The doom-and-gloom economic reporting continues and as a sales manager it is important to keep a pulse on your team.  More articles are being released on the topic of employees getting skittish about their future with the company.  Bob Rosner offers some good advice for these employees in his Working Wounded blog:

Be careful to not drink the Kool-Aid with coworkers by being hyper-critical about your company’s future. Get an outside opinion. If you work for a public company, talk to a stock broker. A search in our city listed 391 brokers who offer a free consultation. If you work for a smaller company, check with vendors to see if they’re getting paid on time. Don’t stop there — also get a read on your department. Is your budget increasing? Do you work with vital customers? These are great check-ups to see if a layoff could be in your future.

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Do you like, love or just plain hate your job? If you’re really unhappy, try information interviews with people on a career path that interests you. Passionate people enjoy sharing career tips with others. You could also obtain a skills and personality evaluation to determine your vital signs. Your work decision-making shouldn’t just revolve around your company or region’s vitality — it should reflect your passions too.

There will be plenty of salespeople jumping ship if they find a more secure opportunity.  Now is the time when sales managers have to secure their top talent before they drink the Kool-Aid.  Take the extra time to interact with your team and get a read of their present mindset.

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Last week, Lee posted about a company that terminated a salesperson via voicemail while he was at home sick.  That’s low, but this company is one that has a long-standing problem regarding turnover.  We know this salesperson fairly well and we know he has significant sales talent.  Yet he is one of many strong salespeople who have left this company or been terminated by them.  It is almost part of their culture (that’s not hyperbole).

This CareerJournal.com article - Best Way to Save: Analyze Why Talent Is Going Out the Door - addresses this very issue.

Rather than deny a talent bleed, executives should carefully analyze why it is happening. Carl Bass, CEO of software maker Autodesk, has found that employees are most likely to accept offers elsewhere if they don’t think they are being challenged to grow. Most frequently, they leave if they don’t get along with their boss.

More times than not, it comes down to the manager.  What is remarkable about the aforementioned company is that the manager has a history of turnover.  Abundant turnover.

Early in my career, I worked for a manager who had a similar style.  He was more interested in riding herd over the sales team than he was in growing the department.  I did not appreciate his approach and finally told him my analysis of his management ability.  I was eventually fired.  I didn’t care because I had gotten to the point where dealing with his petty tortures on a daily basis was more painful than being fired.

Turnover is a symptom, but it is not the disease.

I worked for another company that had many talented salespeople (far more talented than me) who left over a couple of years.  The reason - no place to grow within the company.  Though it was a technology company, there was an established order for promotion that was not broken.  I eventually left too once my job became routine.  I was making great money, but I was bored every day.

Here is a management approach I would have appreciated:

“You can’t be a slave to your structure and tell a very talented director he can’t be promoted to the next rung until a vice president leaves,” says Mr. McClure.

He tries to craft stretch assignments for his best employees that may not have existed before, but fill a current need. He urges employees to get out of their comfort zone and raise their hands for jobs in unfamiliar areas. He has encouraged some sales managers, to spend time in operations, where they can learn about product flow, delivery and other technical issues. The stint broadens their experience so they’re qualified to become general managers.

And in case you think compensation is a small part of the hiring equation:

Salaries that lag behind the norm leave talent open to even modest offers.

I still think salary is a key component to stopping talent bleed.  I stayed at the aforementioned company longer than I should have simply due to the pay.  If you choose to underpay your employees, you do run the risk of pushing them into the market.  Information flows freely today so discovering the “going rate” for your position is not difficult.

Of course, I could be wrong:

Although employees on exit interviews often cite pay as a main reason they’re moving on, they’re often more influenced by what colleagues are doing. “If someone’s best friend is leaving, he or she is more likely to leave, too,” says Jim Harter of the Gallup Organization, “especially if their interchanges become “gripe sessions about an employer.”

I’m more influenced by compensation - probably due to my Utilitarian drive.

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Quick hitter - say a candidate has worked at a particular company for 5 years.  When phone screening and interviewing them about that experience, it is important to determine if they have 5 years of unique experience or 5 years of the first year over and over.

That is a twisted sentence, but I hope you get my point.  We’ve run into this issue with salespeople in previous positions.  Did the salesperson grow in the position over their tenure or did they simply perform the same tasks repeatedly over their tenure.

Don’t underestimate the importance of this distinction.  We’ve seen decent salespeople go “stale” over time and, in most instances, it has been due to a lack of development in their position.

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The resume discussion rages on. Today’s ERE article by Dr. Williams is an excellent discussion about why skills are important in hiring. Resumes cannot clearly display a candidate’s skills so you have to do more digging. Here are a couple of excellent excerpts from the article (emphasis mine):

Once you get past an executive’s glowing resume, dig for details. Most important, try to understand the skills and motivations he or she will bring to the job. Often these will not be evident in the resume, nor will they be evident in the interview. Both usually address results, but “results” are often not the same as skills. Think of results as the score at the end of the game and skills as how the game was played. You need to know skills.

