COMMON SENSE INDICATES MORE HEADS ARE BETTER THAN ONE
My first association with management in the work force came at the age of 15, from the owner of a small radio station. My FIRST job! A place that was so well managed, there was no manager. Of course we all knew who the owner and boss was, but it was rarely, if ever, outwardly visible. Everyone knew the job for which they were hired, did that job with input and guidance from the boss, and everyone was part of the same team…. including the boss. He was smart enough to recognize the contribution of each person he hired, and to further mentor each of those people into giving all they had to the company. I use the word “mentor” with the utmost reverence.
Remember the age of genius? At 15, I was the typical self-professed youthful genius who, as we all know now, really didn’t know very much at all. Did any of us? Our small radio station did not support a large staff and even though I was young and dumb, once there, I had an equal voice in these meetings. On staff meeting days, the boss would go over everything about the week’s operations, sales, engineering problems, mistakes, future plans, etc. Everyone would listen and then everyone was actually “asked” for his or her input and thoughts on what had just been presented! Most of the time, I, like everyone else, simply agreed with the boss. But there were times when we did not, and I can recall his genuine interest in soliciting details from those who had offered objections or alternate solutions. The funny thing was that in most ALL cases I can recall, the majority solution was the one accepted! This was true even when it went against the plan offered by the boss.
I can recall how Mr. Smith, the owner, truly hated Country Music. One of the staff wanted to play it “early” in the morning when the farmers in our south Alabama town were getting up. With much reluctance he agreed to let the morning jock “try it”. A few short months later, with much reservation, he agreed with all the jocks, to take the station full country from sign on to sign off. (Not running 24-hrs a day was the way we did things in small towns in the early 60’s) The station became number one in the market that year and I can remember we were even written up in Time magazine as being over commercialized. One Christmas season, we ran 48 commercial minutes in an hour! I’m still not sure where we put the news, weather, and music in that hour.
I recall the boss’ patience, understanding and sense or humor as he “participated” with his team. Although he WAS the boss and owner, he was also “one of the team” and “one of the guys”. In the old days, the radio station studios were often downtown in order to be near the businesses while the transmitter site was well outside town. Such was the case with our station. The boss, who was also our engineer, kept his office at the transmitter site. Phone communications, remote control of the transmitter, and the actual programming signal were sent to the transmitter site via permanently maintained phone lines, which we additionally split and combined in order to incorporate a multitude of functions on the fewest number of lines. The intercom between transmitter and studio would often give false rings anytime there was a voltage spike or line “hit”. It was an aggravation to us when we had to answer several times and there would be no one on the other end. The boss used to say it was caused by a lineman dropping his pliers across our line. Anyway, one morning as the staff was assembling for the regular Monday morning meeting, I had just tried to ring the transmitter to see if the boss was on his way and got no response. So, when shortly thereafter the intercom began to ding wildly, I was going to do a little “showing out” in front of my fellow workers. I jerked up the intercom handset and said, “What, what, what, what …. Mr. Smith, if that’s you calling to say you’re going to be late I’m going to bust your butt when you get here….do you here me?” I never in my life came so close to messing in my pants as I did then and there, as Mr. Smith calmly responded, “ I’m sorry son, I didn’t know you’d be so upset, but yes, I am running late.” When this incident happened I was about 16, but aged at least two years on the spot and probably developed the first stages of hemorrhoids from the intensity of the moment’s pucker factor.
I asked Mr. Smith once about why he allowed us to have so much input into the operations and got a valuable lesson, which many managers today still don’t know. He indicated that decisions and policies instituted by employees were almost always bound to succeed because the employees were obligated to “make it work” verses admitting they may have been wrong or made a bad decision. As a result, we employees were very careful about suggesting anything that would have been detrimental to the group and the group was, in turn, hesitant to support any suggestions unless they were just as committed and confident of their success. Mr. Smith allowed the group to make the decisions and the group then had to make those decisions successful. What a concept! It sure beats one guy trying to dictate the way things should be, instead of drawing on the experience and feelings of the very people who will be responsible for implementation of the decision and ultimately making it work. Unfortunately, many managers have not learned the application of this principal, whether in entirety or moderation.
