Things went wrong. Despite all the strategy and planning the innovation did not perform on the market...or maybe it didn’t quite make it. There are many reasons why but surely someone is to blame. Someone has to take the fall, right? After all, isn’t that how business works...
Don’t get us wrong, if someone screws up in a fit of incompetence and it costs the firm millions that’s one thing, but if everybody tries their best and something doesn’t work out nobody needs to take the fall, nor should they.
In an effort to get that venture up and running you had to fight against conservativism in your firm. This is incredibly difficult to break away from and if you fire someone guess what that says? It says entrepreneurial nature is to be discouraged. Innovation is important but if things don’t go perfectly we’ll blame someone. Working on this team means that you might lose your job.
It’s the antithesis of the entrepreneurial firm. There are lots of good reasons to fire someone. Ventures not working out to projections is not one of them.
So when is it appropriate to fire a person? If the marketing team doesn’t ship advertisements on time someone should probably be fired. If the product has critical engineering flaws that should have been foreseen through due diligence then someone should probably take the fall.
Never should someone be fired for "things just didn’t go as well as we hoped." You shouldn’t fire them because in an innovative firm you will need them and their skill sets to fix the product and develop new ones.
One thing Japan does with their employees is switch them around regularly. Poole and Van de Ven note in Handbook of Organizational Change and Innovation that approximately every two years Japanese companies cycle their employees and have them change positions. This gives them the ability to learn new skills which means that they don’t have to be worried about having unnecessary or hard-to-lay-off employees. It also gives them the freedom to pull employees from redundant job positions into other jobs without much difficulty.
Your venture team will have similar skills to others in your firm. If you were using a matrix style project management approach they can simply migrate back into their functional departments without difficulty. This kind of long term commitment to employees can lead to them in turn being more committed to their company.
Rather than firing an employee from a failed venture do what it takes to retain them. It’s all too common for companies to go into a panic, fire a bunch of people, and then two months later realize they actually needed them. According to Alec Reed in Innovation In Human Resource Management: Tooling Up For The Talent Wars the cost of losing an employee usually works out to 1.5 times the salary and this figure does not consider negative effects from losing the employee (information lost to the team, impact on customers, etc).
Retention and turnover rates strongly influence the profitability and sustainability of companies. With retention being such a huge concern for human resource professionals it only makes sense to retain valuable people.
The absolute worst thing that can happen is the firing of an entire venture department because the project goes wrong. Sure, sometimes budgets are cut and this needs to happen but it’s just such a waste of key talent.
So rather than simply going on a firing spree do what you can to hold onto your employees. They’re valuable, already know your venture inside and out, and when it comes to incremental innovation as well as being a valuable asset to the company well, you already know that they are.
These are the people able to build something from nothing. Maybe it didn’t work out quite as amazingly as you wanted it to be that’s not the end of the world. It’s a problem that needs to be fixed and who better to fix?
With all that said, there should be absolutely no hesitation to fire those who deserve it. If budgets are being cut then it makes sense to get rid of the weaker employees first. If someone really did make a mistake firing or demoting them is the most sensible path.
As always though, try to resist doing this as it often works out to your firm’s disadvantage in the long run.