A couple of my clients are having issues with their employees right now. One of them a copy sales company has had issues with performance with his sales people and has been continually working to find the right balance of stress and nurturing to get production. More on that in the next blog.
When discussing this with another client who was looking at possibly dismissing one of their employees we applied the rules from Good to Great, Practical Discipline #2: When you know you need to make a people change, act. Two key questions from that are:
- If it were a hiring decision (rather than a “should this person get off the bus?” decision), would you hire the person again?
- If the person came to tell you that he or she is leaving to pursue an exciting new opportunity, would you feel terribly disappointed or secretly relieved?
Making a decision to eliminate someone is extremely difficult for most small business owners. Indeed, many times the very reason many business owners feel they are in business is to provide for the welfare of their employees. They feel an obligation to support them and provide a good income. So it is not difficult to understand why letting someone go can often be the most gut-wrenching and challenging aspect of their job.
As businesses get larger, often times the decision making seems to get more callous and objective. I’m not sure this is true, especially for the person having to make that decision, however I can offer that being objective is a critical aspect of making good decisions on keeping or eliminating employees.
One client recently did his semi annual evaluations with his staff. At these particular evaluations they review compensation and award pay raises. One of his managers indicated he was grossly underpaid and that his pay should equal or exceed several of the other executive team based on his contribution to the company. My client was taken aback. He realized his manager probably deserved a raise, however the request this manager was making was close to a 40% increase. We discussed this employee’s contributions. Part of the feedback was that this manager had only recently[last six to 8 months] begun to fully meet the job description. He was younger and very aggressive and perhaps to add insult to the situation he had asked what he might receive if he was able to bring in a new customer. He had no humility in requesting for this accomplishment an annual residual income if the prospect converted.
I asked my client what it would take to replace this person. Had he done any research to discover what comparable managers in his position were making. What would it take to train a new person and how long would it take to get the new person up to speed if he did hire someone new. Would he expect a new person to do the same level of work? Would he be able to hire a capable replacement that could do the same job, with the same skill level at a comparable price? My client indicated he would research these questions before making a decision.
He did. The result? He offered this manager a $14K a year raise. He discovered that his manager was much more aware of his circumstances and the contribution he was making to the firm than he was. He realized upon reviewing his work and track record that he was contributing as much if not more than his other manager and that a considerable increase was in order.
The lesson from this? Good to great companies show the following bipolar pattern at the top management level: People either stay on the bus for a long time or got off the bus in a hurry. In other words, the good-to-great companies did not churn more, they churned better.
My office copy company owner has discovered that in his sales department he needs to make decisions quicker. Performance levels in sales can be determined quickly, if the right monitoring and key performance indicators are in place. This business owner has been honing his skills to determine what the key indicators for his sales team are, and the results, have immediately given him key information so he can make decisions on which sales people are contributing and which he should churn.
Some of the lessons he’s learned in his business to business practice can be helpful possibly with your sales department. One item is a litmus test he performs each month with his sales team. We will discuss that in my next blog.