It’s not the employer who pays the salary; the employer merely distributes the money. The salary comes from the client.
Henry Ford
Table of Contents
Favorite pastime
Imagine you have a favorite activity. You’re ready to do it all the time, from sunset to sunrise, every day (or at least it feels that way). For some, it’s skiing, for others, the beach, for some, it’s sex, and for others, it’s chocolate. That’s not the point. Now, take a moment to carefully envision your favorite activity.
And now I will tell you how much I will pay you for doing this. To make the payment fair, I:
- I will need your attendance from 9:00 AM to 6:00 PM, with a pass system using electronic passes that track breaks.
- I will implement a penalty system for tardiness.
- I will set a plan and monitor its implementation.
- I will need to write weekly reports and prepare presentations for meetings and planning sessions.
- I will establish a dress code and a code of conduct.
- I’ll write a couple of dozen important instructions.
- I will set up video cameras around the office.
- I will prohibit engaging in anything else during work hours, except for the favorite activity you have chosen.
- I will unofficially encourage overtime and staying late at work.
Do you still want to pursue your favorite activity under these conditions? Because I have other “employee motivation” activities up my sleeve. After all, we completely forgot to use such effective tools as “calling out mistakes, especially in public,” or “criticizing,” or “keeping people in fear of being fired,” or using “iron gloves.”
It’s interesting why managers, seeing that their employees consistently arrive late to work, choose to tighten the rules instead of trying to understand why the employees aren’t motivated to come on time.
Managers often believe that they have the right to demand obedience and compliance from their employees simply because they pay them. There is a common notion that a good “human resource” wants to work on their own and will do so if only given the right conditions—salary, a computer, a desk, and a restroom. The role of a leader is often seen as giving instructions, shouting “let’s go,” cracking the whip, organizing procedures, distributing punishments, forcing people to work, setting tasks, and monitoring their completion. This brings to mind the film “ Mission Cleopatra There, free hired builders (not slaves) were parodied, yet overseers still whipped them to make them work harder. It was just how things were done. The credo of such managers is: no one should be a babysitter. If you want to work, then work.Arbeit macht frei! [13]. If you don’t want to be here, then get out! If you don’t share the company’s goals, the goals set by its owner, then you don’t belong here.Jedem das Seine! The text for translation: [14].
When you ask a person, usually a business owner, “Are there many of those magically motivated people?”, they sigh and say: “In our country“Almost none.” But isn’t it foolish to build your business based on what?almost none?.
There are no people who will work harder and better like idiots without any motivation. If you happen to have someone at work who does just that, it means that you have somehow, probably accidentally, struck a secret chord in their soul, and at this moment, the person has linked their success to the success of the company, which is why they are full of enthusiasm. However, like any infatuation, this feeling fades quickly, and we are left with “ordinary human materialIt seems that there is no text provided for translation. Please provide the text you would like me to translate.
Here’s another example. Look at a garden. What you need grows and yields a harvest only if you take care of it, nurture it, and believe in it. On the other hand, what grows on its own is usually considered weeds. A person who works with unmotivated enthusiasm is likely still contributing something valuable to your company. You just may not know exactly what that is.
If that’s the case, maybe we should understand that a manager’s job doesn’t end with just “creating conditions”? They need to provide people with what they need in exchange for their efforts. In this way, we will get those fantastic individuals who “work on their own.”
Who is the client to whom?
Why is money not what people work for? Because money is part of the contract, the reason a person is willing to come to work. It is paid by any employer, and in the market as a whole, salaries for the same job are roughly the same. Moreover, according to Herzberg’s motivation theory, money is not a motivator; it is merely a “hygiene factor,” meaning it is one of the conditions of work, not what fills people with enthusiasm.
So why do people, especially salespeople, come to work for a company? Why can’t they work for themselves and earn their commissions as independent intermediaries? If you ask them, you’ll find that they are looking for stability and growth. They gain experience, want to secure a better position in life, and at the same time avoid the risks that the company takes on. It seems that the company only “gives” to its employees but doesn’t take anything in return? No. There is always a second side to the exchange.
To understand what exactly salespeople give to their company in exchange for growth and stability (there are other motivational factors, but we won’t delve into those), it’s worth looking at sales as a business process. Every process has a customer. From this perspective, it’s clear that the customer of the sales process is the company. In other words, when a salesperson sells a product or service of the company, they create added value not for the end consumers, but for the company itself. If the salesperson were independent, the company would pay them a commission for each deal, essentially for acting as an intermediary. However, when the salesperson is on the company’s payroll, they earn significantly less than an independent intermediary. Therefore, the difference between the commission and this “significantly less” amount is the price the salesperson pays for their stability and development. When we talk about exchanging something for money, it turns out that we are not discussing an exchange at all, but a sale. Thus, the sales manager is essentially a salesperson for their subordinates. They sell them the company’s “products” called “stability” and “development” and receive money in return.
Salespeople, accordingly, are clients of their manager, and the manager is a client of the higher-level manager. After all, if salespeople bring money to the company, they are internal clients of the entire back office. However, in practice, it often turns out that the internal clients of salespeople are everyone who can be bothered, from the accountant to the driver. This leads to a situation where the salesperson has to report to the accountant, rather than the accountant helping the salesperson make a sale.
Clients are the people who pay your apartment bills, your grocery expenses, your vacations, your medical treatments, and so on. You understand well that your friends are unlikely to come to you with money and say, “Here, pay for your car repairs.” But your clients will do that. In a sense, they are better than friends for you, and you build genuine relationships with them. Well-structured relationships lead to an expansion of your client base through mutual recommendations. Eventually, however, there comes a moment known as the “saturation point.” You can no longer expand your customer base.
A client is not always someone who consumes a product. A client is always someone who brings you money. From this perspective, we start to understand that an advertising poster featuring a mug of a beautiful frothy drink is primarily needed not by the person drinking it, but by the one selling that drink to the consumer. If you are a top manager in a sales network, you know better than anyone that the calls for increased advertising spending come not from the consumers of your services, but from the people selling your services.
