All organizations expect a certain amount of turnover. In small amounts, turnover keeps the organization fresh with new talent and ideas. However, when turnover is higher or unwanted, the result quickly turns negative, costing the organization considerable time and money to hire and train new personnel. (more…)
The history of sales management is a history of two competing narratives about the nature of selling.
The first narrative is built around the concept that “selling is an art.” In this narrative, the activities of the sales professional are seen as essentially mysterious and tied to the basic personalities of the individuals involved. This narrative creates a management style that emphasizes personal development and sales managers are primarily seen as coaches and “people pickers” who can find the sales stars with the innate skill. (more…)
In previous years, companies have generally assumed that investments in sales training will increase sales productivity. Because the sales team is on the front line of revenue and profit, it seemed intuitive that improving sales skills would have a positive, immediate, and direct impact on a company’s bottom line.
That assumption, however, has not served companies particularly well. Companies spend billions of dollars every year on sales training, much of which is wasted, according to Dave Stein, CEO of ES Research, a firm that studies the sales training market. He has identified five basic reasons that sales training frequently fails:
Reason 1: Trying to fix the wrong problem
Sales managers often assume that a top training firm is always a safe bet, much the same way IT managers used to believe that “nobody ever got fired for going with IBM.” Unfortunately, the confidence that sales managers place on established training firms is often misplaced, because even the largest firms have particular areas of expertise that might not meet the needs of an individual sales team. If the root cause of a sales problem is not a core competency of that particular sales training organization, it’s likely that the training will simply be wasted effort. For example, if a sales staff is having trouble closing fully qualified leads, sales training that focuses on lead generation is only going to make the problem worse.
Reason 2: Valuing motivation over sales process
While a motivational speaker can get people pumped up or give them insights into their own character and the psychology of customers, in most cases it can’t fix the root causes of sales ineffectiveness. For example, even a team that’s incredibly motivated to close business is unlikely to close more of it when they lack a pragmatic selling methodology or are not training the sales staff on its use. This is not to say that it’s not important to be motivated, only that motivation needs to be harnessed to a sales process that directs the energy in productive behaviors. Otherwise, the “motivated” sales staff spins their wheels “chasing garbage trucks rather than Brinks trucks” as the saying goes.
Reason 3: Too much focus on technology
There’s no question that there’s been a major revolution in sales technology. However, while it’s true that new skills and new tools are required to sell in an environment where much of the communication takes place online, those skills are not greatly different than the skills required to sell face-to-face or on the telephone. While technology has its place, every salesperson needs to be competent at the basics of selling, or that technology is largely wasted.
Reason 4: Too many tips and techniques
There is a seemingly endless supply of sales tips available on the Internet, not to mention thousands of how-to sales books and courses. However, if they’re going to be of long-lasting value, sales tips and techniques must be incorporated into an overall approach to selling. When sales training is presented in terms of bite-sized nuggets, there’s no context to see how those sales tips fit into the larger picture, or whether they will actually work inside any given sales environment. In fact, many sales tips available on the web are contradictory. For instance, there are about as many sales tips for how to avoid cold calling as there are on how to successfully make cold calls.
Reason 5: Little to no preparation or follow through
Effective sales training requires upfront work building processes, tools, and metrics, as well as post-program reinforcement. It must also be combined with coaching, technology refreshers, and reinforcement. When sales training is presented as an event that begins and ends in the classroom, whatever is taught is likely to be completely forgotten within a few weeks. Without the supporting infrastructure, the money spent on training is largely wasted.
What’s interesting about the above list is that it hasn’t changed much over the past decade because the perpetuation of those mistakes is very much in the financial interest of the sales training industry. As a result, there’s not been emphasis placed upon measuring the impact of sales training in a way that would quickly identify and eliminate programs that fail to increase sales productivity.
In fact, many sales training programs measure themselves (and encourage their customers to measure them) through highly subjective survey vehicles, like course evaluations. Such “measurement,” however, simply reflect the presentation skill of the instructor along with the attendees’ assessment of whether the material taught will be useful. Evaluations presented at the end of motivational speeches are particularly prone to attendee enthusiasm. In the worst cases, the speaker is given the authority to write the survey, distribute the survey, and compile the data – a recipe for cooked results.
Another way that sales training firms measure their effectiveness is through before-and-after comparisons of revenue. While this approach has a certain simplicity, any increase (or decrease) in sales revenue could be the result of many factors, including the state of the economy, the general buying habits within the industry, the behavior of competitors, massive discounts, and so forth. More importantly, the evaluation “equation” often looks like this:
- revenue up=the training worked
- revenue down=the sales team didn’t follow through
In other words, the measurement of sales training is often a “heads you win, tails you lose” situation. As long as the measurement of sales training continues to be done so haphazardly (or, worse, fraudulently), it is impossible to ensure that sales training actually has its promised impact on sales productivity.
One solution to this problem is to compare the ROI for training of one sales group (the subject group, which gets trained) against the performance of a second sales group (the control group, which does not get trained).
