Taking Information Responsibility

Information specialists are tool makers… They can tell us what tool to use to hammer upholstery nails into a chair.  We need to decide whether we should be upholstering a chair at all.

A requirement of an information-based organization is that everyone takes information responsibility.  The bassoonist in the orchestra takes information responsibility every time he plays a note.  Doctors and paramedics work with an elaborate system of reports and an information center, the nurses’ station on the patient’s floor. The district officer in India acted on this responsibility every time he filed a report.   

The key to such a system is that everyone asks:  “Who in this organization depends on me for what information? And on whom, in turn, do I depend?”  Each person’s list will always included superiors and subordinates. But the most important names on it will be those of colleagues, people with whom one’s primary relationship is coordination.  The relationship of the internist, the surgeon, and the anesthesiologist is one example.  But the relationship of a biochemist, a pharmacologist, the medical director in charge of clinical testing, and a marketing specialist in a pharmaceutical company is not different.  It, too, requires each party to take the fullest information responsibility.

ACTION POINT:  Take information responsibility by getting the right information to the right people at the right time.  

Target Customer Alignment

Wholesaler-distributors' confusion over organization and roles is often the result of trying to meet each and every perceived customer requirement a little better than the competitors. 

Market gaps are "big picture" differences between what or how your customers ideally want to buy and what or how you are currently selling to them.  Closing these market gaps is the basis for aligning your organization.   Or course, some gaps may require new capabilities that are outside the realm of your sales force organization.   

We have found that it can be very powerful to use the Jack Palance line from the movie City Slickers  and ask yourself, "What is the one thing?"  Wholesaler-distributors' confusion over organization and roles is often the result of trying to meet each and every perceived customer requirement a little better than the competitors.  They end up deciding that a Field Sales Rep (FSR) must be an expert in all products, visit each customer in person weekly, personally follow up on every service questions, and then match Costco's in store price!  This confusion is a classic result of applying a sales mentality ("more, better, faster, cheaper") rather than a strategist mentality ("what are the fundamental business drivers?").  

ACTION POINT: By limiting your focus to a few key market gaps you can usually define one or tow overarching design criteria for the sales force organizational structure.

Aligning The Sales Organization

Make sure that success does not require every rep to be Superman or every manager to be Gandhi.

There are four factors that wholesaler-distributors should consider in designing sales force structure.  The acronym TACH can be used to guide the process of aligning your sales organization.

• Target customer alignment.  The fundamental criterion for any sale organization is how well it meets the needs of the market.  Using an external perspective ensures that your structure is not held hostage to history or internal politics. 
• Accountability for performance. Reward and punishment can only affect behavior if the individual has clear objectives and the means to reach them.  An appropriate organization structure is the best way to ensure that these prerequisites are met, and is thus the foundation of real accountability.  Paying reps on net profitability when they have limited control over warehousing, delivery, installation or project management is a great example of false accountability.
• Cost of coverage.  The sales organization should be designed to provide key services to target segments at the lowest cost possible.  This can often mean hiring more staff so that costly FSRs aren't tied up with customer service and administrative duties.
• Human factors.  This is the reality check on the model.  It may be unrealistic to expect a harried counter sales rep to make effective outbound calls in his or her "spare time," or to have a technical specialist traveling out of his or her home territory 80% of the time.  Make sure that success does not require every rep to be Superman or every manager to be Gandhi.

ACTION POINT:  Align your sales team to the market needs, hold them accountable, provide them the necessary support and recognize reality.

Sales Structure IV

Organization structure issues can't be tackled solely by new pay plans, better sales tools, or more skills training.

Now imagine instead that you had a process for reviewing your strategy and structure every two years. This activity forced you to ask the tough questions and make a sober evaluation of your market gaps.  You realized that your products were following the classic life cycle in which traditional sales rep services (for example, application support, value-added solutions, new product information) were becoming less important.  Meanwhile, the declining market was making customers far more price sensitive and savvy. 

You concluded that your sales force was not the most appropriate channel for a large and growing portion of your customer base.  As a result you created a new telesales organization, invested in on-line self service capabilities, and established a process to gradually but deliberately migrate your field sales force, with some reps transitioning to new roles and others focusing on new markets.  The average number of accounts served by each rep remains about the same--and so does each rep's compensation--as the lower value customers move to the new channels.  Your company takes market share even while it remains profitable--perfectly positioned for a "last man standing" strategy. 

It is important to apply sound diagnostics and use the right tool for the job.  Organization structure issues can't be tackled solely by new pay plans, better sales tools, or more skills training.

ACTION POINT: Redefine roles and reallocate resources as the market evolves.

Sales Structure III

Because they are "top guns," the reps are experts at making themselves indispensable at their big-dollar accounts.

Imagine that you are selling a mature product line to a declining customer base.  As sales drop, you use the opportunity to upgrade your field sales force, terminating the lowest performers and spreading their accounts over the higher performing survivors.  Over time, the territories grow--along with average commission checks--even though company revenues are declining.   Because the are "top guns," the reps are experts at making themselves indispensable at their big-dollar accounts. They grow accustomed to sailing their yachts through the seas of poverty, believing that their performance is the only thing keeping the company alive.  At some point the CFO recognizes the problem and the company decides to "re-examine" the compensation plan.

Unfortunately, considering the pay plan in isolation at this point is ineffective at best and probably downright dangerous.  Only radical compensation reductions will bring selling costs back in line.   But such big changes would drive the best reps into the arms of your grateful competitors, taking "their' best accounts along with them.  

ACTION POINT:  Reorganizing a pay plan only is ineffective and dangerous.