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Teampay COO, Peter Nesbitt meets with Jack McCullough, President of the CFO Leadership Council, to talk about his most awkward conversations as a CFO, and Jack shares a bit of history and learnings from his two books, "Secrets of Rockstar CFOs," and "The Psychopathic CEO: An Executive Survival Guide." They also discuss building elite teams, the importance of community, and the art of navigating difficult scenarios in the CFO world.
Finance professionals are often forced to be the bad guy, which can lead to some uncomfortable conversations with employees about business purchases. On this show, we sit down with finance leaders to discuss their most awkward conversations, and what they’ve learned throughout their careers.
Peter: What's up everybody. This is Peter Nesbitt from Teampay, and you're listening to Awkward Conversations: Tales from the Finance Department. Finance professionals are often forced to be the bad guy, which can lead to some uncomfortable conversations with employees about business purchases. On the show, I sit down with finance leaders to discuss their most awkward conversations and what they've learned throughout their careers. Listeners can earn free CPE credit for listening to this podcast. Just download the Earmark CPE app from the app store or visit earmarkcpe.com. My guest today is Jack McCullough. Jack's career has included being a CFO at over 26 companies, as well as founding the CFO leadership council. Thanks so much for doing this Jack. You are a first guest here on this podcast.
Jack: Well, thanks. I'm glad to be here. But I wonder you've decided to have a podcast on awkward conversations and I'm the first guy you thought of. So, should I be honoured by that?
Peter: I think so. You're one of the most experienced CFOs I know. And even in your career as the CEO of the CFO Leadership Council, I'm sure you've heard some crazy stories.
Jack: Yeah, that's the thing. I mean, I've got a huge databank of stuff.
Peter: Yeah. Also, our podcast is called the awkward conversations because finance leaders like us, it's often forced to ask employees awkward conversations and questions about companies spending. For example, why didn't you get this purchase approved at advance? Or why didn't you put 20K on this corporate card when our policy says it needs to be on invoice? So, in the spirit of the topic, Jack, tell me about the most awkward finance conversations that you've ever had with an employee.
Jack: Happy to. And I'll say that I would handle it differently today than I did at the time partly because you know I'm just a different person and partly because society has changed. But it was my first time as a CFO for a company. And we had one salesperson who what you'd call an elite performer. We had seven salespeople in North America, and he was bringing in half the revenue himself. And so, he's really good and really valuable. But he'd been working for with us for a few months and I got a receipt. I'll be delicate, to thank a customer for closing a significant deal, he hired a sex worker and introduced them to him.
Peter: Whoa.
Jack: Yeah. I don't want to say to his credit, but he didn't try to hide that from me. He didn't get a fake receipt from a restaurant or something like that. He described it accurately within the expense report. He showed a receipt from the place which you've heard of. And talk about a little bit awkward.
Peter: Yeah. What was your response?
Jack: I told him I thought it was kind of absurd. We were a pretty small county. And he pointed out to me it was a high six-figure, maybe even a seven-figure sale. It was like third of our revenue for the year from the one customer. And he also said the activity took place in Las Vegas if I ever been clear enough about what he did. And it's not illegal in Las Vegas what he did. So, he's like, "You're not breaking any laws, I'm not hiding anything from you. This is what I did for a customer who you know is significant." And that led to a series of awkward conversations because, as you might imagine, you're being a CFO yourself, I wasn't really inclined to pay it. But I will say I did kind of find myself in the minority in that one.
Peter: So, did you ultimately pay it? Was it in policy?
Jack: It wasn't explicitly against policy. But yeah, I ultimately did end up paying it. I sort of held my nose and I did say that if it happened again, I would not pay it, and if someone forced me to, I would leave. I was like a newly minted MBA, late twenties, early thirties. I wouldn't give in so easily today.
Peter: No, that makes sense. That's a real awkward conversation. I guess that was in opposition to your employer. But I'm sure this got brought up to your CEO as well.
Jack: Yeah, and board members too.
Peter: Oh, and board members.
Jack: Yeah. I mean, to me, it was a pretty big deal for something that was a couple of hundred dollars or something. I kind of forget. But I went to the CEO, and he didn't like it, but I'll say he didn't have the problem that I did. And I actually asked a board member. And we were a private company. And some of the board members were against it and some are for it. So, it was just a series of awkward conversations like is this really what we have to do to sell a product and what does it say for the future.
Peter: Well, Jack, you're definitely our first guests on this podcast, but that will be a pretty high bar to pass in terms of the most awkward finance conversations to have with employee.
Jack: Yeah. High bar low bar, I guess based upon your perspective. But yeah, we did certainly have the conventional, a lot of finance versus sales and marketing tension. I remember I wasn't a CFO, but my first job, the sales and marketing people used to call us bean counters. And my boss, who was kind of an old school CFO, he called marketing arts and crafts. That's really helpful.
Peter: Great employee or inter-department relations. And that's-
Jack: Yeah. I'd like to say he was kidding, but I have no reason to believe that he was.
