#83: Why “Bad Employees” Are Usually a Leadership Failure
You don’t have a “people” problem.
At least not most of the time.
If you run a digital agency long enough, you will hit that moment: a team member drops the ball, a client gets frustrated, and suddenly you’re questioning whether you hired the wrong person.
I’ve been there. And I’ve coached enough agency owners to know this pattern is everywhere.
But here’s the uncomfortable truth about agency scaling:
Most perceived people problems are actually process, clarity, or client fit problems in disguise.
If you misdiagnose the issue, you don’t just lose an employee. You damage trust, burn money on rehiring, and stall your growth.
Let’s break down the real root causes and how to diagnose them fast.
The 4 Root Causes Behind “People Problems”
When something goes wrong inside your agency operations, it almost always falls into one of four buckets.
1. The Process Problem
This is the most common and the most ignored.
A “people issue” is often just:
A missing SOP
An outdated SOP
No quality control step
Assumed tribal knowledge
Undefined handoffs
As founders, we assume, “Anyone should know how to do this.”
But what feels obvious to you is often undocumented experience living in your head.
If the system isn’t clear, repeatable, and enforced, the error isn’t personal, it’s structural.
And structure is your job.
Agency scaling requires documented, enforceable processes. Without them, you’re gambling on memory and personality.
2. The Leadership Clarity Problem
This one stings a little more.
Sometimes the issue isn’t the team member.
It’s that I didn’t give:
Explicit expectations
Clear success criteria
Behavioral examples of “what good looks like”
Direct feedback
Confirmation of understanding
One of the most dangerous phrases in leadership is:
“I’m pretty sure they get it.”
That’s not leadership. That’s avoidance.
Clarity has to come before accountability. If expectations weren’t explicitly defined, you cannot fairly enforce performance.
Strong agency operations are built on ruthless clarity.
Weak ones run on assumptions.
3. The Actual People Problem
Yes, sometimes it is the person.
But only after you’ve ruled out process and clarity.
True people problems look like:
Repeated mistakes after clear feedback
Poor judgment
Low coachability
Misalignment with core values
Inconsistent effort or ownership
The key filter is coachability.
If someone applies feedback and improves, you have a development opportunity.
If they repeatedly ignore clear direction, you have a fit decision to make.
Here’s the hard truth:
Fit issues are not fixable. They are decisions.
Dragging them out destroys morale and profitability.
4. The Client Fit Problem
Sometimes your team is fine.
Your systems are fine.
But the client is wrong.
Common examples:
They need services outside your model
Their communication expectations exceed scope
They want strategic depth but pay for execution
They text your team on Saturday night
That’s not a bad client.
That’s misaligned client acquisition.
And misaligned client acquisition crushes profitability faster than almost anything else in agency scaling.
Your Ideal Client Profile (ICP) isn’t branding fluff.
It’s operational protection.
The 30 Second Diagnostic Framework
When something goes wrong, don’t guess.
Diagnose.
Here’s the exact workflow I use:
Step 1: Check the Process
Is there documentation?
Is it current?
Was it followed correctly?
Is there a quality control checkpoint?
If the system isn’t airtight, fix that first.
Step 2: Check Leadership Clarity
Ask yourself:
Did I clearly define the outcome?
Did I define what “good” looks like?
Did I give explicit feedback?
Did I confirm they understood?
If you didn’t say it directly, it doesn’t count.
Step 3: Check the Person
Are they coachable?
Do they apply feedback?
Are mistakes repeating despite clarity?
Do they align with our values?
This is where you determine development vs. decision.
Step 4: Check Client Fit
Does the client need something outside our model?
Are expectations misaligned with scope?
Is this a service design issue?
Sometimes the real fix is refining your client acquisition process not firing a team member.
Why This Matters for Agency Scaling
If you misdiagnose the root cause, the consequences compound:
Employee churn
Client churn
Broken trust internally
Wasted hiring spend
Slower operations
Reduced profitability
Worse, if you fire someone for a process problem, the next hire will hit the exact same wall.
And you’ll blame them too.
That’s how agencies stay stuck under $1–3M ARR, cycling talent instead of fixing systems.
Predictability is what unlocks scale.
And predictability is built on clarity.
The 4 Rules That Protect Your Profitability
Here’s what I’ve learned, sometimes the hard way:
Rule #1: Check the process before the person.
Blame systems first. Always.
Rule #2: Clarity must precede accountability.
No clarity = no leverage.
Rule #3: Fit issues are decisions, not projects.
If someone isn’t aligned after clarity and feedback, stop trying to “coach” what is fundamentally misaligned.
Rule #4: Never guess the root cause.
Diagnosis beats emotion.
Every time.
The Real Work of Leadership
Managing people isn’t about being liked.
It’s about building systems that make success predictable.
When you fix the right problem:
Delivery becomes calm.
Team trust increases.
Client results stabilize.
Profitability improves.
Agency scaling becomes intentional instead of chaotic.
When you fix the wrong problem:
You stay reactive.
You stay frustrated.
And you stay small.
The next time something breaks inside your agency operations, pause before blaming the person.
Run the four bucket diagnostics.
Because if you don’t identify the real root cause, you’ll keep replacing players instead of upgrading the system.
And scaling isn’t about better people.
It’s about better structure.
If you want to go deeper, you can run the full version at agencyuplift.co/mini.
Even if you never book a call, the clarity alone is worth it.