Note: These people are your clients regardless of what you think and how you behave towards them. All your management efforts, if they do not take the form of customer orientation, will not be demonstrably effective. If you are achieving some success, it is likely that you are unconsciously providing these people with something in return for the money they bring, something you may not even be aware of.
Once, I was talking to a retired woman who complained about the director of her organization. It was a quasi-governmental self-financing entity, and according to her, the director acted like a tyrant. For instance, he forced employees to work on holidays.
— But why do you agree to this? Why don’t you report the lawlessness to the appropriate authorities?
She pondered for a moment and then replied:
— You know, I will never do that. When I needed money for joint treatment—implants—he gave it to me. I owe my health to him.
It turns out that the director was a tyrant simply because he made everyone indebted to him. His subordinates expected paternal care from him even afterwards.
If someone brings you money, you need to give them something in return or at least be aware of what you are already providing them. What exactly? Huh? That’s motivation. It’s the real daily work of every manager.
If every leader is a salesperson, then they are not selling a product, but rather their service as a manager. Sergey Bubka would not have become a world record holder without his coach. A successful salesperson would not have earned all their money without effective management. Sales can only be built by recognizing one’s selling role for subordinates. This is the essence of customer orientation.
The reason for the lack of customer orientation is the alienation of employees from the results of their work. An employee believes that they receive a salary from the company, and the company tries to convince them of this. However, deep down, each employee understands that their presence at work is beneficial for the employer. This means that the employer is not paying a salary, but rather returning to the employee a portion of what they have earned themselves.
However, as a rule, the employer or the immediate supervisor of the employee believes that they are the client of the employee, rather than the employee being their client. This leads to situations where, for example, everyone can gather for a meeting, ignoring their phones. After all, the meeting was called by the boss, who we work for, while the clients are just people who come and go. As a result, a conversation with a client can be abruptly interrupted by some “urgent” request from the manager. We exhibit all the signs of a typical alienation syndrome. An employee will never be client-oriented in their work if their supervisor does not see that employee as a client.
To eliminate alienation, it must start from the top, from the head of the company. It is the chairman of the board who must first believe, and then prove to himself, that all other board members are essentially his clients. Customer orientation is born at the top.
No amount of beautiful posters or super training sessions will ever help staff become customer-oriented if the same principles are not embraced by the entire company structure. A company will never achieve success if the accounting department sees itself as the client, instead of considering the other departments as clients. The company’s IT department will never ensure its success if it is fanatically focused on printing rulebooks and building firewalls. [15]. and install spyware. And so on.
When clients are treated in a way that leaves them feeling uncomfortable, it’s not just an issue with a specific manager; it’s a problem that permeates the entire company, starting from the top. Such an organization has no future.
Customer orientation is not just posters in the sales hall; it’s a deep philosophy of the company. A customer is someone who brings in money, not just someone who consumes your product. Your employees are your customers, as they are the ones who pay you money, not the other way around with their salaries. Without establishing internal customer orientation, you won’t be able to build external customer orientation.
When consulting companies, I always recommend removing restrictions on internet usage for sales employees. It may seem that blocking access to social media, video sites, and job portals should discipline employees. However, such actions only address the symptoms, not the root cause. It’s like trying to treat appendicitis with morphine. By closing access, you won’t make people stop slacking off; you’ll just lose visibility into how they are slacking. You won’t prevent data leaks, but you won’t be able to understand how they are happening. You won’t stop people from job hunting, but you won’t notice when they start their search.
Open internet access for employees means understanding who is busy and who is slacking off. You will be able to address people’s behavior directly, motivate them, and… see if an employee continues to be lazy. You’ll easily find out who is job hunting, who is watching porn in the office, and who is trying to rent an apartment or buy a car. Everything is at your fingertips—modern network software allows you to monitor user activity online, save, and analyze logs of that activity. Most importantly, you are no longer acting as a supervisor but as a service provider to the sales team. Granting access is a step towards customer orientation. One more small detail: let the internet access logs be available not just to you, but to all employees in the company. Mutual responsibility motivates much more strongly than the desire to avoid punishment from a supervisor.
Saturation point
There is an opinion (in several business sectors) that the person who brings a client to the company should continue to serve that client. It’s hard to argue with this in general. In B2B and large sales, the decision to purchase is often made with an eye toward future collaboration (service, support). Personal rapport with the company representative plays a significant role. Moreover, IBM—a company that once focused on computers and software, but now earns most of its revenue from consulting—strongly advocates this approach. Regardless of an individual’s career advancement within the company, the clients they acquire remain their clients for life.
There is also a valid approach that suggests efforts to retain existing customers should exceed efforts to acquire new customers by the 80/20 principle. In practice, this means that you can focus on new customers only if all existing ones are satisfied.
This is where we encounter two important issues.
It may seem that the person who “sells” and the person who “leads” are different in terms of their functions. This is not the case. The functionality is the same in both roles — understanding the need, translate its internal language and provide a solution. The functionality can vary when the sale itself is conducted unprofessionally and in a poaching manner. This is what is referred to as “pushing.”
Sooner or later, a saturation point is reached when there are so many existing clients that it’s no longer possible to serve new ones. The process of attracting new clients happens when the old ones gradually “drop off” for various reasons.
The seller’s position at the saturation point is a deadlock situation. It is further complicated by the fact that:
Sellers occasionally “drop off,” and old clients become an additional burden for the remaining sellers, who are already at capacity and can no longer pay attention to new “old” clients. After a while, the number of clients for each seller stabilizes anyway—dissatisfied clients will leave, and the seller will reach a state of equilibrium.
Salespeople not only sell but also typically “serve” the accounting department. The more reporting, paperwork, meetings, and breaks there are, the sooner the saturation point is reached. That’s why it’s important to structure processes in the company so that the accounting department supports the sales team, rather than the other way around.
The only way to grow a business in this situation is to hire new salespeople who will build their portfolio from scratch. But this isn’t a solution either, and here’s why.