Peter: Yeah. Well, that that's a great intro and maybe a great segue of what makes a rockstar CFO, Jack. I know your first book, you put together is called the secrets of a rockstar CFO. Do you want us to give a quick synopsis of the book before jumping to a few questions?
Jack: Sure. Happy to. And it was a bit of an accidental book because I didn't really set up with a plan to write a book. But through the CFO Leadership Council, and I'm also involved with an annual conference at MIT Sloan, I've had the opportunity to meet some of the best CFOs in the country or perhaps in the world too. And they were generous with their time, and I listened well and took some notes. And from these conversations, I actually developed, it was just a... I was going to sort of do a course around it. And I identified nine commonalities. And my vision was there'd be a course for controllers who wanted to become CFOs. And in fact, I shared it with several CFOs, perhaps even you, I don't really know for sure. But said, "What do you think? Is this some good content for your controller?" And they told me, "It's actually really good content for us." So, I gave the presentation a few times at the time and back then, I was calling it "Habits of Highly Effective CFOs."
Peter: Yep, I read the presentation.
Jack: Yeah. I felt like when it was a book, I couldn't really do that to the Covey people. They probably couldn't stop me, but it seemed like I was kind of plagiarizing from them. So, I'm a bit of a headbanger, as you're aware, and trying to think of a book that reflected my own personality and secrets of rockstar CFOs kind of left off the page.
Peter: Great. So, I want to dig in one step deeper, but before we do that, for everyone in this who may be listening to this podcast, it might be also worth a quick plug on CFO Leadership Council, what that is, what's your role there? I know I've referenced it once, you've referenced it, but just real quick as well.
Jack: Sure. It's a professional association for CFOs. And membership is open to CFOs and people who are clearly on the path to becoming a CFO, like a controller or a VP of finance, people like that. But it's a global organization, although about 90% of our members are in North America. And we're all about great content and a very robust network for CFOs. We've learned that CFOs love to learn from each other. And the mission is simply to empower CFOs to grow their organizations.
Peter: Great. And what a great mission that is and has certainly led you to write this first book. So, each of these CFOs pass, how many CFOs do you talk to in this process?
Jack: It's hard to say because I didn't set out to write a book, but I tried to recall them all. I concluded it was 41 that I spoke to over the years.
Peter: So, across all these unique paths, you talk about how rockstar CFOs share mini traits. Can you share some of these top examples?
Jack: Sure. And the 41, but what might be interesting is that they weren't similar. I interviewed Silicon Valley start-ups, I interviewed two CFOs from Fortune 50 companies, some leaders of great non-profits. So, I think I got a good cross-section. And I did come down to nine that just about all of them mentioned, there were three in particular that everybody mentioned. And the first one was strategic thinking or strategic partnering. And a lot of it came out with the relationship they had with the CEO, a very out of 1A and 1B type of relationship because they recognize that the CEO's the boss. But very much a partnership. It doesn't mean that they're taking family vacations together or that they're golfing together or anything like that.
Within work, there's a lot of respect for each other. And it wouldn't be that way if you were sort of the old school CFOs who could only report history. They have a lot of strategic insights and they're great strategic thinkers. And then the other one is ethical leadership. A lot of CFOs reminded me that not only are they themselves expected to be ethical, which I kind of think is table stakes for CFO that he or she's ethical. But I think that they need to provide a climate of ethical leadership where people understand poor ethics won't be tolerated. And you need to be thinking about ethics in every important decision. Ethics is one of those things you can't do it 90% of the time. If you're ethical 90% of the time, that means you're not ethical. So, providing that leadership.
And then the last one, I think that's pretty much universal is they work cross-functionally, they're not siloed within the world of finance and accounting. And one of my friends actually, she gave me great advice that I repeat a lot. She doesn't think of herself as a financial executive, she thinks of herself as a versatile cross-functional financial executive who happens to be an expert in finance. And subtle difference, but when you approach your job that way, I think it will prove valuable.
Peter: Yeah. I think that makes so much sense, even in my experience as well, there's this a lot of finance executives have a deep expertise in finance, but they have to have knowledge of so many other functions within the executive team.
Jack: Yeah. And a generation ago, you could be a good CFO just by being good at finance and accounting. In fact, often that was the case that the best accountant would ultimately become the CFO of the company. And simpler world, I guess, not really sure, but today business is too complex, and they can't have somebody who's just reporting history as part of the executive team.
Peter: Yeah. And you mentioned strategy here, like what does strategic thinking mean to you in this context?
Jack: Yeah. And it is one of those things, it's different for everybody. But it's really understanding the success drivers of the business. So, a lot of times, it might be working, understanding customers, understanding what all of your employees do, what your place is in the market. And taking that knowledge, and quite likely, unless you're working the one and a hundred companies where the CEO is a former CFO, it's quite likely you're the only financial expert on the executive team. So, if you master the strategy, if you have a genuine understanding of your company's products or services, why the customers buy them, what your position is in the market, combine that with your financial expertise, and you're a critical, invaluable member of the leadership team.
