Once A Fraud, Always A Fraud

Once in a while I am shocked. Shocked by people's actions. Its honestly a rare thing in these times of suicide bombers, rapists, pedophiles and Bernie Madoffs, but nevertheless once in a while I am, as the British put it so eloquently, gob smacked. On Sunday I received an e-mail from an old friend and colleague in Paris who is hiring a sales executive for the German market. One of the candidates under consideration worked for the start-up we both worked at from the late 90s to the mid-2000s. Here is what my friend wrote:

What made me think of you is the fact that we are interviewing for a sales position in Germany. I just received a resume from a guy that was at Company X between January 2003 and December 2005. The trouble is, I don't remember him at all. His name is Hans (made up). Maybe my memory is not as good as I thought…

But more troubling is the fact that he says he closed new deals with Sanofi, Bayer, Aventis, Siemens, BASF, Shell Germany, BP Germany, Deutsche Bank, Deutsche Post, Daimler Chrysler, RWE, Deutsche Telekom and a few others…

Do you remember him? What was he in charge of? And what did he REALLY close in terms of new customers?

Wow. I don't remember the name of this guy either, but as one of the General Managers for the business and part of the senior management team that ran the European business, I would have been involved with every single sales executive we had in the region. Especially in Germany which was a relatively small market for us. I wrote a short note back explaining that I did not recall the name and suggested checking with a couple of other colleagues who would know.

Today we got a note back from our European Managing Director at the time and here is what he said in a nut shell:

I don't recall a sales person called Hans in Germany when I was at Company X, but I left at end of 2003, so I cannot say if he joined after then. As for the accounts, as of end of 2003:

Sanofi -- not a customer
Bayer -- not a customer
Aventis -- This was a customer we signed in the US and then became a Europe customer. This guy was not the salesperson during 2003. For him to have been involved it would have had to a be a renewal after 2003.
Siemens -- we had a relationship with Siemens communications. Marty got us the deal. Again, if this guy became involved it must have been after 2003.
BASF -- not a customer
Shell Germany -- We had a global relationship with Shell (all BU's, all geographies) and the relationship was sold at HQ in London by Mike.
BP Germany -- we had a global relationships out of the US. We supported BP Europe from our UK office.
Deutsche Bank -- not a customer.
Deutsche Post -- we signed them through a competitive RFP process in 2003. I worked on this with our head of German sales Oliver.
Daimler Chrysler -- not a customer.
RWE -- not a customer.
Deutsche Telekom -- not a customer.

Why do people screw with their credibility? Especially sales professionals? The biggest challenge I have observed in hiring sales professionals is that the hiring organization rarely does a good enough job of validating the background and claims the candidates make. Its almost like they don't want to verify whether a sales person is as accomplished as they claim because they have already made up their mind this guy is a rock star and we are going to reap the benefits of having him on the team. Nonsense. One of the most inefficient and costly parts of an organization is the sales hiring mistakes that managers make. This area is a treasure trove of 'savings' if you apply the right hiring process followed by the right on-boarding process.

But back to Hans...while there is no doubt he is a fraud and his performance record will validate my accusation, I think there are several important lessons we need to take from Hans. First of all, its a small small world out there. You should know this by now. Between the internet, globalization and social media, its going to be extremely hard to hide the truth about anything, especially something as crucial as your performance record when you are a salesman. I'm only twice removed from Hans on LinkedIn and his profile has no employment history which leads me to believe that Hans has had lots and lots of short term employment. Not a good sign for a salesman, the good ones stay where they are a long time because they are making money, and thus the company is making money.

Second, Hans reminds us that our word matters. History is full of individuals who talked their way into leadership positions only to fail miserably. And that failure has massive repercussions on the lives of others (are you listening Washington??). A professional who is seeking employment cannot afford to get a position that is too big for his shoulders. Sales people generally don't have this issue because they are front line producers who are supposedly motivated by earnings. But the problem you have to watch out for when hiring sales people is two fold: first they need to actually be good at sales, and second they need to be borderline starving for money.

The first problem of spotting sales people who are not good at selling is a broad issue that generally stems back to how they got into sales. At FreeMarkets our sales management often tried to convert young professionals from a customer facing role to a sales role because they brought deep product knowledge. Trouble with that is that once you cross the line from employee to sales you will likely never go back. You get a taste of drawing a comparable base salary plus the upside of commissions based on performance. Its not unusual for a person making $45k to $75k a year in base all of a sudden having a base salary of $65k and an on-target earnings (OTE) of $150k or more. For someone who is still early in their career this is like taking a bite of the apple in the Garden of Eden. Its a terrible thing if you turnout to be no good at sales, and hence begins your career as a traveling salesman, going from company to company, exploiting every business' need for salesmen while unable to deliver any meaningful results.

The second issue of starving for money is also universal, but somewhat nuanced by region. In the US sales managers love hiring individuals who like the good life. Fast cars, big mortgages, lots of bling. This means they can't live on their base salaries and are likely to work tirelessly to hit big commission numbers. At one company where I was leading a turnaround assignment, the sales executive used to cheerlead for his sales people to buy cars they couldn't afford. Interestingly the CEO used to encourage his executives to buy houses they couldn't afford. The whole thing was a three ring circus and does not constitute good management or leadership in my view.

In Europe the situation is somewhat different and many American companies fall into a trap that is widespread. Europeans have lived under rigid legislation and high taxes for the better part of 50 years, which means they do not have access to the personal credit facilities we do in the US (you cannot lease a vehicle as an individual anywhere in Europe), and they have generally been taught by their grandparents to live well within their means. Therefore most (not all) sales professionals in Europe can live comfortably on their base salaries, looking after their families, taking at least one significant vacation a year, and raising their kids. In my experience the majority of sales professionals who draw a base salary of Euro 70k per annum are just not hungry enough to make quota. And many unsuspecting American businesses are wrongly advised to hire 'quality' sales people by paying higher base salaries.

Its a racket that has been going on far too long and I believe Hans is a part of this scheme. You jump from one job to another, last between 9 months and year in each role while drawing your base salary, and then you get to draw unemployment that is typically 80% of your base salary until you find the next victim organization. Having spent 10 years working and building businesses in Europe I can safely argue this is a very real issue that many American companies are victim to.

I suspect Hans will move on to the next job interview and some poor unsuspecting hiring manager will feel like he hit pay dirt by finding a guy in Germany (toughest market for non-German companies to penetrate successfully) who has closed such big deals. He will get hired for a solid base salary, attend meetings and conference calls to play the part of "good salesman", create bogus pipeline reviews for his management, and live off the 6 to 12 month ramp up time frame most companies allow for new sales hires. Hans is a fraud and he will end his career a fraud.