Category Archives: Blog

To get where you want to go, you need to “get the right people on the bus!”

To get where you want to go, you need to “get the right people on the bus!”

Based upon my many years as a business advisor, I have learned that the quickest and surest way for an organization to ensure it gets where it wants to go is to hire, maintain and support a team comprised of “the right people.”

Who are the “right people?”

Those who work to get actually things done…those who embody, live and align with the organization’s culture and values…and those who understand what it means to be accountable. I could go on, but I think you get the general idea.

When you look at your organization as it currently is, do the people you currently have in place possess the talents, skills and abilities you need? Are they doing “the right things?” If you had the opportunity, would you rehire everyone currently working with you?

My experience has consistently shown that businesses that succeed over a sustained period of time have created “a productivity culture” wherein everyone within the organization truly feels accountable for achieving results. Its business strategies are constructed and “owned” by the people who are responsible for executing on them. And everyone is fully engaged.

Have you fostered this type of environment within your operation?

Statistics show that up to 71% of all American workers are somewhat disengaged in their work. Another recent poll showed that only 37% of employees in organizations truly understand their company’s priorities, and that only one in five were enthusiastic about them.

If any of this holds true for your organization, the cost of this negativity could be HUGE. More important, it will be virtually impossible to execute upon a strategy, no matter how brilliant it may be, until you fix this problem.

The bottom line: to get any business where it wants to go, the organization must maintain a healthy culture, have the right talent, and harness the collective intelligence of the entire organization.

Getting Faked Out By Our Pipelines

Getting Faked Out By Our Pipelines

Many businesses track their sales Pipeline as a leading indicator of future sales/revenue. The Pipeline represents the accumulated value of their outstanding proposals. Companies also track their Adjusted Pipeline, which multiplies each proposal by the sales person’s “guestimate” of it’s likeliness to close.

What we’re hearing from companies is that they are struggling now to achieve the results that their Pipelines and Adjusted Pipelines are predicting. What seems to be happening two main causes.

Pipeline / Adjusted Pipeline Defined

First, let’s get clear on how the Pipeline and Adjusted Pipeline works. If a sales person has 2 outstanding proposals, one for $20K and one for $10K, the total value of the sales person’s Pipeline is $30K ($20K + $10K). But, if the $20K proposal is only 10% likely to close (representing $2K in Adjusted Pipeline – $20K x 10%), and the $10K proposal is only 50% likely to close (representing $5K in Adjusted Pipeline – $10K x 50%), the total Adjusted Pipeline is only $7K ($2K + $5K). For more information on Pipelines, see the following article in Wikipedia: http://en.wikipedia.org/wiki/Sales_tunnel.

Fewer Proposals Are Closing

The first problem to address is that fewer proposals are closing now. Sales people are notorious optimists, and 2 or 3 years ago, their optimism seemed to be warranted. Proposals converted to orders with a fair amount of regularity. Now, in the “new economy”, their proposals are not converting as often, and sales people need to adjust their predictions accordingly.

Proposals Are Taking Longer to Close

The second issue with Pipeline accuracy has to do with the speed that proposals close. Sales cycle times have increased in the last year, as companies fight harder to hold onto their cash and force their employees to prove that expenditures are critical. Proposals that once closed in 30 to 60 days are taking 90-120 days or even longer. So – the Pipeline value may be accurate, but the timing of the proposals closing may be overly optimistic.

Adopt Clearer Rules About %’s

Sales teams need to adopt more rigid and clear rules about how to estimate the likelihood of a proposal closing in the calculation of the Adjusted Pipeline. One company we work with has only 4 possible percentages that their sales people are allowed to use. This keeps things simple, and the company has developed clear definitions of what each percentage means. Some sample definitions follow, but you will need to develop definitions that work in your industry:

  • 25% – there is competition and/or they don’t have the project budgeted
  • 50% – there is competition but we’ve emerged as the lead choice
  • 75% – there is no competition but we haven’t gotten approval yet
  • 90% – there is no competition and we’ve been given verbal approval

Estimate Close Dates More Realistically

Companies also need to ask sales people to estimate the expected close date of each proposal, and sales people need education around how long things are taking to close now compared with two years ago. As a learning exercise, gather your sales team, and take their Pipeline reports from April of this year, and see how accurate their projections were with the benefit of hindsight. Sales people need to realize that even if their prospect is telling them a “firm” decision date, their prospect probably has underestimated the difficulty of getting management’s approval to spend the money.