And we saw that during COVID. Personally, I have not been a CFO since 2007, and I saw a lot of companies that their survival was largely due to a lot of people's efforts. But the CFO was right there doing it. And I'll say that the CFO from my generation, not that we were not as smart as sort of the younger generation of CFOs, but we just weren't prepared for that sort of thing. We would've sort of resorted to reporting the history after it happened rather than making it happen.
Peter: Yeah, that's really interesting. And I think of kind of the two core functions these days of CFOs, one is risk management, is how do you manage the downside, and the second is capital allocation of like, how do you manage the resources you have to reinvest in the business and drive ROI.
Jack: Yep. That's kind of the name of the game. You talk to venture investors or PE investors or any others, and their conversations with the CFO are going to revolve around that.
Peter: Yeah. And I think that's a good segue about CFOs from your generation to modern day. In your opinion, who is an example of a rockstar CFO?
Jack: Let's see. One who I've always been impressed with, and I'm saying this partly because she was an unknown contributor to the book, but Gina Mastantuono. And I made me mispronouncing that name, but she's is the CFO of ServiceNow. And she's interesting because she really understands the business. Now, it probably helps that CFOs are the customers or whatnot, but I was impressed with her before she worked there. She used to work for Ingram Micro, which she called the biggest company no one's ever heard of. But she really understood the business as well as anyone. She talked a lot about her relationship with the CEO, still continues to do so. In fact, she's like a really good sort of a fun person to follow on social media. She's very active on LinkedIn and Twitter. And guess what, I've never seen her post about debits and credits.
She's always talking about the team successes, the customers, that type of thing. So yeah, may not know a lot about tax strategies, But in terms of strategy, business, she knows that. Another one is Michener Chandlee. He is the CFO of Fanatics, the sporting groups. Just a guy who just really understands his company's business. He was a big wig in Nike for a long time. And joined Fanatics there. I'm not sure if they've gone public, but you hire a guy like him to take them public. And then just to another person, I don't know her well, but the CFO of St Jude's Hospital, I was talking during the beginning of COVID, and you talk about every company had to restructure. But you talk about a company that really had to restructure right there.
Jack: Their mission was suddenly more critical than ever. They had had a lot more issues and yet they had to take a lot of safety protocols. So even things like how people park had to be rethought and how you admit people. And she was involved in that day and night, working with all sorts of people, tightly regulated environment. Working for a SaaS company, you can just kind of do things without worrying about a lot of regulation. And she just impressed the heck out of me for somebody who was really thoughtful, looked at a problem that seemed unsolvable, and helped solve it.
Peter: Yeah. It's really interesting that compliance is a big part of the role of the CFO. And I think that compliance ties back to the ethical framework you mentioned of understanding the implications of a decision now, even it might be seen pragmatic, could have legal or moral ramifications later.
Jack: Yeah, absolutely. And I suppose compliance will always be part of the chief financial officer's role. I can't imagine it wouldn't be. But if you've noticed, bigger companies, the C-suite itself is expanding you there's positions in it, chief accounting officers are relatively new position. I never heard of one until 10, 12 years ago. But there's like a chief compliance officer. Who ever heard of that a few years ago? Chief diversity officer, chief environment officer. And there are even companies with chief ethics officers. And the business world is getting more complex. It's too complex for one person. But yeah, it is one of those things that I just can't see CFOs not being the ultimate person responsible for compliance and legality and ethics. But yeah, at the start of my career, it was like CEO, COO, and CFO. The C-suite was pretty much those three in most companies I knew.
Peter: Yeah. And so, you mentioned these three rockstar CFOs. Why are they a good model for other CFOs?
Jack: I think it's their... They sort of embody it all, their strategic thinking, their team players. They're great at building teams. They're highly ethical. They're committed to that as a way of life. And they take the time to truly understand their business. And not just say, yeah, that seems like a good idea, but actually seek outgrowth paths, seek out new opportunities, whether it be a new market, a new product line, or whatever it might be. It's not just a back-office job anymore. And the ones that are so forward and outward-looking, those are the ones that are going to ultimately be successful in the world and the ones that CEOs are going to want to partner with.
Peter: Yeah. And sometimes those are some big shoes and big expectations to follow. So, what role does community play in helping CFOs navigate their careers or complex professional situations like this?
Jack: Yeah. Community, it's a big deal. It's over and under and everything else. I mean, you yourself would probably say you wouldn't be successful if you didn't have a great team around you. I've had so many CFOs tell me when they start their job, they immediately want to hire a good controller. So, someone beneath them to sort of make the trains run on time. And then mentoring too. Out of everybody that I interviewed for the book, there wasn't a single person that even if they didn't use the word mentor, they didn't describe a mentor type of relationship. Not only early in their career, but in their current career as a CFO. So, it's sort of like they have almost their own a phrase that's become popular in the last couple of years, or maybe I'm just hearing about it for the first time, is your personal board of directors. And so, it's a community of people who are vested in your success. It's your employees, it's your boss. It might be the literal board of directors for the company you work with, it's your mentors. More and more of them hire coaches as well. So, the community plays a big, big part. No CFO is successful by herself or himself.
