The WSJ recently reported on the challenges Mike Hurd, the new CEO of HP, faced when he joined the company in 2005. In summary, there were 11 layers of management between him and a customer. In addition to slowing the sales development process, less than 60% of the 17,000 people in corporate sales were actually selling.
Candidly I was amazed to read this information. I always think that companies like Hewlitt Packard have the best and brightest in place along with a management system that results in maximum productivity. I often find such management controls lacking or missing all together in smaller companies but without having direct involvement in a business the size of HP, I just assumed they knew what to do.
Mark Hurd knew what to do. He restructured the organization, eliminated non performing staff and cut the buerocracy so that not only were people accountable for selling, they had the time to do it. He also selected one software product to track the sales pipeline. Is all well now? Changing culture the size of HP is not done on a dime. From experience, the fastest timeline occurs when information is used to motivate behavior. An international accounting and consulting firm that I was with for quite a while developed a complete product line named “Information for Motivation”. People do respond to what you inspect not what you expect.
Using the principles from Information for Motivation plus other resources, I developed The Profit System. The revenue module of The Profit System shows a company how to set up the sales management system for their company. Mark Hurd is using these principles with the software product he selected to track the sales process for HP. However, you don’t need a specific software product for most companies. I have successfully helped a number of large and smaller companies using Excel spreadsheets.
People have a tendency to spend a lot of time on which tools they should be using. This is a mistake in most cases. It is important to know when “good is good enough”. The goal of all of this meaning the sales management process is to drive revenue and profit. Compensation should be tied to the goal. When sales force compensation is tied to revenue you can expect higher revenue. But that does not mean you will book higher profits. For higher profits in the revenue model gross margin targets are what are key and don’t forget to account for the selling expense in the gross margin calculation.
ABC Management..I was fortunate to be trained in my first CFO position by a powerful business leader who taught simple but effective prioritization principles. To this day I think of most things in terms of A,B or C. Let’s apply that to sales force management. Who are your A customers and what are your A products? Now the goal that I have found to work the best is to have people spending 80% of their time on the A items and the rest their time moving B’s to A’s and C’s to B’s. In the C category if it doesn’t have the potential for being a B in a reasonable amount of time, often the best action is to drop the resources devoted to it.
Like many things in life this process is easy to write about and discuss, but harder to implement. But it is not that hard. With some effort on the front end there are big payoffs. In every case where I have helped a company install this process the benefits to revenue, gross margin and profit have been huge. There is more detail on this subject in my course which is free. Visit The Profit System if you want you company to make more money.
| You know it the instant you see the person. It is apparent they have achieved an extraordinary measure of success and have the time to enjoy it. Steve Pohlit is an expert business consultant who developed The Profit System shows business owners how to achieve an extraordinary level of profit and the time to enjoy it. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue in profits by at least 30% in the next 90 days, please visit www.StevePohlit.com All articles published by Steve unless specifically restricted may be freely published with this resource box. |
