I know that HR managers realize how much it cost to hire and train an employee, but I'm not sure that middle management or even upper management, grasps the concept of the costs involved in turning over a sales rep. I was at a national sales meeting and the CEO stood up in front of the reps, wearing a polo shirt, khaki pants, and boat deck shoes; very business casual almost to the point of beach casual. And then he said, "If you're below quota then you either need to get your butt in gear, or you need to get your butt out of here." Spoken like a true idiot who's never sold a thing in his life. I think he thought it was funny, but no one was laughing at what he said, they were probably laughing at his outfit. What moron wears Sperry Top-Siders to an annual meeting? I was looking around at some of the reps wondering if we were on the "Love Boat". Where is Doc, Gopher, and Julie?
There was a major problem with his message. Number one, this guy needed to get some fashion sense, or at least respect his employees enough to not look like he just got back from an America's Cup race. And number two, he was forcing his employees to make a career decision which was going to have a huge effect on his bottom line. He had no clue as to the costs involved in turning over a rep, even an under performing rep. Well if you review the studies regarding employee turnover, the costs are astounding. Even I was surprised at how much money is lost.
According to a study by the Society For Human Resource Management conducted in 2008, it can cost a company as much as 60% of the employee;s annual salary to just replace that employee. Moreover, the associated costs of turnover, such as training, lost production, and lost revenue, is approximated at 90-200% or the former employee's annual salary. The percentage is higher for "specialized" employees, and believe it or not people you are special. So with this message, that CEO could have pushed out 10 reps with an annual salary of say $60,000 which might cost his company up to $900,000. That's a lot of Sperry Top-Siders!
So this is just one example of how managers can lose an employee and the associated costs. Here are a few more examples for poor managers to follow and good managers to avoid:
1. Play Favorites- Nothing upsets employees more than a manager who plays favorites. And speaking from a management point of view it's hard not to play favorites. Managers are drawn to people who perform and have an extreme distaste for employees who are not meeting their goals. However, an effective boss is one who disregards the numbers and treats everyone the same. Even I have been guilty of this and have lost employees.
Every manager is guilty of liking some employees more than others, and some like them a little too much. I remember one manager who always hired these incredibly beautiful women to work with him. They would have little to no experience in sales and yet he would bring them in, and they would sell. I guess the customers were too busy staring at their breasts to look at the contracts they were signing. His formula worked for a while, until some of his other reps started complaining that he was spending too much time doing ride alongs with his "spokesmodels". He was doing ride alongs apparently, but not in the car, and eventually the two lovely ladies found out he was sleeping with each of them, and he was fired for sexual harassment. That's an extreme example, but to be honest, one that I've seen played out at least a dozen times. Guys, keep it in your pants.
2. Work Them To Death- Years and years ago we used to hire college grads and then work the hell out of them to see if they would be "management material". I don't even know what that means, but judging from my experience I guess being "management material" involves being able to hold a cup of coffee the right way, type with 2 fingers on your computer, bark orders that make no sense, and displaying an innate ability to ignore employee requests. So I guess most of these young people could be developed into "management material".
In order to help them on their career path, we would have them work 60 hours per week minimum. Why? The company wanted to "thin the herd". In other words, the college grads who weren't committed would eventually quit and the one's who stayed were the type of person we wanted to have working for us. Their efforts showed commitment, or perhaps, that they should be "committed" for putting up with all the crap we threw at them. It's a formula that Enterprise Rent-A-Car still uses to this day. It's the philosophy of "Churn'em and Burn'em". Any of you that have ever worked for Enterprise know exactly where I'm coming from, and hopefully you've already left that place.
If you're a manager that wants to pair down your sales team, just start requiring them to do 10 calls per day and pretty soon, you won't have any reps left. Good luck with that...
3. Promises, Promises, Promises - Supportive management is great for a new employee, especially a new rep, but as a leader you never make promises you can't keep. It's just a bad idea. New employees need to be helped along because most of the time, they have no clue where to start. I find it amusing that in health care, the first 4 weeks with many companies you are required to do "Home Study". Which means you lie around in your pj's and read clinical papers and you take tests. Sometimes online, and sometimes not, but you really do nothing for 4 weeks, besides sit around the house and read. It's boring as hell, and then suddenly, BOOM! You're out in the field trying to sell a product you only know from papers.
