Every decision has consequences. We often don’t fully perceive the consequences because they are often hidden by the compromises that make us feel better.
Every step forward requires a decision. Or the inverse – indecision. Or as I call it, “decision, by indecision,” which is insidious. It rots the core very slowly until you don’t realize you’ve accepted mediocrity.
Let me start with a story.
About a year ago I was working with a team whose performance had not gone as expected. This was not the first discussion I had had with the CEO. He believed we had a weakness with his CTO. I had suggested that if he was sure there was an issue we should move on quickly even if it implied short-term pain.
He said we couldn’t make a change yet. He was deeply committed to change. But this was too sensitive of a time. It might destabilize the team. It might affect fund raising. It would be yet another distraction for this fledgling CEO and he felt he needed to focus on biz dev, sales, marketing and fund raising.
It is my job to be a sparring partner for teams not the decision maker. That’s how I see the role of a VC. Founders have to live with the day-to-day consequences of their decisions and are closer to the nuances of the business. So I fight. And then I pull back and accept decisions even when I didn’t carry the day.
In this case I did not.
Another 9 months of poor performance. Another $100,000 in drained money (salary plus benefits of just one poorly contributing individual).
And far more importantly:
- lost productivity
- lost opportunity to have had a new leader on board for at least 6 of those months
- cultural decay. organizations perceive a poor effort. and they don’t respect organizations that don’t fix them. this last one is one of those that people who avoid decisions least perceive. the unintended consequences of indecision.
Here we were 9 months later and facing the same decision we had avoided previously. Except this time I wasn’t sparring, I was instructing.
“I have never worked with this individual so any negativity we together feel about his performance is simply me reflecting your frustrations back at you.
The only difference between you & me is that I am emotionally removed from the consequences of the decision so I can see it more clearly.
I’m done with procrastination – we’re moving on. I want a plan in place by the end of the week.”
This was said in the context of a board meeting in which I was advocating a view. The board was unanimous and the CEO accepted the consequences of our group decision. He himself now felt it was the right answer whatever the past. So we turned to the how not if.
We talked about what a fair settlement would be. The CTO had at-will employment with no notice period. He had vested 18 months or so.
Our company had limited cash and – like most startups – an unsure future.
I proposed that the CEO sit down with the CTO and walk him through the legal obligation of the company, which is zero notice, paying for all days worked and all accrued vacation time, and allowing vesting through that date. Then on top of that I proposed we offered 2-3 weeks of pay (with a view of settling around 4 weeks) and that we vest an extra 3 months.
He wanted to offer 2-3 months’ pay. My response was NFW. Taking the extremes: 3 months vs. 1 month was about $25,000.
He said, “For the sake of $25,000 I would rather have the peace of mind that we treated him fairly.”
My view was he had already earned 9 months extra pay.
Hidden consequences are opportunity costs.
What else could we have done with $25,000? Wouldn’t it be better to have put $12,500 in the pockets of two of out great performing team members? Wouldn’t it have been the “fairer” thing to do since we were terminating this guy for lack of performance?
$25,000 is a lot of money. Wouldn’t it be better to surprise two unsuspecting people with an unexpected reward? Don’t the performers deserve more spoils than the unmotivated, uncommitted and non-performant?
Or are we merely buying off our own personal guilt from the economic and societal consequences of the hard choices we make? That’s the easy way out. We sleep better at night. It’s egocentric.
Leaders allocate resources wisely and prudently. They use resources to reward and to motivate. And my vote is for motivating the team on the field rather than the team on waivers looking to get picked up by another team. Let them deal with motivating that person.
The CEO made bad choices as defined by me. And being clear – it’s subjective. He may feel otherwise.
After our board meeting where we pushed him hard on appropriate resource allocations he called other CEOs to try and get datapoints and “prove” that I was being too mean spirited. He found takers. You can always find takers. They suggested 6 weeks. So he sent me the emails from these CEOs confirming I was wrong and a message saying he had already fired the employee and paid him 6 weeks (actually, it was two employees for what it’s worth).
He won the battle.
But at what … consequence?
No additional money to bonus the team on the field. Eroded confidence from his most important advocate on the board – me. Somebody slightly pissed off that he was cast in emails with other founds as the “cheap VC board member.” Me, again.
It was never about the money for me. He could have convinced me to bonus our best performers $30,000.
It was about doing the right thing by the people who deserved the resources the most. It was showing me he could make tough decisions. And the right decisions.
Every decision has these consequences. He just didn’t perceive the costs of the board losing a small amount of confidence in him that day. He sold it cheaply – for $6,250.
I’m sure he’ll look back at the sequence of events and see things differently than I do.
But I do know that I have heard this story too many times to not point out the obvious: Every person who faces tough decisions gives you the reasons why “their situation is different!”
Seen through the eyes of other companies they boldly proclaim, “They should have just fired that co-founder. I would have! They should have shut down that product line faster – it was obviously not working! I would never have delayed changing my organization when it was clear we weren’t shipping product on time!”
Expect when it’s actually you. Because “we’re different.” It’s a different situation. I can’t afford to lose my head of sales right now – who would pick up the leads? [that was my excuse for delaying firing my head of sales for 6 months.]
But It’s Not Just About Firing People
How about promotions?
Have you ever noticed how many leaders are afraid of offering promotions to individual superstars because they’re worried about the impact on the rest of her teammates?
Me? I’d rather have my single best performer called out for greatness. I’d rather give everybody else in the organization something to shoot for. A role model. An achievement not yet earned. A statement backed by action sprinkled not only with titles but with economic rewards and decision-making authority. I have done this throughout my career and have never regretted it once. Never.
In any organization only a few key players make all the difference between excellence and pretty good. Sure, it takes a team to perform. But it takes leaders to inspire a team.
For every superstar you hold back at the expense of wanting to be “fair” to the masses you miss the opportunity to offer that extra motivation, that extra adrenaline hit that superstars thrive on. You favor the pretty good over the excellent.
And that’s a choice. It’s a decision. It seems like a decision avoided to keep the peace. But that is a decision unto itself.
Which is why your superstar is already dreaming of her next big thing.
And it may not be with you.