I see what you're saying, but at the same time, a company (especially a small one) can't be "everything to everyone". But I agree that there should be concrete, identifiable problems (so you can check if they are fixable).
I don't think that should be controversial. The key is figuring out what you want from your employees and verify that you're getting that. That saves you from having to guess as to whether or not they're working out. You shouldn't have to resort to tactics like trumping up vague charges.
