Leadership

Posted on January 23, 2010 by John F. Dini

There was an interesting report on National Public Radio earlier this week about Haiti. I tried to link it here, but I couldn’t find it in the hundreds of archived earthquake stories. If someone locates it, please let me know so I can post the link.

The story was about the neighborhoods that had not seen any aid workers days after the quake, but were functioning without outside help. They weren’t fine by any means, but they had managed to marshal resources, care for the injured and distribute food and water. There were no roving gangs or crime, even though they were in the middle of Port O’ Prince.

The neighborhood the story focused on had been organized by a small business owner. (Are you surprised?) This shopkeeper, shortly after the temblor, has gathered the stunned people and started directing them to move the injured. He organized stretcher bearer teams. He consolidated the water and food and had it guarded and distributed fairly. He commandeered a place for the wounded, where they were stabilized within the locals’ limited means. He sent out people to search for the nearest functioning medical facility, and began transporting the worst cases to it.

I’m extrapolating a bit. The story didn’t describe the step by step process of organizing the neighborhood, they just talked about the result. Any of us who direct people for a living know how it happened. One person stood up and took responsibility for impacting his environment. When others were saying “Why me?” or “Who will help us?” he said “What can I do?” and “How should we deal with this?”

The third and fourth questions are ones that small business owners ask every day. The first two are the ones asked by people who can’t or won’t take control of their lives. I highly recommend John Miller’s “QBQ– The Question Before the Question.” I’ve met John, and he leads a crusade for personal accountability. He points out that “Why?” and “Who” questions are usually about avoiding accountability, and “What?” or “How?” questions are about taking on the responsibility for a solution.

Leadership begins with accountability. The story of neighborhoods in Haiti is a great example of how one man (or woman, in many cases) can simply decide to change things, and others will follow. In my next blog I’ll talk about my friend Sam, who has changed the lives of hundreds of people forever, without publicity, notice, or giving up his active life.style.

In he meantime, remember the words of Henry Ford. “Asking why a man should be the boss is like asking why he should sing Tenor in the choir.”

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Sales Comp III: Hunters and Farmers

Posted on January 14, 2010 by John F. Dini

Sales people break down into two subgroups- hunters and farmers. The purists will argue that in fact, only hunters are sales people. I can buy that. The farmers are more likely to be called Customer Service Representatives or Account Managers. Both types, however, are frequently compensated by how much the customer buys.

Hunters are what we usually think of as “Salesman” with a capital S. They are ADD, with the hyperactive focus that ADD folks have. (I know- I R one.) They track the quarry through rain and snow, ignoring hunger and fatigue until they succeed. Then they drag it back to the cave, throw it on the  floor, and tick everyone else off by drinking coffee and slapping each other on the back while the “real” work of filling the order or delivering the service goes on.

Farmers work in cycles. Early agrarian societies didn’t track linear time, they only paid attention to the planting cycle. At best, the concept of multiple years, if it was needed, was described as “Three reapings ago.” Farmers plant, nurture, grow, reap, and then do it all over again.

In our modern world, farming sounds like a boring way to do business. It may be, but the agrarian societies raised healthier kids and their population grew until they squeezed out the hunter-gatherers. History always has a lesson.

Going back to our discussion about Suppliers and Vendors (sales comp II- September 27th) the type of company representative to the customer you utilize is partially dependent on the type of selling relationship you have. We all need some hunters to open up the accounts. It is how you generate add-on or repeat sales that guides the hunter/farmer hiring decision.

If you are a “supplier” by my definition (every sale is made in a competitive environment) then you need hunters and only hunters. They should live in insecurity, with a sense of urgency that begins again the minute a sale is closed.

If you are a “vendor” (and some readers have challenged my definitions- sorry) then you need a few hunters to open accounts, and some farmers to maintain and grow the relationship.

Both should be compensated on results, but in different ways. There is little point in giving a hunter ongoing commissions on steady, repeat business. He or she is paid to hunt. Allowing a hunter to build up residual income is demotivational.

The farmer, of course, is a cultivator. As he or she grows the relationships, income should grow as well. The farmer builds a “crop” of good accounts that produce season after season. Paying a farmer for breaking into new accounts is often futile, and puts pressure on the farmer. Behaviorally, farmer prefer predictable income. Unlike hunters, they don’t get the same adrenalin rush from the big “kill.”

