“The biggest challenge employers face in recruiting new hires is the competition between companies for talent” notes Worldwide ERC, the association for global workforce mobility management. According to an article on their website, more than 90% of the companies surveyed are having problems recruiting the right people and more than 20% consider the problem severe. They were asked to give the reasons why they have been running into difficulties in hiring talented people - here are their responses (including percentages from the 2002 survey):

2002 2006

Competition with other companies 47% 59%

Lack of qualified candidates 48% 50%

Cost of living/housing issues 26% 38%

Undesirable areas 22% 32%

Dual career/family issues 28% 27%

Inadequate compensation/benefits 7% 16%

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Just read this title for a sales position:

Major Regional Account Sales Representative

That almost reads like the author was attempting to stuff keywords into the position’s title. As you know, I am finicky about titles since they are so important for online ads. Here is my first impression of this wordy title:

Major = big accounts
Regional = I’ll have a geographic territory
Account = B2B, no consumer sales
Sales = understood
Representative = warning - mouse nuts position

Now when I reread the title, I suspect that they were using “Sales Representative” which didn’t generate much interest. Their solution was to add title words that carry more clout. I could be completely wrong, but that is the impression I get as a candidate.

I tend to stay away from “Representative” in titles unless it truly is an entry-level sales position. Companies that have strong name recognition or market leadership positions seem to be the only ones that can successfully use that title.

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Complex sales require complex skills and traits to be successful. This week we look at a somewhat abstract capacity that pays tremendous dividends in long, complex sales cycles.

Concrete Organization
This capacity deals primarily with the salesperson€™s ability to properly allocate resources to accomplish a goal or plan. It includes the ability to understand the immediate, concrete needs of a situation and to establish an effective action plan for meeting those needs. These resources are not limited to only physical components. This capacity takes into account a person€™s ability to evaluate and utilize both human and physical resources.

A salesperson with strength in this trait will be able to systematically and logically evaluate the components of a situation and then utilize them effectively to produce the desired result.

A salesperson with a weakness in this capacity may have difficulty in identifying the separate components of a situation, and therefore, have difficulty in deciding what steps to take to meet a goal.

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As you would expect, my interpretations of the articles referenced by Herd Enuff’s comment are much different than the musings of the young lad known as the Velvet Hammer.

I’m assuming the young lad chooses to ignore the aforementioned differences between the private and public sector for a reason. Perhaps it’s because of the harsh realities of situations like the Enron scandal. Or maybe the real need for legislation like Sarbanes Oxley, or the latest SEC disclosure rules - designed to protect the “average” investor from greedy C-level execs. Unless you’re a strict libertarian, you’ll have to admit that you enjoy the benefits of our “horrible government intervention” every day.

I also don’t buy the implication that these greedy types are the only ones that could be effective in these positions. If so, how do you explain the highly effective people that aren’t under media scrutiny for excessive compensation.? Perhaps their reasonable compensation is the result of the very market factors to which you subscribe - who knows for sure?

I do know that our musings won’t change anything. I’ll agree that at the end of the day, our free market will have a major impact on the compensation issues we’ve raised. Unfortunately, the pressure will NOT come from individual investors like us, but from the major fund managers and institutional investors. That’s where the influence resides.

So, in the sales management world we choose to participate in, let’s return our focus to building compensation plans and sales organizations that are motivated, successful and proactive in selling.

I think we can agree on that?

P. S. The only pro athletes that are worth their contracts are hockey players.

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I am attempting to stoke this fire some more with Red Bird. One reader posted a comment to yesterday’s post stating this:

You guys must be living under a bush somewhere back east. Have you ever heard of the golden parachute? Show up, don€™t do anything, get fired and walk away with millions. It€™s great gig if you can get it.

Chew on this
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/03/AR2007010300553.html

or this http://blogs.wsj.com/deals/2007/04/10/a-53-million-golden-parachute-for-sprints-forsee/

Fair enough - I know this is an emotional topic for many people. However, emotions are not the best option for rational decision-making. I think most people will agree that CEO’s do more than “Show up, don’t do anything, get fired and walk away with millions.”

I “chewed on” both article links and want to highlight a couple significant items from them. In regards to Bob Nardelli (topic of the first link):

He has succeeded on many fronts, even as he fell short on others, and in recent years found himself defending his hefty salary. Revenue has nearly doubled, to $81.5 billion in 2005 from $45.7 billion in 2000, though that figure fell short of his goal of $100 billion. During that time, profit rose to $5.8 billion from $2.6 billion.

Not bad. Admittedly, the stock price has not followed this revenue and profit growth. I think the hesitancy from the street has more to do with the cooling housing market as opposed to Home Depot’s revenue performance. I am impressed that he doubled profits in 6 years. What company wouldn’t desire that profit growth? From what I read, Nardelli’s real downfall was his lack of communication ability which ties in nicely to my earlier post.

If you don’t know his history, he was one of 2 top executives to succeed Jack Welch at GE. Welch chose Jeffrey Immelt instead because of his communication ability. Nonetheless, the street was going to pay a hefty price for Nardelli based on experience. Home Depot’s board chose to pay for Nardelli. Note to Red Bird - I am not aware of any of Nardelli’s cronies being on Home Depot’s compensation committee.

