There is likely someone on your leadership team or in middle management right now who you know, in your gut, is not the right person for the seat they are sitting in.
Maybe they have been with you since the beginning. Maybe they stayed late, covered for others, and carried things you never asked them to carry. You owe them. You feel that every time the thought crosses your mind, and then you push it back down. Again.
This is the Loyalty Trap. It is the most universally painful and least publicly discussed problem in entrepreneurial companies. And it is quietly costing you more than you know.
The people who helped you get here are not always the people who can get you to where you are going.
When a business grows faster than its people can grow with it, someone has to make the call.
Most founders never do. They rationalize, tolerate, and quietly resent, and pay a price that shows up everywhere except on an invoice.
The Moment Every Founder Recognizes
In my years working with founders and their leadership teams, I have never had a leader tell me they did not know who the problem was. They always know. They knew six months ago. Sometimes two years ago. What is unclear is what to do about it, because the person at the center of this conversation is not just a name on an org chart. They are a relationship. They are history.
In Five Obsessions of Elite Organizations, I describe the first stage of a company’s growth as being built by doers and grinders, the people who were there from the start, who ground it out when the outcome was uncertain. Without them, there is no company to grow.
But the skills that win in the early days are not always the skills that win at the next stage. A person who was an outstanding operations leader from one location to five may simply not be able to carry the organization further. That is not a character flaw. It is a capacity issue.
Is there someone on your team right now who comes to mind as you read this? Someone you know, in your gut, is not the right person for the seat they are in, but the thought of having that conversation feels overwhelming? How long has that been going on?
What Loyalty Actually Costs You
Here is what the Loyalty Trap looks like from the inside. A founder keeps someone in a role that has outgrown them. At first, it feels manageable. The founder covers for them in meetings, quietly reroutes decisions around them, absorbs the gaps personally, adding it to the already long list of things running through the founder.
Over time, frustration builds, not just for the founder. The team members who are not keeping pace feel it too. The loyalty that made you hold on begins, quietly and painfully, to erode. Team chemistry suffers. Performance drops further.
Your A-Players notice all of this. High performers have zero tolerance for watching loyalty override accountability. When they see the same underperformance tolerated week after week, the best ones start quietly updating their resumes.
What has it already cost you to keep this situation as it is? Not just in time and energy, but in what it signals to the rest of your team about the standards you are willing to hold?
The Ultimate Dichotomy
Jocko Willink and Leif Babin describe what they call the Ultimate Dichotomy: caring deeply for each individual while accepting the risks necessary to accomplish the mission. Nowhere does this play out more painfully than right here.
The instinct to protect the people who helped you build something is not weakness. But when that instinct overrides your responsibility to the organization, and to every other person on the team counting on you to make the right call, it becomes avoidance dressed up as loyalty.
Consider this: is it actually kind to keep someone in a role they are failing in, where they feel the pressure of underperformance every day and their colleagues have quietly lost confidence in them? Is that loyalty? Or is it the appearance of loyalty with all of the costs and none of the benefits?
What Lauren Bailey Did Instead
Lauren Bailey, co-founder and CEO of Upward Projects (the hospitality group behind Postino), faced this exact challenge when we started working together in 2017. She had a team that had helped her grow the business to its first twelve locations. They were culturally great people. They had earned her loyalty and she had earned theirs.
And she also knew that getting from seven Postino locations to fifty-five was going to require a fundamentally different team.
She made a series of bold, deliberate upgrades to her executive team, a CFO with experience at larger hospitality companies and PE firms, a COO with twenty-plus years of operational leadership, a chief development officer who had come from Chipotle and CAVA. Critically, she handled these transitions with care, not cruelty. One long-tenured team member moved to a senior role where she continued to grow and thrive, eventually leaving to take her first CFO role at another company, a door that staying stuck would never have opened.
As of this writing, Postino has grown to fifty locations. Lauren’s willingness to put Great People in every seat, even when it was uncomfortable, is one of the most significant reasons for that outcome.
How to Think About This Differently
A few reframes that have proven genuinely useful for founders wrestling with this:
Your A-Players are free. Upgrading a position from an underperformer to a true A-Player rarely costs as much as you think, and the return is almost always faster and larger than expected. The marginal value of the right person in a critical seat far outweighs the marginal cost of making the move.
Tolerating the wrong person is a decision. Every day you keep someone in a seat they have outgrown, you are making an active choice. Inaction is action. And your team is watching and drawing conclusions about what you are willing to stand for.
Coaching up or out is not the same as giving up on someone. Every person deserves to be coached up before they are coached out, clear expectations, honest feedback, genuine investment in their development. But when the gap between what someone can deliver and what the organization needs has grown too large, helping someone transition gracefully is often the kindest thing you can do, for them and for everyone around them.
If you think about the person you have been avoiding this decision about, what do you believe the next twelve months look like if nothing changes? For them. For your team. For the business. And are you willing to settle for that?
What This Comes Down To
The Loyalty Trap is about the natural tension at the heart of building something great: caring deeply for the people around you while having the courage to put the mission first.
- The people who got you here are not automatically the people who can get you where you are going. Recognizing that is not a betrayal.
- Tolerating the wrong person in a critical seat has costs that multiply: in your A-Players’ morale, in your culture’s standards, in your own energy and growth ceiling.
- The Loyalty Trap is built on an illusion of kindness. Keeping someone in a role they are failing in is not kind. It is avoidance.
- Coaching up always comes first. When it is not working, coaching out with care and clarity is both the right thing and the courageous thing.
- Elite organizations are built by leaders willing to put Great People in every seat, even when every other instinct says to wait one more quarter.
The question is not whether you already know who this is about. You do. The question is what you are going to do about it.
Ready to Take the Next Step?
Would it be unreasonable to spend 7 to 10 minutes finding out where your organization actually stands?
Would it be a mistake to explore whether the Five Obsessions of Elite Organizations framework is the missing piece your business has been looking for?
