Tag Archives: sales_leadership

On My Honor as a Salesperson. A New Look at Why Sales Ethics Matter

Thursday, 28 May 2020 16:51
Written by
0 Comments

Which risk poses the greatest threat to a company’s market value – Pandemics and natural disasters? Terrorism? Product defects? Patent infringement? Theft of intellectual property? Lack of moral boundaries?

If you answered anything but the last choice, think again. The decimation of market value at Tyco, Worldcom, and Enron – three of the most prominent ethical meltdowns of our time – illustrates what can occur when a company lacks ethical footing. According to Public Citizen’s Congress Watch, the cumulative decline in market capitalization resulting from fraud at these three companies was $136 billion.

The financial impact of Covid-19 on the global stock market may never be fully known. But one thing stands out: unlike most risks, companies have ultimate control over their moral conduct.

Many corporate scandals are hatched in the executive suite and metastasize into the organization. The sales operation is a fecund spot for seeding schemes because it is directly connected with the most watched measurement a company maintains and shares: revenue.

Sales is also the linchpin for the trust between a company and its customers. For example, the Wells Fargo consumer credit card scandal was the consequence of stock-price bonus incentives granted to then-CEO John Stumpf and a cadre of senior executives. To enrich themselves, they usurped customer trust and exploited employees by encumbering them with onerous performance quotas, and followed through by browbeating them into hitting targets that would be attractive to investment analysts. The rationale was that when thresholds were met, analysts would make buy recommendations for Wells Fargo stock, elevating its price. The scheme worked for a while before the business media uncovered the story. In the end, Stumpf was fired over the scandal and his bonuses clawed back or terminated.

Bad ethics can take root elsewhere in the hierarchy. When governance and audit controls are ineffective, they can easily spread, infecting employees, suppliers, channel partners, and customers. In 1998, ethical violations at Prudential Insurance Company’s sales organization became so pervasive that the company’s management eventually estimated its liability from the pending class-action lawsuit at $2 billion. Among the voluminous courtroom testimony from the case was this statement from a Prudential sales rep: “Your judgment gets clouded out in the field when you are pressured to sell, sell, sell.” More than two decades later, sales reps face the same difficulty.

How can harm from unethical behavior be prevented? First, accept that no company is immune from facing ethical dilemmas, and second, understand that there are no guarantees that ethical decisions will somehow prevail. This is especially true for companies proclaiming themselves “customer-focused” or “customer-centric.”

Companies must purposefully and actively reduce the opportunities for unethical behavior to enter an organization. Taking key steps such as developing and communicating a corporate code of conduct, modeling ethical behavior in the C-Suite, implementing strong governance and accountability, and making it safe for employees to speak up without fear of retaliation are vital. Importantly, companies must take prompt and decisive action when incidents are reported.

Still, when it comes to acknowledging the possibility of malfeasance in their organization, many senior executives are dismissive. I often hear, “that type of thing could never happen here,” quickly followed by “we don’t hire those kinds of people,” as if “those kinds of people” are easy to spot in the interview. In fact, in companies large and small in any industry, the potential for making unethical choices always exists. If the risks aren’t acknowledged, understood, and managed, stakeholder harm becomes not only probable, but certain.

One “sales-driven” company I worked for felt immune to ethical risks, and their hubris cost them more than $1 million from a scam that began with one rogue sales employee, “Travis Doe.” Travis was a reseller account manager. He was tall, charismatic, confident. He was good at golf. At sales meetings, Travis could always be found in the center of a group of colleagues, sharing a bawdy new joke, or regaling them with something useful he learned over his long career in computer sales.

Travis’s compensation plan earned him a comfortable six-figure income. But he figured out a way to augment that. Travis began his scheme with a transaction my employer made routine: he established a new reseller account. In this case, Travis gave this one a bogus name, bogus address, and bogus line-of-business. Bogus everything. He even anointed himself CEO – a move that came back to haunt him.

The cleverness of Travis’s scheme came from the fact that resellers received 40% discounts for all IT hardware. When customers and prospects sent requests for quotes or placed orders, Travis circumvented them to his bogus company. In this way, Travis pocketed a healthy margin on every order his bogus company processed. There’s more. In addition to that revenue stream, my employer also paid Travis commission on his “reseller’s” sales because, of course, the bogus company was in Travis’s portfolio.

It took an alert order administrator who spotted a part number anomaly to unravel Travis’s scheme. When she called the “reseller” to explain the problem, she was told, “Our president, Travis Doe, will call you back.” The order administrator reported Travis, and he was quietly fired about a week later.