Taking this approach has several advantages. If the two groups are reasonably similar, the use of a control group filters out other factors that might be influencing sales because both groups are operating under similar marketing and sales conditions.
For example, the sales training will show a positive relative ROI, even if overall sales are down for both groups. Using a control group also allows you to assess whether the sales training you’ve selected is effective at creating ROI, before you roll the training out to the entire sales force.
This is an excerpt of Volume 4 of The Future of Selling book series.
To purchase the entire series, click here .
Best practices for developing the next generation of employees and leaders. Based on the Global Leadership Research project – featuring the “Best Companies for Leaders”
What can organizations do to engage millennial employees?
Variations on this theme drive a popular and compelling discussion in talent management circles. Unfortunately, much of the evidence is anecdotal, and much of the conversation is negative. Too often the focus is on “coping,” “mitigating,” or “managing” what some older leaders consider a strange and challenging new phenomenon.
Companies that excel in developing talent, however, are both more rigorous and more positive. These firms view younger employees as a source of new capabilities and fresh perspectives. They approach the rising generation as a powerful force for transformation in the workplace, and indeed as the future leadership of their companies. And while they realize that new employees must always adapt to established cultures, they embrace the idea that the organization itself must also change to make the most of a changing workforce.
The Global Leadership Research Project
The recently-completed Annual Global Leadership Research Project offers valuable, detailed insights in this area. Conducted by Chally Group Worldwide, the project began with an in-depth survey of approximately 300 CEOs and senior HR leaders spanning companies from under $25 million in revenue to over $10 billion, and from fewer than 50 employees to more than 100,000.
Engaging with a sampling of these leaders directly through interviews, Chally investigated the approaches and tools pioneered by companies committed to investing in their own talent. One key issue studied revolves around engaging and developing employees of the millennial generation. Download Report
In this broader context, the survey asked, “how critical is focusing on the attraction, training, and retention of the millennial generation for your company?”
The majority of organizations consider these priorities either “very important” or “critical.” The ways they choose to address them vary from merely conceptual to very tangible, as some verbatim responses show:
- “Educating ourselves on how to reach this generation.”
- “Actively acknowledging the behavior and thought patterns of the millennials.”
- “Developing a more formal career path with advancement opportunities.”
- “Reviewing our policies, benefits and cultural practices to support this age group.”
- “We offer flexible work arrangements, privacy rooms for working mothers, autonomy and being a part of the decision making process.”
- “We have bolstered our mentoring program and offer flex and job sharing.”
The ways in which these goals take shape in recruiting, training, and development programs vary enormously. Some technological approaches, such as social media collaboration and online training tools, arguably have broader utility to the entire organization. Others are undoubtedly millennial-specific, and tend to reflect the deeper goals and concerns of the new generation. These common threads include a clear development path, meaningful work, abundant feedback, the opportunity for rapid career progress, and a respected voice in the organization.
Recruiting New Approaches
The effort to engage millennials begins in the most obvious recruiting arena, the university. Larger organizations maintain a strong recruiting presence there. Deloitte, the top private company in the study’s 2014 Best Companies for Leaders, taps senior partners, principals and directors to work with nearly 40 target universities, recruiting more than 7,000 graduates each year.
Firms take various millennial-focused approaches to enhance the effectiveness of student recruiting, from refreshing their employer brand to increasing their reliance on social media. Aware that inclusion is important to millennials, some companies emphasize their community outreach efforts and connect with or create diversity organizations, both on campus and within the organization.
Once the organization makes contact, internship and co-op programs offer an extremely popular way to involve prospective employees more deeply. The best are shaped by research specifically on the engagement and retention of millennial talent. Here again, a meaningful work experience is a key concept. Best-practice programs collaboratively set clear goals, involve “real” work, and offer significant development support. Because of the value millennials place on recognition, some internships specifically provide contact with executives and opportunities for interns’ contributions to be recognized by leaders.
Onboarding Intensive and Sustained
For many companies, the internship experience is the preferred pathway to full-time employment. Whenever the process of onboarding and training begins, it is immediate, intensive, and sustained. To introduce millennials to the life of the organization, the best programs strike a careful balance between purpose-built learning experiences and challenging, productive work. Providing flexibility, ample feedback, and tangible evidence of progress are key factors in sustaining engagement.
Here again Deloitte’s experience shows the level of commitment and complexity required for a best-practice approach. Realizing that millennials now make up more than 50% of the firm’s client-facing workforce, the company has built a robust “Welcome to Deloitte” program optimized for the learning styles and professional goals of the rising generation.
To engage these digital natives, the program focuses on immediate, interactive experiences. Simulations, role-playing, small-group activities, and games help new hires understand how to work successfully as part of a client team. An enterprise social networking platform connects them to resources and opportunities on a global scale, and reinforces the core beliefs and cultural norms of the company. As employees move through the year-long process, a customized dashboard lets them chart their path and track their progress. Graduates of the program report understanding the organization and feeling welcomed to it at rates of 96% or more.