MOST CORPORATE MANAGEMENT LACK COMMON SENSE
Management has to exist or there would be chaos in the workplace. But it seems that the distance between management and employee has truly widened in the past 20-30 years. I was just told about a company that laid off some 200-300 employees in the same quarter they hired 3-5 new executive management personnel with inflated salaries, benefit packages, and of course golden parachutes. Had they not hired the management people they could have retained 30% of the other employees. If there had been any good management present in that scenario, I would have thought that keeping 60-90 people on staff could produce more of whatever it is that they need, than could the 3-5 additional executives?
Another common case of missing common sense in management is a recent one where the CEO left a particular company. His immediate underling was named to head the company until a new CEO could be sought and of course the company was also considering that particular underling for promotion to the higher position as well. A new CEO was found and put in place over the underling. Almost a year after that, someone finally discovered that the underling assistant had been embezzling money from the company over a period of several years for quite a hefty amount. It was so bad, that the day after it was discovered, when this executive arrived at the headquarters, security escorted him to his office to get his personal items and then even went with him to his home to get the company’s laptop and data.
Within 60-days, this upper level underling management embezzler had a new corporate level position and title at another company within his industry and may have even gotten himself an increase in salary while doing so. His former company never reported the loss or filed any formal charges against this executive, nor had they said anything derogatory about him or his performance. Why? One reason being that upper level management in his former company did not want to admit that they had allowed this to happen for so long, without catching it. By so doing, and the fact it had been ongoing for quite a while, might make them look incompetent to stock holders or others. Because no formal charges were ever made and a legal issue of guilt never determined through a court process, they would not relate the incident to any other prospective industry employer for fear of being sued by this former management person and forced to make their case. In short, it was all swept under the table, the loss written off or allowed to remain buried within the accounting system and this executive allowed to move on to another company. A nice case of the incompetent protecting incompetence and even dishonesty in their associates, for fear of possibly being examined themselves and their own abilities or worth being scrutinized.
Obviously this is not the rule in today’s corporate world, but the fact that such a scenario has occurred, is disturbing. Had the embezzlement been done at a lower level, like on the level of the common employee, that employee would have been terminated, forced to make restitution, possibly have faced criminal charges, and most certainly have found his actions confidentially passed to any prospective employers….not in a manner that would result in liable, but in a way that would immediately end that person’s consideration for employment elsewhere when his or her references were checked.
Keep in mine that this underling corporate executive will eventually and most likely find himself reaching the position of CEO at some company. Also keep in mind that he will not be alone at the top of the corporate world. There will be others who have migrated to the top using equal deceptions and tactics to get there. Once there, does anyone think that these people will change their ways? No, they will continue to do whatever is necessary to feed their own personal greed and hunger for power. Then, just as their actions begin to catch up with them, they will resign, move on to the “next challenge”, and if the the ship they left behind them sinks they will say they had nothing to do with it and that all the leaks developed after their leaving. “It was a sound vessel while I was there”, they’ll say.
Could it be that the outrageous compensation levels being offered in the ranks of many upper level corporate management positions today are one of the underlying problems. We seem to think that if they are paid enough, they won’t have any reason to steal or defraud. We always seem to forget that at some point, MONEY CORRUPTS!
An executive position recently filled in my little city, was under a three year contract that paid almost a quarter million dollars a year in salary, had a car allowance that would cover the leasing of two Jaguars a year, and had a severance package of one year’s benefits. Consider the fact that the day the executive accepted the position, regardless of performance, incompetence, or whatever, he was guaranteed the quarter mil if terminated and he could then actually go to another job and collect that salary too! This one year’s salary is more than ten working years in the life of many police officers who are risking their lives just making a traffic stop! I know of no common working people who have a guaranteed year salary coming if they lose their job, except executives. There is something wrong in a system that allows for this kind of disparity in the work environment.