Let’s imagine that there are 5 “old” managers at a company. A new one joins them. Following the logic described above, the leader will pay less attention to the newcomer. The new employee, noticing the difference in income figures, will feel very anxious; he will be pressured and may even face bullying. He will be a victim of reprimands and the bad mood of the boss (the veterans are already “one of their own”). His mistakes will be forgiven much less often than those of the old-timers. The long-standing employee will have “unfortunate misunderstandings,” while the newcomer will be judged by “the signs that indicate a person’s character.” To top it all off, the standard xenophobic reaction to a newcomer in an established team will kick in. If the employee manages to stay under such conditions, it will take at least six months before he closes his first serious, outstanding deal. However, in 80-90% of cases, the newcomer leaves the company before that happens. This results in a rather stagnant team that, according to the law of decay, gradually falls apart on its own. The company dies and shrinks down to a team of 4-5 people: an accountant, a “playing” director, two old friends of the director, and a constantly changing newcomer. Sounds familiar, doesn’t it?
Even if we imagine the perfect manager who sets up the recruitment process flawlessly, there will still come a point of saturation for them, as they won’t be able to effectively manage more than a dozen salespeople.
So why wouldn’t the manager hire other managers instead of salespeople to recruit salespeople? But how would he find the time for that if he himself is “busy” with sales? Would he assign the salespeople to build their own teams? But how? Where would these “busy” salespeople find the time for recruiting and training newcomers? And do they even need to do that if they can’t afford to lose money from existing clients right now? It’s a dead end. A stalemate.
We have now gotten to the most important point: the answer to the question of why a rare company can grow at all, and why growth is not infinite. As long as growth continues up to the saturation point, no one is worried. But once that saturation point is reached, there are simply no resources left for further development. Now, in order to grow, it becomes necessary to… lose clients. Who would be willing to do that?
The recipe for success lies in the fact that a salesperson should not reach saturation. Instead, after achieving 30-50% of their maximum potential client base and gaining an understanding of the market, product, consumers, and sales techniques, they should focus on advancing their career. The remaining time should be dedicated not to attracting new clients, but to recruiting and training newcomers.
With this approach, the sales department in the company will also reach a saturation point, but much later and of a different kind. At that point, it will concern the fundamental ability of the top management to pay attention to the lower levels, carving out time between all sorts of “nonsense” like meetings, conferences, business plans, reporting, strategic issues, public relations, and so on.
Key advantage
When organizing your business, it’s crucial to clearly understand what sets you apart from others. We have already discussed that only by understanding how your product or service differs from what competitors offer can you establish a foundation for quality sales. This is even more important when selling yourself as a manager to your salespeople.
Why can’t the people working for you do the same things on their own? Why do they pay you by giving up part of their labor? What is your service to them, and what are they paying for? Some of the advantages include initial capital, which can take the form of money, equipment, real estate, patents, licenses, and other assets. The necessary initial capital often determines the entry threshold for new participants in the market. It’s usually not a matter of lacking capital—there are loans for that—but rather that you, unlike others, are willing to take on the business risks associated with using that initial capital. The people working for you and giving up part of their labor pay you for taking on those risks, for a “virtual loan,” for the right to use your capital. And you are willing to take on those risks precisely because you are more knowledgeable in certain areas than others.
For example, you have qualifications that give you confidence. You are an expert in your field and can anticipate all possible risks instead of guessing. Your qualifications enable you to provide your employees with information for which they are also willing to pay with part of their labor. This also allows you to break down production into a series of simple tasks that can be assigned to less skilled personnel.
So, another thing that a businessman provides to sellers is the organization and coordination of the business. Essentially, this involves hiring a dispatcher who handles all the hectic organizational tasks, connects the stages of production, aligns production with sales, and organizes distribution. You also hire the non-production part of your firm to keep the accounting records in order and manage relationships with tax authorities. Additionally, if necessary, you hire lawyers, HR specialists, security personnel, carriers, and so on. These people are paid for knowing what they will be doing tomorrow, as you are a “perpetual” client for them, and that comes at a cost. Naturally, the more qualified you are as a manager, the more your business organizing services will cost. In other words, the better manager you are, the more money you will have. To start, you should understand how to manage your employees so that you can offer them your services.
At least one
Companies providing professional services go through a rather complex path of business development. Typically, they start out as a team of professionals who are experts in their field but lack sales skills. Moreover, their own excessive competence, which has been discussed earlier in this book, hinders them from doing so.
A client calls an architectural firm and asks how much a house project costs. In response, they ask clarifying questions:
— What kind of building is it? How many floors does it have, and what is its area? What is its purpose: residential, office, or industrial? In what location is it situated? What materials will be used for construction?
“Excuse me, everything is so complicated for you… Could you please call someone from the sales department?”
In any business, you need to sell what you’ve created. But first, you need to make it or be capable of making it. This means that production always comes first, while sales come second. The idea of marketing—producing what consumers need—is clear. It’s possible to imagine a business without a single in-house salesperson, but it’s hard to envision salespeople who have nothing to sell.
Therefore, in the sales of professional services, the team of professionals, the quality of their work, and their reputation always come first. These are highly competent individuals. Interestingly, they often lack confidence in their abilities, as they are influenced by the Dunning-Kruger effect.
The Dunning-Kruger effect is— cognitive distortion This phenomenon is that people with low levels of qualification draw erroneous conclusions, make poor decisions, and are unable to recognize their mistakes due to their lack of qualifications. This leads them to have an inflated view of their own abilities. At the same time, truly qualified individuals tend to underestimate their skills and suffer from a lack of confidence, believing others to be more competent. Thus, less competent people generally have a higher opinion of their own abilities than competent individuals, who are also inclined to assume that those around them evaluate their abilities as low as they do themselves.
It’s unlikely that one can rely on effectively selling their own services if they, despite their exceptional competence, lack confidence in their abilities. Does this mean that an uninformed seller is capable of more than a professional in a specific field? No one has ever seen a programmer who actively sells themselves. It’s hard to imagine an engineer who develops the needs of a client, and even more so, it’s difficult to picture a dentist chasing after passersby, asking for permission to look in their mouths: what if there’s a cavity that can be filled?