And this one:

Always remember first-line managers are cited as employees’ greatest source of stress. And stress can be a significant reason for turnover. Incoming and first-line management promotion decisions are the easiest to tackle. Simply forget about “promotions as a reward” and focus on “promotions based on job skills.”

As they say, read the whole thing.

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The above term is from The Herman Group’s weekly newsletter (no link but their website is www.herman.net). I love that phrase - it is quite descriptive. Here is the excerpt that caught my attention:

Fueled by the publicity frenzy the press is enjoying, the current volatility in world financial markets is affecting many people at all levels of our societies.

From the employees’ point of view, this uncertainty engenders insecurity. What will happen to my company? Will it be in business? Will I have a job? The reaction is that they continue “corporate cocooning”, staying in the safety and sanctuary of their corporate jobs, despite their deep dissatisfaction.

A number of studies have confirmed that at least 35 percent of our workforce is unhappy. Thanks to a social network analyst Scott DeGraffenreid, we have a label for it. We call it “Warm Chair Attrition”. The shame is these employees still collect paychecks, take up space, and infect their fellow associates. It would seem to be good news for employers: their workers will not leave. However, bottom line, disaffected employees are not particularly productive.

This topic is always one for debate. I’m not a fan of the Jack Welch theory that you need to be turning over your bottom 10% annually. However, no turnover can be a sign that you have a fair amount of warm chair attrition occurring.

The long-term danger here is that mediocrity can creep in to your culture. At that point “good enough” can become the predominant approach. We’ve encountered companies with this approach and it stands out from those companies where excellence is the expectation. As painful as it is, it is best to upgrade your salesforce if you have a team settling into mediocrity.

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CNNMoney.com has an article that really tweaked me this morning - Help! I accepted a job - can I change my mind?  The article is the standard reader mail format with some good advice in the answer section.

An offer letter - which is usually a brief document describing your position, duties and compensation - is generally less binding than an employment contract - which goes into much more detail and usually states how much notice you must give if you decide to quit.

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So just be honest and say, ‘I’m sorry, but my dream job opened up and I really feel I have to take it.’ Most often they will just let you go. One thing in your favor is that, after only two weeks on the job, it’s probably not too late for them to call their No. 2 choice and replace you.”

Here is what gets me - we had this situation play out a couple years ago when we were helping a client select a manager.  The position was here in the Twin Cities and the candidate was moving here from Denver.  She signed the offer letter and had a scheduled start date.

Unfortunately, she notified our client 7 days before her start date that she was going to pursue another opportunity.  We were stuck since we had ceased sourcing for the “filled” position.

To make matters worse, our client invoked what I like to call the “winner-takes-it-all” approach.  They had no interest in talking to the number 2 candidate even though that candidate was strong.  Our client had a tough time selecting between the two top candidates - they were that close.

For some reason, we see this mentality play out frequently in our clients’ minds.  They have 2 final candidates who are almost equal.  They select their top choice.  If they cannot reach an agreement with them, they want to start a new sourcing process.  The second candidate who made their initial decision so difficult is now considered damaged goods (or something to that end).  Frustrating to say the least.

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Turnover is trouble for any company when it is not controlled.  To use a timely analogy, it is similar to a forest fire.  A controlled burn clears out a section allowing it to be repopulated with fresh, new trees.  An out-of-control fire can destroy an entire forest in a short amount of time.

Obviously, extreme turnover is typically a sign of a “churn-and-burn” organization.  However, a small, controlled amount of turnover is valuable to an organization’s overall health.  But what about a company with no turnover?  Is it healthy?

This question is difficult to answer in a vacuum.  Number of employees, company revenue, market trends, etc. all play into the equation.  Yet, problems will arise when an employee who should be terminated is allowed to continue his or her employment.

CareerBuilder.com covers this topic in their article The Cost of Keeping a Bad Employee.

The majority of bad employees already know that they are not the best person for the job. Coming to work every day with this knowledge is frustrating and stressful. It is likely that this work related stress infiltrates the employee’s personal life. A manager who sincerely cares about the people he/she is managing must be willing to take action to help an employee move into a job where they can be a star player or good employee.

This sounds like an excellent tact to take with managers who have difficulty firing under-performers (especially sales managers).  Often under-performing salespeople have the ultimate albatross hung around their neck - “They can’t sell.”  Some can’t, but many can.  The salesperson is simply in the wrong sale.  As a manager, the best thing you can do is free them to pursue the right sale that fits their abilities.

Here is the greatest risk in retaining a bad employee (my emphasis):

When cancer enters the body, it spreads grows and spreads throughout if gone untreated. A bad employee can be like cancer within a company. Strong negativism, a poor attitude, backbiting, and incompetence can spread quickly within any organization. Co-workers of a bad employee notice the issues and typically try to fight off resist catching the negative traits. However, such traits are contagious and can severely hurt or even kill a company. A bad employee will eventually affect your employees, customers, and product/service’s quality.