Peter: Yeah, I think that makes so much sense. Actually, my path in the CFO Leadership Council was that it was I happened to get an email forwarded to me my first week as the first-time head of finance at a small start-up in New York City. And what I didn't know, I was like, oh, this is a great opportunity to learn from people who have been there and done that.
Jack: Oh, okay. Yeah. That's great. And I wasn't thinking in that light, but you sort of meant like the other CFOs, I think. And what's interesting, I recently did a focus group with our members. It was three different groups and I think maybe 50 CFOs participated in it. And that's all they talked about. They didn't talk about improving the quality of the content or that sort of thing. It's like, we just really want to learn from our peers. And you are part of CFO Connect with other people. It's a form where if you're a CFO and you're having a problem, you can share it with the group of other CFOs. And it's very unlikely that whatever problem you're having, you're the first person to have faced it. And in those rare circumstances that it is, you can reach out to a bunch of CFOs that can help you solve the problem. So that community, that's just invaluable. That's why I encourage people to join a professional association, whether it's mine or somebody else's. Horses for courses, it may not be right for you, but you get a network of your peers because you can learn so much from them.
Peter: Yeah. And I sort of touched on it a bit, but what other advice would you give a CFO in their first 90 days at a new company?
Jack: Yeah, it's a great question. And there's a few things. I'm sort of a big person in building alliances. So, I would say unless if you're working for a huge company and you've got 600 direct and indirect reports, it might not be practical. But if you've got a manageable number of direct reports, spend some time, one on one with them, find out what motivates them, what they're good at, what their goals are, and how they can be a critical part of your team. Build alliances cross-functionally. You don't want to be thought of as that accounting guy. Be out there, spend very little time behind the desk, meet with the other C-suite executives. If your company built something, go to the plant and see how it's built. If you're a software company, talk to some of the engineers, find out what it is that they do, what they need to be successful. Get to know your board members as well.
Jack: And one CFO told me what she likes to do. And she's what you'd call a serial CFO. I think she's probably been CFO eight or ten times now. But she told me when she starts a new job, she'll reach out to the CFOs of the five biggest customers. And it's not that she's trying to sell to them, that's not really her thing, but she's simply trying to build a relationship with them, understand their business, how her company fits into it. And by the way, that was really helpful at the start of COVID. When the salespeople say, "Yeah, our customers are going to do this," she could call her friend, the CFO at the customer and said, "Look, we're sort of counting on this. Is that real? What can we do to help you continue to be successful, whether it's extend payment terms, whatever it might be." Those relationships occur. And sometimes CFOs are the only ones that can have them.
Peter: That's fantastic. So, you have a chapter in the book on building elite teams. Why is intellectual curiosity so important when hiring a successful finance candidate?
Jack: Yeah, it's a great quality because especially with automation and just the pace of change of businesses today, if you hire somebody who's really good at one thing and that's all they want to do until they retire, that's not going to be a really good fit as your company grows and evolves. Just think of we're unlikely to face anything like COVID again in our careers. But just think of how different were before COVID and after COVID. And if you had a team of people who just sort of did their tasks and they didn't ask challenging questions and they weren't thoughtful about it, they would not have been able to help you survive COVID, they would've just kept doing the same thing that they were doing before COVID. But you want those people who want to understand the business, who want to learn, who want to grow, who will challenge you a little bit?
"Hey, I can think of a better way to do it." In my own career, I had, she was an executive assistant. And I would ask her to do a couple of things for me and she'd sometimes challenge me. I just remember. I loved it though. She'd say, "I can do that just like you described, but I think I can make it better." And she'd give a couple of ideas. Sometimes I didn't take them, but most of the time, they were really good ideas and they made me better at my job. And if she would just not intellectually curious and just wanted to do the job, I wouldn't have benefited from those ideas.
Peter: Yeah. I think that's a good piece. And I think something I see as well as around like intellectual curiosity is really highly correlated to coachability. And someone who's interested in learning and trying to figure things out also can be open to feedback themselves. I think those are two sort of things I see. The kind of the two traits I want to see hand in hand is can they hate coaching or can they learn a new way if this is a different way than they before? And can they go try to figure out problems that they run into and rather than just have a roadblock and just keep on doing it, even if it feels inefficient or doesn't make sense, let's just keep on doing it anyway.
Jack: Yeah. You don't want those sorts of people. Because the job is too vast. You just sort of have to have a controller, or whatever it might be, who can make the changes that are necessary and not just follow something because the employee handbook says to do so, circumstances change, you need smart, thoughtful people who can change with them. And the other thing is the reality of the world today is there's still a lot of turnover. And you're in a constant scramble to keep your best people because your competition and even people who want your competition are going to try to pry them away from you. So, if they're intellectually curious, you can continue to give them challenging, meaningful work, you can keep them. Even if there are companies that can pay them a little bit more money, but if they like being challenged, they're not going to stay. Despite gut instinct people generally don't leave for money or at least solely for money. Naturally, you want to leave, you want a pay jump. Because I always did. But I never looked for new job because I was unsatisfied with the salary I was making, it was because I was unsatisfied with something else, usually just boredom set in.