Development The Social Professional
Given their duration, some of the more elaborate onboarding efforts overlap with development offerings for current employees. In these programs, the themes of meaningful work and rapid progression continue to guide best practices for developing millennials.
As befits a global consultancy, PwC’s efforts are rooted in a global research study of millennial attitudes, behaviors, and work styles. The more than 44,000 responses collected helps leaders understand how millennials compare with their non-millennial colleagues, and supports such initiatives as a Young Professionals Network and accelerated development programs.
GE takes a more collaborative approach to the same goals through their Global New Directions program. This brings together teams of next-generation leaders to identify approaches, tools, and processes that can help the company attract and inspire a diverse, globally competitive workforce.
Verizon offers a variety of opportunities across its organization, including internships, entry-level opportunities and robust rotational leadership development programs. The intern experience is a critical element of its mission to attract and retain top talent and serves as the priority pipeline for future full-time opportunities and returning internships and co-ops. The design of the intern program is directly influenced by research on engagement and retention of millennial talent. Verizon has a robust check-and-balance system that ensures all interns have clear goals, meaningful work, and an opportunity to showcase their achievements to the leaders of the organization.
Verizon’s six enterprise-wide Leadership Development Programs (Engineering, Finance, Human Resources, Information Technology, Supply Chain and Marketing) are designed to build a strong pipeline of future leaders by providing rotational assignments that develop functional competency and leadership capabilities. The rigorous rotational assignments enable these high-caliber millennials to contribute to critical business initiatives while building their professional network through bi-annual enrichment and networking events. All VLDP employees are paired with top-talent mentors within their first year of the program, and the company reinforces the importance of being good corporate citizens through annual community outreach events.
Verizon also offers a robust training curriculum for high-potential talent within the organization. Specifically, Verizon Leadership University is a corporate leadership development program designed to grow leaders at all levels and consists of core courses and ongoing learning resources. Verizon believes that every day is a new opportunity to develop as a leader, improve how you influence your team, and create greater value for customers and shareholders. Its suite of training programs and classes all incorporate millennial-friendly features such as social collaboration technologies and e-learning. From a development perspective, Verizon encourages geographic mobility amongst its employees, especially when new opportunities become available.
Deloitte continues its emphasis on social collaboration from initial training into all aspects of their development efforts. In addition to formal programs, the company stresses more organic opportunities for professional growth through community-of-practice microsites and the Deloitte People Network, which facilitates networking and peer-to-peer coaching and allows employees to crowd-source information globally. Micro-blogging is strongly encouraged, and user-created forums help match younger professionals with mentors.
Some companies are already taking these efforts to a higher organizational level with programs for training the next generation of leaders. Verizon’s Talent 2020 initiative is rolling out a series of test and pilot programs focused specifically on millennials. Verizon and others have built rotational leadership programs and numerous high-potential programs. One characteristic shared by best-practice companies is starting early: the strategic effort to identify and develop future leaders starts at the very beginning of the employment lifecycle.
Organizational change Reciprocal Advantages
In the broadest sense, however, a commitment to developing talent reaches beyond one-way training activities, or even programs that give younger employees a truly collaborative role. Leading companies show that a more expansive effort is required, one in which changes to the business itself support a holistic, long-term integration of the new generation.
Verizon’s commitment to managing “cross-generational talent” hints at this broader perspective, asserting (contrary to some conventional wisdom) that millennials aren’t a radical phenomenon but rather just one of many generational populations, each with unique needs and contributions.
Like-minded companies are training managers to understand generational differences and adapt to them. In some firms, this topic is a core part of all management development programs. In at least one, a coaching and mentoring approach, based on the ‘servant leader’ philosophy, is mandated for all leaders in the company.
Communication techniques such as social collaboration platforms are rapidly becoming part of the corporate landscape, not just for new hires or young employees but organization-wide. Even HR practices are changing to align with the inclinations of the millennial workforce: from more robust performance review and feedback methodologies, to health and wellness competitions, to experiments with flexible work hours and locations.
One innovation that perhaps typifies these trends is “reverse mentoring.” Adopted by several firms in the study, this approach promises insights in both directions. Older managers come to understand the attitudes, motivations, and cultural norms typical of their younger peers, learn practical technical and social skills – and often profit from informal, unfiltered feedback. Millennial mentors gain the professional benefits of contact with senior managers, plus a gratifying level of visibility. They feel that their generation’s voices are being heard.
Next-generation development Bigger, Better, Faster
The workplace has always evolved. Expectations, norms, policies and practices, even the physical and digital spaces in which work gets done have changed over time as each generation has come to assert itself. Rising cohorts of young professionals before this one have also been met with a mixture of incomprehension, anxiety, and promise. In the long view, the challenges and possibilities posed by the latest evolution may not be that different from those that came before, apart from some indisputable differences unique to digital natives.