Travis’s scheme created only losers. A characteristic common to all ethical breakdowns. If Travis’s immediate boss knew about his dishonesty, why didn’t he stop him? If he didn’t know, what excuse could he offer for being ignorant about a scam happening in his own office? You know it’s a bad day when any answer you provide isn’t a good one.

In their desire to move on, many executives at the company looked no further than blaming Travis. “You’re always going to have a ‘bad apple,’ or two,” senior managers somberly told me. A convenient rationalization, but very misleading. Other people, from the CEO down, were culpable. Sales Administration allowed account managers to establish reseller accounts without any oversight. Internal audit didn’t see a glaring opportunity for fraud in the order entry process. Contracts administration had no vetting rigor beyond “can you fog a mirror?” Flush with sales orders, the company blithely looked askance despite ongoing grumbling from staff that large dollar orders were routinely being processed through a “reseller” whose qualifications were murky, at best.

This incident happened before social media platforms became ubiquitous. The total direct cost from Travis’s scheme totaled more than $1 million. But that’s without adding the incalculable cost of broken morale and corroded trust. The company issued no press releases or public explanations. No trade journal carried the story. The cost of this scam got paved flatter than a pancake into company’s Income Statement.

Any discussion of ethics involves drawing boundaries. But drawing boundaries for sales ethics is much easier said than done:

“I’ll sell an early version of my software that isn’t fully tested, but I won’t sell anything that I know doesn’t work.”

“I won’t bring up the fact that I’m missing a key feature, but I won’t lie about its absence.”

“At the end of the quarter, I will commit resources I don’t control so I can win the sale, but I won’t promise my prospective customer anything I know cannot be delivered.”

“I won’t overcharge anyone, but I won’t sell at the lowest possible price, either.”

“I’ll look out for my client’s best interests but only if doing so doesn’t jeopardize my business.”

As author David Quammen writes in Wild Thoughts From Wild Places, “Not every crisp line represents a triumph of ethical clarity.” An individual’s ethical interpretations are rarely constant. Rather, they’re a combination of of a person’s current emotions, situation, values, experience, logic and personality. What makes a practice ethical or not can be difficult to define.

This is why evaluating what’s ethical, what’s the right thing to do, or how to get the right thing done requires having conversations about dilemmas. Unfortunately, that idea is heretic in many sales cultures today, where perceiving things as black or white is often considered a badge of honor. “Never lie!” and “A half-truth is the same as a lie,” were among the opinions readers posted when I asked about resolving ethical dilemmas on LinkedIn sales forum. The problem is, judging actions as “right” and “wrong” discourages conversations about ethics in the first place. Most situations business development professionals encounter are not that clear.

Mitigating ethical risk is a vexing challenge for organizations – particularly those with global operations – because ethical standards must first be defined, documented, communicated and followed. In addition, companies must remember that their employees don’t enter the workplace a tabula rasa. Corporate expectations for ethical conduct will always be interpreted through an individual’s awareness of his or her own values.  Even then, we can only be protected when people have the motivation and resolve to act accordingly.

Companies should embrace ethical dilemmas by fostering a culture for open, candid discussion about them. That means  encouraging salespeople and marketing personnel to identify issues, confront them, and take action before they spiral out of control.

Malfeasance thrives in the eye of the perfect storm 1) high financial incentives for fraud, 2) lax audit controls and governance, and 3) non-integrated processes. We need a tocsin to sound in the boardroom and executive suite. Ethical lapses can destroy the best business plans, corporate and personal reputations, and brand integrity. There are too many opportunistic Travises in the world, and too much value at risk, to ignore the warning signs

Considering a Career in Sales? Find Something Different!

Monday, 11 December 2017 20:46
Written by
0 Comments

“Do you know what a sales interview is?” a friend of mine quipped. “It’s one person lying about the future, talking to another lying about the past.” My friend knew his joke contained truth. Newly retired from B2B sales, he wasn’t sanguine about the future of the profession. As we chatted over lunch, I added a few of my own anecdotes and observations. It was a lively talk. No need for alcohol.

Selling ain’t what it used to be. It’s possible that my friend stowed his sales bag for the last time because he was burned out. Though, at age 61, it was probably the right time to get off the bricks. The rest of that afternoon and into the next day, I thought about what he shared with me. I ruminated on the meaning of his dark joke. I considered how I might respond if a young person sought my advice about whether to pursue a sales career. The assessment that followed my introspection did not come easily, but here it is: look elsewhere. Today, there are better choices.