Companies that sell professional services are essentially selling cats in bags, and the impression a professional makes during the first meeting with a client, due to the Dunning-Kruger effect, is unlikely to be the best. The growth of professional service businesses follows organic laws. Natural referrals, rather than active sales, help to build a snowball of clients. However, this requires both time and luck. If all companies were equally capable of building that snowball, there would be not four, but 400 major auditing firms in the world.
Professionals who diligently serve their clients are hindered in actively attracting new customers by their focus on the projects they are currently handling. A dentist is concerned with a specific tooth of a specific patient. An auditor is reviewing the financial statements of a particular company. A lawyer cannot be in two courtrooms at the same time, and an engineer cannot work on two projects simultaneously with the same level of quality. No one needs more than one client at any given moment. You can’t serve or attract more than one at a time. People are not inclined to break out of their routines and plan their activities in advance. A manager running such a company may struggle to properly motivate salespeople, whether through money or other means, to attract new clients.
But the manager or owner of the company must think about profit. And profit in such conditions depends on the average bill, which can only grow when the company has a stable flow of requests for its services and can choose projects or tasks that bring in more money. However, in order to have the ability to make choices, there needs to be something to choose from. Ideally, a company should have more clients than it can serve. This will allow it to choose whom to work with and whom not to. It will give the company the opportunity to raise its prices for services, adjusting both demand and profit. This is the key to the prosperity and rapid growth of companies providing professional services.
What can a manager of such a company offer to their clients—a team of professionals? Naturally, a service for finding and attracting clients. In most cases, this happens organically. The manager is the main and sole salesperson, and the order portfolio consists of 80% of what this manager has brought into the company. Some managers realize that no one else in the company will sell. Others, on the contrary, do not understand why their colleagues—people with the same qualifications and experience—are unable to bring new clients to the company. As a result, the company ends up with ineffective systems for stimulation and motivation, rewarding people for sales, and tying salaries to the number of orders, etc. Then the managers are surprised when professionals leave them.
The main thing in organizing work this way is to avoid reaching a “saturation point” and to ensure that, from the very beginning, at least two people, in addition to the manager, are involved in sales. If you value your professionals, don’t make them sell themselves. Let them focus on the quality of their work rather than on making money. Otherwise, they will leave you, and often they will go off on their own, as you have stopped providing them with your managerial support.
Hiring as Selling
When discussing poaching, we set the following reasonable limitation: compensation and other material incentives for people at this level are generally the same and have been shaped by market mechanisms of supply and demand. Moreover, an experienced human resources manager will confirm that money tends to demotivate rather than motivate when it comes to creative work, where solutions need to be invented rather than simply applied.
So, the problem is as follows: there’s a prince-on-a-white-horse working for a competitor. We need to lure him away for our client. Of course, we’ve already confirmed that this competitor is more successful in the area where we need to find a specialist: they have better processes in place, more effective sales organization, or their accounting operates smoothly and without delays.
What do we need to do? First of all, it’s a good idea to establish a friendship with such a person in advance, for example, by involving them from time to time in interviewing other candidates. It’s also important to engage closely with the upper management circles so that you can seek their advice and recommendations. Don’t hesitate to spend money on coffee and try to be helpful to these individuals as well. For instance, occasionally provide them with tips on good candidates for free. It won’t cost you much. If you don’t have that friendship yet, you should work on building it. This process will take at least a month, and it’s important to inform the client about this in advance so they don’t lose patience.
Having close contact with such a person or being recommended for a conversation, you need to find out what exactly our prince dislikes about the company he currently works for. For this, you will need either a heartfelt conversation with him, insider information, or simple press releases and business news, such as the departure of a board member, etc. Surely, everyone has something that has become tiresome, something that scares them, something they lack confidence in, something they can’t control, or where they don’t see their own growth. At times, perhaps once a quarter, they might even feel like “turning around and leaving.” Your task is to catch him at such a moment. Become a confidant for these individuals; know everything about them. Provide the service of listening to their problems. By understanding a person’s issues, you can use probing and guiding questions to lead them to the realization that it’s time to change something in their life.
For example, like this:
(Nikolai — “the prince,” Valentina — the recruiter)
— Nikolai, by the way, what do you think of Kateryna’s work?
— Oh, it’s better not to ask…
— Yes, I’ve heard about the problems in her department as well.
— Really? It seems this embarrassment has spread beyond our company. Well, what can you do? Sometimes you don’t have the luxury of choosing who you work with.
— Have you tried talking to the CEO about it?
— It’s pointless. She’s either his godmother or his brother’s godmother. To be honest, I didn’t get into the details.
— It’s an unenviable position, Nikolai. How do you think Kateryna’s inefficiency affects your work?
— It definitely has an impact. We are all internal clients of each other, and if Katerina were just a bit more proactive and effective in managing her team, I would have delivered better results as well.
— So, working in the same team as Katerina is detrimental to your productivity?
— Yes…
— How does this affect your reputation?
— Ultimately, my reputation as a successful manager suffers due to my forced inefficiency.
— If I remember correctly, you were recruited through recruiters?
— Yes…
— Nikolai, looking at the situation with Katerina, it seems that business qualities in your company are less important than family ties. What do you think will happen to you if someone close to the CEO comes along for your position?
— Well, he hasn’t been found yet, which is why we decided to bring in recruiters. Although you’re right, they’ll get rid of me.
— Does this give you confidence in tomorrow?
— No, of course not.
— So, it turns out that you’re always at risk of ending up on the street, especially with not the best record on your resume, since you haven’t been effective enough. How long do you plan to search for a job, and do you have a safety net?
— Well, we haven’t discussed the parachute yet…
— How do you see a way out of the current situation?
“I won’t be able to actively look for a job; rumors will start spreading in the market, and for someone at my level of management, that won’t lead to anything good…”
— You know, Nikolai, I think I can help you. We know each other well, and if I come across anything worthwhile for you, I’ll set up a meeting right away. Does that sound good?
— Valentina! You are truly my savior! Of course, I am at your service!
Naturally, Valentina already had something in mind, but before suggesting it, she would continue the conversation with Nikolai to kindly find out about his dream job. Why? So that she could carefully remember or even jot down Nikolai’s wishes and present him with a suitable vacancy as his dream job at their next meeting.
