My Worst Mistake in Business. Ever.

It was late 2000, nearly 20 years ago, and the Peppers & Rogers Group had expanded to nearly a hundred consultants in the US, along with another 50 or so spread across the UK, Turkey, South Africa, and Australia. Powered by a $20 million VC investment, Martha Rogers and I had hired a crackerjack CEO from McKinsey, and our management consulting practice seemed to be blossoming. (Unfortunately, the dot-com meltdown was also just about to commence, which soon put many of our clients out of business and threatened our own existence, but that’s another story).

I remember the day like it was yesterday. We were having a board meeting in our new headquarters office in Norwalk, CT. Two of our venture investors were on the board, and one was in the room with us while the other was on the phone. Also at the board meeting were my co-founder Martha Rogers, me, our CEO and CFO. The subject of consultant promotions came up, and one of the candidates to be made a “partner” – our company’s highest ranking position, other than the board members assembled – was a man I’ll call “Jack” (not his real name).

The pros on Jack: His team of five or six consultants had by far the best track record of all our consulting teams, both in terms of new clients brought in and new projects signed. By the numbers, he was obviously a dogged and relentless business-development executive. And he was well-versed in our fairly specialized expertise, which had to do with what we called “one to one marketing,” more commonly referred to today as either “customer experience management” or “customer relationship management.” In 2000 this was still a relatively new idea and discipline, but Jack knew it backwards and forwards, and could position it to more traditional sales and marketing managers (i.e. our clients and prospects) in a highly persuasive manner. Jack had clearly met the quantitative growth and signed-contract goals that we had circulated among all our team leaders, with respect to what it would take to make partner.

The cons: Jack’s own people, and many other employees who worked with Jack more occasionally, hated him. He was a bully, he tormented and verbally harassed underlings who crossed him, and he often stole others’ good ideas, never sharing the credit for successes. On at least one occasion, it seemed he might even have “set up” another one of our team leaders – a rival of his – for a fall, although there was a serious question as to what the facts really were, and both sides’ arguments were credible.

So, should we promote Jack or not?

Well, he’d made his numbers, right? And we had already said that these were the numbers which would qualify someone for being promoted to “partner.” How could we NOT promote him, if he had met the criteria we ourselves had already agreed to? But the directors were split, with two board members feeling that his overly aggressive and bullying style displayed an unethical management style and did not properly reflect our values as a company, while two others thought that since he did make the numbers, well, a deal is a deal.

And the worst mistake I ever made? I elected to go for the numbers, choosing to achieve faster sales for our business, rather than worrying about Jack’s character or morals.

Unfortunately, promoting him turned out to be a total, unmitigated disaster in the long run, as people were torn apart in the organization and some of our longer-term, more loyal employees left in disgust. We eventually (just a couple of years later) had to fire Jack for cause, and it literally tore our company apart. He sued us, more than once. Although we didn’t lose, and we never settled, the whole scandal clearly tarnished our reputation with our clients.

So here’s my question:

What would you have done in my situation? Would you have gone for the numbers? Or for character and ethics?

(Oh, and by the way, who did you vote for in the last presidential election?)