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Saturday, March 12, 2011

Resolving conflict with Founders, Advisors and Boards

Panel guests include: Joe Caruso (moderator - bio) , Jim Lucchese (bio), Hooman Hodjat (bio), David Diamond (bio) and Mark Haddad (bio)

Hooman Hodjat is the founder of PickupZone, a company that provides alternative delivery locations for people who are not around when their packages are delivered. Soon after starting the company, Hooman brought in a CEO to add some experience to his team and help bring in high caliber strategic partnerships. Hooman’s CEO was also the first investor in his company. Although Hooman’s experience with his CEO was excellent initially, the relationship degraded quickly and he left the company he started after nine months due to significant conflicts.

“Bringing in a CEO is almost like a marriage” Joe Caruso started off. “Before you bring in a CEO, make sure you understand what their objectives are, and be certain they are aligned with your own”. Hooman nods his head in response, he said that he and his CEO “could never come to an agreement”. Not only that, they had not formally allocated equity to the company. Mark Haddad has seen this before during his tenure as a business attorney. He provided an anecdote regarding a company he worked with when he first started working at the firm Foley Hoag. “I always worked with the CEO” he said and the founders never wanted to assign restricted stock. Soon after they formed the company, two of the founders decided to fire the CEO. When the CEO left, he walked away with his stock and still has it today.

Just because someone has been successful in a company before, said David Diamon doesn’t mean he or she will be able to take over and be successful. In Hooman’s case, he said he needed another CEO. But Joe said that Hooman was fully capable of handling the duties done by the CEO. If you are a founder and bring in a CEO, “don’t just give him the reigns right away, give it gradually and observe” commented Joe. He’s encountered this issue many times before. “The first time you have an instinct to fire someone, FIRE them immediately” interjected Jim Lucchese of Echo Nest. “You can wait too long and waste time.

According to Joe Caruso a study analyzed employees contributions to a company in a number of different categories. When the employees total their contribution in each category it’s always greater than 100% and is usually above 150%. “We all overestimate our contribution to the company” chuckled Joe. A way to manage this is open communication so everyone knows what other people are contributing to the team as well. Joe continued, “It’s imperative to set common expectations up front”.

To avoid problems like Hooman’s, the panel stressed that communication is key. If you have an issue with a CEO, have conversations as peers, and provide feedback about performance so people can have actionable advice. Joe told the audience about his philosophy “We are perfectly allowed to call each other assholes as long as we do it in a respectful manner”.

1 comment:

Ashish Shandilya said...

Thanks for sharing this useful info. Keep updating same way.
Regards,Ashish Leadership Development -