What happened in the conversation between Valentina and Nikolai? Valentina acted like a professional salesperson: she took a small hook, expanded it into a larger issue, guided Nikolai towards the solution she needed, and became the implementer of his needs rather than a beggar. This approach in recruiting is valid not only for executive search but for all recruitment in general. For example, let’s consider the dialogue between a sales department manager and a candidate for a sales agent position. There is no salary offered here. The commission is substantial, but it needs to be earned; there are prospects for growth, but they are quite illusory. The manager himself expects that the candidate won’t last even six months. An inexperienced recruiter might falter in this situation or try to “rattle off” the advantages (both real and imagined) without asking the candidate about their needs, briefly describe the job characteristics, and wait for the candidate’s agreement. The likelihood of success is close to zero. But a skilled salesperson will decide that not all is lost and will begin:
(Valentina is the head of the sales department, Konstantin is a future agent)
— Konstantin, before we talk about the job we want to offer you, I would like to know a little bit about you. Is that alright?
— Yes, please.
— Konstantin, could you please tell us what kind of job you are looking for?
“I’m looking for an office job with a clear schedule and a reasonable salary.”
— You’re right, Konstantin. This is a good job. You mentioned that you’re interested in the rate. Could you clarify what rate you have in mind?
— This is primarily stability and confidence in the future.
— Maybe. Can you tell me why you left your previous job?
— I didn’t even leave. We were let go. They made us sign a resignation letter “by our own choice” and sent us on our way. You know how it is, there’s a crisis right now.
— You’re right, the crisis has left many people without jobs. Did you have a position there as well?
— Yes…
— Did it help you with your stability when you were hired and then fired?
— Not really.
— Thank you, I have one more question. Do you know what car your former boss drives?
— Yes, in a Camry. It’s black.
— What do you think, does anyone pay him a salary?
— In what sense?
— So, does your former boss get a rate from someone?
— No, of course not, he’s a businessman!
— What do you think? You say there’s a crisis, but has your boss stopped driving the Camry?
— Why should he stop? He drives just the same as before!
— So, it turns out that your boss has stability, but you don’t?
— So, it seems…
— And no one is paying him the stake. Don’t you think he bought stability for himself by paying you the stake?
— Hmm, that’s clever…
— Moreover, I’ll tell you that most of the people around us who consistently and reliably provide for themselves and their families never relied on a salary. This includes the tiler who laid the tiles in your bathroom, the taxi driver, the lawyer, the plumber, the furniture maker, and even the cigarette seller whose products you smoke. However, thank you for your response; I have another question for you.
— Let’s go.
— Let’s say you have an important task, like you’re going to your best friend’s wedding and you need to buy a wedding gift. Will you go shopping yourself or ask someone for help?
— Of course, I’ll go myself.
“Did I understand correctly, Konstantin, that in important matters you tend to rely on yourself?”
— That’s right!
— Thank you, if I may ask one more question. Do you think your friends, your true friends, would want you to earn more?
— Of course!
— Did your former boss have a strong desire to give you a raise?
— Ha, of course not!
— So, in an important matter for you — ensuring your stability — you relied not on yourself, nor on friends, but on someone who certainly can’t be called a friend, and who paid you as little as he could?
— So it seems.
— And you must have had some overtime… Did you often stay late in the evenings?
— It used to happen…
— Did they pay you extra for that?
— Oh, come on…
— So, you would like to have a job where the more you work, the more you earn?
— Yes!
— And a job where you provide stability for yourself?
— Yes!
— Thank you, Konstantin. The job I’m offering you is exactly that. A stable position with confidence in the future, and fair pay that depends on how much you work. Of course, if you don’t do anything, you won’t get paid. That’s only fair, right?
— Of course!
— You, Konstantin, mentioned the workday. Did I understand correctly that you are very concerned about a convenient work schedule?
— That’s right.
— Would you like to choose your own working hours?
— Well… that’s already in the realm of fantasy!
— Not at all. I’ll tell you about your work schedule later; I still want to clarify some things about the office work.
— Let’s go.
— The job we want to offer you is an office position. We have a lot of office work involving filling out order forms, processing the orders themselves, checking payments, and supporting existing clients. Does this suit you?
— Yes!
— Of course, this will involve visiting clients and also conducting independent client searches, which we will teach you. Personal growth is important to you, right?
— Yes!
We witnessed a classic sales scenario. A person expressed a wish, the recruiter clarified what the person actually needed, translated that into the candidate’s own needs, and offered a solution to their problems. Several persuasive techniques were intentionally demonstrated in this dialogue. In practice, one or two arguments are usually sufficient.
Client portfolio
Employers often express a desire for the salesperson they are looking for to already have a client portfolio. What do employers really want? In fact, they need a reliable solution to their problems. If we ask them directly why they need a manager with a portfolio, they will respond, “This will significantly boost our sales, and we will be confident that we made the right choice.” However, if employers need reliability and confidence, then it is anything but a person with a portfolio or a team.
A “portfolio” person will go wherever they can earn more at the first opportunity, and it will be difficult to keep their clients. After all, the previous employer couldn’t retain them, right? Moreover, this “portfolio” type will take with them everything new they managed to develop with their current employer. If given the chance, they might even take the client base with them. One more point: a “portfolio” salesperson is a utopia. In practice, successful transitions of good salespeople to another company, where they manage to bring a significant portion of their clients from their old job, are quite rare. Why? Because the salesperson sells not only themselves but also the company and its advantages over competitors. Clients already firmly believe in their choice. If the salesperson only sold themselves, they would simply stop working for anyone and start their own brokerage firm. Why would they carry portfolios from one employer to another and lose some clients in the process if they could make the clients exclusively theirs by selling both their professionalism and market knowledge—where the client would be better served next year or on their next purchase? If we do have examples of people migrating from employer to employer with their client portfolios, it’s unclear who is hiring whom and who depends on whom. In such cases, it’s likely that the salesperson is acquiring the necessary resource from the employer, such as an office.
