SECTION II: Talent

CHAPTER 4: Talent

Planning for Failure

Many sales managers start the year with an unwinnable hand. Their CFO won’t allow them to hire in advance of a year or to build a bench of salespeople within their firm. Some sales managers don’t even get their sales numbers until after the beginning of the first quarter. Then they have to begin hiring while carrying a full quota from the beginning of the year. And this doesn’t take into account any turnover that might occur during the year.

As a result, sales managers overassign quotas to the sales reps they have in hopes that a certain number will exceed their goals to offset the bottom 20 percent who aren’t going to make it, open territories that they begin the year with, or turnover they may have.

Many managers try to live with the lesser of two evils: (1) let a bad rep continue to work in a territory because at least there is a “body” there, or (2) live with an open territory that they must cover themselves. The most frequently made mistake is not trimming poor performers early enough. Not only does this demotivate the rest of the team, but it also takes the manager away from being a coach.

Some sales executives aggravate their turnover problem simply by increasing quotas every year based on what the analysts or CFO says the sales increase ought to be, with no thought to where the new sales will come from. Will these quotas come from better coverage, new products, new markets, increased prices, better margins, or an increased win ratio?

Without a bottom-up analysis of true potential, raising sales quotas doesn’t raise sales—it usually only raises turnover and discounts. This is one of the great myths of selling. And if sales quotas are increased as a percentage of an individual’s sales quota last year, then the great reward for a job well done, after the sales banquet, is an even greater quota for your best performers. How motivating is that?

When financial strategy drives sales strategy, quite often the result is planning for failure. And if this overassignment of individual quotas results in discouragement or increased turnover in the sales force, a complete downward spiral begins.

The solution is to improve our hiring and planning processes—to get the right people in the right jobs before the year begins. One best practice that we've seen in several companies is the hiring of junior salespeople who work either on existing accounts or on farming and marketing activities to learn the business and prepare themselves for territories when they open up. In my experience, we hired a number of these — about one per district — and many of them have turned out to be not only extremely successful sales reps but also vice presidents of sales and CEOs of their own companies. Without them, we would have begun the year behind the curve and would never have been able to catch up. The impact would have affected sales results and eventually shareholder value.

Get a Bench and a Pool

The worst recruiting practice is to wait until you have an opening. This means that you are reacting to the marketplace and only looking through the available candidates in your area. The best practice is to build a bench within your own firm and a pool of candidates in your industry on which you can draw when you have an opening. It may take years to build this network of candidates, but it means proactively going after people and companies that may not be looking for jobs at the moment.

In our firm, it takes us about two years to recruit a principal. And we have the possibility of 100 or more at any one time who may come to work with us in the future. The building of this pool has not been an accident. Every sales manager should have a list of several dozen sales candidates within their contacts or background on which they can draw at any given time.

Recruit the Best Recruiters

The next best thing is to build a network of recruiters who are loyal to you. However, a loyal recruiter may be an oxymoron. And if you count on human resources (HR) or advertisements to send you the right candidates, you are abdicating responsibility for your own future.

If you’re counting on recruiters, proceed with caution. Many recruiters try to play both sides of the fence. They may be using you as a net destination and a net supplier at the same time. You need to meet face to face with these recruiters, define your outline, and sell them not only on why your company is a good place for their candidates to come to work but also why you need to have a partnership with them. Make it clear that if they ever recruit from you at the same time they are sending you candidates, that will be the end of the relationship.

You have to be willing to share with selected recruiters the rules of engagement, including your compensation plan, competitive advantages, the direction of your company, and your recruiting process. In this way, they understand how to proceed with you and won’t see it as an unduly lengthy process. The only thing that will keep recruiters loyal to you is the prospect of future business. Once they see your company in trouble and people starting to leave, unless you have a personal relationship with a particular recruiter, they will start to prey on you and take people out of your organization. It’s a double-edged sword they use. Don’t let them use it on you.

Recruiters to Reps—Solve Two Problems at Once

Another best practice used by some organizations is to hire full-time internal recruiters. Why waste a sales headcount on a recruiter? These people are actually salespeople because they can go into organizations and find people who are not yet looking for a job and pull them out along with their friends.

When I was rebuilding my region, my company had a number of these (most of them were ex-military Recon types.) They made great recruiters, and most of them went on to have successful careers in sales and sales management. It was one of the best investments we ever made. Not because we saved recruiting fees, but because we got top-level talent.

