I've got something of a similar situation with a young guy (an old friend's kid brother) that has come and gone over the past few years. Bit of a wandering soul. Good for additional ground personnel. He hit the ceiling of where, by my estimation, he was going to get at my company pretty quickly, but still solid at running a saw, running ropes, and just knowing how things are done with my company. Developing other guys who had what it took around him was more difficult, and the air often thick with negative vibes. Nothing worse than a negative vibe that you can reach out and touch on your own jobsite. That's not what we're in it for. Luckily, he left on his own accord just recently.
Next employee will establish things right out of the gate better. It's really hard/impossible to deal with the situation you're in. In truth, brutal honesty is what people need to hear. They won't like it, and it seems like neither would you, but in the long run it'll be better for all. Easy for me to say....