Another fine example of this disparity between management and workers came to light recently hidden in “News of the Weird”, a regular feature in our local paper. It deals with the fact that all across America, executive compensation is obscenely out of parity with the rest of the working world. “In the last several years, top corporate executives have received compensation (via sweetheart deals to buy their company’s stock) in ridiculously high amounts unrelated to their efforts, according to experts cited in Fortune magazine. Several high profile executives (e.g., Sandy Weill of Citigroup, Jack Welch of General Electric) ‘earned’ over $100 million a year at the same time their companies’ profits were plunging, and their one-year compensation equaled roughly the salary and benefits of as many as 3,000 of their laid-off employees.”
Does that compensation figure need repeating? These executives “earned” OVER $100 million in one year! Personally, my thoughts would be to layoff the CEO, give his job to the next person under him at their same salary, keep the 3,000 people. Then explain to the employees the serious nature of the present situation and get them working on ways to get things back into the profit column while telling the new CEO he had 6-months to a year to lead those 3000 into making a difference or he’d be gone too and the next person in line would take up the challenge. I said this earlier and it bears repeating. Companies don’t fail from bad employees. They fail from bad management. Start the cutting and laying off from the TOP and you’ll be surprised how quickly you’ll get better management.
How can CEO’s and other company executives, making exorbitant earnings, decide to downsize or lay-off employees while continuing to accept no cuts themselves? After a previous years earnings in the double millions, would a cut to a mere three or five million in a tight year seriously hurt them? The above scenario makes me hesitant to support any company that is willing to disrupt the lives of 3,000 employees while continuing to pay obscene salaries and benefits to the very people who lead the company into such a position, but could not see fit to reduce their own ludicrous compensation. We all need to think about these things every time we’re making purchasing decisions. Maybe instead of posting the gas mileage figures on new car stickers, or the energy usage efficiency rating on major appliances, they should be required to post their CEO’s total annual compensation along with a dozen or so of his immediate underlings. Now that’s some information that would certainly influence my buying decision.
Imagine yourself as one of these executives, making a “mere” 20 million a year. In the very first year, you could buy and own, debt free, your own personal jet, two 100-ft Motor yachts (one for east coast and one for west coast), a million dollar house in Florida, one in California, one in the Colorado Rockies, and one in New England …. and still have a few million left just to “play”. What could you possibly need in the second year? I think the problem is that executive compensation has gotten to be a game among CEO’s as to who can command the most bucks. Obviously, at some point the money itself is no longer a relevant factor because what else could you possibly really need. It makes my blood boil when I think of these people making such amounts, but they will not give up a year’s earnings to preserve their employee jobs when times get tough. It’s truly disgusting and I will personally begin changing my future buying habits regarding products from companies that operate in this manner. If we all would, things might begin to get back in line.
When World Com went down the tubes, thousands of Americans lost their retirements, their jobs and hundreds of millions of dollars in assets. The CEO, Bernard J. Ebbers, had earned over a half billion dollars in the previous five years and by the time he resigned, the company stock had plunged to 95% of what it had be just two and a half years earlier. As he was leaving, he was also given 1.5 million a year annually for LIFE!! I can also assure you that all the directors of the company fared equally as well. The directors were not voting those big stock options to the CEO without getting a few million dollar crumbs for themselves! Unfortunately, only a few, if ANY, go to jail … and if so, for how long. Is there anyone out there that would not give a 2-3 years in jail for a paltry 10-20 million upon release?
And don’t think it’s JUST the WorldCom’s, Enron’s, AGI's or Citi Groups in the news. These are just the tip of the iceberg being exposed. Jill Barad, CEO at Matell, Inc. missed annual projections by $500 million in 1998, resigned in February of 2000, yet still was allowed to walk away with approximately $50 million! Not a bad reward for being wrong.
Durk Jager, CEO of Procter & Gamble, in his 17-months reign as top executive ending in June 2000, saw the stock drop 50%, costing stockholders more than $70-billion in asset losses, … Hello? … $70-BILLION! His walking away reward was $10-million.
