Panic and the Rise of Micro Management - Killing Sales From Within

When I read Paul McCord's excellent article on this topic, I knew I needed to share it with you. The first part details the unintended consequences that are happening due to micro-management, while the 2nd part shares strategies that work in today's business climate.

I'm hearing more and more frustration from both salespeople and sales leaders as the slow economy increases the panic on the part of senior management. Sales are slowing dramatically, profits are down or have completely evaporated, and the pressure is increasing on all levels to produce, produce, produce.

Along with the pressure to produce comes the micro managing of the sales team and its leadership. Managers are having daily pipeline meetings with the members of their team. Increasingly these meetings are getting uglier and uglier with increased threats if sales don't increase. 

Middle managers are having daily calls--in some instances two or more calls per day--with the managers under them as they want an accounting for each team member's activities, including reviewing the sales status of each and every prospect. 

Management is demanding detailed reports for each prospect.  If a salesperson deems a contact to be a non-prospect, managers are demanding the salesperson continue to pursue the contact in hopes of turning them into a prospect.

Each minute of the day must be accounted for.  Management is accepting no excuses for not closing a sale--bad credit, not a reason, get them pay cash; no need, not a reason, create a need for them; want to wait to see what the market will do, not a reason, convince them that now's the time to buy; cash flow issues, not a reason, get them to factor their receivables to get the cash to make the purchase. 

As salespeople get bombarded with threats and each second of their day is micro managed, they resort to discounting and trying to include as many incentives to purchase as they can in an effort to get sales to get management off their back. 

They quickly discover that even if that creates a sale, it creates a new set of problems as they get a lecture about how the company doesn't discount and their job is to maintain gross and if they can't, the company will find someone who will. Many managers resort to writing all proposals for their sales team to insure that they control every aspect of the sale.

 As morale declines and sales lag even further, senior management gives more and more directives, demanding greater control and more 'accountability' on each employee's part. 

When today's demands don't create the desired result, they're added to or changed tomorrow, spiraling in a seemingly never-ending series of demands and threats, each more ominous than the last.

And sales plunge even faster than before.

Once management panics it seems impossible to stop the downhill flow of negative consequences.  The more pressure management feels, the more they try to spread the pressure downward, believing they can demand production via force. 

The process inevitably produces nothing other than a bigger hole from which the company must emerge.

If micro managing is such a negative force, why do managers resort to it? The root cause may be panic, but the belief they need to micro manage their team is based squarely in a distrust of their employees--a belief that their salespeople and managers aren't working hard enough, that the sales team doesn't care enough, that their team is intrinsically lazy and is only looking for the low hanging fruit, not willing to get dirty and dig for the hard to find business.

If sheer force and threats don't work, what can the management team do to stabilize--or maybe even increase--sales during this time of economic stress?

1. Don't panic. 
Of course, this is easier said than done. But panic leads to overreacting and bad decisions.  We need look no further than the US government over the past 6 months to see the consequences of panic--squandered opportunities, a diarrhea of ineffective spending in an effort to 'do something now' with little regard to the future, and a massive list of decisions that upon reflection many--even those involved in the initial decision making process--wish had never been made.

2. Make an honest evaluation of the situation and communicate it to the entire team.
Employees are not stupid. They are aware of the economic situation and they not only wonder what impact it has on the company, they speculate--and most often their speculation is far worse than the truth of the actual situation. 

Employees--and in particular the sales team--perform best when they know and understand the company's goals and objectives and the obstacles standing in the way of reaching those goals and objectives. 

The more clearly each sales team member understands the company's needs and concerns, the more clearly they can not only understand where they fit in, but what they can--what they must --do to help address those needs and concerns. If team members sense that the company isn't communicating honestly with them, they begin to retreat into themselves, resisting the company's entreaties and even the most dire threat falls on deaf ears.

3. Formulate a comprehensive and workable plan that includes participation by all parties to address market conditions. 
History is replete with examples of monarchs and generals who when faced with tough opposition retreat into a bunker mentality. They become increasingly overwhelmed with circumstances, they become delusional, they begin to distrust even their closest friends and companions. In short order they are totally isolated. Their plans and orders have little to do with reality.

This same phenomenon happens in the executive suite. When faced with potential crisis, senior management will often retreat to their own mental concrete bunker.  Rather than seeking the wisdom and cooperation of their employees, they barricade themselves in, shouting orders through the barred door.

In our current economy where quality prospects are difficult to find and sales must be fought for, gaining the cooperation and commitment from staff is critical.  Senior management cannot survive on their own. 

If they and the company are to survive, it will take the active participation of all the work force.  Consequently, the more ownership in the solution to overcoming the company's obstacles each member of the team feels, the more committed to the solution--and to their individual contributions to the solution--each will be. 

4.  Commit the company to giving the needed support to accomplish the goals and overcome the obstacles. 
When panic sets in, the cost cutting butcher knife comes out.  Management looks at every expense as a waste.  Can we use a shorter, less expensive screw here; can we make that piece of metal a little thinner?  Do we really need that much money in our marketing budget?  Slash sales training, it's never done any good anyway. 

As the butcher of the executive office is in the midst of a budget-cutting orgy, critical resources for sales stability--much less sales growth--are apt to be gutted also.  While belt tightening is necessary when business slows, a finely honed scalpel is necessary, not a meat clever. 

