November 2005
REDUCING THE SHOCK OF BEING HIRED AS AN EXECUTIVE
By Tony Mulkern
The story may seem just too bad to be true, but the facts are related here as they were recently stated to me by the executive who underwent this corporate purgatory, with changes only to identifying details. Last month’s newsletter discussed the shock of hiring executives for the entrepreneurial firm. This month we discuss the shock of being hired by an entrepreneurial firm—or at least by one in particular that seemed to do everything wrong. The company and the executive who was hired will have to remain anonymous for obvious reasons. It is hoped that this catalog of mishaps and subesequent recommendations will help readers to avoid the worst of these mistakes and to thereby increase the retention of newly hired executives.
Pete (fictional name) had spent two decades at a multi-billion dollar manufacturer in the Mid-West and had progressively risen to higher levels of responsibility and compensation in the vast corporate hierarchy. Further promotions were under discussion. He was not job hunting when the recruiter called, but the allure of new challenges caught his attention. A small, high tech, entrepreneurial firm in California needed a seasoned executive with just his skills to be their number three person, and they would make it worth his while.
Continued from newsletter--
Pete started his new job in the first quarter of 2001 and lasted until the end of 2002. Since the hiring company had communicated a great sense of urgency, he took no time off between jobs. This proved to be a major mistake, since during the first several months on the job he was preoccupied with selling his house in the Mid-West. Neither able to eat nor sleep and “running on pure adrenalin,” he lost 40 pounds. His wife had quit her job to join him, was unemployed, and received no job hunting support from her husband’s new employer. The increased cost of living in California, together with the loss of her income, began to make the 30% increase Pete had negotiated seem inadequate. After a few months on the job, the President, who was oblivious to the stresses on his new executive, told him he was getting off to a “slow start.”
During the pre-hire interviews (with 9 people in all), Pete had asked to see the business plan. He was told there was none but that, once on board, he would have the opportunity to help develop it. After starting, he found to his chagrin, that the plan existed already, but he was not allowed to see the numbers.
In fact, instead of the freedom he expected to enjoy in the small, non-bureaucratic, entrepreneurial environment, he found himself more restrained. He had no direct reports, no budget, no authority to use subcontractors, and only $3,000.00 in signature authority. (In his previous position, he could approve expenditures of $250,000 or more.) More significantly, there were high expectations of him but no clear objectives other than to build his staff from the ground up.
To make matters worse, the President, who himself had over 50 direct reports, was inaccessible, except when he dumped tasks on Pete’s desk. Team meetings allowed for no significant interchanges, and the President seemed to thrive best on inexperienced subordinates who idolized him. Due to the lack of communication, Pete in turn did not appreciate the degree of pressure the President was under.
Hired principally to increase production capacity, half way through his tenure Pete was given a significant quality improvement project for which he enthusiastically rolled up his sleeves. The results included uncovering massive waste. Though he subsequently reorganized processes to achieve significant cost savings and higher quality, he had become a persona non grata for exposing the incompetence of others. Moreover, his popularity had not been helped by his refusing to sign a 16-page employment agreement that was presented to him—three months after hire!
Within about 18 months of his hire, Pete was terminated, and all executives of the company lost their jobs in a subsequent sale of the company.
Pete is now doing better than ever, running his own successful start-up. In addition to the obvious lessons that jump off the page from this story, he reflected with me on some guidelines he will use as his own firm grows:
- Know why you want to hire—as CEO/owner have in mind three top problems you expect the new executive to solve, and communicate them before hiring.
- Proceed very carefully before hiring someone who has for two decades been in a major corporation, however skilled he or she may be. Such a person has grown used to support departments and extensive infrastructure—HR, finance, IT, sales, etc.—and may be at a loss without them.
- Hire someone who is willing to negotiate with you. Executives who change jobs frequently may be highly skilled at self-marketing, interviewing, and negotiating favorable contracts. Those with long tenure in larger companies are used to being pampered and may have no concept of the relatively Spartan conditions found in some entrepreneurial environments. Most importantly, they are not necessarily skilled in negotiating the job terms and conditions that they need to be successful.
- Consider whether the candidate asks the right questions to ensure they really know what they are getting into. Ask yourself, if I was in the candidate’s position, what would I want/need to know before accepting a job here? For example, is this candidate assuming there will be relocation help?
- Don’t hire a top executive if you expect him or her just to follow orders—top executives expect to be given overall goals but then to form their own objectives and plans. And they want autonomy. On the other hand, entrepreneurs, by nature, value their own autonomy and power to control, and so it is often very tough to allow another self-starter sufficient freedom.
- Don’t be afraid of hiring those better than yourself. Entrepreneurs have proved by their success that they know what is essential for success. As the firm grows and greater specialization is required, however, this is no longer true. Do not hire experts you will not listen to.
- Do not rush to hire because of a cash infusion—sub-contractors might be better. Once the top three problems are solved, will you still need the executive? Peter Drucker, the father of modern management, advised CEOs to outsource every function that cannot lead to promotion to President or CEO.
- Be cautious of executives who come with an “entourage”—they have great loyalty to each other, but not necessarily to the company. In Pete’s case, the entrepreneurial President who had been hired by the equity firm came with his “own people,” and they were the only ones he truly trusted or confided in.
Though very pleased with the growth thus far of his new enterprise, Pete remarked sadly on fellow CEOs he knows whose attitude is that they know it all. For his part, the lessons learned through great setbacks make him even more open to advice and counsel wherever he can find it. This sounds like a formula for successfully meeting the challenges of growth that lie ahead.
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Copyright, Mulkern Associates, 2005
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