I'd love to write that every candidate I placed in the
last 14 years is still at the job I put them in (well, at
least stayed at their job for a good long stint anyway).
But, sadly, that is not always the case.
Companies
change strategies, hire new managers, go out of
business, or myriad other reasons come to mind why
some candidates don't stay. Some companies
hire
one type of candidate thinking that is exactly what
they want, only to find months or years later that they
really need another skill set. So, let's face it —
stuff happens, whether you have a recruited
candidate whom you paid for, or one you found on
your own.
Merry Christmas
from Mr. Perfect
Recently, I was particularly pained when a sales
candidate I had placed a few years ago called me in
December to wish me a Merry Christmas and tell me
he had resigned! I was shocked and speechless
— and here's why.
This guy was the perfect salesperson for his
employer — a custom, high-end, boutique
consulting services house. He had worked for one of
their competitors, is a consistent over-quota
performer closing average deals in excess of $500K,
has a professional demeanor that can only be
classified as a "10" (yes, he is the guy in the Armani
suit with not an inch of body fat). And, he's smart
(Harvard undergraduate, Wharton graduate). Get the
picture? Hope so!
The Post-Mortem
So, here's what went wrong. Our candidate is out
there selling large projects. The sales process
(3–6 months) includes having project
managers involved and is "costed-out" on a
number of factors such as time to complete,
manpower needed, etc. Our candidate finds the
deals, manages the sales process and closes the
deals. He then hands the project over to the
internal project manager. He makes a
commission based on the gross amount of the deal
(which, remember, is based on the projections of
those very same project managers). Are you with me
so far?
After a year of very good success with this model,
the
company decides to change the model and the
sales compensation. (That, in and of itself,
doesn't have to be the kiss of death. But what they did
was.) They changed the compensation from
commission on the gross revenue to
commission that was based on the gross
margin of the project.
Gross Revenue vs.
Gross Margin — Ah, the Eternal Struggle
Now, I know all you financial-types out there are
thinking that this can be a very good model. And, in
some instances, I might even agree that you might be
right. But this is not one of them. And here's why.
Our sales guy has NO CONTROL of the
project once it is sold. If the project goes over
budget for some unforeseen reason, he has
no control. The project managers do not report to
him nor do any of the implementation team. Once the
sale is made, he is out of the picture and
powerless as to the outcome, and certainly
the profitability of the project. Yet under the new
compensation plan, his very income is based on just
that.
Keep Salespeople
Top-Line Focused
I think sales compensations should be top-line
focused. Sure, there are exceptions to every rule
and I'm not saying that you should suspend
salespeople from good financial management
decisions, or that the sky is the limit on sales expense
accounts, for example. But I am saying that in the 25
years I have been selling, managing salespeople
and recruiting salespeople, most, if not all, are
top-line driven — and that's a good thing.
They reach for their numbers — they try to hit
their quotas. Give them the figures and let 'em go.
They are independent in nature, for the most part,
and don't mind the responsibility of having a quota.
It's in their blood.
Keep Your
Eye on the Bottom Line
If you allow your salespeople to keep a keen eye
on the top-line, my suspicion is that your bottom line
will take care of itself. If you have cost overruns
in other departments, then that's your challenge as a
business owner or manager to fix those things. But,
don't make your salespeople pay for it — or
you'll pay for it by losing your best
salespeople.
I have no doubt that the departure of our sales star
has put a considerable hole in the company's
revenue targets for 2007. And, I believe this company
made a big mistake. Agree? Disagree? Click here
to weigh in with your opinion and I might make
you famous in next month's Framing the Issues!