Companies need to study their Pipeline conversion rates, and set realistic close dates not based on what the sales person or the prospect is saying, but on the speed that proposals are actually closing. In this way, companies can better estimate how much Pipeline they need in order to be “ok”.

Wrap Up

Two years ago, a company that needed a Pipeline of $1M might now need $2M or even more. We need to convince our sales teams not to get comfortable with Pipeline values that were acceptable in the past, and to keep working hard to find more opportunities. Having a $1M Adjusted Pipeline when you can’t get anything to close doesn’t do a company any good.

If you are struggling with your Pipeline tracking or accuracy, let us help you develop tools to show your sales team what they need to achieve to keep the company healthy in this new economy.

Title Tips

Title Tips (or Titles Are NOT Free)

Always be on the lookout for “title envy” – the tendency by one party to declare themselves equal to someone else who just got promoted, and then ask for a similar title. Too often, in order to appease the jealous employee, we relent, and get nothing in return. In our fear of losing the jealous employee, we mistakenly conclude that the title is “no big deal” and make the promotion without getting anything in return.

Title changes don’t appear to “cost” companies anything, yet they can be powerful motivators. Therefore, inexperienced business owners sometimes use them too quickly and inappropriately. They either get themselves in trouble, or they don’t get the value from the title change/promotion that they could have received.

Titles cost a company more than the business owner understands. By promoting a person into a position, you lose the opportunity to promote someone else. People may leave the company if they get passed over. You lose the opportunity to move a new person, not even hired yet, into that position later, or you need to terminate or re-assign the person to make room for a qualified new person. You need to choose carefully. It’s hard work.

Best Practices:

  • Never give a title without getting something real in return. A promise to behave differently is NOT getting something in return. The employer that gives a title for a promise almost always gets burned. Only give a title for actual performance over a significant period of time. Employees too often expect or want to be compensated first, and then they will begin different behaviors. They need to learn that the behavior or achievement is the starting point, and the rewards come with showing that they can get it done.
  • Keep people moving up a well defined hierarchy with lots of levels – don’t jump people directly to VP levels. Work them up through “Manager” (Operations Manager, Marketing Manager, Sales Manager) and then “Director” titles (Director of Operations, Director of Marketing, Director of Sales). Once past director, you get to the VP level, and then you have the C level (CEO, CFO, COO, CIO, CMO, and a bunch of really crazy sounding titles). Make them earn it – each and every time. If managers do not have to “earn” titles by improving/achieving something, they will inevitably not appreciate the position. Since they view promotions as easy, they will simply then look for the next level for them to ascend.
  • Separate promotions with time – how much depends on the organizational culture. It would be acceptable to limit promotions (except in unusual circumstances of course) to one or two years minimum on average. The key to this is setting expectations of what must happen for the next title change to occur – make it significant enough to take time to achieve and prove.
  • Make sure that you have the best person for the job – never promote someone who is whining for a position or a title because it never goes well. People too often see titles as symbols of power and they use their title to order other people around.
  • Using “interim” titles can be effective – make the first several months or so of a new title a trial process for the employee. If they prove that they are worthy, then bestow the title on them officially. If you both don’t agree that the position works for the employee, they can go back to their previous position without too much of a “loss of face.”
  • Each promotion becomes an opportunity for a celebration. You need to celebrate frequently because most people tend to focus on the negative (what’s going wrong, what doesn’t work, etc.).

Good questions for you to consider for your organization:

  • How is our organization chart defined? How many levels do you have? Do you have enough?
  • How would you rank your management level personnel in order of effectiveness?
  • Who deserves a promotion? What do they need to do to earn the new title?
  • Who deserves a demotion? Where else could they serve?

Recommended Books

Recommended Book List:

General

Mastering the Rockefeller Habits – Verne Harnish
Great By Choice – Jim Collins

Strategy

Good To Great – Jim Collins
The Inside Advantage – Bob Bloom
Blue Ocean Strategy – W. Chan Kim, Renee Mauborgne

Execution

Great Game of Business – Jack Stack
Managing By The Numbers – Chuck Kremer & Ron Rizzuto
The E-Myth Revisted – Gerber

People

Fierce Conversations – Susan Scott
The Five Dysfunctions of a Team – Patick Lencioni
Now Discover Your Strengths – Marcus Buckingham
Switch – Chip Heath & Dan Heath

Cash

Never Run Out of Cash – Philip Campbell