What does seem to be different today is the breadth and sophistication of the efforts leading organizations are taking to integrate the new generation into their cultures. Faced with generational challenges at a time when so many other aspects of business are also changing, companies are responding swiftly and decisively. And by adapting the way the entire company functions to match the inclinations and capabilities of millennials, best-practice firms are affirming just how much each generation can offer to the others.
When people talk about psychological tests, they often ask whether the test is valid or not. What exactly does this mean? What does it mean for a test to have validity?
Answer: Validity is the extent to which a test measures what it claims to measure. It is vital for a test to be valid in order for the results to be accurately applied and interpreted.
Validity isn’t determined by a single statistic, but by a body of research that demonstrates the relationship between the test and the behavior it is intended to measure. There are three types of validity:
1. Content Validity
For content validity, the constructs the test measures have been linked to the tasks, duties and required KSAOs (knowledge, skills, abilities, other) of targeted jobs.
Put another way, it is the extent to which a tool or measure assesses all facets of the construct or job. For example, a test to be a pilot should measure a person’s ability to takeoff, fly and land an airplane (all necessary for a successful pilot), not just whether or not the person can fly an airplane.
2. Criterion-related Validity
A test is said to have criterion-related validity when it has demonstrated its effectiveness in predicting criterion or indicators of a construct. There are two different types of criterion validity:
- Concurrent Validity occurs when the criterion measures are obtained at the same time as the test scores. This indicates the extent to which the test scores accurately estimate an individual’s current state with regards to the criterion. For example, on a test that measures levels of depression, the test would be said to have concurrent validity if it measured the current levels of depression experienced by the test taker.
- Predictive Validity occurs when the criterion measures are obtained at a time after the test. Examples of test with predictive validity are career or aptitude tests, which are helpful in determining who is likely to succeed or fail in certain subjects or occupations.
3. Construct Validity
A test has construct validity if it demonstrates an association between the test scores and the prediction of a theoretical trait. Put differently, does the test measure what it purports to measure?
For example, in the case of intelligence tests, if a test is suggested to be an intelligence test but it is a simple vocabulary test, is the assessment measuring a person’s mental capacity, or is it simply measuring a person’s exposure to the words on the test?
Learn more about how Chally applies validity measures to our offerings by visiting www.chally.com or contacting us at 800.254.5995.
Thirty years ago, customers’ primary demands were related to product quality. Once international competition met and ultimately surpassed the existing quality standards, it became critical to build quality assurance into most elements of the manufacturing process in order to remain competitive. With that accomplished, while still necessary as the price of entry, quality could no longer be considered a significant competitive advantage. Twenty years ago, with higher quality standards in place, service became a competitive advantage and the driving force in winning market share. Consequently, demands for service forced suppliers to look at customer satisfaction as the primary criterion for success.
Now, the focus has shifted again. Due to the nature of the competitive environment where a quality product with similar features and benefits and a commitment to service are mandatory to even enter the sales arena, the critical focus has become the absolute need for added value. World Class sales forces, through a proactive analysis of what the customer needs, leave nothing to chance when ensuring customer satisfaction. They recognize that an effective sales effort goes beyond merely selling products or services; it demands that priority be given to increasing the customer’s productivity, which can only be measured through the customer’s increased revenues or reduced costs. To provide the customer with these value-added services, the seller’s entire organization must embrace a customer-driven culture that wholeheartedly supports the sales force.
Shift focus from selling “products/services” to selling “increased customer productivity” through improved revenue streams or reduced costs.
Through various approaches, sales forces are investigating and analyzing their customers’ needs and challenges. Suppliers are then reorganizing their internal processes, identifying critical skills required, creating new standards, and committing to the need for continuous improvement. With customers that account for a smaller percent of the business, the agreement to meet the customer’s need may be as simple as taking the form of a guarantee. However, the larger and more complex the customer, the more critical it becomes to formalize a mutual agreement that details the customer’s expectations and the supplier’s commitment to provide product, service, and added value. This agreement may even be formalized to the extent that it includes periodic and mutual reviews and adjustments.
Transactional Quality Management focused on the critical needs of the customer.
A performance-driven culture focuses on continuous improvement, not just meeting the expectations of today. The control process requires ongoing measurements as a sale progresses, not after the fact, and at each step of the way there should exist a checkpoint to ensure the process is working and that the focus continues to be on satisfying customers’ needs.
Shared risk/shared savings partnerships focused on selective preferred customer relationships.
In a dramatically new business model, some suppliers are moving toward shared risk/shared savings partnerships with their key, or critical, customers. In a broad definition, the supplier and the customer sign an agreement stating a cost saving goal. The supplier agrees to waive the transactional charge for goods and services, but will be paid a percentage (usually 50%) of the savings accrued. Should costs increase, the supplier will participate by assuming responsibility for part of the increase. Obviously, the supplier is very motivated to improve the procurement process for its customers.
Strong leadership to refocus salespeople from the traditional sales and service role to customer business consultants.