My first foray into health care, I asked my new boss when he was going to ride with me and he would make plans, and then cancel. He did this to me 3 times, and finally I just called him and asked:
"Seriously Jim, are you ever gonna ride with me? I just started and I need a little help. You keep making promises and then breaking them. What's the deal?"
His answer, "Yeah, you seem to be figuring it out on your own, so no I'm probably not gonna be able to ride with you. I have other reps who aren't doing so well, and I need to get them up to speed. You'll figure it out. That's why I hired you."
"Wow. Uh...okay. Thanks for the support.", I responded.
" You're welcome.", he said.
" Fuck you.", I said, but of course I had already hung up the phone. I'm not a complete idiot.
If you want to lose an employee quickly and demotivate them, then just keep making promises and breaking them. It's like any relationship, you have to follow through on your commitments.
4. Be Consistently, Inconsistent- Employees hate managers who are always changing the rules. Whether it's in relations to commissions, vacations, reimbursement, or anything. People want to know what the rules are and they want management to follow them consistently. Not change them every month, every 6 months, or every year. Stability is what employees want in their company and especially in their sales team leader.
How many sales reps out there have received their quotas after the fiscal year has already started? So suddenly you went from being rep of the year in December to already being behind 20% in February because that's when you received your quota. Companies that don't acknowledge that their reps need their quotas early so they can get started on next year, are missing out on lost revenue, and in turn they're just upsetting the sales rep. If a company is going to have quotas then they need to consistently get them to the field in time for the reps to do something about it, not after the year has already started. By then, both the rep and his/her manager are already behind their goal. How motivating is that?
5. Create A Poor Work Environment - Some of you might be asking yourself, "What does this mean?"
A poor work environment does necessarily mean that you are working in a sweat shop where they won't allow you to go to the bathroom, or you're a victim of the slave trade. A poor work environment can be created by just one lousy manager working for what might be a great company.
In my last year at a very well known uniform company, the new general manager, turned over 14 supervisors and managers in a little over a year. What's even more amazing, is that he took a well performing plant and was able to reduce the profit by 8%. and shrink the revenue. Why? He created a poor work environment.
(I know that I keep citing personal references, but listen people I have no other examples but my own. If anyone would like to add comments feel free, but I can't promise I'll be nice in my response.)
I came in at the end of the fiscal year, and tried to explain to him how much turnover was costing the company, how disgruntled our employees were, and how we had to create a "friendlier" work environment for our people. What do you think was his response?
As you're reading this dialogue, picture a short little man, who is balding, with gray hair, and sweating so profusely he has a towel on his desk to wipe his brow. Now picture him inhaling a helium balloon and then speaking loudly at you, as if you were deaf.
"Who's talking about me? Who was it?"
" Richard, I didn't say it was you. I said we, as in WE have to create a better environment."
" Well who's complaining about us? I need you to tell me who it is?"
" Why is that important? The important thing is some people are not happy and we need to motivate them to get this plant back on track."
" Well it's important to me. I need to know so I can get them out of here."
" You're still going to have a problem, even if we fire everyone, well especially if you fire everyone."
" Jim always taught me. If someone isn't on board then there a cancer, and a cancer needs to be cut out."
" What? You're comparing our employees to cancer? That's ridiculous. Okay say it is a cancer, then let's use chemo therapy to treat it, not cut everybody."
" Are you undermining me? What have you been saying about me?"
" What in god's name are you talking about. Richard we need to try and get the employees back on our side."
" Well who said there not on my side. They may not be on your side, but they're on my side."
" Okay Richard. I'll figure it out how to create a better work environment so the employees like me better. I guess it's all my fault."
" Maybe it is. I don't know why Jim brought you in here anyway. Take care of that, that's what you're supposed to do. Isn't it?"
" Whatever." I said and got up to leave.
" Are you being insubordinate?", be squawked. He was what people would call a "seagull manager". The kind who flies in, makes a lot of noise, and shits on everything.
" This isn't the army Richard, and the war is over. I'm gonna go try and rework the numbers. "
" You do that.", he said and went back to two finger typing email responses.
I was mortified. He had no idea what the hell he was doing and here he was trying to lead a group of over 300 people. He had created a work environment of fear, intimidation, and back stabbing. I was brought in to help him but he didn't want my help, he was afraid I was going to take his job. I left after only 6 months, and he was fired immediately thereafter. How appropriate that his name was Richard, because he truly was a Dick.
If you're a manager reading this please don't follow these examples, and if you're a rep, please call your manager on the carpet when they're not doing their job. Have a great day selling!
-M
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