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On The Hot Seat
10/02/02
By: Jennifer Gilbert, Sales & Marketing Management
It's not enough anymore to just meet your profit goals. Senior executives are now expected to prove to their companies?in much less time?that they are valuable assets worth their salaries. Here's how to handle your biggest challenge now: Selling yourself
OCTOBER 02, 2002 -- Robert Goldberg was standing in front of the Bay of Pigs museum when his satellite phone rang unexpectedly. On the line were fellow executives at San Francisco?based online search company LookSmart telling the senior vice president of sales and marketing they needed him back in New York for a meeting the next day. It was two days before the end of what had been a two-week vacation he'd promised his mother and attending the meeting would mean leaving Cuba a day early?no small feat, he would soon realize.
After a dozen phone calls to the airport in Havana he got through to someone who said all flights were booked. He headed to Havana the next day anyway, to try to catch one of two morning flights back to Miami and then New York. But when he arrived, the counter clerk told him the flight was full. A couple hundred bucks finally persuaded the clerk to make room for him on what turned out to be a half-empty jet.
"I clearly didn't have the appropriate clothes for the meeting, so I had to have my brother, who happened to be staying at my house, grab a suit, ties, and a shirt and FedEx them to the New York office," Goldberg says. He also made sure Cuban government officials took care of his mother and got her on a plane back to California the day after he left. Goldberg made it to New York for the meeting that day, even beating his colleagues, who were flying in from San Francisco, by an hour and a half.
As he explains now there was never a doubt in his mind that he had to cut his vacation short and fork over whatever cash necessary to be there for the meeting. That's because he knows that for top executives in these economically uncertain times, every bit of effort counts. "I knew it was an important meeting with an important client," says Goldberg, who at the time was only about a month into his new job. "It seemed like the right thing to do. Building a business and keeping it profitable requires a lot of effort and occasionally extraordinary effort"?effort such as being present at crucial client meetings, even if it means tearing yourself away from a vacation in Cuba with your mother.
Goldberg's experience illustrates a new sense of urgency that's pervading Corporate America, an urgency that threatens the tenure of top executives. Job security is quickly becoming extinct, management experts say. As David Opton, CEO of Norwalk, Connecticut?based ExecuNet Inc., an online career services firm for high-level executives, explains, many of his firm's members are currently employed, but "they know the job they're in today could go away tomorrow." Just look at the numbers: A recent Booz Allen Hamilton survey found that CEO turnover increased more than 50 percent between 1995 and 2001; during that period the number of CEOs who left because of their companies' poor financial performance jumped 130 percent. Meanwhile, average CEO tenure dropped from 9.5 years in 1995 to 7.3 years in 2001. Another survey from human resource consulting firm DBM, in New York, found that the average tenure for CEOs worldwide is three years, a slight decrease from two years ago.
But one needn't rely on surveys to recognize the carnage: Newspaper headlines proclaim the ousting of top executives almost daily. Wall Street and company boards are putting the heat on top executives to perform and deliver legitimate results, creating a pressure-cooker environment not just for the CEO, but also for heads of functional areas, DBM President Tom Silveri says.
The pinch of impatient shareholders and expectant boards is forcing CEOs, particularly new CEOs who know they may have less than five years to make an impact, to be less tolerant of any shortfall in performance from their executives, explains Charles Lucier, senior vice president of Booz Allen Hamilton, in New York. The result? Even the jobs of long-tenured sales and marketing managers are at stake.
Add to that increasing skepticism among employees that their leaders can handle their jobs?Development Dimensions International (DDI), in Pittsburgh, recently found that two out of three employees have low or moderate confidence in their companies' leadership?and it makes for a prickly situation for high-level managers. "In good economic times you can overlook many sins" of upper management, such as impulsiveness, arrogance, and volatility, says Richard Wellins, senior vice president of global marketing at DDI. "This year and for the next two to three years, stockholders and employees definitely will be more observant of their leaders' shortcomings."