All I ever saw in my recruiting efforts were A and B prospects. I wasted very little time talking to turkeys because of the efforts of these people. We were able to rebuild our region from middle of the pack to number one within a year. This is an excellent investment, but like many best practices, it requires a certain economy of scale to be able to afford a full-time, aggressive internal recruiter who is not just a paper passer.

If you’re recruiting, how do you know what to look for unless you sit down and define what a successful salesperson in your organization looks like? What traits, experience, skills and personality will predict success in your organization and in your industry? Unless you write it down and test it against your current performers—you’re guessing. In the absence of a profile, you’ll be hiring on hope. You will be opportunistic instead of purposeful. People tend to hire on hope and fire on faults—a very expensive habit.

Good Is the Enemy of Great

Not having a reason to not hire somebody is not a reason to hire them. The default is to keep talking or keep looking.

One time, one of my sales managers said to me, “We can’t have all ‘A’ players.”

“Why not?” I said. “That’s not true. That’s a bad principle. Throw it out. You can have all ‘A’ players. I’ve done it three times in my life.”

But you have to be willing to wait for the star, and you have to be willing to spend more time recruiting than fixing problems for salespeople. Championship teams have no weak links. It’s pay me now or pay me later, and I’d rather invest in recruiting than in fixing lost sales.

One of the problems we have in business is that accounting systems don’t measure the cost of a bad hire. Our accounting systems don’t measure lost revenue because it never hit the books in the first place. But the cost is there; it’s just invisible. Not only is it an out-of-pocket cost from lost sales, but also there are huge non-monetary costs that have an impact on the manager.

One thing is sure: Whatever the gap is between what you hire and what you need, the manager pays for in the long run. The costs incurred from hiring mistakes include lost productivity, as well as lost time for the manager and the entire sales team—not only lost sales from the poor production of that one salesperson, but also lost manager’s time that was taken away from other people who could have benefited from good coaching—not to mention other losses such as angry customers, employee morale, and even missed opportunities.

What did it cost you to settle for someone who was adequate if you missed the star who would have come along one month later and would have been a quota exceeder for the next 10 years? How much did it cost because you settled for someone who was adequate rather than someone who was exceptional? The principle is—if they aren’t exceptional, they aren’t acceptable.

Additionally, you have the out-of-pocket costs of recruiter fees, moving expenses, and training and travel to get someone new up to speed. What is the real cost? Most of the sales managers I talk with estimate the cost of a bad hire at — when they add it all up — a minimum of one to two year’s sales quota. It takes three to six months to figure out if the new hire can do the job; then you may have to give them a probation period of another 90 days; and then it takes another three to six months to hire someone else and get them up to speed again.

Here is an example based on a salesperson with a $1.5 million quota:

If our accounting practices required us to take a writeoff or write a check for this amount every time an employee went out the door, this would stop.

In addition to money, the other costs of a bad hire include

• Lost productivity.

• Time and stress.

• Error correction.

• Angry customers.

• Employee morale.

• Wasted support resources.

• Missed opportunities.

• Management reputation.

However, a very successful rep could produce quota for 10 years or more. How much time would you spend on a prospect that size? Why would you spend less time on a rep?

The next best thing is to figure out how much your real costs are so that you can figure out where your time is best spent. It's not only pay me now or pay me later—paying me later is several multiples of the time invested now.

Recruiting and interviewing are two of the most valuable investments sales managers can make of their time. But it has to be proactive, and it has to be in advance of an open territory or you will end up settling for someone who is adequate rather than being able to wait for somebody who is exceptional.

A colleague of ours, Rob Jeppsen, tells a story of when he was the CEO of a young technology company:

Proactive Sourcing

Another way to be proactive and get ahead of the curve is to nurture your network—take care of your people — and keep in contact with the salespeople who have been successful for you in the past. When you get your next sales management job, those people could be your pool. I know a lot of sales managers who have put themselves out of business because they not only didn’t nurture the network, they burned bridges.

Another source is to cultivate professional organizations. That dead time during trade shows and conferences can be well spent getting to know the competitive salespeople who always assemble there.

It can be dangerous to recruit from clients, but there are times when clients can be a good source of candidates without destroying the relationship. You also can consider rehires—good people who have left you. Maybe the grass is greener for a reason; maybe it’s the stuff they are spreading around over there. Good people can come back if you keep the door open.

Most managers, in their interviewing process, consider only two dimensions—performance and personality. If this is as deep as you look, you’re not going deep enough.

There are a number of reasons salespeople fail and one of the biggest ones isn’t a lack of confidence or commitment. It’s character. And most interviewers fail to ask enough questions in this area.

In our management training course, we teach people how to drill down to character issues in addition to performance. We teach them to ask questions they wouldn’t normally ask otherwise.

During one of our management training classes, one manager said, “I’m not comfortable asking these personal questions.” The most recent exercise we had done in class was to study why employees fail. When we looked at the chart paper around the room, the irony was that 80 percent of their failures had to do with character issues, yet they weren’t interviewing in that area.

What skills, experience, intelligence level, behavior traits, etc. will predict success? The answer is unique to you and your organization.

Your Sales Process Should Drive Your Talent Profile

The first step is to define your best-practices sales cycle— the template for an ideal sale in your industry segment. Then the next step is to work backwards to the activities, information, and strategies needed for each phase of your sales cycle.

FIGURE 4–1 Best-practice sales cycle competency model.

Then work into the skills, competencies, behaviors, and experience needed to effectively execute each of these activities for each of the roles on your sales team (see Figure 4–1). The last step is to create the interview questions that help you to discover these traits—or their absence—and compare them to your profile.

One of the best books in this area is Don Clifton and Marcus Buckingham’s book «Now, Discover Your Strengths». This is an excellent approach to identifying the characteristics that predict success.

When we used Don’s company in the past, we did a study of our most successful reps — hunters in the high-tech software industry — and were able to identify the most important traits to look for. In our profile, the “must haves” were that sales reps be competitive, have big egos that result in drive and ambition, and have the courage to overcome obstacles and initiate action from a blank piece of paper every day. We found that being smart also was critical. Such people make things happen rather than watch and wonder.

Other traits were either “like to haves” or fell in the category of “compensating strengths and weaknesses.” However, if we didn’t have the four “must haves,” we knew that the person probably was not going to be successful and that the cost of hiring such a person was going to be high. We have found this to be true, by the way, of most hunters in most organizations. The four “must have” traits are necessary for competitive evaluation hunters, as we described in Hope Is Not A Strategy.

Hiring Assessments

To find out whether or not people have these traits, a number of companies offer assessments or surveys. Basic intelligence tests and personality style assessments are fundamental and inexpensive for first-tier screening. For complex sales of big-ticket items to committees in competitive situations, however, much more is needed.

One of the best people at defining selection profiles is Ross Rich of Chicago-based Selection Strategies, Inc. He not only knows what to look for, but he also has created a structured two-hour phone interview that listens to what the candidate says and also to what he or she doesn’t say. Although these processes are not 100 percent perfect, they do help to raise red flags for your finalists. This phone interview and interpretation are fairly extensive, so most companies use them for finalists only, but they will show you the weak spots—where you should drill down deeper—before you make the expensive decision to hire a candidate.

As we mentioned, most people look at personality and performance, but there are potential flaws in both these areas. First of all, it’s hard to judge past performance. How quotas are set differs from company to company. Thus, when a résumé says, “I made quota at this other company,” what does that really mean?

One of our principals, Joe Southworth, tells a story of when he was a sales manager at a large software company:

Two better questions to ask in assessing past performances of salespeople are

1. How did you compare to your peers?

2. Which percentile was your sales performance in each year?

You also should get specifics on how they overcame challenges. Take the groomed references they give you and ask for referrals to other, unsolicited references and teammates who may have worked with the candidate on deals. Their perspective on the rep’s contribution and competency is usually very enlightening. Often their silence or faint praise speaks volumes.

Another important question to ask is what percentage of the reps at your past employer made quota every year? Many salespeople made their quota from 1995 to 2000 because they were reacting to demand in a hot market. If you didn’t make quota, you were considered a failure. In other companies, only 50 percent of the salespeople made it every year. Having this metric gives you some sort of a benchmark to compare quotas.

Different industries also have different sales rhythms — the size and number of deals in a year. Some salespeople are used to a deal a day, some one per week, some one per month, and with some organizations, it’s only one deal per year. Knowing what percentage of their business came from repeat orders vs. new name or competitive sales can indicate whether they are a hunter or a farmer.

Another challenge is taking transactional salespeople and putting them in a long sales cycle. Some salespeople are better at more frequent sales rhythms, whereas others are better at working on bigger deals over long periods of time.

Are Great Salespeople Born or Made?

I am often asked if great selling ability is something that people are born with or whether training is necessary. Without a doubt, there are great intuitive salespeople with innate abilities (see Figure 4–2).

Dave Sample, a long-time client of ours, now at Blackboard, summed up the problem like this: “Heroics don’t scale.” Yes, there are people who can do this intuitively, but there aren’t enough of them. You have to find them and you have to grow them.

Not only that, but intuitive salespeople are unconscious about their competence. If your sales model is different from their experience, they may not be able to adapt because often they are good but don’t know why.

So both hiring and training are important. But what can we change in a person, and what is in a person that is too difficult or time-consuming to try to change?

The nature versus nurture question has been the subject of many stories over the years, as in the movies Wall Street and The Firm, for example. In both stories, the main character was tempted to actions outside their basic principles, with grave consequences, only to find their true character in the end.

In Figure 4–2, it can be seen that there are things in a person’s DNA and in their early development—intelligence, personality, core values—that are very hard to change. And a person may change behavior a little for a little while. But if that change is at odds with the person’s inner fiber, eventually, they will snap back or be ineffective because their heart is really not in their actions. Thus these inner core traits are what you should really focus on in your hiring. In my experience, people usually have to bring these things with them.

The next layer out—goals, habits, and principles — are drivers of action and daily choices. If these are to be changed in a person, they need to be changed within the first 90 days of when the person is hired. The company may set a goal or principle for a person on the outer ring of the figure, but if that goal or principle is not owned in the person’s heart, the result is usually a weak or false effort and ultimately, replacement.

Knowledge, skills, experience, and attitude are the things that enable a person to accomplish his or her goals or job. Obviously, these can be trained and managed by rewards. The rest of the figure includes the many areas management can address to direct short-term behaviors.

Notice how far inside we have placed habits. This is where the subconscious overrides the conscious. Changing organizational behavior often means changing individual behavior, which often takes time and consistency.

Based on experience, I have identified 10 different elements that need to be considered when hiring a successful salesperson, sales manager, or anybody for that matter. Most of my first interviews last either 30 minutes or two hours. Before I hire a salesperson or principal for our firm, I meet with him or her for at least eight hours—two of which are outside the office at dinner.

In the United States, HR managers are very nervous about the types of questions asked in interviews for fear of litigation. In reality, lawsuits probably are cheaper than bad hires. (A statement such as this usually sends HR managers right through the roof.) The problem is that the cost of bad hires is invisible and the cost of litigation is very visible. The truth is that bad hire costs, as we have discussed, are very expensive.

Each one of these elements has a number of questions that will help you to drill down past the standard questions to find the right things you’re looking for. We have to get through what they’ve done and what they seem to be to who they really are.

Personal Accountability

This may be the single most important element in hiring successful people. Some people would rather fix the blame than fix the problem. How do you uncover this tendency? First, it’s always “them,” never “me.” “It’s the product”; “It’s my manager”; “It’s support resources”; and so on. In all behavior modification—from 12-stepping to weight loss—you have to own the problem. Some people find an excuse, whereas others find a way.

Life is a grindstone. Whether it sharpens you up or wears you down depends on what you are made of.

My favorite interview question is, “When did you become an adult and how did you know?” This will tell you when the person took personal accountability for their life.

Most successful people have an answer for this question. For some, it was a memorable event, such as the death of a parent. For others, it was a series of events, such as when they went away to college, when they got married, or when they had their first child. Or it may have been when they got their first job or when they took charge of their spiritual life.

Purpose

Some people are driven by sibling rivalry, others by the threat of poverty, and others by achievement. Still others are seeking a parent’s approval or are driven by their own insecurity or self-image. What does this individual consider to be his purpose in life? How does this individual’s purpose align with the goals of the organization? What plans has he made to accomplish these goals and fulfill this purpose? Or is the person drifting through life like the feather in the movie Forrest Gump?

The point is that successful people are driven by something. And it’s usually not just the money — it’s what the money brings. The point is that they are driven by a purpose and that it aligns with the job.

Principles

Principles are values acted on. They are shaped by an individual’s personal and professional experiences. You need to know the unwritten rules that drive an individual’s behavior so that you’ll have an idea what they will do when you aren’t watching. Does the person have a moral compass? Circumstances and temptations reveal a person’s character. Is the person consistently trustworthy or completely situational? This also helps you to understand how the person wants to be managed.

This is a good place to ask the person an ethical situation question to see how they would respond. Another good question is how the person responds to problem-solving situations. What internal rules guide the person’s decisionmaking process?

Plan

Some people live life; others let life live them. To achieve sustainable success, attention to detail and a high activity level must be personal habits. Are your candidates consistent in their work habits? How organized are they? Can they handle multiple tasks at a high rate of speed?

Do they know where they want to be? Do they know where they are today on that plan? Can they articulate their plans to get to where they want to be?

It has been said that “if they are failing to plan, they are planning to fail.” Plans change, but how will they manage their territory and their accounts if they have no plan for themselves?