Frequently, hunters and farmers work well in teams. One makes the initial sale, and the other grows the relationship. When there is a problem or competitive challenge, the farmer sends the hunter back in to do a new “close.”

A final point: whether a sales position is appropriately filled by a hunter or a farmer depends on the objectives, the length of the sales cycle, and the type of selling relationship. You should NOT decide which type of salespeople you already have, and then try to fit the job to them.

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One Response to Sales Comp III: Hunters and Farmers

  1. Joe Zente says:
    February 8, 2010 at 5:56 pm

    One more word of advice…

    Less than 1% of all candidates seeking work today have the full suite of HUNTER competencies and conditions, so if you are looking for a hunter, make sure to conduct an objective assessment of what you are getting yourself into before pulling the trigger on a new hire.

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A different way of thinking

Posted on January 6, 2010 by John F. Dini

I’ve just returned from a much needed quiet period in Merida, Mexico. Actually, the locals call it by the state’s name, Yucatan, and usually refer to Mexico the way Hawaiians refer to the mainland.

The highlight of an otherwise uneventful trip was our day at Uxmal. Formerly a Mayan city of about 25,000, it is thought to have been the site of the Mayan equivalent of a graduate school for the sons of Shamans. The Shamans ran Mayan government, so Uxmal was kind of the Harvard Business School of its day.

What did a rising Mayan Shaman learn in the 7th century? Astronomy, of course. Their calendar and observatories rivaled modern day science. Mathematics as well. The Mayans, independent of the Arabs, invented the concept of zero- the null place keeper that enables all higher mathematics. A written language (the only one in the new world) Certainly they learned the political, economic and diplomatic complexities that were involved dealing with a civilization encompassing some 8,000 cities with commerce, highways, alliances and mail service.

What didn’t they learn? Engineering. The Mayans never discovered the true arch, nor the use of the wheel. No wheeled transportation, no pulleys, no block and tackle. No iron working or steel. On one hand they were pre-neolithic, on the other nearly 20th century. Part of their society advanced 4,000 years ahead of the other part.

That’s a long time. Certainly if you have the intellectual curiosity to do mathematics, eventually someone would want to apply it to your buildings and transportation, right?

Apparently not. It seems a whole civilization could have a blind spot to what seem like obvious core skills. Funny, but I see a lot of companies that behave the same way. They say “Look what we have built.” without really considering what they might be able to do if they just filled in the blanks.

Lawyers, engineers and accounting firms with recognized expertise, who have no sales or marketing function, but survive on clients that find them. Sales-based organizations that run fast enough to find acorns aplenty, but without a plan or financial controls. Manufacturers who are the very best at one particular thing- and just accept the business cycle of the industry they supply as a fact of life.

Start the new year by refreshing your SWOT. It’s important to know what you are good at, but it’s also important to watch for your blind spots. They will sneak up on you at the most inconvenient times.

Remember, the Mayan cities are ruins. As impressive as they were, they couldn’t withstand a couple of thousand guys with steel armor and weapons.

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The Ghost of Ebenezer

Posted on December 17, 2009 by John F. Dini

Last week three of my clients implemented staff reductions. All three are financially healthy service companies, but they had far more capacity than they had work to fill it. In a service company, of course, capacity means people.

Naturally there was considerable agonizing among the owners and managers about the timing of the move. While everyone involved in the decision process agreed with the numbers and the necessity, when the time came to name the names of people to be let go they balked. Some wanted to wait a bit longer to see if things improved. Some felt that the company had an obligation to keep employees until it was clearly unprofitable and deeply in trouble.

Many prevaricators, however, simply didn’t want to look like Scrooges by doing something now. They wanted to make the necessary business decision, but hold off on the announcement until just after the first of the year.

Why would you think that terminating someone in January would make them think you are a good guy? Most folks aren’t stupid. The normal lull in business activity at the end of the year isn’t a surprise and wouldn’t be the reason, so they would know that the decision was made some time before. As they thought about it, they would realize that at least some folks were toasting them at the holiday party and giving them best wishes knowing full well that they were dead men walking.