Certainly, the current turnover rate is still as high as it was a few years ago when mergers and acquisitions were rampant. The difference now is that the high turnover is more the result of retirement or resignations, Silveri says, possibly forced, because executives failed to meet board expectations.
The good news, however, is that the rocky economy has made companies desperate for exceptional sales and marketing executives who can kickstart sales and bring in much-needed revenue, according to Jeffrey Christian, chairman and CEO of Cleveland-based consulting firm Christian & Timbers and author of The Headhunter's Edge.
The challenge is for executives to prove their worth to companies in a much shorter period of time. It can be done: All it takes is a renewed aggressiveness, enthusiasm, and focus on the new priorities.
Strategy #1: If It's Broke, Fix It?Fast
There's much less time now to put out fires, so managers must quickly identify and address problem areas and inefficiencies. "The challenge now or an experienced executive?especially in a smaller company?is to come in and fix things as soon as possible," says LookSmart's Goldberg.
Managers at Oregon Chai, a tea beverage company based in Portland, Oregon, recently experienced an episode that threatened the health of their business. It took quick action on the part of Senior Vice President of Marketing and Manufacturing Sean Ryan to solve the problem.
About two years ago a typhoon hit Madagascar, all but decimating native vanilla beans. That sent the price of vanilla beans soaring, and companies including Oregon Chai, which rely heavily on vanilla as a key ingredient, were suddenly faced with sky-high costs. Enter Ryan.
"Before our cost of goods got really out of control, Ryan made some innovative and quick decisions that impacted the bottom line," says CEO Cory Comstock. Ryan decided to outsource the vanilla extraction process, something the company previously had done in-house. Outsourced extraction required fewer beans, but yielded the same amount of flavor?for a much lower cost to the company. "It dramatically reduced our vanilla bean needs," Ryan says. "So we didn't need to buy as many of what had become a very expensive ingredient." It was a move that saved Oregon Chai nearly $1 million.
Now more than ever, managers should be working to find innovative solutions to problems that threaten salespeople's ability to compete in the marketplace, says Bill Brooks, CEO and founder of consulting firm The Brooks Group, in Greensboro, North Carolina. Indeed, the vanilla beanproblem at Oregon Chai would have led to a significant price increase and a product shortage had Ryan not rectified the situation. "It's hard enough to sell out there right now," Brooks says. "What if you're not competitive in terms of price, quality, and service? Those are major issues that need to be dealt with. Because if you are able to do this, you also will be seen as a hero by your salespeople, and lots of salespeople will work hard for a cause and a strong leader."
Strategy #2: Stay Focused
Kurt Lang, COO of Air Technologies, a compressed-air equipment distributor
in Columbus, Ohio, believes that employees are looking to managers for
leadership and direction to weather the economic downturn. "To be great,
our associates need to be happy and successful," he says. And that requires
the company to provide them with the tools necessary to dominate their
market: solid sales training, strong products, and good leadership. For
example, Air Technologies, as part of an overall business plan, enlisted
the help of The Brooks Group to implement professional sales training to
make its sales force even more productive and to improve "the way we
interact with every single customer," Lang says. Business growth in a good
economy is practically a no-brainer, of course. It's growing in a down
economy that's the hard part. But Lang believes that following through with a business plan in tough times is the mark of a good leader?and something boards and other executives notice. "I think that reflects well on the company leadership if the team is successful," he says. "We never had to lay anyone off, we built two new facilities last year, grew our labor pool and our associate count, and executed the commitments we made at the beginning of the year in our business plan, thus growing top-line sales in 2001."
That's important, Brooks says, because "a half-executed plan is as good as
one not put on paper: They're both bad. The more competitive the market,
the more complete that plan has to be?with very little left to chance. It's
so competitive today that one small piece of your plan unexecuted can be
your failing, because competitors are always looking for a small chink."
