Hired Gun - "An expert brought in to resolve complex problems or to lobby for a cause." - Google
A few years ago, a friend of mine accepted a position as the VP of business development for a small agency. On the surface, it seemed like a great investment for both sides.
The agency was a small family agency ran by the mother and son. It had grown slowly but steadily over the last 10 years. The owners were very sound technically and operationally, but neither were great salespeople. They never had a consistent sales structure and believed their missing ingredient was to hire a top industry talent with a proven track record that can lead them through their next phase of growth. That's where my friend came in.
They agency owners believed my friend was the highly qualified individual who can lead the company in its growth efforts. After all, he sold his own very successful agency a couple of years prior for a high multiple, and also recently successfully led a region for a large national general agency.
For my friend, who was always entrepreneurially spirited, believed he was joining a company poised to skyrocket under his leadership. After all, his passion was to build and grow companies and take them to the next level.
On the surface, this looked like a perfect match. Unfortunately, as you dive deeper into the arrangement, you can begin to see the problems.
My friend was used to a $200,000 plus salary with big upside and benefits. With this new opportunity, his compensation was slightly less than 6 figures. However, he would be receiving potential equity in the agency in lieu of salary. So, as the agency grew, his equity would grow along with its value.
Sounds okay so far, especially since he agreed to the deal right? Well, the problem is that his salary, while significantly lower than what he was accustomed to, was nearly the equivalent of the two owners’ combined salary. They had been bootstrapping for many years to get the agency off the ground, and had invested much of the revenue back into the business.
This created another major problem. While the company hired him initially to develop and execute long- term growth strategy for the company, they began needing him to deliver short term results and generate immediate revenue.
He was operating under the assumption he was there to build out strategies to bring in consistent revenue for the agency, which would take time to put into place. They really wanted and needed him to “carry a bag” and bring in some deals ASAP.
As he focused on long term, they looked at the monthly bottom line. As each month went by, the agency went further into the red.
After 4 months of this failed experiment, the agency severed the relationship. My friend was frustrated because he felt like he took one for the team. He was felt like he was misled by the agency and underpaid for his time and effort. He had walked away from higher paying opportunities for the potential to be part of something greater.
The agency owners were frustrated because they believed they did not get the ROI they expected. They were now deeply in the red, and would be under financial stress for many months.
So who was at fault? My friend? The agency? Both?
The unfortunate story of my friend is not uncommon. In fact, it happened to me personally many years ago. I shared my story with my friend and warned him of the potential problems with this arrangement. But, he decided to do it anyway.
I can’t really blame him because I was warned of the same dangers of the “hired gun” arrangement when I accepted the position that ended the same way. The sad irony is that my former boss and trusted mentor still today, who originally warned me of the "hired gun" pitfalls, fell victim himself several years later.
So what is a “hired gun”? My definition of a hired gun is an individual a company hires to deliver exceptional results. This person possesses experience and skillset the company simply does not have, but believes it needs. The individual usually receives compensation that is significantly higher than the company’s usual salary range, and realistically well above what it can afford.
Typically, companies utilize this practice when they believe they need special talent, such as a leader or a salesperson who can help them achieve the next level of growth. Unfortunately, as my friend’s story illustrated, these types of arrangements never end well for three reasons.
Reason 1 - Money: Money is the primary reason why these hires almost never work out. Most of the time, the companies simply can’t afford the salary. The stress the added salary has on the bottom line affects decision-making and proper evaluation of the situation. This ties in directly with point number two.
Reason 2 - Expectations: Although these arrangements are often made with the best of intentions from both sides, the reality of the financial impact dramatically impacts the expectations of the hired gun once the salary hits the books.
The company often expects the hired gun to perform miracles overnight, when the process of implementing strategies and tactics that generate results could take months or even years.
Reason 3 – Decisions Making: With the pressure of money bleeding out the door and unrealistic expectations, both sides will often make poor decisions that ultimately affect the performance of the employee and the mutual relationship.
For example, the companies typically pre-maturely terminate the employment relationship when the results may be around the corner. Or, the hired gun may be under tremendous pressure to produce immediate results and begins to operate out of desperation and negatively impacting performance and results.
Can hired gun arrangements work?
Yes, but only if both sides understand the pitfalls and are 100% clear and committed to the financial impact, timeline, and realistic expectations of results.
If both sides can successfully work though these issues, then the “hired gun” arrangement has a chance to succeed. Otherwise, both sides should walk away and avoid the inevitable financial and emotional stress.