The second article link references the CEO of Sprint Nextel. I am a former Sprint stockholder but I sold the stock since that industry is difficult to predict. I think the Nextel merger was a mistake - maybe knee-jerk reaction to other mergers.

Forsee has been under fire from investors since, as the head of Sprint, he orchestrated the company€™s 2005 merger with Nextel. The deal hasn€™t lived up to its billing, with subscriber growth slowing and Nextel€™s creaky network taking a toll on call quality. That has helped drive down the combined company€™s stock 26% since the deal was closed.

A number of Sprint investors say they expect Forsee has another quarter or two to show some progress turning the ship around before being shown the door. Should he get the boot, the severance payment would represent a surcharge for investors, if you will, on top of the $20 billion in market value that has evaporated since the merger.

Bad deal and a serious market value “evaporation” (glad I sold the stock). But take a closer look at the specifics of Forsee’s package:

Most of the value of the package, $43.2 million, comes from the accelerated vesting of options and restricted stock. Forsee gets the money only if he€™s forced out €œwithout cause€ or suffers a €œconstructive discharge,€ as defined by his employment contact. The payment was calculated at the end of 2006, when the stock was at $18.89. (It closed at $19.33 today.)

A couple of important points to the severance package, wouldn’t you say? This money is not guaranteed to him. Simultaneously, he gets more if he increases the company’s stock price. Those conditions seem reasonable to me.

The final point for me is simple - why should I get upset over a CEO’s compensation? How does Nardelli or Forsee getting less money than what they received affect me in any way? They negotiated their compensation packages and the company agreed to pay them that amount.

The final question that I posed to Red Bird last week was this - If you want CEO compensation capped, who is the arbitrator of the cap? Who determines what is reasonable and what is excessive?

If your answer is the government, I have much more writing to do.

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Communication is the balm of corporate success in that it helps maintain cohesiveness. I have worked for companies that had excellent communication throughout the chain-of-command. Although there were problems and disagreements, communication from the leadership team was always thorough and timely. That fact made the culture far more pleasurable a work environment.

In many companies, this need for strong communication is devalued. MarketingProfs.com has this article - Wanted: Leadership and People Skills. The gist of the article is the need for finding CEO’s with strong communication abilities.

When asked “what do you look for when recruiting talent” at the recent Leaders in London conference, Richard Branson gave this answer: “People who are good with people. If the person at the top cares about the person cleaning the floor and the people on the switchboard, then everyone comes alive. If the people at the top are not good with people, then it ricochets down and the culture of the organization is miserable for everyone.”

Notice that Sir Richard didn’t say “people who graduated with top honors from the most prestigious B-schools, and who truly understand the financial and competitive demands of business today.”

Executives have to be able to interact with and manage their own personnel if they are to foster their core beliefs about the company in those people and nurture the corporate brand. They also have to be willing to listen to their employees, who are much closer to “the action” than the executive branch.

How true. I’ve always believed culture flows from the top down. What I mean is that the majority of my perception of the corporate culture is formed from my interaction with my boss. And his or her perception of the corporate culture is formed from his or her interaction with their boss. And so forth. If the CEO provides a strong communication culture, it trickles down through the entire organization.

Companies where the CEO does not have strong people skills or communication ability tend to be stiffer - more likely to have a mechanistic culture that does not promote fluid communication. It has been my experience that these companies are more secretive, hierarchal and withholding of information.

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The illustrious Mr. Hammer has been attempting to illicit a response from me regarding Executive Compensation. His latest post Why Executive Salary Caps Don€™t Work requires a response.

Maybe I missed it in his post, but, I don’t see where Mr. Hammer separates the “Public” domain from the “Private” domain. Two very different worlds.

First a confession. I’ve been known to manage and exploit a compensation plan to it’s fullest. Actually, I am quite proud of the fact that I’ve made some CEO, CFO and HR types very, very unhappy. Getting the most out of a compensation plan is EXACTLY what you should expect from a top-level sales person. Exactly why a solid compensation plan is the very foundation of assembling a top notch sales organization - from top to bottom. A well designed compensation plan will direct behavior and result in the desired outcome.

Executive Compensation is, in my mind, an entirely DIFFERENT matter. In the private sector? No holds barred. Do what you like, as long as it’s legal. Compensate any way you like and in any amount.

In the Public sector, the rules are - and should be - different. That’s why the SEC and several other agencies exist. (Don’t get me wrong, I’m not a regulation proponent)

The “C” level pay in public companies deserves the attention and scrutiny it’s receiving from the media. Why? Because the deck is stacked by the key shareholders and their cronies placed on the compensation committee.

As an example, the “minority” share holders (people like you and me) of a very large national homebuilder attempted to have the compensation of the CEO brought in to line. We all know the status of the home building industry…. The result - the largest shareholders (primarily the “family”management) squelched the attempt. Today the CEO continues to be one of the highest paid CEO’s in the nation. The share price has dropped by 50%, earnings are down and write-offs are ridiculous (probably means they won’t be paying much in the way of taxes, either). To this the Velvet Hammer says “Sell the stock if you don’t like it!”