Strategy #3: Watch the Numbers
Recent corporate accounting scandals have made financial transparency a key
requirement for public companies. "The disclosure requirements from the SEC
are going to require companies to look internally," says Kerry Moynihan,
managing director at Christian & Timbers. "For sales and marketing people,
particularly in the technology sectors, revenue-recognition policies are
going to be more stringent. That's going to change how sales and marketing
executives do business."
For one thing, sales and marketing managers can no longer be "just about
brand management," Moynihan says. They also have to understand the
financial implications of their decisions for the whole company. "For
example, if I'm a sales manager, I can't say I'm just going to stuff the
channel to make my numbers this year. I have to think about how that is
going to affect the company's overall financial performance."
In addition, Moynihan explains, "there will be a change or redirection of
compensation plans for all senior executives. What gets done gets
rewarded." In other words, pay will be tied to performance like never
before?for executives and for salespeople.
As Paul Dorf, managing director of Compensation Resources, in Upper Saddle
River, New Jersey, explains, "Companies are starting to wake up to the fact
that they need to be proactive in that sales force compensation has to be
totally in line with their marketing program and their business strategy."
He advises executives to shift away from what has become a trend toward
paying salespeople larger base salaries and lower commissions. "It means
the fixed costs go up. And you're having a somewhat demotivating effect on
salespeople, because they won't be as hungry," Dorf says. Particularly in
big companies, the responsibility to implement this shift will fall to
senior sales and marketing managers. "It could threaten their job security
if they don't make these changes in sales force compensation," Dorf says.
At Oregon Chai, a small company, instead of changing compensation top
executives decided to drive up profitability by giving an additional bonus
to salespeople who not just meet but exceed annual financial objectives. So
far, it's working. "We are trending right now at eight percent over our
financial goals," Comstock reports.
Strategy #4: Say it Loud and Clear
High-level managers must prioritize clear communication within their
organizations. That's because there's less leeway for mixed or confusing
messages.
"In our business, competition is extremely tough," says Bill Lovejoy, group
vice president of field sales, service, and marketing at General Motors
Corporation, in Detroit. "In order for our people to understand what's
required of them, they have to understand the competitors, the market, the
product, and the mindset of the consumer and distributor. When you're in
difficult times, people need to be overcommunicated to."
Good senior managers also should make themselves available to employees and
customers who wish to communicate with them. Lovejoy, for example,
personally invites dealers and salespeople to e-mail or call him with any
questions or concerns; he says he answers all queries. Doing so "increases
the trust level" among him and his customers and employees, he says. Why is
that so important? "In uncertain times they need to be able to feel that
they have contact with senior leadership. They need to know that things are
okay." High-level executives also need to make sure they are fully
communicating a company's vision and direction to their field sales
management team, Brooks says. "The thing that makes or breaks an
organization are the sales managers in the field, who are working
day-to-day with salespeople."
Strategy #5: Monitor Reps More Closely
Gone are the days when just waiting for quarterly numbers was enough to
make sure salespeople were delivering the goods. Now, executives must set
short-term, measurable goals for salespeople and must keep a closer eye on
performance. "The only way to see if you can turn your business around is
to have tighter accountability measures," Brooks says. Managers might want
to watch things like self-generated prospects, earned referrals, and the
number of face-to-face appointments scheduled and conducted. "The sales
executive is no stronger or any more effective than the effectiveness of
the salespeople in the field, and their effectiveness is the result of how
they are managed on a day-to-day basis," he says.
Of course, short-term goals must be clearly defined and most important,
within reach. "It's incumbent upon a leadership person in any sales
environment to never give your salespeople achievements you know they can't
achieve," Lovejoy says. "Because if they do something wrong, who's at
fault? It's you." If you force people to try to reach an unattainable
number, that could drive deceptive behavior, he says. "You have to set
achievable goals for your people."
Oregon Chai executives work with salespeople to figure out new ways to meet
overall goals as economic conditions change. "So often when a tough year
occurs, the top guys spend more time riding employees to perform on a
business plan instead of working harder themselves to carry out the plan,"
Ryan says. "We burn a lot of late night oil figuring out with our
salespeople other ways to skin the cat, instead of just saying, 'Sell
more.'"
