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Performance criteria and firing

Firing is a sensitive issue and also difficult to deal with in a written document. It is very difficult to objectively specify targets failing which a co-founder will be asked to leave. Businesses frequently fail to achieve targets, but that does not necessarily lead to the firing of a co-founder. Therefore, firing needs to be addressed in a broader way. If it is unaddressed, lack of participation from one of the co-founders can cause slack amongst the others, as the others see themselves working extremely hard while one of the co-founders is not involved.

Co-founders should try and lay down the circumstances under which all of them agree that the ouster of a founder member would be justified. For example, regularly not showing up for work, taking up alternative employment or consultancy, etc. Some acts may be so objectionable that firing is automatically justifiable irrespective of a co-founder’s talent or performance. For example, sexual misconduct or involvement in a serious crime could be such acts.

Pre-identification of such situations can make co-founders work efficiently and in the event any of such situations does materialize, it imparts legitimacy to the firing of the co-founder and makes the process smoother.

A voluntary provision to enable co-founders to leave can be incorporated. Co-founders may agree to a process where if a co-founder leaves or is fired before the completion of a specified amount of time, the economic interest of the outgoing co-founder reverts back and is proportionately distributed amongst the remaining co-founders. 

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