One positive thing I learned from an ex-business partner is that if you have to tell someone bad news, it’s best to just blurt it out. Generally speaking, you’re better off saying, “Joe, I’m sorry, but I’m firing you,” and then following that with an explanation. That’s much better than trying to lead up to that sentence with a bunch of reasons for why you’re firing them.
(Unless you’re on the tv show Chopped. There it’s much more entertaining to enumerate all of the reasons first.)
It’s like when you’re breaking up with someone, it’s a lot better to say, “I’m sorry, this isn’t working for me, I’m breaking up with you” — again followed by an explanation — but the discussion comes after you’ve said the main point. I can’t recall an instance where trying to break this sort of news to someone gently has ever worked well for me.
Summary: when the words are hard to say, I find it’s best just to blurt them out to get the conversation started.