Creating sales takes money.  Salespeople need the same resources in slow times to create sales as they do during hot markets. Certainly gratuitous expenses such as client dinners and games of golf may be legitimate areas for trimming, but training, travel, clerical support, and other expenses that lead directly to or support the closing of business are not to be cut indiscriminately. In fact, when it comes to training, prospecting, lead generation, and client retention expenses, the slower the economy, the more funds should be directed to those areas.

Times are tough. That doesn't mean that it is time for a management meltdown. 

There are solutions to slowing sales. 

Resorting to micro management and threats won't produce anything other than disgruntled employees and slower sales. 

However, gaining the trust, cooperation, and commitment of your team to address the issues facing the company--and by extension, themselves--can give your company the coordinated effort by all to weather this economic downturn. 

___________

Paul McCord is a leading authority on prospecting, referral selling, and personal marketing.  He is president of McCord Training, a Midland, Texas based sales training, coaching, and consulting company.  His first book, Creating a Million Dollar a Year Sales Income: Sales Success through Client Referrals (John Wiley and Sons, 2007), is an Amazon and Barnes and Noble best-seller and is quickly becoming recognized as the authoritative work on referral selling.  His second book, SuperStar Selling: 12 Keys to Becoming a Sales SuperStar has just been released.  He may be reached at [email protected] or visit his sales training website at www.mccordtraining.com or his highly popular blog http://salesandmanagementblog.com 

Comments

[Allison O'Neill]

I agree panic is the worst thing to do, and yes employees can spot panic a mile off. Tell employees what the best margin products are so they can focus on them, discuss your survival plan with staff (pen it WITH them) they'll have much better and wider ideas than management! Maybe take the time to do a skill stocktake (http://thebossbenchmark.blogspot.com/2009/02/how-to-do-skill-stocktake-in-your.html ) and a secrets audit (http://thebossbenchmark.blogspot.com/2009/03/why-you-should-audit-secrets-you-keep.html ) to get management and staff on the same page. Times like this need calm and creative thinking NOT panic and micro management.

[Jonathan Farrington]

Jill,
This is indeed an excellent article from one of the foremost sales gurus in the world.

Paul consistently demonstrates through his writing and the rest of his work, that he has a very wide commercial band-width, which allows him to offer superior consultancy across a broad spectrum of industries - very few sales coaches achieve that.

Jono

[ChrisH]

Jill, how timely is this post, our small office of multi-national corp $20B in revenues just started the micro-management daily tally sheets. Two weeks ago it was "no more sales training until next FY". Short sighted management fails to notice that working smarter is what is needed now NOT working to the numbers. Salestypes make more calls now to less qualified accounts just to "hit the numbers" when what's needed are quality calls with good pre-call planning to present NEW products or solutions that are required in this new era of "we can't afford it" rejections. Sales training now more than ever and quality calls not "quantity of calls". To the extreme, salestypes are out interviewing to "dig the well before they're thirsty".

[Trip Allen]

Hi Jill
Thanks for presenting Paul's insight.

This is a HOT topic of discussion and the root of it comes from the top.

With CRM systems, there is visibility and with visibility comes pressure from the top (I dont just blame CRM systems for this- there are other drivers).
And as Paul says, it then trickles down to management who then micro manages for what they think is the needed results- which leads to a frustrated sales organization.

It is all VERY short term thinking- and I know, I have been through all of this too often dealing with it from all sides!

So, how do we get the "top" to see what is really happening? How do we change behaviors up there?

When will they realise that their employees are more than just numbers, that they are human beings?

It all won't change until the right message trickles down from the top.

Trip Allen, Team Egyii, Singapore

[Sales Brochure Printing]

Definitely agree with what you're saying. It's refreshing to know that I'm not the only one that thought so.

[Jayne Hannon, Director at HTS]

Hi Jill. An interesting article, but micro-management can be helpful in certain situations if handled in the right way.

As a small, boutique-type recruitment consultancy we have always kept a close eye on sales metrics. This approach has facillitated very accurate sales forecasting and helped us to always operate in profit. Our salespeople understand the benefit of producing these regular reports.

The downturn in the economy has certainly necessitated more frequent scrutiny of our sales performance - but not as a stick to beat our salespeople with. Micro-management does not have to go hand in hand with threats - for us, its purpose is twofold. Firstly, it's a way of measuring performance so we know in which areas we can improve and secondly, it helps us to ensure that cashflow doesn't become an issue.

We are transparent with employees across the board about the company finances and everyone is well aware that this is a lean period and we could be in for quite a bumpy ride. We have explained to our sales staff the need for more regular pipeline updates and they are happy to produce this data - timely payment of their salaries depends on the quality of this information, after all.

Individual pipeline spreadsheets are now updated daily rather than weekly, as new prospects occur or potential deals fall through. Consultants are also conscious of the need to be conservative in their predictions. Individual updates are then emailed to the rest of the team, rather than holding formal meetings during the day which are a drain on consultants' time when we need to be identifying new opportunities and nurturing existing accounts in readiness for the inevitable recovery of the market. Each update takes a couple of minutes, tops - and then it's straight back to the business of selling :-)

These changes aren't borne out of panic - they are a calculated and sensible response to new and challenging market conditions.

We just want to be able to ride this out. Our consultants know that we don't expect them to meet targets in this climate, just to generate enough revenue to weather this storm. We don't want any casualties - we have a loyal and positive workforce and we're determined to keep our team together. Micro-management can help to achieve this if you have the buy-in of your team - it just gets a very bad press!

[Jill Konrath]

Jayne,

Thanks for adding your well-thought out comment. I love the fact that you have a definite process and are totally open with your people. Process is key, not panic.