Promoted Beyond Their Capability? How CEOs Should Handle Underperforming Leaders

There's a cost that doesn't show up on any P&L, and in my experience it's one of the most significant costs a growing business can carry. It looks like this: someone who was brilliant in their last role isn't performing in their current one, everyone around them can see it, and yet the conversation hasn't been had. It just keeps not being had, week after week, quarter after quarter, while the business quietly pays the price.

The reasons it doesn't get addressed are almost always understandable. This person was there early. They've been loyal. They helped build something real, and moving them feels like a betrayal of that history in a way that's genuinely hard to separate from the practical reality of what the business now needs. So the CEO carries the discomfort privately, covers the gaps quietly, and waits, hoping something will shift without anyone having to say anything difficult. What tends to happen instead is that the team around that person adjusts to compensate, standards quietly lower in exactly the place they need to be sharp, and the CEO spends more and more energy managing around someone rather than being able to lead through them.

The question I ask when this comes up, and it cuts through surprisingly quickly, is this: if this person applied for this role today, with everything you now know, would you hire them?

Most CEOs already know the answer before I've finished the sentence.

What's worth understanding is how these situations usually begin, because they rarely start as a mistake. Promoting someone away from what they're good at is one of the most common and costly leadership errors I see in scaling businesses, and it almost always comes from entirely the right place: loyalty, recognition, and a genuine belief that someone who has been exceptional in one role will naturally be exceptional in the next. But technical brilliance doesn't automatically transfer to leadership, and loyalty, while it matters enormously, isn't a qualification for a role that requires something fundamentally different from what the person has demonstrated so far.

What tends to follow is a particular kind of mutual pretence. The person struggles in the new role. The CEO, aware that the promotion was their decision, finds it hard to be direct about what isn't working. Neither party names what is obvious to both of them, and probably to everyone else as well, and meanwhile the business pays the price in team performance, in customer experience, and in the CEO's own time and energy.

The conversation that needs to happen is rarely as difficult as it feels in anticipation. In my experience it's almost never received the way CEOs fear it will be, and that's because most people in the wrong seat already know they're in the wrong seat. They've known for a while. They've been waiting for someone to say it out loud, and when it's finally said with honesty and genuine care it tends to be a relief for everyone in the room, including the person it's about.

But before that conversation happens, there's something worth sitting with first, because not every performance problem is what it appears to be on the surface. When a leader isn't performing, the instinct is to look at the person, and sometimes that's right. But in my experience, most performance problems in leadership teams trace back to a transition that was never properly managed. The role changed, the title changed, the expectations changed, but the support and the clarity around the person didn't change with it, and nobody noticed until something had already gone wrong.

There's also the question of whether the expectations were ever actually named, spelled out specifically rather than assumed. Vague accountability produces vague performance, and when people aren't told clearly what good looks like in a role they fill the gap with their own version, which is rarely quite the one that was needed.

And then there's the distinction that often matters most: is this a capability issue or a will issue? Because those two things need completely different responses. One needs investment, time and genuine development support. The other needs an honest conversation about fit. Treating one as the other doesn't just waste time, it usually makes the situation harder to resolve the longer it goes on.

So before you have the conversation, it's worth being clear which conversation you actually need to have, and whether the system you put them into gave them a fair chance in the first place.

This article draws on three posts I shared on LinkedIn this week, which you can read here: post one, post two and post three.

What would change in your business if you finally had the conversation you've been putting off?