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At this time
of year, companies are working diligently on a business
plan that will make 2003 better than 2002. One thought
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 mentioned 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.
For more
information on this article, please contact Rod
McDermott, Managing Director, McDermott & Bull Executive
Search at
mcdermott@mbsearch.net, or (949) 753-1700 ext. 308.
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