In a continuous effort to improve their customers’ business results, World Class sales organizations are repositioning their salespeople as business consultants. The removal of these representatives from day-to-day transactional issues is facilitated by the availability of systems and personnel to support customers’ administrative needs. The sales force is then equipped with a wide array of tools that provide the information needed to consult with the customer.
Take responsibility for educating customers in any areas that can improve performance results.
More sophisticated and discriminating corporate customers are looking for suppliers who can bring technical and applications expertise to the table. They seek a salesperson/consultant who can analyze a problem, conceptualize a solution, and assist in implementation. More than simply taking on challenges for the customer, World Class sales forces acknowledge the value in serving as an educational resource to their customers.
Technology. Globalization. Specialization. Speed.
We see predictions about their effect on business practically every day. But while the concerns of the “CEO of the future” are often discussed and debated, what about sales? What will the sales leaders of the future need to do to compete effectively?
To explore this question, Chally Group Worldwide co-founder and Chairman Howard P. Stevens sat down recently with some of the most eminent practitioners and thinkers in the business: Neil Rackham, renowned speaker and author on sales, Andy Zoltners, Co-founder of ZS Associates and Frederic Esser Nemmers Distinguished Professor Emeritus of Marketing at the Kellogg School of Management at Northwestern University. As part of an ongoing conversation about the future of sales leadership, Stevens asked them what sales leaders can expect in years to come, and how they can prepare.
Education vs. Training
This begs the question of how the salesperson of the future can consistently perform in this new role as a trusted advisor. Rackham sees an increased focus on education. Rather than giving a lot of specialized training to generalist, sell-me-this-pencil candidates, he foresees recruiting people who have the specific education and knowledge to deliver a higher level of expertise. “We’re not looking for an MBA in sales, but rather for the kinds of things that go into an MBA.”
Does this shift mean that salespeople will become management consultants? Perhaps. But, according to Rackham, the leadership role in high-level selling teams might call for someone who finds and delivers the appropriate expertise, rather than having it themselves.
As he explains, “a big eye-opener for me in some recent research we did was that the best account managers weren’t the ones who spend the most time out talking with the customers. The top players spend nearly all their time working internally. Why? Because by focusing on the way the company serves the customer, managing the relationship between the two companies, they could create more value.”
Sales or Consulting?
Psychometric evidence tells a similar story. Chally Group research shows that many of the characteristics that are most predictive of high-level success in sales overlap strongly with those that predict the best senior managers. In practice, says Stevens, “Whatever their job description may say, top salespeople succeed by taking on more of an internal management role. They manage the resources in their company, orchestrating them to meet the needs of a particular customer.”
He points to additional research by Arun Sharma, Professor of Marketing at the School of Business Administration at the University of Miami, indicating that the top 20% of a sales force consumed 52% of the company’s total resources. This supports the idea that even today, success in sales leadership “takes people who know how to manipulate processes within the company to the advantage of their customers.”
On the other hand, the same study showed that the top 20% of performers brought in 54% of the business – considerably less than what the “80/20 rule” of conventional wisdom would predict. So the standouts fail to significantly outperform average in terms of earning a return on the resources they spend.
As Rackham puts it, “over-resourcing the best opportunities may be the most successful of all sales strategies today. But it’s often simply the most senior people who shout the loudest who can allocate those resources.”
He believes that opportunity management will have to be a much greater focus in the future. “In a world in which it costs IBM half a million dollars in global services just to bid on a major piece of work, this kind of informal approach isn’t sustainable. Organizations are going to need much more rational decision processes.”
Managing Through Compensation – or Through Management?
If the sales leaders of the future look more like specialized business consultants, professional managers, or both, will they still be compensated largely by commission?
Zoltners believes that this bias may be inevitable. “You could change to another system tomorrow, but of course you’d want to retain and motivate the best people. So then the high performers would get more money anyway through bonuses and the like, and your system would get broken. I think the decisions companies make usually are manifestations of their culture and their beliefs, and sales compensation is deeply ingrained in those. It takes an unusually strong company to overcome the status quo.”
Rackham reluctantly agrees. “If you try to manage by compensation you’re probably not managing by management. The best system to me would be a bonus system where the incentive and focus came from the culture and the management of the company. But I think we may have no choice but to have a high level of incentive compensation.”
Making Sense of Customer Value
Of course, not all sales efforts will depend on high-level professional expertise. Enabled by online technologies, the experts believe that more transactional sales will continue to migrate away from face-to-face selling. As the extremes of the spectrum grow farther apart, customer segmentation will become more critical, and more complex.
Rackham frames the divergence in terms of value, “If you look at customer value, there will always be two components: the cost and the benefits. You can create benefits by increasing the expertise that you give them. Or you can decrease the cost for the more transactional customer. The interesting thing is, customers are neither entirely one nor the other. It will depend on the opportunity.”
