Case Study: Your Star Salesperson Lied. Should He Get a Second Chance?

KANAS HOME, THURSDAY NIGHT

Kana Kapoor rarely checked Facebook. As CEO of one of the largest pharmaceutical-marketing firms in Western India, he didnt have time for social media. But right now, he needed to log on. He searched for the doctors nameParasaran Srinivasanand recognized the first picture that popped up. Just as hed thought, theyd gone to university together in Mumbai. Looking at his old classmates page, he groaned. The pictures of Parasaran at a recent World Cup party confirmed that one of Novacib Labs top salespeople had falsified his sales report. Now he had to decide what to do about it.

NOVACIB HQ, THAT MORNING Surprising News

Everyone at Novacib knew Kana hated getting emails with that little red exclamation mark. So when he saw both the red mark and the word URGENT in his in-box, his stomach dropped. The email was from Armina Pillai, Novacibs regional sales manager in the Mumbai office. Shed kept her message short: Need your advice on a potential ethical breach. Kana canceled his next meeting and called her mobile. Tell me whats going on, he said when she picked up. Im afraid we have an issue with one of our sales reports, Armina said carefully. What kind of issue? It seems that Dave may have intentionally falsified some information about his customer calls. Dave? Kana made no attempt to hide his surprise. Dave Madhav was one of Novacibs best salespeople. He routinely exceeded his targets by 10% to 20% and had earned the companys top commission prize three times in the past five years. And he was a generous colleague. He often took new salespeople under his wing, sharing sales tactics and handing off easy customers. There was no doubt that the companys targets were ambitious. Sales reps were required to meet with a minimum of 10 physicians and four retail pharmacies a day, allocating that time according to the potential of the target: 50% to platinum-class customers, 30% to gold, and 20% to silver. The regional sales managers worked closely with the reps to coach and support them 2 but Dave rarely needed Arminas help. In fact, he often served as a mentor to his more junior colleagues. Could there be some mistake? Kana asked. Its possible. But I know how seriously you take ethical issues. I wanted to bring this to your attention right away. Five years earlier, when Kana had taken the helm at Novacib Labs, its founder and outgoing CEO had given him a mandate: grow the company by 40% and ensure that it remains the market leader. New competitors were popping up every day, vying to capitalize on the explosive growth in the Indian pharma industry. Kana knew that to accomplish his goals, he needed to be laserfocused on strategy. And by all accounts, hed been successful. During his tenure, the companys portfolio had grown from 22 brands to 46, and from 10 sales territories to most of Western India. That success, he believed, rested on Novacibs new positioningto customers and employees as the ethical pharmaceutical-marketing company. Amid growing concerns that similar firms were bribing customers or overstating products benefits, this stance distinguished Novacib. Kana and his leadership team had even changed the firms tagline from Health for everyone to Health with integrity. Behaving ethically became part of Novacibs story, and all employees were encouraged to share it, especially during sales calls. And the tagline was more than a marketing slogan to Kana. Hed always prided himself on leading a principled life. Armina was absolutely right that he would be concerned about false reports. To protect its reputation, Novacib had a zero-tolerance policy for ethics violations. But would sacking Dave really be in the best interest of the firm, Kana couldnt help but wonder? He had always made or exceeded his numbersand boosted the performance of his colleagues as well. Kana? Armina asked. Im still here, he said. Tell me exactly what happened. Something Doesnt Feel Right Armina recounted what shed discovered the evening before. I was leaving the office last night, she began, when I got a text from Dave that said, Baby still sick. Need to give wife a reprieve. Ill make up the visits next week. Of course, I felt for him. Id been in his shoes. The baby is just a few weeks old, and neither he nor his wife have slept much. Hes still been hitting his quotas, but he looks exhausted. I decided to stay at the office to finish up my reports in case I had to cover his sales calls. And as I was looking over his activity, one date stood out: June 21. That was the day Argentina lost to Croatia in the World Cup. 3 I remember it well, because I had followed the match online. Dates dont typically stick in my mind, but that day was depressingly memorable, not just because my team lost but also because I watched the game by myself. My familylike most of Mumbaihad skipped work to watch together. I hadnt wanted to get behind, so I spent the day alone in the office. I had spoken with Dave the morning of the game, and he mentioned that he was going to watch it. And yet his daily report listed the names of three doctors that he supposedly saw that afternoon. I texted him about the discrepancysomething like Sorry to bother you with baby sick. Can you resend your activity report for the week of June 18? Ten minutes later he emailed me the same information, so I texted again: Are you sure thats accurate? He sent back a thumbs-up emoji. She paused. Go on, Kana said grimly. Im not in the habit of tracking our salespeoples whereabouts, especially in the case of Dave, who has always been a star performer.Normally, Id give him the benefit of the doubt, but something didnt feel right. I looked him up on Twitter and scrolled back to his tweets from June 21. Hed clearly been watching the gameat