Effective management also means stepping in when necessary and being willing to deal with really difficult employees.
This woman who used to work in my office was seriously paranoid, neurotic, moody, egocentric... She was impossible. She jumped me one morning (over nothing) and I'd had enough. I insisted we seen the manager and she poured out her sad little tale while I listened.
Finally, the manager turned to me and said, "What's up?"
I said, "I'm tired of walking on eggshells *all* the time. I've had it. Move me or move her. Doesn't matter. I can't tell her anything. She's already made up her mind and tells me she doesn't want to hear it. So move me or move her. I don't care. I cannot be in her vicinity anymore."
He made the decision to move her to another desk. She vigorously protested about all her years of experience, but I had the years of seniority with the company. But, because he was willing to make a decision, he kept me as an employee. She left soon after, but she had been talking about leaving, anyway. No one misses her.