“Have you fired him yet?:, I asked the owner of a rapidly growing company with global ambitions when he had told me, “We hired the regional managing director from a multinational to be our CEO.”

Puzzled, even shocked, by my question, he asked, “How did you know?. Did somebody tell you?”

No one told me. I didn’t even know who this company was before meeting the owner. But I know how this story plays out.

Regional companies on a massive growth trajectory idealise the thought of hiring an outsider as CEO, particularly from a multinational, believing he’ll professionalise the company. If you didn’t know better, it seems like a logical idea. After all, there is a respect for what the western multinationals have achieved and the hope is that when you hire one of their leaders you’ll get the practices of the multinational.

The owner continued, “I hired him in February and fired him over the summer.” To which I asked, “How much did he increase your SG&A (selling, general and administrative expenses)?” In utter disbelief at this question, he wanted to know how I knew that was the reason.

Adding new staff is a go-to move for outside CEOs joining emerging market companies. For some reason they feel this will professionalise the firm. So, instead of growing the firm first, they argue for building up the organisation.

Recently, the relationship of Cyrus Mistry- ousted chairman of the Indian conglomerate Tata — with his board and shareholders came to a breaking point. While the media is ripe with speculation about why his tenure was short-lived there is one fact not to be overlooked: since 2014, when he took over, the SG&A costs shot up.

This temptation to invest ahead of growth is an epidemic, as is the owner’s reaction to reject it. One of the CEOs that I worked for used to say, “Sell it, then build it” and warning us not to get costs too far ahead of revenue. Yet, there is an outsider’s practice that says until you build the organisation (meaning support functions) you can’t grow the business (the part that makes the money).

The focus should be on the money-making part. It’s easy to say, we’ll do more if we spend more. And I’m not opposed to spending more when it’ll produce multiplicative results.

The best way to earn support for your investment is by delivering results rather than leveraging your honeymoon.

Multiplicative results come from creating surplus value, which is simply defined as getting more from what’s already there. Instead of relying on the argument that says, if you want a greater result (output) then give me more resources (input), you should focus on getting more results from your current resources. Growth from increased productivity rather than an increase in input volume.

Focus on decoupling your rate of growth from the payroll and other expenses. When you’re able to extract more from your asset base, without increasing input, then you’ll truly become competitive compared with your peers because you’ll be growing on improved productivity rather than input values or external market factors, which are level for all.

Surplus value is the new value created by workers in excess of their own labour-cost. In those examples where new CEOs started hiring additional staff and increased SG&A costs with the promise of results in the future, he completely missed the central point of multiplicative results.

I watched a newly appointed CEO walk away from his plan to add a top layer of support function leaders when he realised that his hands were tied by the owners who didn’t have an appetite for his plan to aggressively grow the size of the top management team and adding to the balance-sheet.

His promises of future returns couldn’t comfort their concerns. This forced him to shift the basis of competition to a surplus-value strategy, which played out beautifully resulting in him turning the unprofitable businesses around, improving margins, and outgrowing the market rate.

My dad used to tell me, “Use what you have if you want more.” The best way to get the investments you want is to deliver with what’s in your hands, not to increase SG&A. Earn your support with results.

— The writer is a CEO coach and author of “Leadership Dubai Style”. Contact him at tsw@tommyweir.com