Many people can relate to this truth.  I suspect most have experienced a “cancerous coworker.”  No team is worth putting at risk over a hesitancy to fire a bad employee.  That statement sounds harsh, but there really is no option in that situation.  Moving that employee to another department does not ensure the end of their effect.  The best move is to clear the forest of the dead trees an allow new ones to grow in that place.

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We often speak of the costs of making a bad hire especially in sales. One bad sales hire can send prospects to your competition and sully your company’s reputation in the market all while you pay this salesperson. But what if it goes even further than that? In our litigious society, what if an employee decides to make a run at a discrimination lawsuit?

BusinessWeek online offers up some incredible examples in Fear of Firing:

-Many of the lawsuits may seem ridiculous. IBM is currently defending a case filed by James C. Pacenza, a plant worker it dismissed for visiting an adult Internet chat room while on the job. In his lawsuit, Pacenza claims that his propensity to such behavior stems from post-traumatic stress disorder, which he suffers as a result of military service in Vietnam, and that IBM violated the Americans with Disabilities Act.

-In October, 2002, Southview Hospital in Dayton fired Karen Stephens, a nurse who worked in a unit for premature babies and other at-risk newborns. Six other nurses had reported that Stephens was abusive to infants, according to court filings, spanking them when they were fussy, wagging their noses until they screamed in pain, pinching their noses shut to force-feed them, and calling them “son of a bitch.” Stephens, who was 60 at the time, sued Kettering Adventist Healthcare Network, which operates Southview, denying “inappropriate” conduct and alleging that the real reason she was let go was age discrimination.

-Even in the face of theft, Revolution Partners, a small investment banking advisory firm in Boston, balked before showing one of its employees the door. The woman had used her company credit card for a personal shopping spree and plane ticket, but Revolution retained an employment attorney, got the woman to sign a form waiving her right to sue for wrongful dismissal, and after she was fired took no legal action to recover the amounts improperly charged. “We’re a little firm, and the last thing I need is to spend a lot of time on a lawsuit, whether it’s warranted or not,” says Peter Falvey, one of Revolution’s co-founders.

Pathetic examples of malfeasance, don’t you think? It is difficult to predict which employees will choose this path if terminated. However, it is possible to do as much as possible to hire the best person for the job. Each hire leaves the company with some exposure for a potential lawsuit no matter how frivolous the accusation by the former employee. Invest in finding the best candidate and you provide some insurance to these headaches.

In our candidate assessing business, I have always believed that our prices should be double for identifying candidates that look good on paper to the hiring company but are not a match for the position based on the objective assessment. One parting thought about a bad hire who resides on your payroll for any extended period of time:

This set of divergent incentives puts line managers in a tough position. When they finally decide to get rid of the underperforming slob who plays PC solitaire all day in her cubicle, it can be surprisingly tough to do. And that, in turn, affects productive workers. “Few things demotivate an organization faster than tolerating and retaining low performers,” says Grant Freeland, a regional leader in Boston Consulting Group’s organization practice.

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We at The Hire Sense have been focused on employee retention this year. Pretty smart of us, I know (especially when the national unemployment rate is 4.4%). Michael at Hidden Business Treasures pointed us towards the Herman Group’s Trend Alert e-newsletter and I received my first one this week. The topic - wellness programs and their impact on benefits.

This shocked me:

The financial impact of healthcare spending is indisputable. Starbucks spends more money in one year on health insurance for its employees than it spends on coffee for its customers. The US automakers will spend more money this year on health insurance than they will on the steel that goes into their automobiles.

Amazing, but then I read this nugget:

Also, employees who are in the middle of a weight-loss or smoking-cessation program are much less likely to leave. Reducing employee turnover also decreases benefit costs, mostly because there is lower utilization of the healthcare system. When you bring on new people, they have often avoided visiting doctors, because they had no coverage. Once on your system, it€™s time to visit the doctors. This increased system usage produces higher insurance premiums.

Yet another reason to put an increased effort into your retention programs. Turnover is expensive unless you have underperforming salespeople (then it is needed).

We have seen benefits enter the interview process earlier in the discussions. This approach used to be a flag for us back around 2001. Now we consider it a standard aspect of qualifying opportunities. If your company offers a strong benefits package, introduce the package early in your hiring process.

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If you think you are experiencing hiring difficulties, be happy you are not on Wall Street:

Fresh off some of the richest bonuses ever handed out, investment bankers and traders, especially those who deal with leveraged debt, are in high demand. In some cases, bidding has driven newly hired employees into the arms of a rival in mere weeks.

That statement seemed like hyperbole until later in the article:

Securities-industry employment rose to 804,000 at the end of 2006 after a third consecutive year of increases. The employment figure is just 4% shy of the all-time high set in 2000, according to the Securities Industry and Financial Markets Association.

The market is tight everywhere and especially in sales.  Old hiring strategies are being left in the dust.  If you are sticking to a newspaper ad, good luck.  If you are posting a job description as an employment ad, be prepared to wait.  The changing market requires a process for effective sourcing and selection.

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