Interpersonal Business

Vol. XVIII

Dear Manager,

There is a very unique position in American business today: the relationship between manufacturers and their use of manufacturer’s agents. The development and maturity of this relationship is worth our review.

Where else in American business can you find a relationship of total independence and ultimate dependence? Only with the relationship between manufacturers and independent sales agencies. Originally, this relationship was developed to assist smaller and independent manufacturers with the sales and marketing aspects of their products. It provided a fixed cost of sales, and direct compensation in the form of commissions based solely on the performance of the individual. How very pure.

As manufacturers grew, so did many of the sales agencies. There was a time a few years ago in my industry when a number of manufacturers tested the waters of a direct sales force. For some this was a good decision. For many others, their sales staff and field management costs forced them to return to a fixed cost system they could once again control.

The single greatest value of a commissioned system is its ability to fully compensate its sales staff based on pure performance. From a management perspective it is survival of the fittest. Over time, the below average performer cannot survive, the above average performer will prosper, and the elite will set the standards of performance for the whole. At each level they will be compensated in a manner consistent with their own ability to perform.

IMPACT FOR MANAGEMENT

When properly selected, management using independent commissioned sales representation has the distinct advantage of working with a much higher caliber of field sales personnel. Only the confident, capable and experienced sales professional will accept a position with compensation based solely on their own abilities and performance. Your ability to rely on the strengths and management ability of your independent sales agency can reduce the need for expensive field-level sales management.

In recent years, Regional Managers have become more commonly used in tandem with manufacturer’s agents. Its obvious intent is to raise visibility and generate support in the field. This decision should be reviewed on a case-by-case basis. Often, the quality of the individual involved cannot realistically compete with those they are expected to manage. In essence, they may not have a clue as to how to motivate, challenge and compliment the independent nature of the sales agency. The very best Regional Managers are those with field sales experience. They have been in the trenches, seen the obstacles and fought the daily battles. With out this, their value does not exist.

While manufacturers are certainly entitled to hold a high standard for their sales agencies, rarely is this fully taken advantage of. If you have hired a sales team to represent you, and you believe they are incapable of serving your best interests, find a sales agency with the management team that can! Do not continue to layer on levels of field sales management. This is in direct conflict with the very premise and value of using independent sales agencies. There can be great benefit in having a field sales management team. This decision should be dependent on your ability to hire and afford capable, energetic and street-wise professionals. When the time is right, your ability to properly financially support this commitment will become obvious.

Until then, consider investing in a much more cost effective form of sales support, located within your current sales service departments. Provide a qualified and dedicated individual to assist in the needs, and develop a more personal relationship, with a limited number of your organizations. This Super Assistant should become familiar with three to seven of your sales agencies and the varied dynamics and personalities of each. Once trained, they need and deserve the latitude to assist, negotiate and, at times, even bail out associates in the difficult times often found out in the field. Yes, this quality is well beyond a minimum wage individual, yet its effective cost is substantially less than the actual costs of support towards a field sales manager. What most salesmen are looking for is someone who cares, someone who is readily available, and someone who can step up to a decision. Most manufacturers would be amazed by how seldom this is available.

IMPACT FOR SALES AGENCIES

The greatest advantage for sales agencies is one of flexibility, diversity, and the ability to react to the needs of your region and marketplace. With no single manufacturer “owning” your time there is generally an understanding of the value in each individual. Once again respect is always an earned privilege. Those who find it will enjoy a “work with” rather than “work for” attitude.

Sales agencies have ultimate control over whom they choose to work with. If a manufacturer cannot meet the needs of your sales agency, you have every right to lend your professional support to one that does. Just as manufacturers have the responsibility to meet the needs of their company’s objectives, so too do sales agencies. I often hear of an agency’s complaint regarding policies established by their manufacturers. No one has forced this relationship upon the agency. Either make the very best of the situation, improve it, or make preparations to move on. These are the options available.

THE NEED FOR CHANGE

Early in my agency’s growth (it was an agency of one!), I developed a primary relationship with a manufacturer at the very beginning of their entry into the marketplace. They soon enjoyed simply explosive growth that became almost legendary in my industry. Along with this growth came perhaps the most difficult, demanding, and self serving sales manager I had ever, until then, “worked with”. In fact, this individual may still be at the top of my list.

This individual thought nothing of calling at any hour of the evening or early morning to motivate the troops. With the company’s phenomenal growth, forecasting became very difficult. Despite the successful efforts made, it was never enough. Aggressive forecasts were developed and modified three and four times a year, regardless of performance. Have you ever heard of a moving target? As you may have guessed, this person was making me miserable. I obviously needed to move on. There was only one catch: I needed the income to support my family.

Out of pure frustration I certainly wanted to, shall we say, share my very specific opinion of their organization. Yet it was this very relationship that taught me to never come to decisions from a position of weakness. Always come to decisions from a position of strength. I dedicated myself to replacing this income.

Within a year, and while continuing to meet their expectations, I had developed relationships with other manufacturers I wished to work more closely with, and had been able to replace the income. It was indeed a pleasure to notify this manufacturer that I would no longer be representing their product. The response was one of disbelief. No one had ever dropped their line. They misjudged their own position of strength.

I am often surprised by the attitudes of some manufacturers relating to their self- perceived position with their independent sales organizations. While their intent may be honorable, they have bought into the old school and assumed an attitude of intimidation with their sales agencies. What they fail to realize is that in working with independent agents they are competing for attention with all the other manufacturers in the agent’s “bag”. When the representative’s car trunk lid goes up, whose samples are they going to grab? It is only human nature to be enthusiastic and supportive of those manufacturers by whom the agent feels supported.

