If someone isn't working out, whether it's their fault or yours, you are doing them a favor by terminating them so long as you give them appropriate severance that will cover them long enough to find a new job.

Most people don't want to settle for slightly below average, and it takes a shock to get out of complacency. It's happened to me in the past. The only regret is not getting better severance, but even there it lights a fire.