"You have to know when to cut a man loose," as said by Gary Bertier from "Remember The Titans."
Truer words were never said in being an entrepreneur and/or a CEO. In my job of running a recruiting, staffing and culture firm, I see this with our clients all the time.
They have one of three types in the organization. Let's start with the brother-in-law, or cousin, or best friend, "Steve." Everyone else knows Steve has to go, but the CEO won't make the hard call.
Whether it's having to spend Christmas with him or he being the fishing buddy, The CEO doesn't think he's that bad.
You're lying to yourself when you say the fact that you're paying him a lot of money is the only bad thing. You tell yourself he's a good guy. All while everyone else knows he doesn't work hard, or he just doesn't get it, whether it's putting his nose into things he shouldn't, or coming in late...he's just a black cloud.
If he were a good guy, he would be working harder, learning more, and not taking your money without breaking a sweat.
Then there is Mary. Mary is the bookkeeper/accountant who has been there since day one. In family owned businesses, Mary is the one who your dad hired 30 years ago (she probably didn't graduate college).
Mary was an office manager and accountant, and knows where everything is. Except the future of your company.
She can't manage people (or be managed by anyone but you!), and her attitude is slightly below the kid who had is Xbox taken away on Christmas Day. People don't go to her for information and avoid her like the plague.
She is only polite to you, and even you know she isn't that nice. Oh yea, her son works in your shipping department or her daughter is in marketing, and they will leave if you fire her. Excuses. Mary is a lock on the elevator not letting your company go past a certain floor.
And then there is the salesperson who is a producer and a manipulator. We'll call him Jack. He manipulates his coworkers. He manipulates management. He manipulates clients. When the sales are coming in, you call him a great salesperson. When it creates personnel issues you look to say other people aren't thick-skinned enough. Some of his points are valid, and he knows business so you just let it go.
However, once you realize culture trumps everything else and you know when to cut a man loose, guess what happens? Personnel issues go away. Staff becomes happier. You realize clients love your company, not the employee. In fact, you find out how bad it really was. Harmony exists once this change is made.
You find out the issues were way deeper than you could have imagined, whether it's scenario No. 1, 2, or 3. The problems are always bigger and deeper than you imagined.
I've dealt with variations of the above and once we made the changes, sales grew faster, people were happier and management wasn't focused on the petty things (which have to be dealt with), and could focus on bigger-picture vision and operational issues.
Letting go of people who have given to your organization is difficult; however, keeping them isn't fair to everyone else, to those who bring a great attitude every day. The people who work hard to learn and grow stronger. The people who put up with the others' bad attitudes and troublesome ways.
As a manager, entrepreneur or CEO--as a leader--you have to move these people out. Only then can your company truly achieve growth and success.