home. Then I tried one of the doctors on Daves report. Same thing: Hed been watching the game, too, not meeting with Dave. Thats when I started to panic. Kana was starting to panic as well. Trust was essential to the companys mission, and Daves actions were exactly the kind of thing that could undercut Novacibs culture and reputation and breed resentment among employees. Kana recognized that Novacib was bound to encounter less-than-honest salespeople, but he was still having trouble believing that Dave would be the one to get into trouble first. At the same time, there was no denying his outsize contribution to the success of the firmand how hard it would be to replace him. Shocked and angry, Kana wondered to himself, How could Dave have done this? NOVACIB HQ, FRIDAY MORNING Now What? The next day, Kana met with Bob Batra, Novacibs HR director, in his office. They dialed in Armina on speakerphone. This is bad, Kana began. Last night, I confirmed another doctor listed on the report whom Dave couldnt have met with that afternoon. Armina and I had a conference call with him after she spoke with you, Bob said. We asked him about the report, and he said he had met with the doctors he listedbut not on June 21. He all but admitted that he lied. Im not seeing any option other than letting him go. I dont understand why he didnt tell anyone he was struggling, said Kana. Hes the first one to help his colleagues out; people would have jumped at the chance to return the favor. 4 Its definitely out of character for him, Armina. Thats why I feel strongly that we should issue a warningespecially with his being a new father. After all, he did meet with everyone he said he had. He wasnt fabricating that. But he was altering the dates to meet his daily targets, Bob countered, leaning toward the speakerphone. Thats a serious breach, and we have to consider the broader impact of merely giving him a slap on the wrist. She looked up at Kana. When you brought me in after the rebranding, you asked me to help you build a culture of ethics and honesty. Id be failing at my job if I advised you to let a transgression like this go. I recognize the value of Dave to our team, but our motto isnt Health with occasional integrity. We have to always do the right thing.7 I agree, Kana said. Integrity is our promise to every employee and every customer we interact with. If our people knew we tolerated this behavior after all the ethics training weve put them through, wed look like hypocrites. Wed be hypocrites. And if this ever got out to our customers or the press, it could destroy our reputation. But how are we going to look to the rest of the team when we sack their beloved colleague with a newborn at home? Armina asked. And hes such a strong performer! Think of the revenue hit wed take. Are people actually going to care about three names listed for the wrong day on one weekly report?8 Its not as if those call targets are tied to his compensation. Small offenses may seem harmless, but research shows that they can breed problems by desensitizing our brains to the negative emotions related to unethical behavior. Its the principle of the thing, Bob retorted. And how do we know if this is the first time hes fudged his reports? How can we trust him going forward? Are you going to check with his customers every week to confirm his reports? Armina was silent on the line. Kana closed his eyes briefly. He knew she was right that the company would suffer if they fired Dave. He brought in over $250,000 a year, and he had built strong customer relationships that Novacib stood to lose if they sacked him. But Kana couldnt shake his disappointment in Dave. Bob broke the silence. Youve addressed this issue repeatedly in our sales offsites, she said. Youve stated in no uncertain terms that youd rather salespeople not meet their targets than fake their numbers. If you dont take action, youll damage your credibility. I know its painful, but I think its time to put your money where your mouth is. NOVACIB HQ, FRIDAY AFTERNOON A Second Chance? Thank you so much for the baby gift. Did you get the thank-you note my wife sent? Daves voice sounded tentative on the phone, the small talk forced. 5 Kana had dreaded making the call, but before he reached a decision, he wanted to talk with Dave himself. I did. Listen, Dave, I dont want to make this anymore awkward than it needs to be. I just want to hear your side of the story. Dave repeated what hed told Armina: that he had met with those doctors, just on different dates. That he shouldnt have submitted the false report. I made a big mistake, and Im sorry. I was feeling the pressure with the new baby. I knew I wasnt going to hit my targets, and I didnt want to disappoint anyone. Kana hated to hear Dave sound so dejected. But part of him still felt betrayed. He reminded himself that Dave could easily find another job, especially since Novacib had no intention of going public with the circumstances if they let him go. But Dave would be devastated nonetheless. We need accurate data to grow this business, and weve been very clear about our ethics policy, Kana said. I wish youd talked to Armina about the pressure. I know, and Id understand if you have to make an example of me. But please believe me that it has never happened before and wont happen again. Dont people deserve a second chance?

Questions:

1. Should Kana fire Dave? Why? Why not? Explain in detail.

2. What options should Kana consider before firing Dave or overlooking the infraction?

3. Should Armina have kept a closer eye on her top performer?

4. What are the ethical implications of checking up on employees by tracking their activity on social media?

5. Do you think zero-tolerance policies result in bad outcomes? Do they force leaders to take action when a better solution could be found? Explain.