November 25, 2009

Strategic Hiring - By Sanjay Anandaram

“I hired him as President thinking he would transform my company. He was experienced, had worked for Indian and MNCs and we got along well. He was the highest paid executive in my company at Rs 45L plus incentives. Unfortunately, I didn’t see any impact on sales or margins and I had to ask him to leave”, said the founder-CEO of the startup. “How long did he stay in your company?” I asked the founder-CEO. The COO was asked to go after 4 months.

On further probing, the founder CEO explained, “I think 3-4 months is sufficient time to see results in sales. I want to see execution and quickly, not ideas and plans. He just spent time meeting customers, spent money hiring a company to train employees, wanted clearance to hire some more people and wanted to build a plan that he would then execute. Arrey bhai, what’s there to plan about when we know our customers and market and know exactly how much we can do.Instead of “doing”, he was wasting time and money in planning! Apparently, he couldn’t work without a plan in place. I couldn’t understand what his problem was – after all, we’ve been in business for a few years and are profitable and we never worried about planning-shanning. I think I made a mistake in bringing him on board. I think getting these high-fliers into a young and small company is not appropriate since they want all kinds of resources and time to execute. We cannot afford such luxuries.”

“I was excited to join the company to help it grow to 10X its current size. I really liked what they had done so far and I enjoyed good chemistry with the CEO. I was impressed by his knowledge and vision for his company. To grow at the desired pace would’ve required us to expand practice areas, enter newer geographies, build relationships with very senior executives, develop a brand, leverage technology and become a process driven organization. We would’ve needed to have strong operations and performance metrics. We would’ve needed to make investments in people, marketing, sales, and technology. But, the quality of the people around me left much to be desired. Many of them had poor communication and interpersonal skills. Learning to listen to customers problems didn’t seem important. While there was this intention to grow ten times, the details of how that was to be achieved were more than hazy. For example, What kinds of customers and markets and practices should we focus on? How much money would be required to be spent? In what areas and over what time frame? What kinds of people would be required to grow and manage the business? What kind of marketing needed to be done? What kinds of internal systems of measurement would need to be in place? And so on. To do this, required me to understand customer needs, capabilities and competencies of the current team, market trends etc.

There was no planning process in the company and that made it difficult to estimate resources, activities, headcount, time and outputs. There was seat-of-the-pants management with an enormous amount of focus on tactical aspects of the business, the here and now. There was no thinking about planning of any kind. If there’d been planning, then we would have understood what was an investment and what was an expense. Because some things take time to develop and one needs to budget that into the planning process. Else, treating it as an expense would result in dropping initiatives that would pay off over a 6 to 9 month period. The company would therefore not be able to grow multiple engines of growth to achieve its goals of growing ten times.” This was the former President speaking.

He continued, “The founder-CEO had achieved success over the past few years but I think he had become a victim of that success. It was difficult for me to make him see that what had brought them to this current point wasn’t going to be sufficient to take them to the next levels. They need to look around and see how larger better companies were doing and more importantly learn from them.”

What do you think?

Sanjay Anandaram is a passionate advocate of entrepreneurship in India; He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. He’s involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at sanjay@jumpstartup.net. The views expressed here are his own.