Agencies show acceptance of a style of management by their continued relationship with a manufacturer. Agencies that have no need for this type of relationship will invariably move on to more productive ground, and will be replaced with-hand picked agencies that thrive in this arena. And you know for a few, it’s hard to find a good sales agency any more!

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2008. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL/INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM

Vol. XVII

Dear Manager,

One of the most difficult realizations for any manager is the conclusion that an individual is no longer suited for their organization. We should not assume that all individuals are suited to work with one another, yet it is often our nature as managers to give every benefit of the doubt to the members of our team. Our investment in our staff is substantial, and only after every possible option has been exhausted should we seriously consider making a change. Change is painful, yet all of us at some point must come to the conclusion that change is our only option. When is it time? Have we given the individual every opportunity to succeed?

This topic takes me vividly back to the first time I was faced with “firing” an associate. I anguished over the decision for days, yet with every thought process my decision was obvious. I was convinced that when the day of “firing” arrived, I wouldn’t even like the individual. If only I didn’t like them, it would be so much easier!

With my conversation prepared, I scheduled an appointment for the next day. By the time of the appointment I could feel my heart race, and the anxiety building towards the conversation at hand. I suddenly felt the need to apologize for what I was about to say. Aware of the difficulty I was having, it was ultimately the associate who suggested that our business relationship had simply not worked out, and that it would probably be best if they looked for a new position. Without knowing, my decision had become obvious to both of us. The associate was very matter of fact about the decision, as I proceeded to melt down in my chair. In similar circumstances, I have since been able to better manage my thoughts and emotions, but that first one can be tough!

I learned on this occasion that in a performance-related termination, there is never the need or justification for management to create the element of surprise. Let’s look at the alternatives.

In many cases, the signals of an ineffective relationship will become evident early on. As managers, we know there’s a learning curve and understand the dynamics and adjustments of getting started. On occasion, however, nothing (or very little) gets started.

In these instances I have found the only solution is to maximize your support efforts to determine the problem. These types of early concerns will seldom solve themselves. Your options are to solve the problem . . .. or to solve the problem. Begin by giving very specific and attainable objectives for the short term. Determine if the individual fully understands the objectives, and is willing to accommodate your needs and expectations. STAY CLOSE to this individual. Two or three conversations/meetings on a weekly basis may be required. Once again, accept the fact that these situations will not solve themselves. Valuable weeks and months can be lost by management’s willingness to simply “see how it goes.”

Within four to six weeks of this intensified relationship, your options should become very clear to you and the individual involved. Either you have resolved your initial concerns or, effectively, they have taken themselves out. Once again, because of your committed efforts to assist in their success, your conclusion to make a change should not come as a surprise. You have now given your best efforts to this individual, this position is not suited for them, and it is in both of your best interests to move on.

This thought process could also be used for a territory that has succeeded in the past, but has recently fallen below your expectations. First, meet with the individual to determine if there are some personal issues that may be affecting their performance. If this is the case, I believe you, as their manager, have the right to an understanding of their current situation. Details are not necessary; an understanding is. Personal issues will affect all of our performance on occasion.

Patience and support on management’s part are essential. You never know when you will be asking for their patience and support under similar circumstances in the future.

On other occasions, it is not a personal issue but simply a change in circumstance that has caused their performance to change. Communication and understanding are important in establishing a common foundation. Establish ninety-day objectives based on your observations and concerns. Be willing to proceed with the assumption that they can get back on track. You must STAY CLOSE, with timely and pointed reviews of the topics that have previously been discussed. Establish a sense of confidence with the individual; you are simply asking for a reversal of recent trends. Restate your responsibility for the success in all regions, and their ability to take control of their future with your organization.

In many instances, I have found that these individuals have been able to meet their objectives. This is one of the greatest rewards for management, and will only serve to strengthen your relationship in the future. Their success is your success, which rewards you both! If, over a period of three to four months, your mutual objectives have not been met, in most cases it is time to make a change. Further delays will only diminish the territory, compromising your ability to support and maintain a new associate.

The element of timing can play a significant role in the transition of a sales region. Prior to coming to a final conclusion, it is important for management to determine its priorities three to six months in advance. I have often found it prudent to delay a decision due to a higher priority within the organization. This may include seasonal introductions, trade shows, or a concern within a territory of much greater significance. Define your current ability to meet the substantial demands and challenges of a new sales associate. If there is a reason to delay the decision, do so, continuing your support and staying close, in the hopes that the current associate may meet your objectives in the interim.

There are two significant reasons for management to come to the difficult conclusion to terminate a working relationship. The first is non-performance, and the second is an individual who may choose to compromise the integrity of the organization. There is no single individual who should have the right to position their best interests above those of their fellow associates or the organization with which they have chosen to work. No one has the right to compromise the integrity of the group as a whole.

Under these circumstances, there could very well be a surprise. Managers have a responsibility to all members of their organization to move decisively and effectively. Termination should be swift and without compromise.

The collective strength of an organization is no stronger than the weakest element in the team. We must continue to remind ourselves that each individual within our organization is a direct reflection of us as managers. These very challenging aspects of management are “part of the package.” With time, the alternatives to making these decisions becomes clear, and are ultimately more difficult than having made a timely decision. Hiring within similar values, work ethic, and personal attitudes will consistently minimize the need for future change, and develop a strong foundation in the event of unforeseen difficulties or concerns. When given every opportunity for success, the individual qualities of a staff member should enhance and strengthen your organization.

The decision to terminate an associate must be considered as a realistic, certain, final option for management. When is it time? When your exhausted options become apparent to all parties, your decision has been made for you.

Personal Regards,
Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2008. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL/INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM