TWO SALES TALES: WHY WHAT YOU DO (OR DON'T DO) IMPACTS ATTRITION
Having supported numerous CEOs over the course of our careers in both HR leadership and management consulting roles, we often find ourselves ‘at the table’, coaching leaders, solving problems and contributing to create the strategy and plans needed to build and grow businesses. Sooner or later a discussion about an organizations’ talent occurs, especially when existing staff are viewed as key to delivering the desired results.
Today, more than ever, what senior leaders tell us they worry about most is the strength and stability of their talent base – who they have and how to keep them in the organization. Great leaders understand the importance and value of their talent and go the extra mile to treat their people as the rare, valuable, precious human capital that they are. Sadly though, when leaders fail to make talent management and employee engagement a priority, it often results in a more reactive approach to managing the business – creating panic when a critical person (or team) decides to leave.
What follows are two contrasting examples of how talent management practices have impacted large sales organizations – the first, a true success story, with the second being somewhat of a lesson learned.
Case # 1 – Winning Through Proactive Leadership
A major organization committed to a strategy that called for significant geographic expansion into new markets coupled with a 15% increase in gross profits year over year. But, flying in the face of their ambitious plans was a reality which took the form of a growing and increasingly worrisome level of sales turnover that was running well in excess of 11% a year. Staffing the sales organization was frequently compared to operating the business on a ‘recruiting treadmill’ – replacing talent only when they resigned - using a process that was both cumbersome and highly ineffective. Senior leadership knew major changes were needed but had no definitive solutions in place to remedy the situation.
What Happened
HR was tasked to dramatically reduce turnover and bring lasting stability to the sales organization. Senior-most leadership (starting with the CEO) positioned themselves as the agents who would drive the change, communicating that HR had the full support of the leadership team to do ‘whatever was needed’ to bring sales attrition under control and position the firm for the strategic growth it was counting on. Over the course of twelve months, numerous initiatives were launched which included an in-depth analysis to determine the root causes of turnover and surface recommendations for implementing change. While there were a considerable number of outcomes, among the most impactful were:
uantifying the true cost of regretted attrition and educating leaders on the financial drain it was having on profitability
Creation of a pipeline recruiting process and dedicated sales search team which resulted in a persistent recruiting presence in the market
Reengineering unwieldy requisition approval and workforce planning processes
Introducing panel-interview and behavioral interviewing screening processes
Strengthening the semi-annual talent identification process with an increased emphasis on top contributors and potential rising stars
Analyzing the full-range of management practices and policies and eliminating those seen as highly restrictive
Surveying past leavers to identify specific reasons for departing and opening the door for their possible return
Analyzing sales compensation and quota allocation practices and implementing needed change cited by sales staff
Positive Results Achieved
Within twelve months turnover dropped to 4% on an annualized basis. Sales compensation and quota allocation schemes were revised. Communications across the organization opened up considerably and managers at all levels began to behave differently – engaging their people to a much greater extent, becoming more proficient in selecting (and retaining) people and even welcoming back past leavers who returned. Of course there is more to the story, and all this did not occur without any pain or huge effort on the part of many people, however what made this a success was the level of engagement and commitment senior-most leadership demonstrated and their willingness to effect meaningful change throughout the organization.
Case #2 – Losing the War for Sales Talent
A large, global organization, part of a major conglomerate and generally regarded to be one of the market leaders in their business experienced several quarters where results fell short of expectations. The parent company’s reaction was severe, focused solely on the performance of the business and the impact it was having on overall corporate results. In what many viewed as a ‘ knee-jerk’ reaction, all operational plans were put on hold until such time as the business could demonstrate satisfactory, sustainable results. Senior leadership of the business knew that retention of valued sales staff was critical to achieving their goals, but they were increasingly powerless to implement any tangible programs that would foster engagement and aid in retaining their best people.
What Happened
The parent company mandated business leadership implement a 30% reduction of their workforce – a move that seriously impacted sales and sales support personnel. In addition, other extreme measures were enacted which included: expense constraints applied to all travel, personal development and essential training. An all-out hiring freeze was put in place and the business quickly became noticeably absent in the recruiting marketplace. Compensation, across the board was put on hold (salary, bonus and more) and staff were not permitted to transfer elsewhere within the business or within the corporate family.
After the round of staff cuts were implemented, attrition began to rise significantly, particularly with respect to the best sales contributors. Sales leadership readily acknowledged that their competitors were eagerly luring away their people, with aggressive, market-based sales compensation packages. Leaders were left with no ability to counter competitive offers or provide any meaningful ways in which to engage their staff.
In an increasingly negative and desperate climate, sales leaders were encouraged to do whatever they could to foster employee engagement – a directive which became not only a source of frustration but also somewhat laughable. Leaders and employees held the perception that people do not matter, that corporate only cares about the bottom line and was quite willing to let a dominant market franchise disintegrate all in the name of short-term gains.
Negative Results Achieved
Unfortunately, a second round of layoffs occurred, that time cutting far deeper to the bone and requiring even high potential sales talent to exit the organization. Market share declined, recruiting efforts became so highly reactive that the organization could only hope to attract ‘C’ players – as all the best people in the industry would not even entertain a recruiting call from the firm. Worse, perhaps, customers began to choose competitive alternatives as support staff became increasingly scarce and in many cases traditionally well-covered accounts had no assigned sales personnel due to the substantial quota and territory changes that were put in place.
Some Conclusions
Talent really does matter. As evidenced in the first case, with the support of the CEO and the rest of the leadership team, the organization made attracting and retaining sales talent a top priority. They employed methodical approaches, leveraging quantitative and qualitative measures to guide the change process. Their results confirm that with the support of senior leadership and a commitment to talent, an organization can improve business results and dramatically reduce turnover – particularly regretted turnover. The second case highlights the downward spiral that can occur when talent retention and employee engagement take a backseat to cost cutting. Once a business starts down that path, the opportunity to build a successful employment brand and to attract and retain talent is lost. Recovering from the stigma of layoffs, while not impossible, takes time and a very concerted effort.
Our belief is that valuing talent is the key to achieving sustainable results. With the right team in place an organization’s opportunities can be boundless. A focus on talent must start with the CEO, as she or he needs to show their commitment to hiring, retaining and developing their people even in the face of market headwinds.