Reassignment is Not Disgrace
"The Generals" by Thomas E. Ricks is one of the best books I've read in years, largely because of its many insights on the management of large organizations.
One of the personnel practices used by General George Marshall during World War II has caused me to give particular attention to termination decisions. If a combat commander didn't perform well, General Marshall often followed a practice of what Ricks calls "quick but not terminal relief." The commander would be relieved but without retribution; indeed, some redeemed themselves in future assignments.
There are obvious exceptions (and make no mistake, Marshall sacked a lot of officers), but simply removing a person from an assignment strikes me as an option that deserves far more attention than it receives in many workplaces.