--- url: 'https://lonelyentrepreneur.com/founder-left-in-place/' title: 'Of Employers With 1 to 4 Employees Who Spot an Underperformer, 21.6% Leave Them in Place. At 20 to 49, 11.9% Do.' author: name: Samantha Lankford url: 'https://lonelyentrepreneur.com/author/sam/' date: '2026-10-15T15:30:00-04:00' modified: '2026-10-15T15:30:00-04:00' type: post summary: Census asked employers what happened to under-performing staff. The smallest firms left them in place almost twice as often as firms of 20 to 49. categories: - Blog Post image: 'https://lonelyentrepreneur.com/wp-content/uploads/2026/10/founder-left-in-place-hero.webp' published: true --- # Of Employers With 1 to 4 Employees Who Spot an Underperformer, 21.6% Leave Them in Place. At 20 to 49, 11.9% Do. ![The Lonely Entrepreneur](https://lonelyentrepreneur.com/wp-content/uploads/2024/01/TLE_Logo_mobile-490W-26-26.png)Founder Data Report ![Of Employers With 1 to 4 Employees Who Spot an Underperformer, 21.6% Leave Them in Place. At 20 to 49, 11.9% Do.](https://lonelyentrepreneur.com/wp-content/uploads/2026/10/founder-left-in-place-hero.webp) Founder Data Report # Of Employers With 1 to 4 Employees Who Spot an Underperformer, 21.6% Leave Them in Place. At 20 to 49, 11.9% Do. By Michael Dermer • Updated October 15, 2026 You can’t afford to risk your business without a Sidekick at your side. [Book a Call →](https://lp.lonelyentrepreneur.com/meetings/victoria-sherman/sidekick-call) Census Annual Business Survey 2023, by firm size: what employers did once they identified an under-performing employee, and whether they promote anyone at all. Quick Answer The Census Bureau’s Annual Business Survey asked employers whether they had identified an under-performing employee and what they did about it. Among firms with **1 to 4 employees** that identified one, **21.6%** did not reassign or dismiss the person. Among firms with **20 to 49**, **11.9%** did not. From 50 employees up the share is under 10% in every size band. The smallest firms were also slower when they did act: 58.0% moved the person within six months, against 69.9% at 20 to 49. The 30-second version - The 2023 Annual Business Survey asked employer firms what happened to under-performing employees. About half of firms answered. - Of firms with 1–4 employees that identified one, 21.6% left them in place. At 20–49 it was 11.9%; from 50 up, under 10% in every band. - Acting within six months: 58.0% at 1–4 employees, 69.9% at 20–49. - Where promotion applies at all, 38.0% of firms with 1–4 employees say employees are not promoted, against 8.3% at 20–49. - Firms that do promote say it is based solely on performance at about the same rate, a little over four in five, from 1–4 employees through 50–99. ## The smallest firms leave an underperformer in place most often The survey’s management module asked whether an under-performing employee was reassigned or dismissed, and how fast. Firms could also answer that they identified no under-performers, or that the question did not apply. Among the firms with 1 to 4 employees that answered, 66.8% said it did not apply. Leave those out, and the ones that identified no one, and what remains is an estimated 123,000 small firms that knew they had a problem employee. 21.6% of them did not move the person. Below 20 employees the share sits between 15.7% and 21.6%, and the bands under 10 are level with each other. At 20 to 49 it drops to 11.9%, a gap well clear of the survey’s sampling error. From 50 up it is under 10% in every band, and those bands cannot be told apart from each other. The Data Of firms that identified an under-performing employee, share that did not reassign or dismiss them 1–4 employees95% range 19–25%21.6%5–9 employees95% range 17–20%18.6%10–19 employees95% range 14–18%15.7%20–49 employees95% range 10–14%11.9%50–99 employees95% range 6–10%8.2%100–249 employees95% range 5–11%7.5%250–499 employees95% range 1–9%4.2%500 or more employees95% range 3–6%4.1% Base: firms that answered and identified at least one under-performer. Bars drawn on a 0 to 25% scale. Each band shows a conservative 95% range built from the published standard errors. The four bands from 50 employees up, shown faded, are level with each other. U.S. Census Bureau, Annual Business Survey 2023, Module Characteristics of Businesses by employment size of firm (AB2300MCB04), question on under-performing employees, U.S. employer firms, all sectors; retrieved from census.gov on October 11, 2026. > Among the smallest employers that knew they had an underperformer, about one in five left the person where they were. ## When they act, small firms act later Speed follows the same line. Of the firms with 1 to 4 employees that identified an under-performer, 58.0% reassigned or dismissed the person within six months and 20.5% took longer. At 20 to 49 employees, 69.9% acted within six months. The gap in the six-month share clears the sampling error. An earlier piece here found most manufacturing plants rarely or never move an under-performing *manager*. This survey covers every sector and every employee, and it shows the same reluctance concentrated in the smallest firms, where the person in question may be one of only a handful of people on the payroll. The Data What happened to the under-performing employee: firms with 1–4 employees vs. 20–49 Reassigned or dismissed within six months 1–4 employees58.0% 20–49 employees69.9% Reassigned or dismissed after