Money and career
К. regret Money does not motivate. Often, it’s quite the opposite: the more money a person has, the less effort they are willing to put in to earn another penny. Therefore, it’s important to clearly distinguish between commission rewards and employee motivation activities. For the same reason, motivation cannot be called “additional,” as it is fundamental. Commission is not a form of motivation; it is part of the contract between the company and the salesperson, meaning it is a mandatory factor. Yet, we have a tendency to label everything we do, aside from paying commissions, as “additional motivation.”
And, of course, wages are balanced. All employers pay approximately the same for the same work. You can’t force people to work just because you pay them a salary. If an employer pays more than others, their cost structure for producing goods or services will make them less competitive in the market. This means that everyone pays as little as they can. However, paying less than competitors is also not an option, as skilled workers will leave the employer.
Exists Herzberg’s two-factor theory of motivation suggests that money is not a motivating factor for work, but rather a retention factor. Other retention factors include management policies, working conditions, and relationships within the team. Even if all these factors align perfectly with an employee’s wishes, they do not, on their own, lead to job satisfaction unless motivating factors are also present: achievements, recognition of merit, responsibility, and opportunities for career growth.
What is the purpose of “additional” motivation when we are dealing with salespeople who earn more the harder they work? For a businessman, any form of motivation should be seen as a means to intensify the efforts of the sales team.
Some companies are starting to introduce so-called “levels” of salespeople, categorizing them into first, second, and third tiers, and offering them a “horizontal career” — sell better and earn more!
However, in reality, it turns out like this: at the most challenging stage of a salesperson’s job—at the beginning—they receive a penalty from the company instead of support, even though their efforts are just as significant, if not greater, than those of an experienced salesperson.
From the perspective of job market dynamics, a new salesperson will evaluate the prospects of working at a company based on the commission they are likely to receive, which means they will consider the lowest possible amount.
Since the commission for agents of different “types” is not a loss for the businessman, it turns out that he underpays all his sellers except for those of the “higher” type. This means that competitors will surely be able to make a more attractive offer to the seller.
It’s not beneficial for a businessman to have top-tier salespeople, and the business model tends to naturally shift towards bringing in a large number of inexperienced newcomers instead of focusing on retaining valuable employees.
Sorting sellers is more challenging from an administrative standpoint — it’s not just about tracking the commission rates for each seller, but also about making timely adjustments to the commission plan for those who have changed their “category” in one direction or another.
The sellers will quickly figure out what’s what and will start recording sales under one seller’s name so that the commission received is paid at the highest rate, resulting in unexpected losses for the business.
Therefore, it’s not worth thinking about dividing agents into such categories. They already have financial motivation, and coming up with something new in this area is pointless. It’s already clear that the more you earn, the more you receive. The human brain is unable to distinguish between two similar stimuli coming from the same point. Similarly, we cannot differentiate double stars in the sky without instruments. In other words, the “message” conveyed through a “horizontal career” already duplicates the “message” transmitted through commissions.
The opportunity to build a real career is one of the four motivating factors mentioned earlier. By paying proper attention to your employees’ career ambitions, you can enhance work efficiency. Ideally, the rules for career advancement should be transparent and achievable. However, their achievability should not encourage salespeople to focus solely on building their careers. Career growth should be managed administratively. In other words, there should be no rules for “automatic” advancement (upon achieving certain performance metrics). Decisions about growth within the organization should be made by managers who are one level above the immediate supervisors of those being promoted. However, if we try to develop rules for career advancement based on the achievements of a salesperson fulfilling their immediate duties, we will encounter the following problems.
The duplication of “messages” occurs when the opportunity for career advancement runs parallel to financial rewards. This is inefficient.
Competence at one’s level is not a reason to take on a leadership position.
Promoting a “star” to a higher position, without having brought in a good manager, deprives the company of a good salesperson.
In fact, we don’t need a salesperson for the manager position. What we need in this role is a true manager — someone capable of hiring, training, and overseeing people. So, here’s what we will do. We will set a performance threshold, which, when met, will allow for consideration of the employee’s career advancement. This threshold shouldn’t be too high — just at the level of an average successful specialist. This will serve as a good incentive for newcomers to improve and will allow you to remain flexible if you decide to expand the management team while keeping the rules consistent.
An important criterion for the possibility of career growth should be work experience. If you are in a phase of rapid growth, the experience should be kept as short as possible, for example, three months. However, if you already have an established network, the required experience should be such that it outlasts most “job hoppers”—people who leave without achieving anything and without developing loyalty to the company. Additionally, a longer tenure will be positively perceived by existing managers, as they will be able to devote more attention to training and mentoring promising salespeople, without fearing that they will quickly climb the career ladder.
It was mentioned above what qualifications should be required for a manager. How can we determine if a salesperson can manage other salespeople? First, we establish that training is necessary for the position. Accordingly, what we will teach the future manager must be known in advance. This includes, at a minimum, a thorough knowledge of the product, the sales cycle, an understanding of recruitment theory, and familiarity with reporting.
In the penultimate instance, we say that career growth is only possible when the company has a current need for a new manager. For example, you might simply not have the budget this year for office expansion, and hiring a new manager isn’t part of your plans, even if there is a worthy candidate.
Lastly, we give him the opportunity to test his future role: within a certain period, he needs to assemble a team of salespeople and train them. We show him that he is still a salesperson, not a manager, and the results of this trial work should demonstrate what he is truly capable of. Of course, during this time, the future manager cannot and should not be involved in sales, so we can set his salary at 80-90% of the managers’ salary level. Naturally, poaching salespeople from the former supervisor is unacceptable, even if those salespeople are relatives of the future manager.
In any case, the initiative for career advancement should come not from the salesperson themselves and certainly not from the manager, but from a higher-level leader. The manager, by virtue of their position, is simply not invested in the salesperson’s growth and cannot assess them as a potential leader.
The very best
When we try to come up with some additional reward, such as organizing a trip abroad for the top salespeople, we usually start thinking about the budget for such a gift. This raises the question: “How can I determine how much money I need to set aside for the gift if I don’t know how many people will be going?”
