|The numbers game|
Kamran Rizvi, Navitus
It is troubling to see some companies take the easy route, and rather than managing performance of individuals and teams, they resort to tracking results against agreed budgets, turning a blind eye on ‘how’ outcomes were attained.
How can any business survive without the top lines that come from selling?
No business can survive without revenues, which come from products and/or services sold by salespeople and bought by customers. In the process of bringing in the 'dollars', 'pull' and 'push' strategies are applied. The degree to which either approach is used, depends on the nature of the market, the industry, product/s or service/s and business strategy of the company.
In corporate jargon, the word target is very closely associated with the act of selling a product or service. In a recent conversation with a friend, the subject of selling as a profession cropped up. We discussed how salespeople suffer from a negative image. Many have an aversion to 'selling' or being 'sold to'. Why? One reason could be that it is viewed by salespeople as having to ‘go out there and ‘get’ the numbers, or else!!’ The sheer pressure to achieve seemingly unrealistic numbers can lead to behaviors that smack of desperation.
Now imagine running a company without goals, targets or objectives! While having targets and milestones are essential in achieving desired outcomes, if we are not careful, they can lead to more harm than good. This article examines how the numbers game can become a blessing or a curse.
Targets are a blessing when viewed as a source of direction - an essential ingredient in business planning, budgeting and supply chain management. Targets are also a blessing when, on achieving desired results, individuals and teams are appropriately recognized and rewarded, and that too, on time. In this context Fred Smith’s (founder of Federal Express) achievement is a wonderful illustration. His brief biography can be obtained from www.achievement.org. However, selected extracts are reproduced below:
While attending Yale University, Fred Smith wrote a paper on the need for reliable overnight delivery in a computerized information age. His professor found the premise improbable and, to the best of Smith's recollection, he received only a grade of C for this effort, but the idea remained with him. He started his express transport business in 1971 by raising $80 million to launch Federal Express.
On the first night of operations, a fleet of 14 jets took off with 186 packages. In the first two years, the venture lost $27 million. In a short time, the company was on the verge of bankruptcy. It appeared that Smith had lost all of his investors' money, including the capital of his own brothers and sisters. But Smith succeeded in renegotiating his bank loans and was able to keep the company afloat. By 1997, the company was worth $16 billion, with 170,000 employees flying a fleet of 584 planes and 38,500 trucks to deliver 2.8 million packages daily to over 200 countries and territories.
What comes through strongly in FedEx’s example is their desire to deliver quality service by “shipping all manner of goods around the globe quickly and reliably”. There are countless examples of how major achievements come about through focus on providing value-adding products and services and by committing to goals and targets.
To understand how targets can become a curse for salespeople, you need not go far. It’s the world of “ends justify the means”. Values in such a world are often seen as ‘nice to have’ and are conveniently displayed in offices simply to create good impression. Commonly preached values in companies include terms such as integrity; respect; passion; ethics; excellence and the like. But how many companies truly assess performance of people on the basis of these values? Regrettably, very few.
Just consider your own work environment. Has a star performer in your company ever been fired for bribing someone to secure a business contract? Or have you ever rewarded anyone publicly who said no to a lucrative business deal in order to uphold a principle that he and the company held dear? Sadly, principles enshrined in good corporate governance, which include adopting ethical practices, have yet to sink into the psyche of many business leaders.
The movie, ‘Glengarry Glen Ross’ – made for everyone working for a living in a conventional setting - examines the machinations behind the scenes at a real estate business office. This film describes the path a working salesman follows. Actors Lemmon and Arkin act brilliantly. They play the role of salesmen whose luck has turned sour. You can literally see their passion for living being sucked out of them with every blown sale and missed opportunity. Ed Harris is great in the role of the angry salesman willing to do what it takes to save his own future. Kevin Spacey plays the tight -collared boss, pushing people and not giving them breaks they need. Times are tough. The salesmen are given strong incentives to succeed in a sales contest. The prizes? First prize is a Cadillac Eldorado; second prize is a set of steak knives; third prize, which goes to those missing the numbers, is the sack! There is no room for losers in this dramatically masculine world; only "closers" will get the good sales leads. There is a lot of pressure to succeed, so they resort to robbery and face unforeseen consequences.
Achievement of sales targets is the result of intelligent effort. It is a ‘cause and effect’ relationship. Salespeople need to do certain things, in a particular way, in order to obtain the desired outcomes. This aspect is well within their control and it is here that they need to pay lot of attention to find ways of improving performance. How much one learns and applies in a practical situation to meet targets is the responsibility of the individual concerned. Holding people accountable for what they can influence is fair. However, it is troubling to see some companies take the easy route. Instead of managing performance of individuals and teams, which takes time and effort, they resort to tracking results against agreed budgets, turning a blind eye on ‘how’ outcomes were attained. This is a short-sighted and convenient way and ignores the fact that while results are important, ‘how’ they were achieved is equally, if not more, critical.
There are instances where people have been rated highly on performance, without any consideration being given on whether the process followed by an individual was ethical or not.
This brings to mind another film, ‘Wall Street’ (1987), which is about those for whom material wealth takes precedence over morality, and those for whom it does not. It shows a person who is struggling to discover which of the two he is: greedy or ethical.
Numbers become a curse when people are held accountable for things that are beyond their direct control e.g., achievement of targets. Other than skill, luck also plays a part and so do the market forces and the prevailing state of economy. The products and services may in themselves be inappropriately priced and the quality might not meet customer expectations. There may also be non-availability of stock. These factors become excuses for why budgets were not met, when management overlooks ground realities in its assessment of performance.
When we encourage individuals to do what is right, which is to ethically add greater value at work, and create a fair environment for recognizing and rewarding their efforts, will the numbers game become a blessing.