In this week’s Ask the CFO, we stepped away from financial statements and numbers for a moment and talked about something that affects nearly every small and family-owned business: making the tough people decisions.

If you run a business, you know exactly what I mean.

Most of the time, the hardest problems in a company aren’t spreadsheets or strategy. They’re people. And in smaller organizations—where teams are tight and relationships run deep—those decisions can be especially difficult.

But avoiding them can quietly weaken a business over time.

When Loyalty Clouds Accountability

Over the years, I’ve seen a pattern repeat itself in many small and mid-sized companies.

There’s often someone in the organization who is considered indispensable. They’ve been there a long time. They helped in the early days. People trust them. And because of that history, leadership hesitates to question their role or performance.

Then a new executive or advisor comes in and asks a simple question:

“What exactly does this person do?”

And surprisingly often, no one can clearly answer it.

This doesn’t mean the person is malicious or trying to cause problems. In many cases, they simply became a bottleneck over time. Processes evolved around them, responsibilities blurred, and accountability faded. What I’ve seen repeatedly is that once the situation is addressed and the role changes or the person moves on, something interesting happens.

The rest of the team often breathes a sigh of relief. Many of the issues people feared would occur simply don’t happen. Yes, a few things may fall through the cracks temporarily—but nothing unmanageable. The bigger problem was the hesitation to address it in the first place.

Why Owners Avoid These Decisions

It’s completely human to avoid difficult conversations. Business owners often carry the weight of loyalty, history, and personal relationships with their teams. Letting someone go—or even confronting performance issues—can feel deeply uncomfortable. But leaving problems unresolved creates its own cost. When accountability is unclear, several things start to happen:

• Work slows down or becomes inefficient

• Other employees become frustrated

• Resources are wasted

• Leadership spends mental energy worrying about the situation

And perhaps most importantly, the business owner becomes distracted from running the business. I often remind clients that difficult decisions are part of leadership. They’re uncomfortable—but they’re also necessary to protect the organization and the rest of the team.

Start With Clear Expectations

During the conversation, a fractional HR leader on the call raised an important point that many businesses overlook. Accountability is almost impossible without clear documentation of expectations. That starts with something very basic: an accurate job description. It sounds simple, but many organizations are operating with outdated or vague descriptions—or none at all.

A strong job description should clearly define:

• The role and reporting structure

• Key responsibilities

• Expected deliverables

• Metrics or indicators of success

When both the manager and employee acknowledge these expectations, performance conversations become much easier. Instead of being emotional or subjective, they become objective discussions about agreed-upon responsibilities. Without that clarity, managers often struggle to explain what’s not working.

When Performance Doesn’t Improve

If someone isn’t meeting expectations, another tool many businesses overlook is a Performance Improvement Plan (PIP).

A well-structured PIP outlines:

• The specific areas where performance needs improvement

• Clear goals or expectations

• A defined timeframe

• How success will be measured

This approach gives the employee a fair opportunity to improve while also protecting the organization by documenting the process. But again, it all begins with clear expectations in the first place.

Managing Contractors and Outside Resources

Accountability isn’t just for employees. Many businesses rely on contractors and outside providers—marketing agencies, IT support, finance professionals, HR consultants, and others. The same principle applies here:

If expectations aren’t defined, it’s very difficult to measure value.

For any outsourced relationship, the business should be clear about:

• Deliverables

• Response times

• Scope of work

• Expected outcomes

If those expectations aren’t being met, the business owner has a responsibility to address it. In fact, I often tell my own clients something that surprises them:

If you’re not getting value from me as your CFO, you should replace me.

Not because I want to lose clients—but because accountability should apply to every professional relationship, including mine.

The Reality of Today’s Workforce

Another topic we touched on is how much the workplace has changed. Many business owners still operate with the expectation that employees will stay for 10, 20, or even 30 years. In today’s environment, that’s increasingly rare. Good managers often see talented employees grow beyond their organization.

And that’s not necessarily a failure—it can actually be a sign of strong leadership and development.

If you hire capable, ambitious people, some of them will eventually move on to bigger opportunities.

The goal shouldn’t be to hold onto everyone forever. The goal should be to build a team that performs well while they’re part of your organization.

Do the Best You Can With the Resources You Have

One final reality of small and mid-sized businesses is that many of them simply don’t have the HR infrastructure of larger companies.

They’re often managing people issues by the seat of their pants.

That’s understandable.

But even simple steps—clear expectations, documentation, and regular communication—can go a long way toward making these situations easier to manage.

Leadership isn’t about avoiding tough conversations.

It’s about handling them thoughtfully, fairly, and in a way that keeps the business moving forward.

Join the Next Ask the CFO

Ask the CFO is a free, live session where we discuss real issues facing business owners and leaders—from financial strategy to operational decisions and leadership challenges like the one we explored this week.

If you run or help lead a business, you’re welcome to join the conversation.

Bring your questions, your scenarios, and the challenges you’re working through.

Because sometimes the most valuable insights come from the conversations we have together.