Peter: Yeah. Yeah. That makes a lot of sense. So, the last piece I want to ask this book is if you want readers to take away one thing from the "Secrets of Rockstar CFOs, what would that be?
Jack: I would say you can't be a great CFO sitting behind the desk. Understand the business. Talk to employees. Talk to customers. Read if groups like Gartner and other people like that cover your company. Read those reports, get sort of the perception of what people are thinking. Talk to your competitors or similar companies, your strategic partners, whatever it might be. Just always be thoughtful and aware of what's going on in your surroundings. Did you see the movie, "The Intern"?
Peter: Yeah.
Jack: Yeah. If you remember, it was with Anne Hathaway and Robert De Niro. But the opening scene in "The Intern", Anne Hathaway's character was on the customer support desk. And you later found out she was the founder and president of the company. But she actually picked that up. She added that into the character. She followed a very successful CEO who went through a journey similar to her character. It might have been the CEO of Spanks, as a matter of fact. But that person... And I'm not sure if it was Spanks, so I'm sorry if I got you wrong. But she used to make it a point to spend half a day, every week on the customer support line. And she just found that helped understand the business a lot because it was an internet retailer.
It's like, why'd you pick this? What was the buying experience like? Was the delivery good? What could we do better? That was just information. She wasn't going to get that from her team. She could only get that kind of direct feedback from the customers talking to her. So Jules brought that into the movie. And I think it's great advice. Now, if you work at NASA, you might not want to jump on the support desk when they're launching a rocket, but if you work for a more conventional business, give it a go. I think you'll learn a lot.
Peter: Yeah. That's really interesting. I think about that too, around even like the kind of the core question of this podcast, of these awkward conversations. If I think of one of my customers as head of finances, as my employees, why did they think this was in policy, or why did they make this purchase, or was it they just didn't know the policy? So, I can start with kind of thinking back, first principals, how to solve it. So I think that's like a big piece of takeaway for me is that this sort of like 360 view of all of your different stakeholders as a CFO and then from there, using that as a jumping-off point to dive in one step deeper to actually develop strategy of knowing, oh, your customers are thinking that actually thinking this is, so this is an idea of a new market to go in or a new product to launch or a new policy to change if something's confusing to employees.
Jack: Yeah, exactly. We've all worked with difficult people. I worked with a sales guy. I actually had to change the policy with him because he flaunted it. And it's boring, but it shows human nature. So, our policy was, if you had a meal over 24.99, you had to have a receipt for it. So, he had three meals a day, five days a week between $20 and $24.99. Never had a receipt. And I just didn't think that he was actually doing that. I couldn't prove it of course. So, I said, "Okay, I'm going to lower the policy to $14.99, man, just for this one person." Any meal over $14.99 needs a receipt. All of a sudden, every meal was $10, 20, 15, 17 meals a day between $10 and a week, excuse me, $14.99. He knew the rule, and, to him, he was just going to manipulate it as best he could.
Peter: Yeah, that's really funny. And one aside, a similar story. So, I work at Teampay, which is a spend management software and we can actually set rules for individual people. So, I can notify myself about a specific employee. So, I had an employee, a couple of companies go when I was using Teampay. Also, in the sales team also is a difficult person to work with. And they didn't even have to know that I was actually having to hire scrutiny of their expenses than everyone else.
Jack: Yeah. I could have used that because this actual same guy, he just did everything. I remember he'd get a rental car and he'd put in miles for the rental car. He'd put in a receipt, get the gas at every receipt. But he covered text.
Peter: And then also double dip on the miles.
Jack: Yeah. What are you putting in miles for the rental car? It's not your car. Why would we reimburse you for that? But yeah, he claimed he was confused. He wasn't confused, but you can't prove he wasn't confused, so you just remove it. But yeah, we had, talk about some difficult conversations. We had one or two over the years that we worked for like three years. I think he left because I was making him miserable.
Peter: Yeah, that's probably a whole nother conversation of employees who've left after the difficult conversations I had to have with them. All right. Well, I'd love to move on to your most recent book, Jack, "The Psychopathic CEO and Executive Survival Guide." Would you just give a quick background in this book?
Jack: Sure. And as it turns out, about 15% of CEOs in America are psychopaths. And that's roughly the same percentage of the prison population of psychopaths. So, I have a friend, he works in a prison. And I pointed out to him, if you do your day job in the prison and then you go to a function at night, like a business function say honouring CEOs, you're probably with the same percentage of psychopaths at both events, even though you wouldn't think it. But it's kind of a scary thing, but there are a lot of aspects of corporate America that are very attractive to psychopaths and that enabled them to be very, very successful. So, they sort of found their niche in the executive suite. The ones who have the talent to get there actually perform pretty well. Some of them, not all of them.
Peter: Yeah. Can you give me a little background? What makes a CEO a psychopath and what are some of those traits that someone should look out for?