When I began my business career in the early 1980’s, things were different. Salespeople were respected. While most of us toiled in offices with a boss sitting nearby, salespeople had autonomy. They worked variable hours. They dressed well, and from all appearances, they lived well, too. At many companies, salespeople could expect higher-than-average income, often garnering better pay than managers. At a time when level of education predicted lifetime earnings, selling careers flamboyantly defied the calculus. A salesperson’s earning ability depended more on his or her motivation, tenacity, and street smarts than having a college degree. It still does.

At the manufacturing company where I worked my first job out of college, you could easily identify the cars that belonged to the salesmen (the company had no female sales reps): big, new, four-door, and well-appointed. A sales rep’s car did not just provide transportation, it proclaimed success. An important message for customers and coworkers to hear.

As the company’s IT Manager, I had nebulous goals. But the salesmen were measured on one thing –  revenue production. And they were paid accordingly. No mealy objectives, no ambiguity, and no boss holding sole power to dictate next year’s income. If salespeople felt anxiety about their compensation at risk, their job perks and upside income potential eased the pain. For these reasons and others, I too became drawn to a sales career.

When I was hired for my first sales job in the 1980’s, Marketing Representative was a common title for entry-level salespeople. Dale Carnegie, Zig Ziglar, and Brian Tracy were popular role models. I read their books, and listened to their tapes on the way to sales calls. Their messages brimmed with optimism, and were consistently inspiring. “Success is getting what you want . . . Happiness is wanting what you get,” Dale Carnegie wrote.

I learned that great power came from an unwavering belief in yourself. Good stuff. Today, those messages can still be heard, but they’re muted beneath the torrent of condescension and humiliation that spills unabated into my newsfeeds. Mislabeled as coaching and tips for self-improvement, today’s writing upbraids the rank-and-file. It carries titles like Salespeople – Shut up and listen!, and Salespeople Can’t Sell Anymore . General Patton would be proud.

What happened? The sales profession has lost its allure. Technological, economic, and social forces have combined to erode many of the once-valuable tasks that sales professionals provided. None have been profound than Artificial Intelligence (AI), data warehousing and distributed information systems, and investor demands to increase profits.

AI: AI has displaced thousands of repetitive, tedious sales tasks, and enables buyer self-service. Lead qualification and content fulfillment, once large drains on selling time, can now be performed better, faster, and cheaper by using algorithms.

Data Warehousing and distributed information systems: The ubiquity of customer information has allowed companies to knock down the massive walls that once surrounded the sales organization. Today, almost any employee can make rain, or generate revenue. In departments as disparate as customer support, maintenance, and route delivery and logistics, employees can take an order, recommend upgrade services, sell new products, and make other changes without referring customers to a “sales desk,” or an assigned salesperson.

Investor demands to increase profits: Spending excess has always been a popular target for the CFO’s scalpel, and sales operations contain conspicuous fat. Peeling back the covers on Sales, General & Administrative expenses reveals copious spending hiding in plain sight. Cutting high sales salaries, generous incentive pay, over-the-top benefits, Quota Club, annual golf outings, and season tickets at sports events, quickly gains approval from investors. “Think about it: If you have to ply your clients with gifts or meals to get them to do business with your firm, then your product  probably isn’t worth its price,” Andy Kessler wrote in The Wall Street Journal this month (The Expense-Account Racket, December 4, 2017).

Young people will find sales and business development careers less promising than when I started out. Some key issues:

Money. Meh. Commonly used as a recruiting tool, the promise of high income for salespeople is often illusory. A chunk of annual comp is “at risk,” which means what’s actually earned might be less than what’s projected (recall my friend’s joke at the beginning of this article).

The University of Virginia McIntire School of Commerce Destinations Report for 2017 reported average total compensation for its newly-minted grads who accepted sales and sales management jobs: $61,300. Tepid, compared to other business disciplines listed in the report. Among McIntire grads, the best coin goes to investment bankers, who were rewarded with a list-topping average annual comp of $115,000. Finance holds the #2 spot, at $90,294. (The average starting pay for 2017 undergraduates across all categories is around $50,000, according to Money magazine.)

Career path. You might think I’m mansplaining, but I’m not. There are two well-established trails:

  1. Revenue you produce meets or exceeds quota – keep your job
  2. Revenue you produce is less than quota – get fired.

If you crave living in northern reaches of the corporate org chart, the likelier route to get there goes through finance. “About 30 percent of Fortune 500 CEOs spent the first few years of their careers developing a strong foundation in finance. This is by far the most common early experience of today’s CEOs,” according to an article in Forbes.