So will we see companies actually developing two or more different sales forces? He thinks so. “I’ve always disliked the hunter/farmer model. I don’t think that is going to predominate in the future. I agree that we need something more subtle than that. The evidence seems to show that the successful company has got to be able to use multiple models and target them appropriately.”
Given all these issues and trends, what two things are most likely to change in the near future?
The hardest changes may be in the area of structure. How can companies segment their sales expertise in a way that is both efficient for the organization and meaningful for customers? Specialization gets very complicated, says Zoltners. “You’ve got big accounts, little accounts, U.S. accounts, and global ones. Whatever structure you begin with needs to be extensively customized, and flexible enough to adapt to changes.”
The other major evolution will be technology. Zoltners believes that innovation in the ways salespeople can touch customers, such as tele-presence technologies, social networks, data analytics, and outsourcing, are just getting started. “Even today, inside sales jobs are growing three times faster than outside sales thanks to technology,” adds Stevens. “According to Salesforce.com CEO Marc Benioff, inside salespeople are getting higher close rates than traditional teams, in a third of the time and at a third of the cost.”
Importantly, many of these advantages work in both directions. Technology adds flexibility and convenience to the sales process for customers. And those who have a fairly clear idea of what they want can go and find it. Zoltners points to recent SSC research showing that before the first discussion with the sales person even happens, many customers have already made a first-stage decision.
The End of Sales As We Know It?
If these trends continue, what does the future look like for the salesperson? Rackham predicts that the number of face-to-face salespeople will fall, but the demands on them in terms of job complexity will rise. “That’s going to mean a different kind of person, a different skill set, and different kinds of autonomy, supported by an organizational structure that’s both more rational and more flexible.”
Regardless of what insights, skills, and resources the salesperson of the future may need to bring to the table, Rackham is confident that personal interaction will continue to be a critical part of the process. “At the end of the day, we’re still talking about human beings making important decisions. Sometimes buyers just need your reassurance that a particular product is going to fit their needs at a particular cost. Sales, as we know it, will not just go away. I think we’ll all still have jobs.”
Once upon a time, bad performers were measured in terms of cost of turnover. Those days are gone. The cost to source, recruit, interview, select and train are definite costs that still exist, but they are miniscule compared to the real pain today’s sales managers feel. For the sake of building an ROI in this case, we are going to focus on numbers that salespeople understand, revenues. Bad performers cost the company big time – not only because of cost of turnover, but because they don’t generate the revenues expected/needed. In many cases, poor performers take up 80% of the sales manager’s time, but produce little revenue, and are often difficult to manage. The question that begs is, How much does a poor sales performer cost? Consider the following equation and you will begin to see the impact a poor sales performer (bad hire) has on your organization:
Calculate the revenue averages for the participants in each sales group: Top, Average and Bottom Performers
The purpose is to help clearly define what the difference is (in financial terms) between a bottom, average and top performer in revenues. The following is a pretty typical scenario:
Top Performers Average = $800,000/sales rep
Average Performers Average = $600,000/sales rep
Bottom Performers Average = $400,000/sales rep
In this scenario, the bottom performers generate just $400,000 in sales, compared to $600,000 in sales for the average performers. This is a difference of $200,000. So, the reality is that every time you make a bad hire, it costs the company at least $200,000.
Note: we are not even taking into consideration the difference between bottom and top performers. The reality is that if you can move the needle just a little with every new hire, the impact is substantial. In other words, the numbers being used are conservative in this case, but the point is clear, every hire, when it comes to the sales force, is critical.
Annualized Lost Revenue
If you take this concept and apply it to the sales organization as a whole, over one year, the numbers become large very quickly.
50 New Hires Per Year
25% are Bad Hires = 13
13 Bad Hires x $200,000 each lost revenue = $2,600,000 in potential lost revenue!
The good news is that success in sales can be predicted, and Chally is the best there is. The reality is, if we only help prevent your organization from making 1-2 bad hires this year, or if we can help you better realign your existing team, the results more than easily pay for the cost of partnering with Chally. The better news? Research shows we are accurate in our predictions on average 75-80% of the time, and that can translate to millions of dollars for our clients on an annual basis!
Chally realizes that more emphasis is put on the interview than any other selection aspect. Here are key factors that experience has proven to be valuable. We’ve also included a short, practical interview example to assist in interview design.
While interviewing may be the most common of selection techniques, it is effective only if it focuses on factors that are truly observable. The format should be structured and applied consistently across all candidates. An interview:
Offer an avenue to explain unclear background data provide an opportunity to evaluate presentation skills, poise, appearance, and the ability to think on one’s feet furnish an opportunity to check stress tolerance, planning, and some learning ability
- verify honesty or integrity
- attempt to separate between real motivation and the present need for a job
- provide totally objective and valid proof of non-bias for legal purposes (in most cases)
Determine the job-relevant characteristics and skills necessary to do the job successfully, and define the purpose of a specific, upcoming interview. This will depend on where the interview is positioned in the selection process. Earlier interviews typically screen people out while later interviews focus on confirming a positive impression which could lead to an offer.
