How to Spot the Wrong People Before They Cost Your Business

I used to think being a good leader meant giving people the benefit of the doubt.

After eight years of running a company, I've learned an expensive lesson: Sometimes giving someone more chances doesn't solve the problem. It gives the pattern more chances to repeat itself.

When relationships with employees, vendors, or partners became difficult, my instinct was usually to start with myself: Am I being too demanding? What should I do differently? What am I missing?

Those are important questions. But trying to be your best self can become its own form of blindness when it stops you from critically evaluating the person across the table.

Good leadership requires empathy. It also requires discernment.

Start with the gap between the story and the results

Everyone has a story about the value they bring. Employees work hard. Vendors promise results. Agencies have impressive case studies. Partners tell you what they'll deliver.

Usually, they believe it. But effort isn't results. Confidence isn't competence. And sometimes a convincing explanation masks the fact that someone isn't very good at what you've hired them to do.

Hiring a digital marketing agency is a perfect example. Everyone has a great pitch. The harder moment comes months later when results aren't what you expected, and you start asking why.

Maybe they need more time, attribution is complicated, or your expectations were unrealistic. Or maybe they don't actually know why it's not working. From the CEO's seat, it can be hard to tell.

See what happens when you question the story

This has become one of my most useful tests: Can they withstand reasonable scrutiny?

They may get defensive initially (we're all human), but eventually, substance should show up. They answer questions, explain their reasoning, show their work, or admit what they don't know. Sometimes they say, “We got this wrong. Here's what we're changing.”

Real expertise and trustworthiness don't require you to stop asking questions to remain convincing.

The opposite is worth noticing: specific questions producing vague answers, moving goalposts, changing explanations, or every attempt to discuss Problem A becoming a conversation about Problems B, C, and why you were wrong to raise Problem A.

Arthur Brooks discusses a related behavior in his conversation about the Dark Triad called DARVO: deny, attack, and reverse victim and offender. Now I'm not a psychologist, and leaders shouldn't diagnose people, but my takeaway is practical:

Is this person trying to solve the problem, or win a narrative?

Trust patterns more than explanations

I once spent months treating a series of problems with someone as separate incidents. Each had a plausible explanation, so I kept adjusting: clearer expectations, more support, different processes, different ways of communicating.

I was so focused on finding the right approach that I missed what was right in front of me: I kept changing, but the outcome didn't. Eventually, I had to accept that I couldn't want change more than the other person did.

Now, when something doesn't add up, I go back to the boring stuff: emails, messages, deliverables, timelines, and results (pro-tip: make sure you document as much as you can in writing!)

Separate how someone feels, their interpretation of what happened, and what you can actually verify.

One mistake deserves grace. A repeating pattern deserves attention.

Calculate the cost of getting it wrong

“More time” isn't free.

The wrong professional relationship costs more than money. It's the employee requiring hours of additional management, the vendor you constantly chase, the partner whose promises never become deliverables, or the expert who requires you to become an expert just to determine whether they're doing their job.

I call this the toxicity tax: the time, emotional energy, additional work, missed opportunities, and attention a dysfunctional relationship consumes.

At some point, giving someone the benefit of the doubt becomes a bad business decision.

Choose discernment over cynicism

The lesson isn't to trust no one. It's to recognize what trustworthy people actually do.

The best people I've worked with build informed trust instead of demanding blind trust.

They answer questions, show their work, admit what they don't know, and can be challenged. When they're wrong, they can say so.

Great people still get defensive sometimes. The distinction is whether defensiveness is a moment or a strategy.

So balance the benefit of the doubt with sober truths. When promises repeatedly exceed results, reasonable questions produce vague answers, or you're doing mental gymnastics to reconcile what someone says with what you're seeing, ask:

“What evidence would tell me this relationship is actually working?”

Ask the uncomfortable questions and give them the opportunity to answer. Then, believe the pattern.

Related articles by Jennifer Tsay:

When Entrepreneurship Stops Feeling Like Winning 5 tips to Anchor You During Your Toughest Days

Scaling a Values-Driven Business to $10M as a First-Time Founder

Splurge or Save: A Scrappy Founder’s Guide to Knowing When to Spend