Autonomy. Thanks to CRM software and advanced analytics, selling has become the most scrutinized, measured, and micro-managed business activity. “Drive higher quota attainment across your entire sales team by recording, transcribing, and analyzing their sales conversations,” one product website says. Some reps might welcome the assist. But I question the reasons. If a sales rep or manager needs software and spreadsheets to learn how customers perceive his or her words, or if they struggle to recognize positive things to say, maybe they’re in the wrong job. Or, maybe management simply doesn’t trust them to have adequate judgement.

Culture. A sales organization’s mission is to produce revenue, and its activities are aimed toward that goal. That’s a good thing if you don’t mind thinking about money above all else. But if you’re moved by more than how much business you will close this quarter, or the gross income figure on your W-2, that can become stultifying. Further, employers are often conflicted about sales. Sales VP’s expect reps to open accounts and build customer relationships, but they feel threatened when customers become more loyal to a sales rep than to the company. Hiring managers promise high income, but ratchet it back when they feel reps earn “too much.” It’s a power game, and companies try to maintain hegemony. As one district sales manager I worked with described it to me, “My ideal rep is a young guy with a stay-at-home wife, a mortgage, a baby, and another one on the way.” I’ve heard similar sentiment from others. A rep in a consumption trap can be controlled.

Goal conflict. Almost every sales position faces this problem, and it can be gut-wrenching to navigate. “Above all, make your number!” versus “Serve our customers!” It’s hard to keep two masters happy. But companies put their reps in a moral vise when they tie job security and pay to revenue results.

I don’t mean to imply that sales experience isn’t worth having. In fact, hands down, nothing prepares a young person better for success than gaining the rare combination of skills needed for converting prospects into buyers. This knowledge transfers to every business discipline, and provides understanding for how an enterprise achieves its central mission: acquiring – and keeping – customers.

You can’t learn any of it in a college classroom, and no other business experience provides a person anything more useful. People who have sales background understand not only that revenue doesn’t roll in on its own, they know the nitty gritty details of face-to-face selling. If you can get the opportunity to sell door-to-door, work as a sales intern, or have another sales experience, take it!  And if the work pleases you, stay with it. But keep your options open. There are other careers that are possibly more rewarding, and they can also benefit from your energy, effort, and passion.

From accounting to zoology, every career has its unique set of warts. Those that sully professional selling are no better or worse than any others. But whatever career you choose, make sure the warts that exist are warts you can live with. And as many in sales have learned, stay vigilant, because new ones grow all the time.

“Today, it is estimated there are anywhere from twenty thousand to forty thousand distinct occupations in the United States,” writes Robert Moor in his book, On Trails. “Rapid changes in technology, culture, education, politics, trade, and transportation have combined to allow people access to an array of lifestyles that was previously unthinkable. In the aggregate, this is a positive development, proof that our life’s paths are evolving to meet our varied desires. But a side effect of this shift – halting, gradual, and unevenly distributed as it may be – is that life’s options continue to abound until they overwhelm . . . Collectively we shape [life’s pathways], but individually they shape us. So we must choose our paths wisely.”

Should Inmates Run the Biz-Dev Asylum? The Case for Stronger Sales Governance

Friday, 01 July 2016 16:35
Written by
0 Comments

“I don’t care how you make your number, as long as you make it,” my district sales manager told me many years ago. Nobody accomplished a Big Hairy Audacious Goal while stressing over boundaries. I know how the West was won.

But my manager should have cared. Achieving a revenue target entangles many different behaviors. Some are laudable, like agility, tenacity, assertiveness, customer focus, and good personal hygiene. But others can be manipulative, unethical, or illegal. When conditions are ripe, bad behaviors spawn and fester. Occasionally, they are exposed, like a colony of voracious termites found under a fallen tree trunk that just rolled from its dark, earthy foundation. In June, 2016, Volkswagen agreed to pay $14.7 billion to settle claims resulting from its sales deceit. A mondo penalty for not caring how a number is made.

Volkswagen’s dishonesty was propagated through modern software technology, using flowcharts, decision boxes, algorithms, code, and computer chips. But other techniques for juicing the top line have existed since the invention of accounting records. As Karen Berman and Joe Knight wrote in their book, Financial Intelligence, “Revenue recognition is a common arena for financial fraud . . . the most common source of accounting fraud has been and probably always will be in that top line: Sales.” Channel stuffing and bill-and-hold. These crafty techniques have vaulted thousands of sales reps and managers into bonus-land. You won’t learn about them on Etsy.

I can’t fault my boss for being laissez faire. His attitude reflected that of his boss, his boss’s boss, and every boss all the way to the C-Suite, where information technology converts biz-dev complexity into integers. A process that cleanly extracts ethical messiness and other biz-dev slop, leaving executives room to “focus on the numbers.” Message to sales force: as long as revenue meets expectation, what happens in Sales can stay in Sales. “If I told you all that went down It would burn off both your ears.” No thanks. I’ll stick to analyzing my spreadsheets.