Prepare the questions to probe the candidate and determine the match between the person and the job. Start the interview by greeting the candidate in a professional manner, establishing rapport, and stating the objective for this specific interview.
Allot time to discuss each key area you need to talk about before you discuss the job requirements and your company. The amount of effort you spend on “selling” the job and the company should be determined by how closely the applicant appears to match your requirements.
Finally, ask the applicant if he or she has any questions and respond accordingly. Finish by telling the candidate the next steps and by reviewing what to expect.
Getting The Real Picture, Put the Candidate at Ease
This is often called a “permissive environment.” By helping the person to feel free to talk, you create the opportunity for the applicant to provide more candid responses.
Listen – Don’t Give Away the Show
The key point of a selection interview is to gather information, not to sell. Even naive and inexperienced candidates can follow interview clues projected by a talkative interviewer, allowing them to package their answers. Practice the 80/20 Rule: listen to the applicant 80% of the interview; talk 20%.
Silence – Don’t Be Afraid of It
Talking may be either communication or a defense. Too much of it on your part is an indication of your own discomfort with silence. Likewise, the need for an interviewee to talk too much indicates discomfort with silence, a characteristic that can hinder future success. No one can listen while talking.
Offer Opportunity – Not Just Security Good employees tend to live on their own merits and expect to be rewarded as a result. They prefer more opportunities for growth, not just long-term security. They may be unwilling to commit to guarantees for employment tenure.
Look for People Who Exhibit the Courage of Their Convictions People are better suited to persuade others to buy an idea or product in which they strongly believe. Even the best actor cannot feign a false belief in the product all the time. A lack of conviction leads to cynicism and, eventually, personal problems for the candidate.
A Structured Interview Example
In terms of overall impact on the value of an interview, “asking the right questions” is second only to understanding what you are looking for in the first place.
For an in-depth interview, we at Chally advocate a
When using this approach, the interviewer starts by asking open-ended questions which focus on a characteristic sought in the candidate.
As you can see in the following diagram, coning questions often start with the broad inquiry, “tell me about.” For example, an opening question could be, “Tell me about yourself. How would you describe yourself in a work situation?” As the candidate answers, listen for areas of interest, and begin focusing downward in the cone. In our example, a more narrow, second-stage question might be, “What have been some of your biggest mistakes?”
This last question would lead you to the bottom of the “cone” with a very specific follow-up question intended to pinpoint what was learned from key mistakes as in, “What did you learn from _____ (one specific mistake)?” In this example, what you are looking for is a person who owns his or her mistakes and can persevere in spite of barriers. Having debriefed what went wrong in order to learn for the future, your candidate has taken responsibility for fixing the situation. It is this final point in the inquiry where you can start forming conclusions about the candidate, drawn from specific answers to your pinpoint questions.
“Chally’s assessment quite often highlights candidate traits and characteristics that can be probed in more detail during subsequent interviews.” Vice President, Sales
A Sales Example: As we defined earlier, successful performance is supported by a number of critical skills. Using a Cone Approach to evaluate customer relations skill could flow as follows:
General: Describe a long-standing customer relationship you’ve had.
Focus: What tactics have worked well to help maintain the relationship? Look for:
- a recognition of situations which may become problems in the future
- a focus on building goodwill
- pro-activity in asking the customer for ways to improve
- not allowing previous problems to bias how customers are treated now
Specific: On a scale of 1 to 10 (10 = high) how would you rate your ability to nurture customer relationships and why? Look for:
- willingness to listen to customer’s challenges and help problem-solve even in unrelated areas
- helping customer stay abreast of changes that may be of benefit
- objective and cool-headed approach; not trying to impress for its own sake
What To Avoid
In the United States, it is illegal for employers to disqualify job candidates based on a variety of personal characteristics. For example:
- Questions dealing with arrests
- Questions asking about citizenship
- Questions concerning a spouse, the spouse’s employment or salary, children and child care arrangements, dependents, or pregnancy
- Overly specific questions not likely to affect job performance, such as health questions
- Questions dealing with marital status
Questions about type or condition of military discharge
- Questions about whether applicants own or rent their own homes
“A pre-employment assessment profile by Chally can radically increase your chances for success when recruiting and hiring … low-priced evaluations, while interesting, simply don’t offer the in-depth analysis provided by Chally.” Business Owner
The business of assessment, psychometrics and industrial/organizational psychology continues to grow, but there also continues to be a lack of governance and oversight to ensure providers are actually adhering to some standard of excellence. After 40 years of partnering with numerous global and Fortune 500 companies to help provide them with best practices on personnel selection, interviewing, development, on-boarding and upgrading their sales, service and leadership organizations, Chally has constructed the following guidelines to help new companies critically evaluate their potential business partners to help ensure their brand and quality are supported.