Stephen Hilbert, CEO, Conseco, Inc. resigned in April of 2000 when ther stock was down 90% and the company had cut 2,000 jobs. His walking severance package was about $49-million.
There is no justification for this much discrepancy between the common workers and top executives in corporate America. When the gap gets this wide, it becomes a canyon large enough to not only kill corporations, but as we have seen, it seriously threatens and hurts the entire economy by destroying the trust of buyers and the American public in general.
Do you think that maybe we common working class could pay less in taxes, if these over compensated corporate executives were taxed at 90-95%?
COMMON SENSE IN SALES MANAGEMENT
Consider this scenario. You are the salesman in such a case. Your company, overall, is slightly short of reaching their forecast goal for this month’s sales. However, you are already over quota. They ask you to go to some customer and give him additional discount to issue the order now….this week! You do it under pressure to help the company reach it’s goal. Did they offer to compensate you for the commission you lost by reducing the price? You were already over quota this month, but when next month rolls around and you’re short of your quota because you forced that sale early (at a loss), they then reduce your commission or pay no bonus because you didn’t make quota in the following month. Now if you see nothing wrong with running a sales operation like I’ve just described, then you’re probably already working in sales management. If you see the “wrong” in this, then YOU are a salesman!
Most products go through several levels of sales and distribution before ever reaching the consumer or end user. Everyone is familiar with the fact that there is wholesale and then there is retail. Often there are other additional levels. Below the manufacturer there may be importers, distributors, dealers, reps, etc. Each level has specific duties, and most often salesmen are directly involved. Let’s look at one example:
A company manufacturers a product for use within a specific arena. We’ll call this product a “Doo-Dad”. Let’s say that the Doo-Dad is a well-engineered product that has a better price and more features than its nearest competitor. The manufacturer hires a sales manager, who in turn hires two salesmen for the entire United States. Their respective territories are east of the Mississippi and West of the Mississippi river. Obviously two guys can only sell and show so many Doo-Dads. So, the company sub contracts with a few manufacturer’s rep agencies to support and help setup sales to dealers and/or distributors, who will in turn offer the products to end users. These reps work only on commission, thereby saving the company the cost of full time salesmen. Let’s say there are four such agencies covering the US. These agencies work on a regular basis with maybe 25-50 dealer offices in their respective regions. Each dealer office may have 2-5 salesmen working the area and calling on end users. So the pyramid looks like this from the manufacturer down: 1 VP of Sales, 1 Sales Manager, 2 Regional Sales Manager, 4 Sales Rep Agencies (which may have several salesmen themselves), 200 Dealers with an average of 3 salesmen per dealer for a total of 600 potential sales people on the street.
Now here is the place where many company’s sales managers lose sight of how the system actually works. These managers apparently are influenced by the company bean-counters. The accountant’s world revolves around simple mathematical rules that, when properly applied, give expected and predictable results. Unfortunately, selling does not always work that way.
When the company started there were zero products and zero sales. So starting from zero means there is no place to go but up. Therefore, initially things may actually look rosy the first few months because everything is going to automatically increase as exposure to dealers and their salesmen increases. However, sales will eventually reach a plateau where the initial exposure and excitement begins to level off. (Kind of like in a marriage.) Now we’re getting down to the job of really “selling” and how to keep sales going?
In this scenario, there are still only two people working full time for the company. Remember those two regional salesmen? The reps have several other manufacturers besides the Doo-Dad folks because they can’t survive on only one manufacturer’s commissions. The dealers, who actually work with the end users, have even MORE products that they sell, and those salesmen on the street are selling the products in which their customers have an interest and are asking about. So, when sales flatten and the Doo-Dad manufacturer decides that adding more dealers will equal an increase in sales, they may be short-sighted right, and long-term dead wrong! This is the math that comes from the bean counter’s approach. The truth being that if you increase the dealers to the point they are all fighting over the same few customers and forced to lower their prices to where the profit on the Doo-Dad isn’t worth the fight or their time, they quit promoting and selling Doo-Dads! It would be like establishing a Chevrolet dealership in every town of 10,000 people. At first GM would sell a lot of Chevrolets to all their new dealerships. However, sales would eventually start to drop as the market reached saturation and almost everyone had a Chevrolet. Dealers would become overstocked and therefore drop prices, even further flooding the market. One day GM would find itself in the position of having a lot of dealers with Chevrolets, a lot of people with Chevrolets they bought cheaply, and no place to sell more new Chevrolets. At this point, dealers begin to go under because of no sales. Existing product is then further devalued as the company’s stock gets pushed into the market at a loss and below cost. The ripple effect then goes all the way back to Chevrolet’s home office and management who are now laying people off while sitting around in meetings speculating on what happened to the GREAT sales of previous years while blaming everyone and everything except themselves. I can assure you that they will not see the problem or the fact that they themselves originated and even orchestrated it from the beginning. So what’s the answer?