Jack: Yeah. Well, I wouldn't say that being a CEO would actually make you a psychopath. I think you would enter the world as a psychopath. I don't know that you can actually become a psychopath. You can become a sociopath. But anyway, yeah, I mean, a lot of the qualities are just like... The major quality of being a psychopath is just you cannot relate to people, you cannot care about people, which is not a great quality necessarily, but it enables you to make very difficult decisions very easily because if you need to lay off 20% of your company, you can do it without feeling one ounce of guilt, and you don't have to second guess yourself a little bit. The other thing is like a lot of them are phenomenal communicators, and that inspires people to believe in them and whatnot.
They just inspire a lot of trust in people that they can. A ton of them are very, very charismatic. The willingness to lie and the ability to lie really well plays a big, big role in their success. And the other thing is people who study them, they call it a grandiose sense of self-worth, which, to me, sounds a lot like arrogance. I'm not sure why they don't just call it arrogance. They're very arrogant, but one man's arrogance is another person's confidence. So just a lot of times, they're very sure of themselves, they're very confident decision-makers. And these are all qualities that can translate well into Corporate America. The ability to make quick analytical and emotional decisions, that's great quality. The ability to inspire people to believe in you and to work hard for you, who doesn't want that in a CEO. But unfortunately, it's a quality that psychopaths possess in spades.
Peter: Yeah. Well, it seems you're pretty passionate about this. So, what inspired you to write this book then?
Jack: Yeah. When I worked with him, he was the VP of sales. And I'll just say he orchestrated pretty significant systemic fraud throughout the company. We were in a reseller environment. And unbeknownst to me or anyone on the finance team, he was actually issuing side letters to the resellers, which meant that they could return the product if they didn't find an end-user. I didn't know this, so I was shipping it, recognizing revenue, trying to collect it. And then one of the salespeople actually told me about it. He just said, "Look, from what I know about you, I can't believe you signed off on this." I want you to know that we're doing this. And when I challenged the VP of sales on it, he just absolutely went ballistic at me. I just remember him sticking his finger in my face and yelling, "How dare you?" He knocked over a table really through a temper tantrum.
And I later found out not only did he know about it, but that he orchestrated the whole thing. I remember thinking Meryl Streep, Robert De Niro wouldn't have put on a better acting performance than this guy. But then wind the clocks forward a couple of years, I met, it's actually one of our own conferences, we had an FBI agent who is an expert on corporate psychopathy. And she was describing psychopath and executive suite. And I'm like, "Oh my God." What I just thought was a jerk, he checked all of the boxes that she gave for a psychopath. And then she said, "By a show of hands, how many people filled they worked for psychopath?" And about half of us did. And I was just kind of hooked. It's just one of those things I wanted to learn more. What would motivate somebody to behave in this way? And I'd always wanted to write a book. And when COVID came along, I said, "It's now a never." So, I wrote the book at the start od COVID.
Peter: Oh, I love that. That's a great COVID hobby. Some people learned to bake bread, some people learned to knit, and you wrote a book.
Jack: A book on psychopathy.
Peter: So, in this book, you argue that most people are bound to work for at least one psychopathic CEO in a career. How do you deal with the situation if you happen to be one of those people working for a psychopathic CEO?
Jack: Sure. And largely just in America, at least, it sort of becomes almost a mathematical probability because 15% of psychopaths of CEOs are indeed psychopaths. I think the average American now has 14 jobs during his or her career. So, you just kind of run the numbers. One of them is going to be reporting to a CEO. In fact, maybe more than one. But there's a few things you can do. And I, often, when I give this presentation, I ask a question. Because one of the people who's believed to be a psychopath and he's passed on, and I'm not qualified to say who is and who isn't, but Steve Jobs of Apple computer. A lot of people consider him to have been a psychopath.
But I ask people, show of hands, would you work for Steve Jobs if you knew he was a psychopath? Elon Musk most certainly isn't a psychopath, but would you work Elon Musk if he was a psychopath? And I say I would just because I think you could learn a lot from it and you don't have to take ethical shortcomings. But most people would. Most people, their instinct is to run. And that's actually a pretty good instinct. If you know the person's a psychopath, few psychopaths are in the jobs must type of category. If you're talking a God variety psychopath, you might be better off just leaving, finding a new job. But maybe you love your job, maybe you have some loyalty to your team and your company.
There are people that try to work with psychopaths. It's difficult, but it can be done. Again, if Steve Jobs was a psychopath, people who worked for him have, a lot of them have nothing but good things to say about him. That's because of his charisma and whatnot. But the point is that you can work with a psychopath, at least some of them. So just always remember everything that they care about, if it benefits them, then it's worth doing. So, whenever you're framing something to a psychopath, explain it to it, why it's in their best interest. You can't go to a psychopath and say, "We shouldn't do a layoff because these people have families and will devastate their lives." They don't care. But if you can make a persuasive case why they're better off without the layoff, this will be dissolutioning to lay off 20%, this will be devastating to the 80% who stay, our top performers will leave once they think there's some instability. I think we need to have a stronger, more united front. That might get them because now they might have a selfish reason to not do the layoff.