1. Does your business partner of choice actually understand your business?
Routinely, Talent Management practitioners, sales leaders and executives are challenged to understand their own talent, or upgrade the talent they have. Chally has been exposed to every talent management-driven, process-oriented solution all the way up to sales and CEO-driven transformations. None are completely wrong. Few are entirely right. Chally knows the importance of starting with strategy, which provides the framework and structure; which then leads to the people, their competencies, and activities, which ultimately lead to results. Look for facts to solidify opinions. Do not assume a dominant salesperson wins, an extraverted customer service representative retains or an aggressive leader can lead. Chally can show you the data to help your company make more effective decisions.
2. Does the partner solution have content that is focused on sales, service, and leadership positions? Is the solution flexible to meet your changing needs over time?
Talent management solutions are a dime-a-dozen. Does the solution provider really have depth of expertise and know what they are doing? Have they done it before and can they speak the language of business? Chally has helped transform some of the biggest, toughest, most complex global organizations of the world. Think you have problems? We’ve likely seen it. We can likely help. We’ve likely done it already.
3. Does your business partner of choice maintain a research archive that can document relevance of understanding of your organization, what it sells, how it sells it, who it services and how it leads and the relevant comparison points?
Chally has an unparalleled global database of over 500,000 Business-to-Business sales, service, and leadership professionals with which we can benchmark your team. This is a fact. Most other providers use validity generalization (job component validity) which means the provider is comparing your salespeople and leaders to groups like truck drivers, grocery checkers and gas station managers. Don’t be fooled; ask who the comparative group really is.
4. Is your business partner of choice a member of the American Psychological Association (APA), American Psychological Society (APS), Society of Industrial/Organizational Psychology (SIOP), or another professional organization that ensures ethical, legal and statistical guidelines for creating instruments that measure human potential, behavior or aptitude related to sales, service, and leadership roles?
Chally employs senior Ph.D. and Masters degreed professionals in industrial/organizational psychology who are globally recognized and have an average of over 15 years of experience bringing value to global and Fortune 1000 corporations. Proper credentials and experience are critical to ensure quality work. Don’t be fooled by flash, be cautious about quality measurement.
5. Is the instrument of choice (i.e., application, tool, assessment, multi-rater) supported by a robust technical manual that addresses critical industry standards such as validity, validation process and practices?
Chally’s assessment manual contains detailed information on the development, validation, norm groups and best practices for our methods, which adhere to the Uniform Guidelines on Employee Selection Procedures, Principles from the Society for Industrial and Organizational Psychology, and APA Standards for Educational and Psychological Testing to guide the development of our manual and specific technical reports.
6. Is each solution from your partner of choice (off-the-shelf or customized) supported by a technical report that is organized according to the standards outlined in the Uniform Guidelines on Employee Selection Procedures that are relevant and specific to the target role? Are they fair and legally defensible?
Chally provides summaries of validation results for every position for which we provide a solution. This means you are protected with proof of statistical relevance of the solution you are using, in the unlikely event of a legal challenge to your organization. Chally maintains a large research base that allows us to investigate fairness of the solution for gender, age and ethnicity.
7. Can results of the assessment, survey or multi-rater be aggregated to provide a diagnostic view of the entire sales, service, or leadership organization?
Individual matters are important at the individual level, but it is critical that we understand what that means from a macro-economic perspective. Where do you invest in hiring practices? Where do you invest in training and on-boarding? How do you support strategy, market-segmentation and compensation plans? What do you do with succession planning for leaders? Chally has a flexible solution to answer these questions called a Talent Audit.
8. Is the administration system easy to use, integrate and implement?
Chally has a proprietary online system called HR Assistant that makes it simple to administer, retrieve and deliver results. Chally is also HRXML compliant, which means we can integrate with your existing systems. Our competency library is the most robust in the industry, measuring 140 unique facets of sales, service, and leadership that can drive access to individual results, business unit results, corporate-wide results, structured interview guides, on-boarding reports and a unique proprietary multi-rater system called Performance Trac that produces unique multi-rater tools specific to each job’s unique skill set. All of this comes standard with the industry’s richest content related to actionable competencies.
9. Does the business partner have additional services to offer beyond immediate capabilities?
So what? Now what? Chally has the most comprehensive organizational diagnostic tools for sales, service, and leadership roles. Our proprietary assessment and software can inform you at the company, group or individual level what strengths to leverage and what gaps you need to close to be successful. Following that, customers can gain access to the Chally preferred provider network of premier sales strategy, sales training, and leadership development companies across the globe to make sure that the right treatment plan is executed to meet your needs.
10. Does your partner of choice have a viewpoint, philosophy and approach to bringing best practices to your organization?
Chally will challenge and push your organization. Get out of your comfort zone; challenge us to challenge you – don’t pay us to help you do nothing. If we don’t know about what will help you be better, then we will figure it out and bring it to you. If you do not succeed, neither do we.
Sales, service, and leadership roles are the most critical jobs for most every company. Chally is invested in helping ensure companies make more effective choices. We hope you have found the criteria useful in helping you evaluate a partner or vendor.