"If the plan is the highway, then short-term goals are the road signs along
the highway," Comstock says. Quarterly goals and objectives for employees
"are tangible and they keep us on the path." Twice a year the company has a
sales and marketing meeting that enables salespeople to review their
business of the previous six months and to take a look at the new products
for the next six months. It's a way for the company to make sure all
salespeople, spread out across the country, are adhering to its long-term
strategic plan for continued profitability.
Strategy #6: Be Your Own Advocate
It's important to realize that in an era of limited job stability the only
one looking out for you is you. "The days of keeping your nose to the
grindstone and expecting the company to take care of you are over,"
ExecuNet's Opton says. Sales and marketing executives must think of
themselves as independent contractors?even if they are full-time
employees?networking inside and outside the company. The activity of choice
should be something the manager is genuinely interested in, either
personally or professionally. For example, inside the company, volunteer
for particular projects or task forces where you might be able to work with
different people and increase your exposure within the organization.
"Really good task forces take up a lot of time, but they are smart things
to be on," says William Byham, chairman and CEO of DDI. They are great
learning opportunities, he says, and expose you to other operational
initiatives within the company.
Outside the company, become active in a local chapter of an industry
organization, or even in community programs?kids' soccer, local theater, or
your place of worship. The goal? To have a network of business
professionals in your community in place to rely on if you need it. "Think
about having a contingency plan, a personal development plan," Opton says.
And put yourself out there. Let the board and other managers know who you
are, Byham says. Assuming new responsibilities, even sending an e-mail to a
project head volunteering to participate in a new endeavor "shows
initiative," DBM's Silveri says. "It's a quiet way of saying, 'I'm here,
and I'd like to contribute to the organization's greater goals.'"
Strategy #7: Expand Your Base
As you're developing a network within your organization, figure out what
your company expects of you?and what it expects of itself. Understand a
company's goals and where you can contribute to its achieving those goals.
To understand your company's vision read company newsletters, listen to the
CEO's quarterly report, surf the company Web site, even catch wind of new
projects and initiatives by engaging in lunchroom conversations, Silveri
says. That'll help you seek out the opportunities that will expand your
knowledge base and also show your company that you're a valuable asset?not
to mention increase your odds of making it to the top slot. "What you as a
vice president of sales must do is be sure you have a breadth of experience
if you want to be CEO," Byham says, experience in areas in which presidents
would operate.
For example, volunteer to take on a short-term assignment managing your
company's sales operation in France, he says. "It could be a small
opportunity, but who cares? You'll be getting international experience, and
you're still keeping a hand in what's happening back home."
Strategy #8: Tend to the Garden
Finally, make sure you're developing talent beneath you?cultivating the
next vice president of sales and marketing to take your place should your
efforts to prove your worth pay off to the point where you're crowned CEO.
Keep other managers and the board aware of your efforts, Byham explains.
"Present the CEO with a list of high-fliers and the actions they are doing
to maximize strengths and minimize weaknesses within the company," he says.
Get your top-performing salespeople face time with the CEO and board, too,
and even draw up a leadership development program. It doesn't have to be a
formal, off-site program; any initiative that recognizes high-potential
employees "reflects well on managers, because it shows they are taking
responsibility for growing talent," he says.
Oregon Chai's Comstock and Ryan have groomed top-performing salespeople not
so much to take their places, but to have a team that can make good
decisions for the company in their stead. "You have to multiply yourself,"
Ryan says. After going on sales calls with one regional manager, Comstock
discovered that the manager's skill set was so valuable that he promoted
him to channel director and began to include him in the company's financial
discussions so he'd understand the ramifications of his efforts on the
whole company. "I knew from the first week of working with him that he had
an ability to define a problem and in a short capsule of time come up with
solutions," the CEO says.
Identifying and cultivating that kind of talent ultimately bolsters the
bottom line?and senior executives' job stability. "It frees us up to grow
the business," Ryan says, "and that's the most important piece."
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