Ben:
At 13:44 19/10/1997 -0600, Benjamin B. Compton said:
>Replying to LO15407 --
>The result is a group of people that work phenomenally well together, but
>who also fiercely compete with one another (and, of course, because of the
>structure, they chase away the "dead meat" before it spoils the whole
>organization). This must be one of the contributing factors of Micorsoft's
>success.
>[Host Note: I enountered another famous and successful high tech company
>in which employees who were bottom third two times were manditory
>terminations. My client (in the company) and I both felt this was
>draconian and would terminate valuable employees. ...Rick]
Please accept the following not as a "position for all cases" but a data
point from my experience. While managing domestic and international sales
operations (direct and distributor), I annually removed the bottom 20% of
individual contributors (sales staff). Yes, I believe that the system is
responsible for 90+% of the problem, the employees 10% or less, and as
management controls the system, the burden falls (should fall) most
heavily on management. Following is my restructuring of the system to
support this culling:
Most sales organizations fall prey to Paretto's law - the 80-20 rule - in
which the vast majority of sales are delivered consistently by a few (with
some variation within this upper strata) and that the bottom tier delivers
little (and much that they deliver is not "clean business" and thus
margins are further eroded) while consuming substantial "draw"
compensation and much sales management time.
The principal reason I heard for not removing these low performers sooner
were variants of, "We need to have someone to cover the territory... or
call on the clients." Long before I became immersed in service delivery,
loyalty, and recovery issues, I had the feeling that a system that
permitted retention in such cases - that consigned poor performers to our
valued client base - was flawed. My solution was a well-publicized "up or
out" program that was designed to prevent anyone from being surprised.
New/low performers were assigned mentors. Consistently low performance
mandated internal sales training/coaching. Decline the training and you
were gone immediately. Accept and you went into a "substance abuse"-like
program (and the substance abused was an excuse). Mentors and myself
looked at the contributor's region, customers, quota and individual
performance before making a termination decision. No termination decision
ever came as a surprise. Most low performers left of their own volition.
We developed sales forecasting tools (which I now recommend to clients)
that tracked things like order slippage (ability to forecast close of
business), factored revenue by a shared set of descriptions tied to % of
sales cycle completed (reality check on contributor's ability to
understand the prospect's environment, the condition of the sale, and what
had to be done to retire the business), etc. Sales forecasts were
required weekly and you didn't get your expense check until they were in,
so the process was largely self policing. In short, we had a reasonably
real-time reporting process that gave us enough information to parse the
situation.
The program was noted in our hiring, became a word-of-mouth item among the
sales staff, to the point that we lifted the performance bar before we
actually did anything. The poor contributor stayed away (and there are
many that struggle along on the draw compensation before moving on to the
next posting). Middle performers saw it as a safety net, even to learn
and grow. The top performers, of course, thought it unnecessary as well
as a drag on their time (they being the mentors), but we wrote it into
their comp plan, and as long as the time required was not onerous, support
was available.
Overall, it lifted the performance bar as everyone knew that they were in
a group that was held accountable in quantifiable terms, that poor
performance was unacceptable, that proactively helping your peers was
expected (we'd developed an early form of best practices capture but could
have done much more with it). The staff, especially the technical sales
support staff, came to like working in an environment where there was an
above average chance that the sales contributor knew what he or she were
doing, and that we minimized direct and indirect opportunity costs. We
did this in an environment (sales) that is notoriously resistant to
training
The program was not without personal pain. The plan caused concern in the
sales force when first announced (I'd not done enough pre-selling of my
own) and I had to fight off a number of back-channel entreaties to senior
management (I hadn't sold "upwards" enough either). I had an (expected)
revenue dip during the early stages which hit my compensation. (In
retrospect, I realized that any new initiative picks up costs and burdens
from other programs/personnel so I carried a bigger hit than the program
itself warranted.)
I repeat that this worked for me and my sales staff, onshore and off.
Please apply as you see fit.
Best regards, Gordon Housworth
Intellectual Capital Group
ghidra@modulor.com
Tel: 248-626-1310
http://www.modulor.com
--Gordon Housworth <ghidra@modulor.com>
Learning-org -- An Internet Dialog on Learning Organizations For info: <rkarash@karash.com> -or- <http://world.std.com/~lo/>