Corporate boards, beware. “The responsibility of the board to prevent scandals is more important than the responsibility to clean up the mess once it has emerged. Here most boards are still at the starting gate,” wrote Kirk O. Hanson in a 2014 article, Five Ethical Responsibilities of Corporate Boards.

It’s a global problem. In June, 2016, IndianExpress reported that “poor customer service practices of [Indian] banks have come under fire from the Reserve Bank of India (RBI). Despite the banking regulator putting in place Codes of Conduct and Charter of Customer Rights, the RBI has found that banks observed the code ‘more in breach than in practice,’ raising the possibility of a regulatory intervention.”

“We have taken cognizance of the fact that there has been mis-selling in third party products. We are going to take it very seriously. The banks should review how it is being done and be very careful that 75-year-old people should not be sold wrong products simply because salesmen require bonuses or compensation. It is something that we will undertake careful review of and if necessary take action wherever warranted,” said RBI Governor Raghuram Rajan in June, 2016. He could not have expressed this ugly reality in a more genteel way.

His statement points to an even darker story. Too often, companies don’t bother to govern the internal machinery that drives their revenue, leaving it up to the inmates to run the asylum. “You made goal this quarter. Keep doing what you’re doing.” Sales and selling has traditionally been a black box to the rest of a corporation, and many senior executives prefer to remain unknowing about what happens within the guts of its raucous machinery, and what goes on outside, where prospects are “engaged” deals are “closed.”

Ethical principles frequently clash with demands for quota attainment, and in the absence of governance, it’s not always clear or predictable which actions and outcomes will prevail. One thing is certain: when others don’t examine the black box’s innards, the likelihood of harming employees, customers, suppliers and shareholders increases substantially. As Mr. Rajan knows, bad sales ethics break customer trust, poison a company’s brand, undermine shareholder value, and corrode economies. Sounds like a governance problem to me.

What is governance? Corporate governance provides “the structure for determining organizational objectives and monitoring performance to ensure that objectives are attained,” according to the Organization for Economic Cooperation and Development’s 1999 publication, OECD Principles for Corporate Governance. “The OECD emphasized that ‘there is no single model of good corporate governance,’ but it noted that in many countries corporate governance is vested in a supervisory board that is responsible for protecting the rights of shareholders and other stakeholders (employees, customers, creditors, and so on). The board, in turn, works with a senior management team to implement governance principles that ensure the effectiveness of organizational processes,” wrote Peter Weill and Jeanne Ross in their book, IT Governance. Their ideas apply equally to governing sales.

A 2008 CapGemini Survey shared that “all sales executives stated that Sales Governance will become more important in the future. In addition, 86% of the Sales Executives anticipate their group management to put more focus on questions related to Sales Governance the coming three years.” The study covered 42 companies in Norway, Sweden, and Finland, and defines sales governance as “the method used by management to drive the sales organization towards effectiveness and high performance and to promote a desired sales behavior.” The study’s authors represent sales performance in context – specifically, in relation to influence from competitors, customers, organizational culture, corporate strategy. So far, so good.

The study explains that “Sales Management is the core element of the Sales Governance Framework. It entails both a strategic and an operational level. At the strategic level of Sales Management, the sales strategy is aligned with the corporate strategy and short¬-term and long¬-term business objectives are defined. At the operational level, the activity plan is implemented and managed as required. Cross-functional co¬operation is a pre-requisite for achieving internal strategy alignment and operational efficiency. . . Sales Governance enables best practice identification and implementation, and ensures an adequate sales behavior.”

Given CapGemini’s inclusion of a method used by management in its definition of governance, there’s little surprise that “Sales Executives saw driving sales productivity and reducing non¬-value adding time” among the major benefits achieved from undertaking the program. Unfortunately, promoting adequate sales behavior (whatever that means) and driving sales productivity do nothing to protect companies and their customers from unethical and illegal activity, or its consequences. In fact, they might exacerbate the problems. When juxtaposed to the OECD’s governance standard of protecting the rights of shareholders, employees, customers, and creditors, I call CapGemini Governance-lite.

Although CapGemini addresses one important component of corporate risk, sales readiness, its governance model falls pathetically short for deeper risks. Using this model, the unethical practices in 2015 of GM, VW, Takata, Peanut Corporation of America, Wells Fargo, Medtronic, and many others would not have been thwarted. Sales organizations can be highly productive and efficient while institutionalizing seamy practices. “The dashboards look peachy! Keep doing what you’re doing . . .”

