Physics question: What is the difference between transparent and translucent? Opaque and clear? Iridescent or luminescent?
We use descriptive “clarity” words in our everyday speech. But in business, if you talk about “clarity”, i.e. being transparent, there is a difference. It is supposed to mean nothing is hidden: all the financials and agendas are open and known, and the path which has been chartered by executive leadership is easily accessed, followed and understandable by all.
Now, let’s stop laughing and dry the tears from our eyes as we discuss what really happens in business–obfuscation, misdirection, subterfuge, and outright lying. I’ve held off posting for a couple of weeks as I was observing some first hand obfuscation at a client and dealing with it. Management, in this scenario, was opaque and misdirecting with its policies and procedures. Personal agendas seem to trump corporate agendas, and covert strategies appear in hindsight to have been executed to maximize some individual’s leverage and pay.
I know this sounds jaded, but sadly, many times it is true.
First, a couple of stories around the good and the bad.
The good first. My friend owned a business which started off from nothing. Three partners came together and started a recruiting firm. They did what most startup business owners do, they hired sales talent and paid with highly leveraged compensation plans, and as the reps hustled and the company grew, the reps watched their commissions come in. The commission plan worked for the first few years, but as the company’s original business shifted and it became apparent the original commission plan didn’t fit the new path, the partners knew they had to make a change.
My friend came to me for advice. He explained where they started, where they were going and what the company needed to do to remain profitable. (In a nutshell, they were a permanent placement firm which had shifted to predominately staff augmentation in a niche market.) He did some mild railing against some of the biggest abusers of the comp plan and told me about the partner’s plan to roll out new, individualized comp plans to each rep. Their focus was on crafting plans for the senior reps which didn’t completely destroy their current commissions and shaft the newer reps with a greatly reduced commission structure–a kind of “robbing Peter to pay Paul” scenario.
When I asked how they arrived at that, the essential answer was they formulated their plan in a vacuum. The partners had met with each other and hadn’t asked for any input from their sales reps, nor were they planning on discussing the roll out with them.
What I recommended was transparency. First every rep got the same plan. Second, was a disclosure of the company numbers on sales, revenues and margins. And third, an explanation to all the reps why the company had to change the plan.
My emphasis, more than anything, was to use data to justify the “why”. If three years ago permanent placements made 90% of the revenues and that commission structure made sense but now only 10% of the revenues were placements, then that is a change which has to be addressed. But to simply move the bar on the reps without explanation creates distrust and paranoia. “What are they going to take away from me next?” I told him the reps would say. And things like, “I heard the company is in trouble.”
Surprisingly, (but happily for me) he took my advice. They gathered all the recruiters together and showed them the numbers, the trends and the future path of the company. They presented a new compensation plan which was fair, focused on the new direction, and still allowed for equal income as before by incenting the desired sales path. And they promised a transition period during implementation. After three months, only one of the senior reps had left. And the company transitioned to their new model. In the end, they survived the transition to go onto their next phase which catapulted them from a boutique to a medium-sized business.
The bad story. I’m changing some of the details around this so as not to identify any business in particular.
A company I consulted for had been holding more and more closed door meetings. The president and the VP of Sales, or the Controller, or the VP of Marketing. Individual meetings, sometimes with some different combinations of the aforementioned people, but more and more meetings. Prior to this, the company had been relatively open about its numbers and direction. A new VP of Sales had been hired, and its executive team began having more meetings with themselves than with the employees.
Soon, territories were being realigned. Specific accounts were shifted from one rep to another. Commission plans were changed and private commission promises were made. “Covert” was the operative word. I was brought in to analyze their sales operations but found (and reported–ahhh, the beauty of the consultant…) that sales operations weren’t their dysfunction.
So, what happened? Implosion. When the level of secrets met with the growing dissatisfaction of the sales force, there was a screeching halt of productivity. Why, the reps grumbled, would they work in this uncertainty? And so they started leaving.
As I’ve stated before, there are a lot of individuals which make a company run, but sales is the engine. If you don’t have any sales, you don’t have any revenue. And without revenue, you don’t have a business.
This particular story isn’t finished yet, so I can’t wrap this story up with a bow on how the company had its happy ending. It is a work in progress, and I’m watching them closely.
So, these are anecdotes, and maybe you’ve seen something similar. But my point is, no matter what the size of the company, transparency matters. If people know what they are working for, and feel valued providing value to the company, then magic happens. If people work without trust, then they will always have one foot out the door. Which do you want? Which would help your company be its best?
Thinks, Inc. is a consulting firm which specializes in Smart Sales Operations. If you’d like for us to come and assess your chaos, drop us a line at contact@thinks-inc.com