But if you frame it in terms of right and or that sort of thing, you're not going to get with them. So just keep that in mind when you're dealing with the psychopath, that it is all about them. And the other thing, just I recommend that you... They can turn on you. Psychopaths. They very quickly kind of put you in buckets. And to oversimplify, its friend or ally and in between. And you can move between buckets depending upon how circumstances change. So, I would say, if you suspect you're working for a psychopath, document everything, Peter. If they give you praise document it. If you help close a big deal, whatever you do, document it. And by the way, document it on a spiral-bound notebook that you keep at your house or something. Don't document it on the company computer because they might be reading it. They tend to be a little bit paranoid that way. And employers actually do have the right to read their employees' emails. So don't put it front and center for them.
But I'd say document everything and trust nobody. They inspire a lot of loyalty. So, there've just been instances that they can turn people against you, either through charm or fear. One person told me the CEO sexually harassed just about everybody in the company, apparently, at least all of the women who was a smallish company. And she was going to go to the board to take them on, and none of the other women who told her that they'd been harassed were willing to stand up. And she doesn't know if they were threatened, if they were bribed. Doesn't know exactly what happened, but she found herself reporting a serial sexual harasser and no one to support her.
So don't think you have any allies. The other thing, but I say you should leave. I know a guy, he decided to stick it out. And it can be really stressful working for these people. This guy, he was seeing an analyst like every Thursday for a couple of years, even after the experience. And he ended up suing the company and didn't win. So ultimately he lost his job, lost $50,000 in legal fees, and he's talking to a professional because he needs help all the time. And do you like your job that much? This person's life would've been better off if he just quit. Good skillset. Would've found a job in no time.
Peter: Yeah. The sort of extreme narcissism you see in a lot of sort of start-ups is surprising. I was just at a conference a couple days ago and it was surprising how many other CFOs mentioned they'd worked for a CEO that like committed fraud or some other embezzled money or other sort of like high financial crimes, just like stuff you expect to read in the newspapers, but just don't. It's not reported and people don't realize that's how often happens because boards cover it up, the executive teams cover it up, all this sort of stuff that doesn't actually make the headlines, unless it's like a huge company like Better.com or WeWork.
Jack: Oh. Or like Harvey Weinstein. In my book, I talk about people who empower psychopaths. And he just had people that protected him. I don't think many people knew the extremity of the behavior, but a lot of people knew that at a minimum, he was harassing women and destroying careers for people who didn't go along. But his employment contract, it literally allowed him to sexually harass employees. He would just pay a cash fine if he was found to have harassed somebody. So, who knew about that? Probably the chief financial officer and senior HR person note, I don't know for sure, but chances are board members had to have known. There had to have been a comp committee. The company's lawyers knew.
Can you imagine you graduated from law school and you're excited you're working for some law firm and you're working for the Weinstein Brothers film company and you're typing up an employment contract like that, you're like, "What the hell is this? So, you can do what? You can just pay a fine. What are they thinking?" But he was just a monster. And a lot of people allowed him to get away with it. There's the people that said, "Well, we're making great films, we're winning Oscars, so it's the cost of doing business." And even, he sexually harassed Gwyneth Paltrow when she was 19. For Harvey, there were a million Gwyneth Paltrows in his life. And he destroyed not only careers, but he actually destroyed their lives. He didn't bluff. If he said he was going to ruin your career, he ruined your career. And a classic-
Peter: Yeah, I think-
Jack: Go ahead. I'm sorry.
Peter: Yeah. I was going to say like, you mentioned a lot of the sort of like the manipulation techniques on the outline in the book. What's it like talking to someone like that? What are some of these? And maybe as a CFO, how do you like... Or even as an employee interviewing, how do you identify this as like, "Oh, this is potentially happening in this company?" How do you identify this before you even start?
Jack: Yeah. I mean, an ounce of prevention is worth a pound of cure. So, it starts with the interview process. And first of all, train everybody to interview, ask tough questions. The other thing is like, they're going to come well prepared for the interview. They're going to read up on the company. And we kind of made it easy on them. So, you go to your company's website, you can probably understand your company's core values. Maybe you list some charities that you support. Maybe you list the employee of the month, whatever it might be. You give a lot of information to someone who's manipulative by nature to use, to convince you to hire them for their job. And in fact, one HR person told me she interviewed a guy and her company supported Alzheimer's research. And during the interview of this guy, he started talking he lost his mother from complications of Alzheimer’s, and he started crying during the interview.
Peter: Wow.
Jack: They ended up hiring the guy. A year later, they met his mom. She's like, "Wait a second." He apparently didn't remember the lie that he told. And she died of Alzheimer’s, and you broke down and cried, recalling the story. I mean, they're good liars. I don't know about you; I couldn't fake a tear right now. I just don't have that ability to do that. But yeah. So, they're gifted liars, and they're willing to do it. To them, it's all about them getting the job. And they will manipulate you, they will know stuff about you, they'll play on your emotions. If you played football in high school and that's somehow publicly available level knowledge, they'll talk about how much they like football.