The case for board-level involvement in sales governance. Today, selling abuses make international headlines, and the case for board involvement in sales governance could not be stronger. “Boards must think about risk and strategy,” said Erica Salmon Byrne, Executive Vice President, Governance and Compliance of the Ethisphere Institute, in a webinar titled, Enabling Ethical Leadership: Equipping Your Board to Govern Companies with Integrity.

Ethisphere, which conducts an honoree program for the World’s Most Ethical Companies (WMECs), reported that 90% of its 2016 corporate honorees offer employees its board or a board committee as a conduit for reporting misconduct or raising concerns. “Boards are increasingly interested in measuring and cultivating an ethical corporate culture; 86% of WMECs update the Board on such efforts . . . Not only do WMECs more frequently evaluate their [Ethics and Compliance] programs (61% of honorees conduct annual reviews vs. 27% of non-honorees who annually review), but honorees tend to evaluate their program very broadly,” Ethisphere said in its 2015 report.

The duty of board-level sales governance. The line between board oversight for sales governance and management’s responsibilities can be thin and fuzzy. Board-level sales governance addresses strategic risks extending beyond salesforce productivity and efficiency. Primarily,

1. To ensure sales goals are balanced, and support corporate strategy

2. To ensure business development policies and practices are consistently legal, ethical and fair

3. To protect the customer’s best interests

4. To ensure effective mechanisms exist for identifying and reporting activities or events that threaten the above

Hanson’s Five Ethical Responsibilities of Corporate Boards provides useful guidelines for what boards must know or examine. He wrote:

1. Knowing the health of the company’s ethical culture. Most boards or their audit committees hear pro forma reports on ethics violations and lists of calls to their hotlines. Few know anything about the culture in which these violations arise. Do these behaviors reflect widespread acceptance of improper behavior — or a few bad apples?

2. Evaluating the ethics of the business strategy. Business models and strategies are being junked and reformulated everywhere in our modern economy. New sources of revenue are being sought; radical transformations of manufacturing and delivery systems are being implemented. Sadly, some boards are swept along by management proposals to change the nature of the business without asking critical ethics questions about the strategies.

Most boards have learned to ask whether the company is ready to monitor a China-based supply chain to insure worker safety. But few boards have discussed the ethics of tax inversions, big data mining strategies, or staffing strategies which make family life difficult.

3. Monitoring the real ethics risks in the organization. Every organization manages financial risks, and boards pay close attention to the level of that risk. Few senior managements and even fewer boards evaluate the ethical risk of entering new markets, extending the supply chain to new regions, or putting extreme performance pressure on a sales force that is prone to shortcuts . . . Boards are charged with oversight over the adequacy of this ethics risk assessment.

4. Monitoring the ethical behavior of the leadership team. No decisions are more complex than hiring and firing top executives. It is tough enough to find a prospect who has the skills needed to execute the company’s strategy for the next five years.

5. Verifying that the elements of the ethics and compliance system are strong. The Federal Sentencing Guidelines list seven to 10 elements of an ‘adequate’ ethics and compliance management system.

For sales governance, Boards should have access to, and regularly review the following:

• Sales Code of Conduct
• Corporate compliance and ethics policies
• Ethics training program or curriculum
• Misconduct reporting system
• The investigation process

In addition, boards should ensure that employees who report misconduct understand their legal rights, and have appropriate protection. Few people will want to report misconduct when companies exert draconian penalties on those who have voiced concerns.

“Make your number any way you can!” Right now, millions of sales reps operate under this heavy, boundary-free instruction. How will they behave? Which strategies and tactics will they use on their prospects and customers? What outcomes will occur? Corporate boards should care, and get involved.

“Honesty is the Best Policy.” But, Is the World Ready for a CHO?

Monday, 05 May 2014 14:05
Written by
0 Comments
“Oh, and it doesn’t hurt to be honest about your capabilities and limitations. These will come out sooner or later,” Bob Thompson of CustomerThink wrote in a recent article. (Why Reps Can’t Sell. It’s the (Selling) System, Stupid!)
In other words, honesty is the best policy. But if you’re searching for succinct how-to’s for honesty, I’m sorry to disappoint. You won’t find any here. Wikihow already offers a practical, easy-to-follow 7-step process, and I won’t attempt to improve on it.

Besides, Thompson’s “it doesn’t hurt to be honest” admonition sent me on a slightly different tangent, piquing my curiosity to understand the cha-ching! –  the actual dollars-and-cents business value of honesty. Though I couldn’t calculate the exact amount, I will estimate it contributes substantially to our gross national product, and leave it at that.