Preparation

Preparation includes education and past employment from the candidate’s résumé. When I ask candidates, “What have you done to prepare yourself for leadership?” I often get a blank stare. Sales is a leadership job: you have to be able to get people who don’t work for you to follow you.

How well your candidates have researched and prepared for the interview is one of the best indicators of how well they research and prepare for sales calls. Do they know your company’s history, culture, financials, and issues? Did they at least read your website?

Passion

Passion represents enthusiasm for the work itself, for service, or for the people or organization and its vision. The first sale must be in the salesperson’s heart. If they don’t buy it, they can’t sell it. If they don’t have a contagious conviction about what they are selling, neither will the buyer.

At some point candidates need to pick up the special nature of your company and turn from buyer to seller. If they don’t, they are not passionate about working for your company or not passionate at all. “If you think this is just another place to work, you should just work at another place.”

Performance

No one works in isolation in today’s business environment. Ask about the source of the candidate’s past sales success. How important was the product? Was the market hot or not? Did the candidate rely on other members of their team to carry them? Are they used to one big deal or several small ones? How closely did they work with their manager? Was the candidate a team leader or a loner? Some people are better at different types of sales. This is why a salesperson can be good in one company and not another.

For salespeople, quota performance is an arbitrary measure. Two questions to help put this in perspective are

1. What percentage of the sales force made quota every year?

2. How do you compare with the rest of the sales force? Top half? Top 10 percent?

Personality

People buy from people they like and people they trust. Will their interpersonal skills and chemistry wear well over time in your industry and with your clients? Are they sincere? Empathy is a necessary component of consultative selling. The people they interact with over time will be able to tell if they are sincere.

Will they fit in with your team culture? Ask yourself, “Would I like working with them?” Also consider their presence, image, and the way they dress. We make choices when we put on different clothes. It is important that they know how to dress when dealing with clients in different industries — especially if they are going to be selling to executives.

Clients and prospects can discriminate for whatever reason they choose, and they’ll never tell you the reason. Remember that most candidates can sell a one-hour interview. Look past the charm to the character.

Practical Intelligence

Howard Gardner, who developed theories on multiple intelligences, says that there are at least seven kinds of smart. Practical intelligence extends beyond the amount of education and training the candidate has. Although knowledge is important, being able to apply it — through mental quickness, political savvy, and common sense — is essential.

Cultural literacy — knowing a little about a lot — is also necessary to be able to communicate with all types of people with varying interests. A critical type of intelligence for salespeople is discernment — the ability to assess multiple complex situations and determine priorities of action. Like the old vaudeville routine, can they keep multiple plates spinning in the air without dropping any?

Perseverance

Successful people don’t run from challenges — they redouble their efforts. If the door is closed, they find another door. Does the candidate have the ability to stay the course despite unexpected obstacles? What obstacles have they overcome in the past? If they haven’t had any failure to date, how will you know how they will respond when they inevitably experience some?

The challenge here is that perseverance can actually work against successful salespeople in the area of qualification. No one wants to be seen as a quitter, but the best practice for individual salespeople is to choose the right battles and to qualify out of lost causes early. The question is, “Do you have a defined set of criteria for knowing when to hold ’em and when to fold ’em?”

A useful exercise that we use in our management classes is to take each of the 10 P’s and rate your top three performers and your bottom three performers in a job category to see the relative importance of each attribute to that specific job.

Start Performance Management in the Interview

How long does it take to do a performance review? The answer is six months to a year because the first step in managing performance is to set the standards, values, tolerances, and expectations. You should give your candidates the performance review form and set their expectations as part of the interview process.

New hires are like wet cement. You can mold them and shape them early, but as time passes, habits form — both good and bad. After 90 days or so, their attitudes begin to calcify to the point where it may take a jackhammer to change their bad habits.

But how is the performance review actually handled in most cases? Performance reviews are seen as a necessary evil from HR, often written by HR, and often don’t include the behaviors, skills, and competencies needed to perform the adopted sales methodology. They are often seen as just checkboxes to get the HR people off your back.

If the performance review doesn’t include the sales methodology, then perhaps it should be ignored. However, if performance management is driven by the ideal sales cycle, it can be a very constructive performance coaching tool that actually should be reviewed on a quarterly basis rather than annually. This allows sales managers to coach not just deal competence, but the other factors of overall performance such as character, chemistry, competence, commitment, communication, and cognitive skills.

The time to start this process is in the interview itself, where expectations about how you want things done in your organization can be set early.