The rumor on the street is “Class Action Suit.” Maybe the system works better than I thought? Maybe I should have been a lawyer?

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The title of this post is a shot across the bow of Red Bird since he and I go toe-to-toe on this topic. I am a strong proponent of letting the market determine executive pay. I trust the market as the best arbitrator of compensation. The principle works every time it is tried - if the executive is overpaid, he or she will be dismissed. If they are underpaid, he or she will receive an increase. Seems fair to me.

I realize I am oversimplifying the issue, but I want to make a point. It does not bother me that the head of Exxon received a $400 million comp package. Good for him and the record profits that he led during his tenure. I suspect there are few Exxon shareholders who are upset by their most recent earnings. If they are disgusted by his compensation, sell the stock. Beautiful how the market works, isn’t it?

CareerJournal.com offers this article - Limits on Executive Pay Are Easy to Set, but Hard to Keep. The article’s focus is on Whole Foods’ capped executive plan. The article is an interesting read:

Other companies have had mixed success in limiting executive pay. Ice-cream maker Ben & Jerry’s dropped its pay cap in 1994 when it hired an outside CEO to replace co-founder Ben Cohen. Office-furniture maker Herman Miller Inc. eliminated its salary cap in 1996, as the company faced trouble recruiting top managers. James Sinegal, CEO of Costco Wholesale Corp., has for years voluntarily capped his salary at $350,000, although the company says it doesn’t track the ratio of executive-to-worker pay.

The one piece of data that gets my ire up is the executive-to-worker ratio. It doesn’t matter. Certain positions pay more than other positions based on the market’s demand and the value of the position as perceived by the company. If this ratio is truly significant, why don’t we see college president-to-non-tenured professor ratios or chief of surgery-to-nurse ratios? Are these statistics not as significant in the overall scheme of compensation?

Here is the crux of the cap problem:

Last year, as sales hit $5.6 billion and rivals tried to poach Whole Foods managers, the board of directors raised the cap to 19 times average pay, or $607,800. The increase was needed “to help ensure the retention of our key leadership,” Chief Executive John Mackey wrote in a Nov. 2 message to employees. Mr. Mackey said every top executive, except him, had been repeatedly approached by search firms seeking to lure them to rivals.

If companies want to install such caps, more power to them. I think if you read the article, you’ll see many companies that found the principle to be well-meaning in theory but of little use in practice.

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The stereotypical description of a “good” salesperson is his or her ability to talk.  Granted, good communication skills are extremely important in successful selling, but there is far more to it than just that ability.  Salesopedia.com posts What to Know Before Every Sales Call which details common sense goals for each sales call.

A dramatic shift in selling today involves prospect expectations.  A salesperson is expected to understand general market conditions for a prospective company before contacting them.  The salesperson also needs to have a general qualifying system to discover the information needed to either move forward or move on.  What doesn’t work is the salesperson who believes they can simply talk their way through a sales call.

So here are the 6 questions each salesperson should ask before each sales call:

1. What is the prospect’s current situation?
2. What are my business development goals for this client or prospective client?
3. What is my desired next outcome?
4. What are my relative strengths?
5. What are my relative vulnerabilities?
6. What actions do I need to take before the next call?

The author elaborates on each question in more detail within the article.  The one I want to call out is number 3 because it is often overlooked or assumed.  From the article:

Sounds simple enough, but this question is so often overlooked by professionals before they meet with clients or prospects. Our advice: if you don’t know what you want to get out of your meeting with them, don’t get out of the (proverbial) car (credit to Mack Hannan and his book If You Don’t Have a Plan, Stay in the Car).

That topic is difficult to comprehend since most salespeople will oversimplify their goal - I want to close them, I want to provide a quote, etc.  Wrong.  Each meeting needs a goal beforehand.  A lack of a goal often leads to rambling salespeople trying to talk their way to a conclusion.  Have a plan.  Have a selling system.  Work your plan.

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We’ve had a very busy Q1 which has led to many sales positions for which we are actively sourcing right now.  Hence, sourcing is foremost on our minds.  We are not part of the “anti-online job boards” crowd.  We actually find the boards to be quite efficient and effective for finding strong sales candidates.  Our approach incorporates other channels simultaneously to broaden our candidate pool, but the boards should not be ignored.

That being said, there is a critical piece of information to placing ads that should be maintained.  Titles equal opens, plain and simple.  I know this fact isn’t a revelation, but many companies still ignore it.  We have tweaked similar ads to observe open rates and responses.  Titles are important on job boards since that is probably all the candidates will see.  None of the major boards preview the ad in their job search agents (I subscribe to all of them).

We have one customer who provided a simplistic title of Product Specialist which wasn’t going to cut it.  This position was to sell into specific niche markets, in a geographic territory with marketing control to expand their market share.  Product Specialist did not draw the right candidates.  A quick change to a more apt title - Regional Sales Manager - led to a far better response rate and clearly stronger candidates.

Titles are cheap.  Poorly-written ads are expensive.

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