six months 1–4 employees20.5% 20–49 employees18.2% Left in place 1–4 employees21.6% 20–49 employees11.9% Base: firms that answered and identified at least one under-performer; each size group’s three shares add to 100%. All bars on one scale. U.S. Census Bureau, Annual Business Survey 2023, Module Characteristics of Businesses by employment size of firm (AB2300MCB04), question on under-performing employees, U.S. employer firms, all sectors; retrieved from census.gov on October 11, 2026. ## Many small firms have no promotion ladder at all The same module asked how promotions were decided. At 1 to 4 employees, 63.3% of answering firms said the question did not apply. Among the rest, 38.0% said employees are not promoted. That falls with every step up in size to 8.3% at 20 to 49, and each step clears the sampling error. Among firms that do promote, the basis barely changes with size: a little over four in five say promotions were based solely on performance, from 1 to 4 employees through 50 to 99. The difference between small and larger firms is less about how they promote than whether they promote at all. The Data Of firms where promotion applies, share that say employees are not promoted 1–4 employees95% range 37–39%38.0%5–9 employees95% range 21–23%22.2%10–19 employees95% range 13–15%14.2%20–49 employees95% range 7–9%8.3%50–99 employees95% range 3–6%4.4%100–249 employees95% range 1–4% · one small cellsuppressed2.5%250–499 employees95% range 0–9%2.3%500 or more employees95% range 1–1%0.9% Base: firms that answered, excluding ‘not applicable’. Bars drawn on a 0 to 40% scale with conservative 95% ranges. At 100–249 one small answer category is suppressed by Census and counted as zero here. Bands from 50 up are shown faded. U.S. Census Bureau, Annual Business Survey 2023, Module Characteristics of Businesses by employment size of firm (AB2300MCB04), question on employee promotion, U.S. employer firms, all sectors; retrieved from census.gov on October 11, 2026. ## What to take from this if you are building a company With four people, a weak performer is a quarter of the team and often someone you work beside every day, so the hesitation is understandable. It is still a cost you carry. Settle two things before the next hire, while it is easy: what you will do, and by when, once someone has clearly been falling short, and where a good person can go next. Larger firms in this survey act on under-performance and promote people far more often. Four limits worth holding. **About half of employer firms answered** the module, and every share here is of the firms that did. **‘Not applicable’ is large** for the smallest firms, about two in three at 1 to 4 employees, so the bases here are the firms the question applied to. The survey is **one point in time**: it compares different firms of different sizes, not the same firm as it grows. And it reports what happened, not whether it was the right call; leaving someone in place can be the right decision. The Data Where the numbers land 21.6% firms with 1–4 employees that left an identified underperformer in place 11.9% the same share at 20–49 employees 58.0% → 69.9% acted within six months, 1–4 vs. 20–49 employees 38.0% → 8.3% say employees are not promoted, 1–4 vs. 20–49 (where it applies) U.S. Census Bureau, Annual Business Survey 2023, Module Characteristics of Businesses (AB2300MCB04). ## Frequently Asked Questions How often do small businesses keep an under-performing employee? In the Census Annual Business Survey 2023, 21.6% of firms with 1–4 employees that identified an under-performer did not reassign or dismiss them, against 11.9% at 20–49 employees. How quickly do employers act on under-performance? Of firms that identified an under-performer, 58.0% of those with 1–4 employees acted within six months, and 69.9% of those with 20–49. Do small businesses promote employees? Many do not. Where the question applies, 38.0% of firms with 1–4 employees say employees are not promoted, against 8.3% at 20–49. Are promotions based on performance? Among firms that promote, a little over four in five say promotions were based solely on performance, at about the same rate from 1–4 employees through 50–99. Who answered this survey? U.S. employer firms in every sector sampled for the 2023 Annual Business Survey. About half answered the management questions, and the shares here are of those firms. Keep reading - [More Than Half of Manufacturing Plants Rarely or Never Move an Underperforming Manager](https://lonelyentrepreneur.com/founder-the-manager-who-stays/) - [Most Employers With Fewer Than 20 People Track No Key Performance Indicators. Half of Those With 1 to 4 Set No Targets.](https://lonelyentrepreneur.com/founder-no-numbers-to-watch/) - [Owners With 1 to 4 Employees Rank Managing Them 61st of 75 Problems. At 20 to 49, It Ranks 9th.](https://lonelyentrepreneur.com/founder-the-problem-you-hire-into/) Part of the entrepreneurial struggle: [Leadership Burden](https://lonelyentrepreneur.com/entrepreneur-struggle/leadership/) ![The Lonely Entrepreneur](https://lonelyentrepreneur.com/wp-content/uploads/2024/01/TLE_Logo_mobile-490W-26-26.png) Published by **The Lonely Entrepreneur** — the community and coaching platform for entrepreneurs who are building alone. [lonelyentrepreneur.com](https://lonelyentrepreneur.com/) This article is for educational purposes and is not a substitute for professional financial or legal advice.