Organizations casually talk the honesty-talk, but many conspicuously meander when walking the honesty-walk. Words, without will or motivation behind them, are just words. What’s missing is Corporate Muscle: a Kahuna of Honest Communication who wields power to make people stay within the lines of the truth, the whole truth, and nothing but the truth. If kahuna doesn’t suit your literary style, call him or her a Chief Honesty Officer, or CHO.Corporate honesty should be easy. But I’ll make a confession: it’s not. Sometimes it’s really hard to drive demand without stretching and distorting the truth like a glob of silly putty. What’s a sales pitch, “Business Case Study,” or ROI Calculation without cleverly stacking facts and figures? But despite the difficulties, honesty-is-the-best-policy can still be embedded into a business strategy. Remember how effectively Radio Shack used bold honesty to parody its own lack of innovation in the spot it aired during the 2014 Super Bowl?

JP Morgan Chase, Bank of America, Goldman Sachs. Immediately following the banking crisis, I expected to see a CHO in their executive suites. But no. How about BP and ExxonMobil? The same. Some industries are more ripe for a Senior Honesty Champion than others. Oddly, instead of anointing a CHO, corporations large and small regularly plug other chiefs into the org chart. From the important, like Chief Financial Officer and Chief Marketing Officer, to the inane, like Chief Fun Officer. But alas, not even titular homage for Honesty (sigh).

Compliance! Change! Synergy! Value! Shout out most any trendy topic, and you’ll find a Chief-Something-Officer all over it, like a fly on poop. Only in America can we find Management-by-magazine so lovingly woven into a bureaucratic corporate tapestry. This seems so wrong. Did someone say, “Well, at our company, honesty really falls under Legal . . .”? Puh-leeeeze!

Today, “honesty is the best policy,” yields 14.7 million online search results. While I didn’t analyze how much of that content contains positive sentiment, it’s seems safe to say that people clearly lionize honesty. Not bad for a 415-year-old idea that traces its origins to an essay, In Europae Speculum, by Sir Edwin Sandys, who wrote, “Our grosse conceipts, who think honestie the best policie.”

Consider three common business situations involving honesty, and how a CHO would formulate strategy, manage risk, and provide governance to increase business value:

Not enough honesty.
As the General Motors Cobalt product liability case demonstrates, companies often use Marketing and Sales to obscure sinister truths about a company’s safety and quality issues. According to Keith Crain, Editor-in-Chief of Automotive News, “This issue is not about a faulty switch. Car companies have been dealing with defective parts and recalls for decades. This does not even rank in the top 10 recalls. Far more serious is whether GM executives knew about the defective switches and the crashes long ago and someone at GM tried to keep the whole issue quiet.”

Too much honesty.
In a recent article in The Washington Post, (College tour de Farce: 5 Ways not to Sell Your School, April 25th), Melinda Henneberger wrote about a tour guide she encountered at the University of California, San Diego. The “truth-telling tour leader dispensed way too much information,” and “soon had parents and progeny alike staring intently at our shoes as she talked about her steamy dating life and her preference for being the one who picks up guys when she goes clubbing.”

Exaggeration and distortion.
There are infinite examples. But here’s a current favorite of mine, a (barely) fictitious sales pitch from the HBO series Silicon Valley:

“The greatness of human accomplishment has always been measured by size, the bigger, the better, until now. Nanotech, smart cars, small is the new big. In the coming months, Hooli will deliver Nucleus, the most sophisticated compression software platform the world has ever seen because if we can make your audio and video files smaller, we can make cancer smaller and hunger and AIDS.”

Outsized marketing floats all boats, especially if you work for a start-up. As advertising executive Milton Glaser said, “If you don’t have a change-the-world outlook, you’re doing it wrong.”–Which is great, but what happens when braggadocio permeates every conversation?

In a recent episode of Comedy Central’s Colbert Report, Stephen Colbert quipped, “Ladies and gentlemen, I believe honesty is the best policy, but a close second is lying about how honest you are.” Colbert’s comment harpooned a disturbing reality, hitting a nerve that needed to be hit. Could an honesty policy at General Motors have saved the lives of thirteen Colbalt drivers?

It’s hard to say, but without someone at the highest level within an enterprise responsible for establishing a culture for honesty, as well as creating a strategy for executing and governing it, we won’t see the end of criminal corporate liability, massive breakdowns in trust, and the implosion of business value that accompanies it.

Six Ways Companies Promote Sales Failure

Sunday, 08 December 2013 20:32
Written by
0 Comments

Every now and then, a senior executive describes a funky selling practice at his or her company. One that prompts me to ask, “. . . and how’s that working for you?”