First, understand that getting dealers to purchase stock for inventory, IS NOT ACTUALLY A SALE! So, many manufacturers think this is where the sale occurs and they are wrong. The true sale does not occur until the actual user of the product purchases and uses it. Everything in between is part of distribution. It may “look” like a sale to the bean-counters, but if management does not look past their distribution, see, recognize, court and promote the products to their true customers, then it’s eventually going to bite them in the back. If you don’t promote the product and do what is necessary to help close the sale to the end user, eventually your sales to dealers are going to stop and you’ll find yourself with a lot of product sitting in the warehouse aging and depreciating. Dealers and distributors faced with slowing sales and stagnating inventory, will in turn start to dump it in the market at any price necessary to recover their costs or lessen their losses, they will not replace it, and the future sale of Doo-Dad’s will be facing extinction! And, so will Doo-Dad manufacturing!
So, what do you do? You need to advertise and promote your product to end users. Do not expect the reps, dealers, or even salesmen to do this for you. All the aforementioned people “sell”, they do not market or promote! Salespeople work directly with potential customers and therefore can and usually do, make the difference it actual product “choice” between competitive products. They will often times get a customer to purchase an entirely different product than they originally wanted, but they very seldom “initiate” product interest. The day of the door-to-door vacuum cleaner salesman is over. He’s still out there, but he no longer wastes his time going door to door. He now advertises, runs promotions, does mailings, pursues the internet, gets referrals, offers incentives, etc. to get the names of people who will allow him to make his presentation. Now he can concentrate his efforts on those who have an interest, allow him in the door and are going to be making a purchase decision. This holds true regardless of what you are selling. A good salesman does not waste valuable time knocking on doors with a Doo-Dad under his arm in a market that does not even know what a Doo-Dad is, what it does, or that they have any use or need for one! The good salesmen of today have narrowed their market to those who have the ability to purchase and have an interest or need for the product. In other words, he does not go fishing in the desert.
Know who the real customers are for your products and through advertising, mailings, whatever, promote your products to the people who actually use them. They will, in turn, seek out the dealers and salesmen who will give them that final confidence and assurance level needed to “CLOSE” the sale.
Another example of much of today’s sales management floored me this past month when I worked with a dealer closing a sale. For sake of discussion and as an example, I’ll use Doo-Dad’s again as an the example. A customer wanted to purchase 100 Doo-Dads from a dealer, at $1000 each. ($100,000) The dealer placed the order with the manufacturer for 100 Doo-Dads at a dealer cost of $80 each. ($80,000) The dealer was new to the program so the manufacturer initially refused to accept the order unless the dealer also purchased their demo package of 25 Doo-Dads, “required” to meet the “new” dealer opening qualification order set down by management. The opening (required) demo package of 25 Doo-Dads was specially priced at 50% discount to encourage new dealers. So, the dealer re-wrote his order to include one demo package of 25 Doo-Dads at $500 each, ($12,500) and placed an additional opening order for 75 more Doo-Dads at $80 each ($60,000) for a total order of $72,500. The manufacturer’s management was happy because they got a new dealer and an additional order. The end user (customer) was happy because he got what he ordered. The dealer was happy because his profit increased from $20,000 to $27,500. Did anyone but the common sense sales rep notice what was simply given away to meet some management set rules?
