I came here to say something similar. I'm a founder, I've been a manager and a software engineer, I did 5 years @ Google.

When I hear someone in "upper management / founder / in a position of power over employee's lives" say that what they really needed for their own success was a way to threaten/risk the livelihood of their employees so that they would work harder, it just makes me sad for anyone affected by them.

Yes, sometimes employees need to be fired... but sometimes management also needs restructuring. The truth of the matter is that at a company the size of Google, it gets harder and harder for an individual employee to directly influence success. I think that's mostly because of the policies in place to make sure that employees don't directly *damage* success either.

This means that you have to work within the system you have. An employment contract is two-sided, you're offering something that the employee wants, and they're offering something that you want. If your first reaction when there's a problem is to cut their pay or fire them, then you're the one with the problem, not them.

Yes, there are times you need to fire someone (and I have), but that should be reserved for one of two cases: 1) they are actively damaging the business (e.g. destroying company property, morale, hurting business prospects), or 2) despite your best efforts, they are unable/unwilling to fulfill their side of the contract. Just realize that firing someone has a cost for your company and team as well as for the employee.

I'd rather part ways amicably, finding them something that works for them if possible, and I think what Noam said about managers recommending great employees is unfair both to the managers and the employees. I've had employees who were hard-working and passionate, just not passionate about the project they were working on. When that happens, the best thing you can do for both of you is to find them the fit that works.

Can you build a large company that doesn't get mired down in things like management and governance and legal and policy? I hope to someday get large enough to find out, because I've got some ideas... (Like separating those functions out in the same way there are engineering teams dedicated to software tooling.)

But it requires a will and effort from the top down, and the people who get excited about building billion dollar businesses don't seem to get excited about maintaining them once they get that size.