By Brett Fox at www.brettjfox.com
Where have we all seen this movie before?
You hire someone, or better yet, you promote someone to a senior position. Let’s say you just promoted someone to become COO.
That’s the end of the story, right? Just set it and forget it.
If only it were that easy.
One of the biggest mistakes managers make is not agreeing on what the new hire’s responsibilities are going to be. This is especially important in a role like COO.
So what do you, the CEO do? Actually agreeing on the new COO’s responsibilities is very straightforward: Just set them.
In other words, sit down with the new COO and specifically outline exactly what she is and isn’t responsible for. But let’s be honest, COO is more often then not a vanity-hire especially in a small company. I’ll get back to this later.
The Importance of Goal Setting
I learned early in my career the importance of setting goals. The company I joined had everyone in the company set goals and objectives. My new boss and I sat down my first week and agreed what my goals for the current quarter would be.
I can’t even remember what they were, but the goals had points associated with each goal. Most importantly, the goals were put in writing. I asked my boss, “What happens if I don’t meet all my goals?”
He said, “First, you score yourself, and then the CEO and I will adjust your score up or down. Don’t worry about getting 100% on your goals. No one does.
“Just worry about doing a good job.”
I was young and inexperienced, so I took him at his word. I know you’re expecting a horror story of getting screwed over right now, but that’s not what happened.
The goals were used as a guidepost for myself and the other employees. I never got 100% on my goals, but I was regularly promoted and given an excellent bonus.
The fact that my goal scores weren’t directly determining my bonus or standing in the company motivated me to really go for it.
I pushed myself even harder, setting tougher and tougher goals. The result was I rewarded even more.
Goals should be a positive feedback loop, but…
That’s not what happens sometimes.
I’ve seen that story play out as well. The next company I was at tied completion of your goals directly to your quarterly bonus.
You can guess what happened…
The result was predictable. Employees sandbagged their goals (myself included), so they made sure they hit them because money was at stake.
The company paid a lot of bonus money for goals that meant nothing to the company’s success. The company floundered for years.
This is the wrong way to use goals, and, unfortunately, it is the way most of us have seen in our careers. You, the CEO, can change this, but it will take time and discipline.
It starts with you the CEO
The CEO sets the tone for the company. You can make goal setting a positive part of your company’s culture, but you’re going to have to overcome the well-founded fears of your team through a consistent, positive message:
This takes work. One mistake on your part, and you will lose all the goodwill you built up.
So why is promoting someone (or hiring someone) to COO a vanity move?
One of my biggest mistakes was bringing a co-founder on the team as COO. I fell into a trap you see. I wanted the name and the intellect and the skill, and I choose to ignore the ego that went along with it.
It’s so obvious that small companies don’t need a COO. Come on, you mean to tell me that you can’t handle running a 10 person company and you need a COO to handle the day to day operations?
Give me a break!
But wait. I did that. I actually did that!
So I brought on Randy (not his real name) as COO, but Randy only had responsibility for Test Engineering and Manufacturing. Why didn’t I just bring Randy on as VP of Operations?
I wanted to make sure we got Randy onboard. I knew he could help us raise money (he did), and I liked working with him.
Randy wanted to be COO, so I made him COO. Why? Well, I remembered the old maxim that “titles are free.”
But, there’s a second line to that maxim that no one ever says. The second line goes, “but they (inflated titles) can cause you huge problems later.”
A Coup, You Say?
Sure enough, making Randy COO brought us problems almost immediately. Let me set the scene for you.
We had just agreed to terms for our Series A financing. We raised $12M ($1M more than we asked for).
I excitedly sent an email to the co-founders announcing the great news. Two of the four co-founders were thrilled. However, Randy and our VP Sales weren’t so excited.
In fact, they were downright pissed. Why? They weren’t included in the negotiations with our investors.
Randy was the ringleader. He bamboozled the VP Sales into believing that they had more knowledge then I did. Randy felt he should have led the negotiations.
Randy and the VP Sales then laid down their demand: “We’re not joining the company unless you have an ‘Office of the President’ consisting of the three of us (COO, the VP Sales, and me).
My Dad taught me long ago to do what you need to do to get the deal done, so I agreed.
We never implement the ‘Office of the President’ once the company started. I had the leverage once the financing closed, so I ran the company as CEO. There would be no Office of the President.
This was unnecessary drama, and this was caused because I made Randy COO long before we needed a COO. I fired Randy six months later (Read: https://www.brettjfox.com/how-do-you-join-or-build-a-great-team/), and the VP Sales was gone within one year.
Would Randy have joined the company if his title was VP Operations? I’ll never know, but he probably would have.
More importantly, the dynamic between us would have been different. It was a rookie mistake on my part, and one mistake I will never make again.
C-level titles should not be given out like candy. Just remember that you’re likely placating someone’s ego when you do this, and you may pay the price later.
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