The simplest solution would be to set up a promotion like “the top 5 salespeople will go to Turkey at the end of the year.” However, when asked what exactly needs to be done to achieve this goal, there is no clear answer. As a result, all the salespeople, thinking that none of them are truly the best, forget about the promotion and continue to work as usual. By the end of the year, the businessman realizes there are no stars, as no one aimed for “stardom.” Yet, he still needs to send someone to Turkey so the salespeople don’t feel cheated. He then chooses the technically best performers based on criteria known only to him (perhaps he decided that selling to corporate clients is better than retail, and thus rewards the top corporate sellers instead of those who sold more overall) and sends them to Turkey, fully aware that he is throwing money away. The salespeople who didn’t go are left puzzled, unable to understand how Ivanov, who sold just 10 hryvnias more than the average, ended up being chosen over the others. To put it mildly, they are bewildered.
But even if we specify the criteria for “best” in advance, a contender for the prize (a well-known favorite) will be interested in ensuring that the others fall behind. To secure the prize, it’s not necessary to sell the best; it’s enough for the others to sell worse. In such an environment, instead of cohesive teamwork, we will end up with a “terrarium of like-minded individuals,” where everyone will be sabotaging their peers.
Such an unpleasant situation arises for both sellers and business owners due to the incorrect setting of goals for the sales team. As is well known from management literature (and therefore this topic will not be discussed in detail), goals should be:
- specific;
- measurable;
- significant;
- achievable;
- limited in time.
In other words, the conditions for the competition for the trip to Turkey should be phrased approximately as follows. Those who will go to Turkey are:
- over the next 12 months
- will attract more than 3 new clients
· each of which will bring in over 100,000 hryvnias in sales and therefore will become a new key client for the company.
To all of this, we can add that this goal, in our estimation, is quite achievable if we make an effort. Last year, the company gained a total of 50 such clients. So, do we not know in advance how much money we will spend on the trip to Turkey for our top salespeople? Yes. Let’s consider that our business risk. Moreover, it’s not entirely bad if the company ends up with more good clients than expected. We can somewhat mitigate this business risk by evaluating last year’s performance, comparing it to this year’s plan, and understanding approximately how many people will go to Turkey. Most likely, it will be between three and eight people. This range is quite sufficient. If we have budget issues and the expenses for the trip to Turkey need to be determined in advance, we still have plenty of room for maneuver: the timing of the trip, the class of the hotel, the season of travel, and so on, including whether or not there will be excursions.
By the way, the worst thing you can do is, after setting such a specific goal, to add that only the top 5 performers from those who meet the competition criteria will get to go. In this case, we return to the fact that no one knows what exactly constitutes the “best.” However, from a planning perspective, the cost of the trip is clear and final in advance. This is a striking example of how the tail wags the dog, and how one must avoid a situation in their company where sales are adjusted to fit other processes.
One possible way to ensure that you stay within budget is to announce that the number of prizes is limited. It’s worth explaining that there is a certain qualification level required to be eligible for a prize. However, the actual gift will be raffled off. In this case, the prize must be truly mind-blowing. A car, an apartment, a round-the-world cruise—these are examples of super prizes.
Fines
A common practice among managers in the former USSR countries is to impose fines on employees. Managers believe that this way they encourage employees to adhere to discipline and work standards. Additionally, the penalty system often allows for “legal” savings on the payroll budget.
But if you look at how a herd of bison runs, you can see that it moves at the speed of the slowest and lagging bison. There’s no point in running faster. Lions attacking the herd will first catch the slowest one. So there’s no need to run at full speed. However, bison do sprint with all their might when they need to secure a good spot at the watering hole. In the same way, penalties work. They don’t motivate people to act responsibly; they motivate them to avoid punishment.
Fines are a clear sign of a lack of customer orientation within a company. Often, an employee’s behavior is driven by the desire to avoid a fine rather than the intention to serve the customer in the best possible way. Almost every resident of Ukraine has encountered the so-called “guard syndrome,” where an employee of a commercial company seems to be working not for the customer, but for themselves and their fines. In hardware and tool supermarkets, you won’t get help with purchasing inexpensive items; instead, they will demand prepayment, arguing that the seller risks a fine without it. This is instead of simply guiding you to the checkout and placing that “valuable” item on the conveyor, since it can’t be handled without prior payment. In a shopping mall, a security guard won’t escort you to the ATM in a section still closed off to the public; instead, they’ll tell you that you can’t go there, or else they’ll be fined. A bank employee won’t stretch their mind to help a customer withdraw money from their account without a card. Fines not only turn employees away from customers but also stifle initiative and critical thinking. If a person is constantly whipped with a lash, they stop thinking and become a dull, frightened animal.
Another feature of fines is that they replace informal agreements with a formal contract. A person who pays a fine believes they have already atoned for their wrongdoing, freeing their mind from thoughts of the offense. Once, the head of an elite kindergarten, aiming to encourage parents to pick up their children on time (by 6:30 PM), introduced fines for lateness. As a result, parents who previously felt obligated not to let the caregivers down began to arrive late regularly and were generally in no rush to pick up their children on time. The caregivers ended up leaving for home only around 9 or 10 PM.
Knowing this peculiarity of fines, while consulting one of my clients who complained about the sellers being late despite the penalties, I suggested completely abolishing the fines. Naturally, the owner of the company opposed this, stating that then they would “completely relax.” I asked for two weeks to explore how we could eliminate the fines while still motivating people to arrive at work on time. During the analysis of the company’s operations, it became clear that:
· Salespeople earn 70% of their income from the variable part of their salary. In fact, they are independent agents and do not understand how work discipline affects their productivity, especially since clients do not show up at work before 10:00 AM.
Every morning, the salespeople had a meeting where they were criticized, their failures were put on display, and they were harshly pressured about meeting sales targets. In other words, no one wanted to attend this meeting at all and was willing to pay a 10-hryvnia fine just to avoid being there.
I then suggested changing the agenda of the meetings and conducting them myself for a while instead of the sales director. Fortunately, he had just gone on vacation. During these so-called “new” meetings, we only discussed achievements, and instead of listening to complaints and making excuses, the salespeople shared ideas and praised each other. Each person was expected to recall specific reasons for wanting to compliment a colleague. We also discussed opportunities to connect with various influential individuals and shared leads.
