Beware hiring a “Charles Ponzi” to lead your sales or IT team

“How strong is our sales pipeline for next year?” Bob, the CEO of Creative Analytics asked in the annual strategy planning meeting.

“Great!” replied Pat, the sales VP. “I’ve got a dozen projects lined up, at least half are a lock to start in the first quarter. Revenues next year should be more than 50% higher than this year.” Pat had been a real find, a sales executive who had joined Creative Analytics eighteen months earlier with a solid track record with her past two employers.

Creative Analytics typically had a two- to three-year sales cycle for most of its projects, so it wasn’t surprising that Pat hadn’t yet brought in projects that were generating revenue. With that positive report from Pat, the team put aside their concerns that half of this year’s projects were coming to a close. In anticipation of next year’s anticipated growth spurt, they focused on plans to insure that there would be sufficient staff and capacity to support it.

Two months later, Pat surprised everyone by resigning to accept an attractive offer from anther company. She explained: “They offered me more money and a relocation to the city where I grew up and where my family still resides. I’ve loved working here and wish you all the best of luck in the future.” When Pat’s prospective new employer had done a reference check, Bob had given Pat a glowing report, highlighting how she had filled the pipeline for Creative Analytics.

One month later, Bob had a completely different view of Pat’s track record. None of the projects that were thought to be “a lock” came to fruition. As it turned out, Pat was an expert in three areas. She always appeared to be busy with lots of sales activity. She was very good at reporting progress, whether or not there was any. Third, she had impeccable timing in switching jobs before being held accountable for the ultimate results. When Bob had a chance to talk to Pat’s former employers, he found out that they had the same experience he did.

In effect, Pat had successfully pulled off a Ponzi scheme — using “good will” from a previous job to “pay off” the next duped company. There are two aspects of a position that attract potential Ponzi candidates:

  • The executives of the company don’t have a base of experience in hiring and working with senior executives in this position.
  • Tangible results won’t be seen for several years, creating a window of opportunity for the Ponzi schemer to get paid for talking a good game and then leaving before he or she is found out.

Big IT projects are notorious for attracting Ponzi-style leaders. The pattern involves many promises for a major system development, a couple of years of positive “progress reports,” and the Ponzi schemer moving to a new position 6 to 12 months before the new system effort is declared a failure. Having moved on, the former IT leader can claim that “had I still been there, it would have been a success.”

When hiring people for a top sales or IT position, it pays to get outside assistance. Call on board members, outside consultants, and CEO group members to vet the candidate. Push harder when doing reference checks. Identify just how tangible the results were that the candidate is claiming. Once someone is hired, insist on meaningful metrics and periodic audits by outside experts. If your new leader yells something like “don’t you trust me?” call on the old President Reagan slogan: “Trust but verify.”

Identifying key positions to fill in order to support your strategy is part of the strategic planning process. It’s common for a company to identify recruiting, on-boarding, and retaining a key new senior team member as a strategic goal for the coming year.

If you’re interested in having a facilitated strategic planning meeting that moves you from concept to tangible implementation, check out our service offerings online, contact us, by email or better yet, give us a call at (800) 207-8192 to arrange for a complementary consultation to determine if you are ready for strategic planning and if our program is right for you.

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