Now, it's okay to be manipulative. I remember when I was a CFO, small company, I interviewed most of the salespeople. And you know, a lot of them would talk about how they made a good effort to understand revenue recognition. And they didn't like to cheat on expense reports. I get it. They were playing to the audience, which they assumed that I would care about those things. They probably didn't talk about clean expense reports for the VPs of sales and marketing, but I get that. But that's not unethical, that's just playing to your audience. The problem is they do it to an extreme. So, train your team to look for those sorts of things. And by the way, if you have eight people interview a CEO, don't have it be eight individual interviews, actually do it as a unit.
Get together afterwards, talk about it. What did you learn? What seemed not right to you? And by the way, if there's something off, even if you can't put your finger on it, don't be afraid to tap the brakes and slow down the process a little bit. One of their tricks is that they will say, "Hey, this has been great. I'm really enthusiastic." I did get an offer earlier last week, I've got a deadline of Friday, do you think we can accelerate this? They actually want to walk out the door with an offer in hand. And that may be legit, but if you have worries, fight that battle a little bit because it's a mistake that can be devastating to you and to the company if you hire the wrong person.
Peter: Yeah. And I see that a lot, especially now with the large war and talent and every team seem to be hurting for needing more employees. I think a lot of companies are cutting corners in terms of interview process, evaluation. I think one piece which we haven't talked about even references, not just references for employees are hiring, but like something I've done that most companies I've gone to, find references for people who've worked at the company in the past and can speak to the culture independently of... may not be there anymore, but can speak to the culture and the CEO and the management team.
Jack: Yeah. And I have a story. This came out during the book too. I don't know if you read the book, but this one guy, he kind of destroyed the company. Just burned every bridge possible. Everybody hated him and he couldn't possibly get a good reference. So, what he did is he went to Walmart or Target or one of those places and got a burner phone. And he didn't use it, other than when people asked for a reference, he gave that phone number. And he claimed to be one of the VCs was on the board of the company. And said, "Yeah, Jack McCullough's. Yeah, best CEO I ever worked for. If you can hire him, do it and do it fast. He is a godsend. You'll not regret it."
So, he was pretending to be a VC, giving himself a reference. And because he only shared that phone for that purpose, he knew that any incoming call to that phone was a reference check on him. And so, call people personally. It's easy with LinkedIn and other places. We, we all know each other, six degrees of separation. Don't trust the references because it may not even be the reference that you think it is. So yeah, that was kind of nasty because they found out they ran into the... It happened in Boston. They ran into the VC a year later. And they said, "We hired that guy, your recommendation. He's just a nut." Not my recommendation. I would certainly not hire that guy. And they kind of pieced it together that he faked his own reference.
Peter: Wow. Yeah. And I think it goes back to sort of the networking community, Jack, to kind of like bring it all full circle of like, even if you don't know someone at this company, the community, generally speaking, some will know. Whatever industry it is. Other CFOs of the same industry will know this company and know the reputation. And so, it's like trying to build those sort of connections that people in advance of taking a role or intervening for a position.
Jack: Exactly. It's all about those relationships at that moment they're invaluable. If this person's been a CEO for three different companies over the last 10 years, he's touched hundreds of lives. You can get to them. You can talk to an investor; you can talk to a direct report. You can talk to a junior employee who just saw stuff that they might have found crazy. So, it's definitely worth it to rely on your network and build it.
Peter: Great. And any final comment you'd like to wrap up with?
Jack: No. I know that this is all about sort of difficult conversations. And it is both an art and a science to resolving these issues. But the big thing is empathy. Even though we've been talking a little bit about psychopaths, I think most people that you'll come across within your work life, I think if you get to know them, even if you're disagreeing with them all the time, you probably actually have similar goals, you just have different ways of pursuing the goals and maybe you draw ethical lines or whatever at different points. But I think most people you work with, just find the commonalities. Build a bridge to them. And sure, difficult conversations there, you're never going to not have them unless you're both being phony and that's not doing anyone good. But just being empathetic, ask them to be empathetic and just resolve the differences. Understand not all of them... You're not always going to agree, but you've got the same target, work hard to achieve it.
Peter: Yeah. I think that's some great advice of sort of care deeply about the person, but challenge directly.
Jack: Yeah, indeed.
Peter: All right. Well, these are some great insights for our listeners. And thanks so much for being an excellent first guest with such a great awkward conversation. So just real quick, is there any social media or LinkedIn page you want people to get in touch with you?
Jack: Sure. Well, the easiest way to reach me is actually, I'm the king of texts. I get too many emails and I can't respond quickly. But if anyone wants to send me an SMS, that number is 617-678-0957. And if you just want to learn about the CFO Leadership Council, it's CFOLC.com. And feel free to connect with me on LinkedIn as well.
Peter: Great. And also, for folks who are listening, make sure you subscribe to this podcast, so you don't miss an episode. Until next time, thanks a lot.