[vaidhy]

This is one of the key reasons you let the recruiting/HR do this. The other red flag is the amount of time you have engaged with the person before the decision which also sounds bad. You might have inadvertently let them have false hope.

One of my starting points for companies looking to grow from small founding team to a more larger structure is to define the hiring and firing process way up front. It is not worth playing around with people's emotion and putting everyone in a difficult position.