This was a TRUE story with only the numbers and product changed for simplicity sake. If you see nothing wrong with the change in the order needed to accommodate the manufacturer’s rules, then you are in management. If you did catch something wrong with the above, then you are a sales person. I am NOT going to explain it!
MANAGEMENT IN GENERAL
As I may have already said, it seems that much of today’s management comes from some lateral movement rather than up through the ranks. Although I have seem some managers who once were good salesmen, they seem to totally lose their former sales skills and comprehension of the profession once they become managers and start spending their time in meetings or behind a desk doing reports, changing rules, and forecasting future sales.
I know that upper-level management requires written reports, charts, graphs, etc. for them to use and speculate over during their many days of meetings. This is especially so when they are dealing with stockholders or venture capitalists. Pressure from these investment people force management to come up with almost daily forecasts for sales and production. So much money can be influenced by these reports, it often encourages lying at the very highest levels in corporate America. Enron and it’s eventual demise is just one example.
The importance of these reports, such a forecasts, also leads to the establishment of goals or quotas. Now don’t get me wrong, a goal is a wonderful and positive mark to which you need to strive. A quota, on the other hand, is the establishment of a negative mark that serves as a penalty for falling short of the goal. All too often, management unknowingly pursues the negative approach instead of the positive. They fail to realize that on the sales and production level, things may be a bit more on the simple side. Good employees and salesmen sell and produce all they can, all the time. This is especially true with salesmen, where their income is directly related to their production.
I used to have a sales manager call me near the end of every month and ask which of the sales I was working on were going to close during the last week of the month. I used to answer, “every one of them that I can”. He never liked that answer and I knew it was not what he really wanted to know. What he wanted to know was if we were going to meet the goals or forecasts he had made to management. Management never asked this question if we were well ahead of any forecast positions because they knew the mark was made. If we were below forecast, they would ask if there was anything we could do to close any of the customers early. I used to remind them that I could not take a gun to the customer and “make” him issue the order earlier. Then management would respond with, “How about if we give them an additional 10% discount to close this month?” This is the kind of thing that always makes many salesman want to throw up, especially if the kind of goods you’re selling are not “spur of the moment purchase” type goods. When what you’re selling has taken weeks and maybe even months of work, that included product demonstrations, several written and re-written proposals, price negotiations, and God only knows what other hoops through which you have had to jump. At this point in time and in reality, the salesmen have basically already “closed” certain sales and are just waiting for the customer’s paper monster to finalize all the approvals necessary to actually issue the purchase order. Now management wants to give away 10% of everything just to get the order this week instead of next week?
I’m amazed at the way so many large companies operate today. I used to think the lack of common sense was limited only to the places I worked. Then as the years rolled by and I talked with so many others in the work force in a variety of levels within a variety of industries, I realized that this problem was as common as there are companies!
I was not a “born salesman” as the saying goes. In fact, I didn’t want to ever be in sales. I was exposed to it in high school because I was in a program that allowed me to schedule all my courses in the morning and then work in the afternoon as a disk jockey in one of the local radio stations. The school figured my chosen profession did not fit into the skilled labor part, but since advertising did have some association with sales, I ended up having to take some “sales” courses in school in association with the program. I was truly bored with all that mundane stuff about “How to Close a Sale”, “How to Judge a Customer’s Responses and Adjust Your Presentation”, “How to Determine the Customer’s Needs”, etc. I decided I never wanted to be a salesman, partly because it was a very “measured” profession. It didn’t take much IQ to figure out that “no sales” equals “no commission” and eventually “no job”. I was not sure if I could sell, but I knew I could talk, so I just wanted to stick with what I knew I could do.
Eventually, as I progressed from radio, into television, into newspaper, than back into television, I was able to convince a few people that I was worthy of some management status.
I actually enjoyed my time in management. During the time I was working my way up from the very bottom of the ladder into a spot more near the top, I enjoyed watching, helping and teaching to others what I had learned or been taught by mentors before me. I took much pleasure in watching many of them improve their talents, exceed my expectations, and in many cases, my own talents. It was a very good feeling and I’m very proud to say that most people who worked under me, are my friends to this day. I think that’s important.
