Sinking Stock Syndrome

I made that up, Sinking Stock Syndrome, from some interactions I have had recently with a couple of small business owners.  Both owners suffered from this syndrome which had disastrously negative effects on their company, both in revenue and morale.

Here is how I define my newly-minted syndrome – an irrational hope that a grossly underperforming salesperson will miraculously turn things around and become a sales superstar.

It rarely happens.

The problem stems from the business owner who has invested in this failing salesperson.  Notice I used “business owners” – I do believe this syndrome is more prevalent among this group as they are closely tied to the business (i.e. financially, emotionally, historically).  They usually have a relatively accurate count of the resources invested in this salesperson.

The sinking stock analogy will be understandable to anyone who buys and sells stock.  When you purchase a stock, you expect (hope) it increases in value.  When it goes the other way, you encounter a sinking feeling as you have now lost money.  It is at this point that you need to make cold, objective decisions about the stock.  Is it going to rebound in an acceptable time frame or did you make a bad investment?

The temptation is to hang on to the stock with the expectation it will turnaround and at least get back to the buy price you paid so you can break even.  While you wait, the stock drops further and you have now lost more money.

Hope keeps you from dumping the stock.  The desire to earn back what you have lost keeps you from making the tough decision to sell.

Business owners can get caught in this same trap.  They know a salesperson is not performing and that they are losing money by continuing to keep them in the role.  Other employees see that this salesperson is not closing deals and they start to become upset.  This salesperson stays on the payroll even though it is clear that he/she cannot do the job.  At some point, the tough decision has to be made.  It can be to put together a get-well plan for the salesperson.  However, most times it is to part ways…or should I say cut your losses?

It is difficult, almost an admission of failure that hits the owner directly.  But it has to be done.

Sales Departure Time

I do think there is an impending, colossal jump of sales talent in the very near future.  The Herman Trend Alert speaks to this potential in their latest report:

According to a new CareerBuilder survey, more than one-quarter (28 percent) of sales employers are concerned about losing their high performing workers in the second quarter, while more than one-third (35 percent) of sales workers said it is likely they will start looking for a new job when the economy picks up.

And here is why:

Increased workloads, longer hours and fewer resources related to the recession may be contributing to job dissatisfaction. Looking at key factors that influence job satisfaction and company loyalty, sales workers reported the following:

•Pay – More than one-third (35 percent) of sales workers said they are dissatisfied with their pay.

•Work/life balance – One-in-five (20 percent) sales workers said they are dissatisfied with their work/life balance.

•Career progress – One-in-five (21 percent) of sales workers said they are dissatisfied with the career advancement opportunities provided by their current employers.

I’m a bit jaded here in that I think pay is probably much higher then what is normally reported in these surveys.  Nonetheless, I have talked to a handful of salespeople recently who are starting to put their ears to the tracks regarding new opportunities.  I still believe the hiring landscape will be slow this year, but will begin to ramp up in Q4.  A year from now may be one of the largest retention struggles we have seen in quite some time.

Battle Lines

I’ve been busy over the past week or two handling a myriad of business topics and tasks which has decreased my blogging time dramatically.  One item has come up during this time at one of our customers – a battle of wills amongst managers.  This is no small battle, it has turned into an ongoing war for which I am now in the midst of the battlefield.

Without going into specifics, I can tell you where we start in these situations – motivations.  The first place to look when there is interpersonal conflict within an office team is the motivation pattern for each individual.  In the instance with our customer, we have two people with almost polar opposite motivational patterns.

Here is why this matters – neither person can understand where the other is coming from, especially in terms of decision-making.  Each person finds the other one to be inconsistent, off-base and…well, wrong.  The relationship has deteriorated into acerbic communication.

Unfortunately, this customer did not assess this employee when they were in the hiring phase.  Instead, they made an emotional hire.  This employee has the skills to succeed in this role, but the hiring manager was never informed of the employee’s motivational pattern.  If he had been, he would have known the differences between the two of them and he could have managed through them.

I’m not sure the relationship is salvageable.  I am certain it was avoidable.

Electronic Layoff

The news stories are flowing about layoffs, downsizing and closing in this brutal economy.  One such story from abcnews.com shares stories from readers regarding extreme situations for being let go.  This one was amusing:

After a traditional face to face layoff session, my company tried a new kinder gentler approach. They called a big meeting and announced that every employee had e-mail back on their computer that would tell them if they still had a job. I didn’t!

I’ve been let go during layoffs before and there isn’t any easy way to do it.  However, it seems to me that if your communication strategy is to use some form of electronic notification (like Radio Shack from a few years ago), you are probably taking a bad approach to it.  Just a thought.

The Key To Sales Retention

Listen, according to this Selling Power article:

“One of the mistakes companies have made in the past is that they make decisions without real input from the people who are most affected by the hiring decisions,” says Opton. “Companies need to realize that they always have two sets of customers – internal and external. The minute that someone comes to work for them, that person becomes an internal customer to the organization. The organization needs to listen to what their needs are and act on those needs.”

The article references a survey regarding executives’ wants, but it is representative of employees also.  The interesting stat that always seems to come out of these surveys:

“Just 12 percent pointed to compensation as the reason why they leave companies,” says Opton. “We see this year after year – money will motivate people to come on board, but it can’t make them stick.”

Excellent point, can’t make them stick.  Many managers assume a decent paycheck (the manager gets to define “decent”) will keep most salespeople happy.  But look at these numbers:

“Nearly half of the dissatisfied executives reported limited advancement opportunities; lack of challenge; a desire for more managerial responsibility, autonomy or technical improvement; or dislike of the work as the reasons they were ready to bolt,” states the study. “Issues relevant to lifestyle – work/life imbalance, commute, relocation, and business travel – became deal breakers for another 21 percent. Difficulty with the culture and the boss accounted for 13 percent of executive dissatisfaction.”

I suspect the commute topic will become more prevalent in the next study thanks to the gas price trend.

Top Reasons People Change Jobs

These lists seem to come out on a regular basis with different results.  Yet, I’m a sucker for a list so I read them.  The one consistent piece of information I read is that compensation is often overrated.  People may say they changed jobs for a better compensation package, but usually it is some other factor driving them out of their current job.  I’m not sure that holds up well in sales.

The top reasons people have changed jobs:

  • Downsizing or restructuring (54 percent);
  • Sought new challenges or opportunities (30 percent);
  • Ineffective leadership (25 percent);
  • Poor relationship with manager (22 percent);
  • To improve work/life balance (21 percent);
  • Contributions to the company were not valued (21 percent);
  • Better compensation and benefits (18 percent).
  • In the online survey, respondents checked all circumstances that were among the reasons they left previous jobs. The percentages add up to more than 100 because people have been in more than one of these circumstances during their careers.

    Don’t Drink The Kool-Aid

    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.

    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.

    A Tourniquet For Talent Bleed

    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.

    Defining Experience

    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.

    You Need To Know Skills

    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.