everyone "knows" that management is just being cheap.

    If someone was a bad performer, they team knows it's because of 
    bad performance, but reasons given will be "cost cutting", 
    "personal matters", or "they've moved to a better project."

If I fire someone for bad performance I will absolutely tell the team that's why i fired them. I may not tell people outside the team (I don't want to bad mouth my former employee) but the team deserves the truth.

When I see someone getting fired for performance, usually the team has been complaining about them (in performance reviews or 1-1). So it's no surprise to the team and the reason isn't given.

When someone has poor but not terrible performance, it's usually accompanied by a second factor (high salary, absence). In that case, the nicer reason is usually given even though we know they were not faring that.

There also tends to be a bit of theatre before someone is fired for bad performance. "Are you sure you fixed the bug?! Give me a video. Which PR? Which line?"

I am in the camp of: Fire people before they break the morale on the team. Nothing burns a team out faster than a bad colleague.

> Nothing burns a team out faster than a bad colleague.

Ever had a bad boss?

I've had both: a bad colleague who went dancing while we were struggling at 23 PM in the data center for a government project, and a really shitty PM whose incompetence ruined a lot of people personally. Both can have adverse effects on people, although a bad boss in an otherwise sane environment would probably strengthen the group for being perceived as an external "enemy".

That has not been my experience with a bad boss. They do things like play favorites and create a culture where people are competing rather than cooperating. Even if they are just shitty to everyone equally I find it far easier to deal with a bad colleague than a bad boss.

> a bad colleague who went dancing while we were struggling at 23 PM in the data center

If that's your definition of a "bad colleague" I would be a little concerned. There are situations where it may be necessary to do that struggle, but in my experience there are far fewer than you think, and people often fall into a trap of competing to be the last one standing rather than actually doing good work. If you're struggling in a data center at 2300 you may well be doing more harm than good and going home to sleep (or dance, or whatever you need to refresh yourself and come back focused...) is often a better choice.

Incompetent management is far worse than a bad colleague, imo.

I always try to be pro-labor but i had such a situation in my own company. A person I tried to make work for months, the situation just got worse the OP describes (it wasn't performance issues but more attitude/social/soft-skills related). I hesitated before firing them, fearing effects on team morale. After firing them morale improved immensely.

The best thing you could have done is fire them 6 months ago. The second best is firing them today. Don't hesitate.

A decent percentage of the time the person 'management' sees as problematic is a problem because they are a threat to management not to the team.

If I had a nickle for every time management used the 'saving team morale' excuse to get rid of someone out of fear of them being promoted faster than thenselves ...

It could go the other way too.

Employee coasted, did bad work and still gets a generous payout at the end? The team could very well be bitter about it, especially considering that it's such a small company and they certainly "know" about this employee's issues.

They might figure it out by reading this AskHN too.

Rather pick what you think is fair based on circumstance and let the team know your reasoning. It's your company after all, show leadership and set the standard that you want based on your values.

Edit. The "you" here is directed at the ask hn poster, not the person I'm replying to.

The employee spent the time at the firm that it took for the vest to happen. That time is mostly already served. Yanking the promised reward like that does not send a good signal to the rest of the staff. If the employee was so bad they should have fired them long ago, for the sake of the rest of the team if that was a concern. But a month ahead of the vesting? That is a shitty move. In this scenario, the eventual firing is sufficient signal to the rest of the team that the person was not living up to their paycheck.

Being fired is not a "generous payout"; colleagues will hopefully remember that the company got rid of an underperformer, without being bitter about their stock. The parable of the workers in the vineyard comes to mind.

On the other hand, a boss screwing an employee over stock, for any reason, would set a terrible precedent of greed and untrustworthiness.

> IMO the time to fire someone is as soon as you've decided you're going to fire them.

Life tip: This also goes for relationships. Don't wait until after xmas, their birthday, whatever…

Is the opposite also maybe true? Allowing someone who has contributed so little to the team to have an equal share in the company may make people feel like their comparative effort isn’t recognized.

Lots of people giving you advice vest or not to send a message of generosity or "no slackers". I'd encourage you to take the high road, good leadership is more about showing everyone you take care of everyone you're responsible for, more than you're a tyrant who sends hard messages.

Plus if this person is really all over the place, I wonder if they'll actually exercise anyways. (Unless they're RSUs in which case you're probably public, in which case your shares outstanding is likely way too large for the dilution to matter...)