The firing decision is one of the most consistently delayed in entrepreneurial leadership, and the costs of the delay are systematically misattributed. The entrepreneur who waits six months past the point of clear underperformance typically understands the delay as a form of care — for the team member, for the relationship, for the possibility of improvement. The research on what the delay actually produces tells a different story.

The sunk cost and identity mechanisms that produce the delay

Staw’s (1976) escalation of commitment research predicts the primary delay mechanism precisely. The leader who hired, onboarded, trained, and managed a team member has accumulated personal responsibility for that investment. When performance evidence accumulates that the investment is failing, the sunk cost mechanism produces commitment escalation rather than rational recalibration. The Arkes and Blumer (1985) formalisation confirms the irrationality: the time and emotional energy already invested cannot be recovered regardless of future action, but they reliably drive continued investment in the failing course.

The identity mechanism from Pierce et al.’s (2003) psychological ownership research amplifies this. The hiring decision was the leader’s own — made with their judgment, their time, their confidence. Terminating the person is not just ending an employment relationship; it is acknowledging a prior judgment error. The identity-invested leader experiences this as self-indictment rather than as learning, which produces the sustained rationalisation — this person just needs more time, more support, more clarity — that extends the delay past the point of rational justification.

How the delay deepens the problem rather than resolving it

The Golem effect mechanism predicts what happens to the retained underperformer across the delay period. The leader who has privately concluded that the person is underperforming but has not acted on that conclusion is progressively withdrawing the four-channel leadership investment — less developmental input, less challenging assignment, less corrective feedback — that would be the actual conditions for improvement. The delay does not preserve the opportunity for improvement. It reduces the conditions under which improvement is possible, while extending the person’s experience of ambiguous standing without the honest information that would allow them to address the performance issue or pursue a better-fitting role proactively.

Colquitt’s (2001) organisational justice research established the counterintuitive finding: terminations that follow extended underperformance periods during which the person received inadequate honest feedback are experienced by the terminated individual as more unjust and more identity-threatening than terminations that follow clear performance conversations and reasonable time to improve. The delay that was motivated by compassion produces an outcome that is less compassionate in total — for the person being kept in a role that is not working, and for their perception of how they were treated.

What the retained team is learning

The most underestimated cost of the delayed firing is what it communicates to the team that stays. Barsade’s (2002) emotional contagion research and the social norms literature together predict the normative signal that underperformer retention sends: capable team members observe that the leader tolerates below-standard performance and update their model of the actual performance standard. The stated standard (“we have high standards here”) and the observable behaviour (managing the underperformer without consequence) produce the Kim et al. (2004) integrity trust violation — the gap between stated values and actual behaviour that the research identifies as the hardest category of trust damage to repair.

The Mulvey and Klein (1998) research on team effort norms provided the experimental confirmation: high performers working alongside low performers in interdependent tasks reduced their own effort levels through the perceived equity mechanism. The norm contagion is not motivational weakness; it is a rational update to the social norm that the leader’s behaviour has communicated.

Bradford Smart’s Topgrading research documented the attrition consequence. The most capable, most market-valuable team members — the people the entrepreneur most needs to retain — report that working alongside retained underperformers is one of the primary factors driving them to seek employment elsewhere. The delayed firing that is justified as protecting the underperformer is simultaneously producing the exit of the team members the leader most wants to keep.

What the team experiences after the firing that was delayed

Research on team dynamics following termination consistently finds that remaining team members — particularly high performers — report increased engagement, increased leadership credibility, and increased confidence in the team’s direction following the removal of a clearly underperforming colleague. The delay is experienced by the team as a leadership failure across its duration; the eventual action is experienced as leadership credibility restored. The cost of the delay is distributed across the retained team throughout the delay period; the benefit of the action arrives immediately and broadly.

The pre-mortem technique provides the practical tool for overcoming the delay-producing mechanisms before they have accumulated their costs. Imagining it is twelve months forward, the person has been retained, and the consequences have played out — and then generating the most plausible account of what those consequences are — forces the outside-view assessment that the sunk cost and identity mechanisms are suppressing. The exercise makes the distributed future costs vivid before they are incurred rather than only recognisable in retrospect.

Books worth reading on this

The Effective Executive by Peter Drucker. Drucker’s account of executive effectiveness — including his specific treatment of the staffing decision as the most consequential decision a leader makes, and his prescription that leaders who get the staffing decision wrong owe it to the organisation and to the person to correct it quickly — provides the most intellectually grounded available framework for the firing decision as an act of leadership rather than an act of cruelty. His specific account of the cost of keeping the wrong person in a role as a cost borne by everyone except the decision-maker provides the most direct available challenge to the compassion rationalisation that produces delay. The Manager’s Path by Camille Fournier. Fournier’s account of engineering management — including her specific and unusually direct treatment of the performance management and termination decision — is the most practically structured available treatment of how to recognise when the decision has been deferred too long and what a respectful, clear termination process actually involves. Her account of the difference between managing someone out slowly and making a clean decision is the most actionable available complement to the research this article describes.

If the dynamics described here are significantly affecting your wellbeing, speaking with a psychologist is the right next step. UK: Samaritans (116 123, free, 24/7). Mind (0300 123 3393). BACP: bacp.co.uk/search/Therapists. Crisis Text Line — text HOME to 741741 (US, UK, Canada, Ireland). International: internationaltherapistdirectory.com.

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