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At
this time of year, our clients are all working
diligently on a business plan that will make 2003
better than 2002. One thought we've heard echoed a
number of times is that sales growth is going to be
the focus, since cost cutting and improvements in
efficiencies to enhance margins have all been
employed. Most companies, especially technology
related firms, have seen revenue decline, or at least
growth rates slow to a trickle over the last two
years, and are working hard to stabilize their current
base of business. Assuming business does remain at the
current level, all the productivity and margin
enhancing programs that could have been implemented
have already been done, and now the trick is growing
the business again.
There
are a number of areas that could potentially have a
business plan/people plan mismatch, however, since
many companies have already focused on reducing costs,
the most likely place going forward is in the sales
area. This is how one company identified the mismatch:
Last
year at this time, a CFO told me that his company had
just finished their pristine 2002 AOP (Annual
Operating Plan) and had all agreed and signed off to
the numbers. The board was informed, and duly
impressed with the fact that the sales decline would
subside and that the business would actually achieve
some growth in the coming year. The management team
was impressed with the forecast for a better 2002 than
2001, all except for the CFO. You see, he had run the
numbers, had looked at the sales force very
objectively, and had used financial results to
determine which salespeople were A's, B's, or C's. His
reasoning was this: the A's are easy to spot; they're
the ones that are continually hustling down
opportunities, always following up on leads, going
after singles and doubles if the homeruns are too few
and far between, and generally still making their
numbers. Intuitively, the CFO and the VP of Sales knew
who the A's were - those individuals that outpaced the
C's by a 2 to 1 margin, if not more. Using his
knowledge of the salespeople, he created his list. He
then ranked the same people strictly by the numbers
using a bell curve, with the top 10% (compared to
quota) being A's, the next 70% being B's, the next 20%
being C's. To be fair, anyone that achieved at least
80% of the mean compared to quota, was considered a B
(for example, if the mean achieved only 70% of quota,
then anyone that achieved 56% of quota or better (80%
times 70%) was considered a B, which he thought was
being generous). Surprisingly, the statistical figures
matched up pretty closely with his own intuition.
What
was the result of all this number crunching and
subjective assessment: The current staff of
salespeople, i.e. the 2002 people plan, did not have a
prayer of achieving the 2002 business plan. Without a
change in the sales team lineup, failure was assured.
Does
your 2003 people plan meet your 2003 business plan? Do
you have similar disconnects? Now's the time to do the
math. |