If you prefer to avoid the pain that someone else has experienced, I present to you six practices that earned a top spot on my list titled, We Have Met The Enemy And It Is Us.

#1. Create commission incentives that reward the wrong results.

This winner comes from a software company that used a declining commission reward for increased revenue levels. Stick with me, because I am not making this up.

Here’s the schedule from the company plan:

Up to $60 K revenue = 6% commission
$60 K to $100 K = 4% commission
$100 K + = 3% commission

By now, you’ve done the math and realize that closing a $50K deal will net a salesperson $200 more income than he would make from a $70K deal. I can hear a salesperson saying to a customer, “I know you plan to spend $70,000, but Christmas is coming up—can you make it $50,000?”

When I asked the company’s VP of Sales about this absurdity, she remarked “Our view is that it takes a village to close larger-sized deals. We pay less commission to reflect that.” Translation: A CXO at her company doesn’t want salespeople driving a newer Lexus than he drives.

Solution: If meeting quarterly revenue objectives is important to your business strategy, buy the salesperson a Lexus as soon as he’s earned it–and park if for him! Whatever your strategy, build your sales incentives around achieving it.

#2. Provide no-value “special offers” for prospective clients
This company offered purchase incentives that were plainly hollow. The company compounded their own misery by insisting their sales force push the incentive to every prospect every month—even though the monthly deadlines didn’t conform to the prospect’s buying pattern. Prospects resisted, and the more astute salespeople covertly abandoned the promotion. The company committed what author Tony Parinello calls a “reload.” Shoot yourself in the foot, reload, then shoot yourself in the other foot.

Solution: Listen to your customer and to your sales force. If customers aren’t buying the promotion, there’s a reason for it.

#3. Measure and manage unproductive sales activities.
By holding steadfast to the view that sales is a “numbers game,” this company rated salespeople on how many prospecting calls they made and how many software demonstrations they provided to them. Since efficiency wasn’t part of the measurement, it’s worth pausing a moment to think about what behavior they encouraged—and got—from their sales team: indiscriminate prospecting. Jennifer’s numbers looked great because she averaged 70 calls a day last month. Steve was a bum because he averaged 38. Steve’s revenue is 3% lower. But who is working smarter?

Solution: Measure and manage efficiency. Ask yourself whether you want to reward more activity, or better activity.

#4. Maintain a long, painful, agonizing exit strategy for under-performing salespeople
Under the guise of a “Performance Improvement Plan,” this company mandated underperforming sales people hold monthly meetings with a manager so they could receive instruction on how to improve. Absent from this remedial program was any attempt to mine insight from the salesperson’s point of view. The Plan didn’t require a manager to even learn about any difficulties the salesperson might be experiencing. And there was a lot of it—the company churned almost 30% of its sales force every year. When I asked a sales manager if any sales person ever was saved after being on The Plan, which averaged four months, the answer was, “Well . . . no.”

Solution: If your company has no resources to elevate the performance of the bottom of your sales staff, make the exit short and sweet. Also, remember that you can learn as much from your under performing reps as they can learn from you. Ask yourself “what was missed in the hiring process? Did we provide the right sales support? How can we avoid making similar mistakes again.”

#5. Uncouple your new account capture team from your installed account team
This company took “silo” to a new dysfunctional height because management felt that New Account reps would become complacent if they received an annuity for renewals. When a software subscriber failed to renew, the account was considered “lapsed,” which meant that after four months, it reverted to a “new account” status for sales credit purposes. The result? This company’s new account sales team craved “lapsed” accounts, because they were easier to sell to than cold call leads. In fact, members of the New Accounts team continually trolled subscriber activity for such “low hanging sales fruit.” You can be sure that no New Account salesperson ever called Inside Sales to share information.

Solution: Encourage your sales force to sell to valuable customers, not just to many customers. Employee complacency is a risk that’s not limited to salespeople. When salespeople can reap rewards for establishing long-term relationships, they will not only seek better prospects, they will remain valuable to them long after they have signed on as customers.

#6 Build rapport-breaking statements right into your sales scripts.
This company found a way make prospect alienation repeatable and scalable. When asked for a reference, telemarketers were scripted to advise a prospect that they were obligated to protect their client’s time, and they couldn’t provide reference information.

Solution: Take your sales scripts on a trial run before you distribute them to your national sales team. Most important, ask yourself “how will our communication be perceived?” If the answer is “poorly,” revise the script.

© Contrary Domino 2013-2016.
Website development by Crisp Point.