It seems that many of today’s management people came laterally into their positions, often times from non-related industries. I’ve never understood why some management people think that success managing a waste disposal operation would directly qualify and transfer to success managing a medical facility. Now that’s just an analogy folks and I’m sure your local hospital administrator did not come from the garbage dump; however, some of his accounting associates may have! As I said earlier, I used to think that bad management was something unique to my industry or area of expertise, but I have since learned from MANY people that inept management seems to be increasing in American business today.
So, why does this bad management not show up in the failure of these companies you might ask? Simply put, until just recently, during the past few decades, more times than not, the economy has been growing at such previously unparalleled rates, that it would not matter if a monkey were heading some of these companies! Needless to say, many of today’s incompetent and egotistical management types have simply been riding the wave as if they had made the ocean and created the surf. As we have seen some hard times come in recent years where these companies have encountered some true competition and those same “heroes” have been dragging some of those same companies to disaster.
I worked for such a company during this past decade. I went with them when there were only 40-50 employees and 10% of that number were the salesmen. During the next 6-8 years, the officers and founders became millionaires and the company grew to over 300 employees with holdings, cash and sales in the hundreds of millions of dollars. One would think that the sales staff that helped this company gets to that position would have done equally as well in the process. Not so. The company, like so many, constantly kept changing the commission rules, territories, etc. As growth continued it began to acquired or swallow other smaller companies. The company then slowly pushed out various salesmen until none of the original sales people were left, except one. That lone survivor was probably saved by the fact he had a past working relationship with one of the officers. During the growth years, ALL of the expanding upper level sales management for this company were recruited and hired from outside. Never once was anyone promoted from within. Many of the new management team came from companies that, during the growth years of our company, had themselves, been in management positions within declining companies! I never could understand the greatness in hiring management people from a company that was in decline as a direct result of bad management? We even hired people from competing companies that we were finally beating, as if those people had some greatly needed talent? Were not those the same people making bad decisions for their companies allowing us to gain ground against them? Since when do you go out and recruit the planners of the battles lost against you, and ask them to help you plan your battle strategy against new competitors? Such companies, applying this technique in today’s exponentially growing economy, are laying the foundation for failure and collapse if, and when, they come head to head against a new and better managed company.
This company to which I have just referred, came into the stock market with an IPO for stock of $10 per share. Within the following 2-3 years it split 2 for one at least twice, and eventually got as high as $60 a share! So, a $10 investment could have returned $240, and did for some! They are still in business today, but unfortunately many of their management changes have cost a lot of investors. The stock has traded recently as low as $3.50 a share or $14 against it’s original IPO and eventually were taken over by a better managed company.
What true salesmen have that many of today’s management people lack, are “people” skills. Those skills will make or break companies in tough times. Many American industries today see “people” as a mere commodity, or necessary evil, and if they could figure a way to continue to make sales without them, they would do it! Today’s Internet is even further re-enforcing that management misconception.
A large sector of American industry is in a mode of operation that says “if you build a better mousetrap the world will beat a path to your door”. Let’s look at that philosophy for a moment. Although there IS truth in this concept, we need to keep in mind that our wonderful capitalist system also encourages others to make mousetraps. Understand that the basic function of the mousetrap is to catch mice. So, once you have a lot of people making mousetraps that perform that same function with a similar level of success, the word “better” becomes somewhat mundane and unimportant. If there are hundreds of mousetraps from which to choose, and they are all about the same in price, and they all perform the primary directive reasonably the same, what makes someone choose one over the other? Hence the need for salesmen (the original marketers) …. and a well managed, supported and a motivated sales program. It will be the difference between success and failure for many of the mousetrap builders. The problem with management today is that because many didn’t come up through the ranks of sales, they haven’t a clue as to how sales works. Many of these “sales managers” never actually made sales themselves, have no personal sales records to prove their ability and they just simply don’t understand the process. To them it’s a formula and not a skill or talent. However, sales is a people-oriented process requiring a somewhat special talent. (70% talent, 20% formula and 10% luck) The very nature of some management not understanding that factor in the process, keeps many managers from being “people” oriented … a success trait that has been attributed to most all great men throughout the history of the world. Those who ever attained any degree of greatness in history had the ability to rally people to their cause and support. In other words, they were great salesmen FIRST. You can’t SELL through the use of intimidation, threats, falsehoods, or fast-talking rhetoric. That may get a few sales, but in the long run it will eventually kill you.
