“Relentless performance management”

One area of the business in which it is easiest to monitor the differences between people’s individual performance is sales. Whether it’s how many new customers they have signed up, how much volume they’ve pumped, how many trackers or mobile phones they have sold, how much new gross profit they have earned the company, how much gross written insurance premium they have signed up, or any number of metrics like this, at the end of the month, you can make an unequivocal ranking list of your salespeople.

As our salespeople are onboarded, they are given very clear and relatively low monthly targets. The onboarding includes a ramping-up period as they build their pipeline and go through training. Over a period of four to five months, the targets build up to a level that will give us our planned return on investment over the longer term. For example, in the fuel division, it might take a new salesperson twelve to eighteen months to get to the company’s monthly breakeven and twenty to twenty-eight months to get to a cumulative breakeven position before we have to start making a profit.

This means we have to monitor new salespeople’s weekly performance extremely closely, and if they’re falling significantly off their flight path and we can see that they aren’t going to make it, we have to make the decision to let them go very quickly, or our whole delivery plan economics fail.

Telesales is a tough job and one that I did for the first few years after I started. It does not suit everyone, so you have to be prepared for relatively high rates of people churn. For instance, if we are starting a sales office in a new town or country and want to get to a team of ten, we are probably thinking we will need to go through thirty to forty people before we will form a team with an average performance that is at the right level.

One more thing that soon stands out from the numbers is that top performers are not just 10, 20, or 30 percent better than average; they are 100, 200, or even 300 percent better. Poor performers tend not to be just below average as well but are more likely to be 60, 70, or 80 percent below average.

Most of our best sales managers started on the front line, and they are also rewarded on a volume/margin basis, so they learn to be able to make the tough decisions to get their teams working. However, in the central functions, such as finance, credit, IT, marketing, and people, the senior teams have not been brought up in this same disciplined way, which means they all tend to be much softer when it comes to managing people.

Just as in sales, good people in these central divisions are much better than average and bad ones a lot worse, although it is much harder to have an accurate stick to measure them against. Personal judgment is much more important here, and you want your team to be able to identify the very good ones and bad ones quickly so they can start making the tough decisions in a similar way to the sales teams themselves.

One final thing to note that definitely gets missed sometimes is that when you have a poor employee that you have let stay longer than you should have (before you eventually bite the bullet and exit them), the other members in their team are not actually thinking you are the axe man and being too hard but more often than not are thinking, “Why has it taken management so long to come to that course of action?”

The main lesson here is to make decisions and changes quickly, even if it feels tough, as the longer you leave them, the harder it gets.