Then the January bills come in. “If I had only known…” they would say. I wouldn’t have bought so many presents. I wouldn’t have thrown that party. I wouldn’t have booked that airfare for a short vacation. I wouldn’t have blown my year end bonus.

I wish I had known when I went to those business open houses and our vendors’ holiday parties. There were lots of opportunities to network there, if someone would just have warned me that I needed to.

Finally, many if not most employees spend the holidays with family. The security and affirmation or loved ones is at its highest over the next few weeks. The common post-holiday let down isn’t a great base for dealing with a new shock.

There is never a good time to tell people that they are no longer employed. In a small business, where the owner knows every employee and probably their families, downsizing is especially painful. Making the decision and telling people after the holidays, however, is a special form of cruelty. Like the Santa Clause bonus bosses mentioned in my last posting, these are self-serving motivations. The boss just doesn’t want to look bad; to have folks think of him as cold and heartless when he is working so hard and spending so much money to look like a great guy.

Instead, let’s praise the boss who makes the painful decisions to protect the employment of the majority, even though those decisions may not make him look good personally. That takes courage and leadership.

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Gifts are not incentives, and incentives shouldn’t be gifts

Posted on December 1, 2009 by John F. Dini

I knew a couple who owned a company with about 20 employees who had what may be the worst incentive distribution plan I’ve ever seen.

The company gave out large holiday bonuses every year at the company party, which was the last day before closing at Christmas. There was no documentation of how the amounts were decided, each employee received what the owners felt they “deserved.”

Worse than that, they gave out the bonuses by putting them in envelopes and hanging them from the company Christmas tree.

Wait- it gets worse. The owners had a standing family obligation for the holidays in another city, so every year they left the employees to celebrate on their own, and to open the bonuses together!

One year things had not gone so well for the company. They had eked out a small profit, but nothing like the highly successful year prior. The owners were determining bonuses, and each was running at about a third of the prior year’s amount.

The owners weren’t particularly concerned. The bonuses were gifts, after all, and they had no obligation to pay them. The employees certainly knew that it hadn’t been a great year, so further explanations shouldn’t be necessary.

They came to one employee who had worked very hard. He had really stood out that year, and was largely responsible for what success they’d had. The owners discussed it, and decided that he needed to be rewarded for his exceptional performance. Instead of a third of his prior year’s amount, they gave him 80%. Since they knew the employees discussed their bonuses, the recognition would be obvious to everyone.

The employee party went as before, with the envelopes distributed from the tree, and all opened at once. The high performer took out his check, read it, exclaimed “Those bastards!” and walked out the door. He never came back or spoke to another person in the company again.

A holiday gift should be just that, a gift. It should never be a major portion of the employee’s compensation. Even if your business structure dictates end of year incentive distribution, keep it separate from the holiday “bonus.” Give turkey, or a ham, or a check for $100 inside a card.

Gifts are gifts. They are tokens of appreciation. Bonuses are rewards for work performance, and must always be tied to specific goals and measurable objectives. In the case above, all the employee had to go on was a yardstick that said “I worked a lot harder this year and they appreciated me less.”

It’s weird how this time of year makes so many business owners start acting paternal (or maternal.) They run a great company 364 days a year, but for one day they want to play Santa Clause or Ebenezer (after the ghosts) by displaying warmth and largess and goodwill towards man.

That’s a great sentiment, but put it in the right place. In January you will want employees who understand they have a boss, not an extra Daddy or Mommy.

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2 Responses to Gifts are not incentives, and incentives shouldn’t be gifts

  1. Brad says:
    December 14, 2009 at 1:30 pm

    John, Merry Christmas! I continue to appreciate your insights into small business ownership and the disease of entrepreneurship. It is true that many of us struggle as business owners at this time of the year, missing the target and the meaning of the Season.

    Thanks for your continued friendship, and all the best for the New Year!

    Brad Elmhorst
    Direct Hit Data, Inc.

    Reply
  2. airhawker says:
    December 16, 2009 at 4:59 pm

    Great post John. Sounds like our family business over the past 40 years! Your post definately opened my eyes and got me to re-think our holiday party and bonus program for tomorrow night!

    Reply

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