In short, there are a lot of American companies out there being run by non-sales and non-people (customer)-oriented, management, that are taking credit for the success actually generated by others efforts and abilities, who will eventually destroy their own sales program due to their lack of support and understanding of how the process actually works. It will only take a little competition, lean times, or a change in the market and their decline will be certain. More disturbing is that many of these managers will then move laterally from their declining company, to another company that is on the upswing and again “ride” the wave of the success of others to claim more success for themselves. So, on it goes. Incompetent managers swinging from tree to tree, all the while claiming they actually planted the falling trees left behind, now beginning to rot from failure that was not their own.
There’s nothing really magic about selling. Yet, it’s probably one of the least understood facets in industry today, except by those who are actually closing the sales. Management meets, speculates, meets, forecasts, meets, changes policies, meets, changes the product, meets ….. and although their actions can directly have either positive or negative influence on sales, they don’t actually make the sales. It takes salesmen! Salesmen who are many times totally excluded from the management decision process. Good salesmen always have, and regularly do, use good common sense. Unfortunately, in a lot of sales management these days, common sense is not only uncommon, it is non-existent.
I worked for another company for about ten years. It too started very small, but slowly grew into a multi-divisional business and all divisions were growing and prospering. It was tightly run and a large portion of the stock was employee owned. Unfortunately, the company founder died and his family didn’t want the hassle of running a company, so they sold it to another family. The new owner brought in his brother with the title of Vp of sales over the existing and long term sales manager. He then hired one of his buddies to be marketing director. All the new upper echelon paid themselves quite well, including year-end bonuses. The company was cash rich at the time and these new majority stock holders took that opportunity to pull on those reserves to invest in ego boosting outside ventures. At the same time, this new VP of sales, who previously had never sold anything, but his claim to fame was he managed the trust department of a bank, made the statement, “the salesmen are making too much money!” The deceased owner used to say he hoped the salesmen got so rich they retired early. He knew that if that happened, the company was going to be doing VERY well. Anyway, these new guys started doing things like taking key accounts and making them “house accounts” so as to not have to pay commissions. One large sale required the product be painted a different color than usual. Regardless of the fact they had to paint the product anyway, the new management refused commission to the salesman because with different paint it became a “special order” product. Needless to say, with this kind of respect for salesmen and others who had built the company over the previous ten years, they started losing those experienced people. Within the first year they lost their sales staff of seven years for an entirely new sales staff. By the end of the second year they lost their experienced and long time sales manager, the guy who had built the original sales team which the VP of sales had since run off. Not only did they lose that experience, but they lost it to their major competitor! Within only a few more months, the company, now headed by the VP of sales (brother of the owner), was facing bankruptcy. However, before actually going bankrupt, they talked the employees who were left, into allowing them to restructure the company ESOP (Employee Stock Option Plan). Although it was illegal for them to take any of the employee’s contributions to the program, they could legally tap into the gains made through the years from interest, investments, etc. When the company did finally go bankrupt, the employees stock was basically worthless, the growth funds were gone, the management people walked away with their personal bank accounts fat from salary plus bonus money and left their creditors holding the bag. It CAN happen, it DOES happen, and in this case, I saw it happen. Companies usually fail because of bad management, not because of bad employees. Your present job and retirement is only as secure as your company’s present management, and unfortunately, as many of us learned from this event, that security can change or even be gone tomorrow. Only the management people have usually taken care to protect themselves and their families with “golden parachutes”. The rest of us are usually stuck with the aircraft all the way to the crash site.