Salespeople have started to be motivated to arrive on time by being “sold” the benefits of sticking to a schedule: productive meetings, internal discipline, and having time to warm up before serious work begins at 10:00, tackle routine tasks in the morning, or make a few new calls. Arriving on time now meant earning more money. Real-life examples showed that those salespeople who came in earlier managed to accomplish more and sold better. It turned out that undisciplined employees were penalizing themselves even more than the amount of the official fine.
A week later, at the next planning meeting, the salespeople were asked if they wanted the fines to be canceled. They said they did. So I told them that the fines would be lifted if no one was late for exactly one week. It was an easy goal and, most importantly, a collective one. In the first week, the team didn’t succeed; there were some “laggards.” Then they were given a “second chance.” The second chance exceeded all expectations. People started arriving before the secretary who opens the office. The work in the morning was buzzing, and the sales department resembled a beehive.
I simply showed the director the results of my work, and he publicly announced the cancellation of the fines. Naturally, this boosted the sellers’ enthusiasm and strengthened their trust in the company. Most importantly, if people were late, they now made an effort to inform others and expressed a desire to “make up” for their tardiness by staying a little longer at work. It’s worth noting that no one asked them to do this.
What do bad salespeople sell?
What do bad salespeople sell? Bad salespeople are great at selling their activity to their manager. They convince their manager that they are “doing everything possible.” However, for some reason, there are no results. In fact, they don’t achieve results because they don’t strive for them. All they want is to keep their job. And everything they do is the bare minimum of effort that allows them to maintain their position.
The manager’s role is to ensure that everyone is motivated to achieve results. Sales techniques, the quality of leads, and experience don’t matter. What truly counts is the desire. If that desire is present, then skills, techniques, and leads will be absorbed and fully mastered. Without that drive, unfortunately, no training will help.
There is an interesting chain effect in the problem of poor salespeople. The manager knows that a certain level of activity will lead to results. However, a poor salesperson demonstrates that this activity does not yield results, yet the manager continues to insist on maintaining that activity. Meanwhile, the poor salesperson keeps showing activity without any results. As we can see, poor salespeople are very good at selling managers on the idea that there is no connection between activity and results, making the manager feel responsible for their failures and prompting them to look for ways to optimize the salesperson’s activity.
Good salespeople are confident that activity leads to results. It’s like battery-operated toy cars sold in subway stations. They race around a cardboard “arena,” bump into walls, turn, and keep going. If you leave one of these cars in an empty, unlocked room, it will eventually find its way out. It will do so simply because it is programmed to: activity leads to results.
Bad salespeople are like toy cars that, when they hit a wall, either stop completely, bounce off at exactly a 180-degree angle and return to their starting position, or keep banging against the wall without bouncing back. All of this is a demonstration of activity without results.
The manager asks us to be proactive—here’s your proactivity. Who cares about the results? No one. “I care about my job and my responsibilities, which consist of doing what the manager asks.”
However, a manager shouldn’t think that their goal is to turn bad salespeople into good ones. The manager’s work also needs to be effective. If you have two salespeople, one selling 10 phones a day and the other 100, by focusing their management efforts, attention, and support on one of the salespeople, the manager might increase their productivity by, say, 10%. Now, answer this: what’s better, selling one more phone or ten more?
Why do most managers focus on helping underperforming salespeople and nurturing them? Why do they “buy” activity instead of results? It’s important to simplify your approach: spend time with those who are selling, and you’ll achieve more. After all, results matter to you too, not just activity, right? So instead of asking your subordinates about their actions, ask questions about the results. The score is on the board. A poor salesperson will always try to tell you what they did or what held them back, rather than what they achieved. Don’t fall into that trap.
Chapter Summary
Main ideas
· A client is someone who pays money. In a sales structure, the sellers are the clients of the rest of the structure. This means that the manager of these sellers must sell to them.
The manager sells the idea of working for the company to the salespeople. Without the manager and the company, a salesperson is unlikely to be as successful. If there’s no added value, the salesperson will probably leave.
A sales structure, if not planned for growth in advance and strategically, will eventually stop growing. The business will gradually deteriorate.
You should understand why sellers are working specifically for you. What is your key advantage? How are you better than others?
Recruiting and sales are essentially the same thing; there’s no need to look for a difference. The only distinction is that you’re not selling your own product, but rather the idea of working for you.
Don’t expect any miracles from hiring salespeople with an established client portfolio. In fact, you should be wary of them.
· Money doesn’t motivate. Money is an incentive and part of your contract with the seller. Sellers will get paid anywhere. What won’t they get elsewhere?
Any incentive campaigns must be clearly defined. Everyone should know exactly what they need to do to win a prize. Competition is not appropriate here.
Sellers need to understand what you value in their work beyond just the sales volume. Keep them informed about the company’s strategic goals.
– Find a role in the team for each salesperson.
Remember that a demotivated salesperson is worse than having no salesperson at all. If you demotivate your salespeople, their performance will suffer. Is that what you want?
People appreciate a human touch in their interactions. Unfortunately, being a salesperson is not the most rewarding job. It requires love. So, love your salespeople too. In the end, it’s you who depends on them, not the other way around.
Exercises
– Remember the birthdays and family situations of your employees. Recall where each person is from and what their living conditions are like.
· Think about each salesperson: what motivates them to work effectively? Don’t just say “money.” If you don’t know what it is, you should find out.
– Connect each salesperson’s personal goals, as you see them, with their achievements in your company.
– Come up with an engaging promotion with specific rules for winning a prize. The prize should not be awarded for actions for which the seller is already compensated.
Where to start?
– Start by building client-oriented relationships. Begin with yourself. What can you do every day for your people?
– Create a plan for personal meetings with each of the salespeople. Spend 30 minutes a week talking with each of them. You need to understand their goals.
Cancel any fines you may have.
[13].The phrase “Work makes you free” or “Work liberates” was used as a slogan at the entrance of many Nazi concentration camps.
The text for translation: [14].“To each his own.” This phrase gained a grim notoriety as the inscription made by German Nazis above the entrance to the Buchenwald concentration camp (Wikipedia).
[15].Special software that acts as a “firewall” between the company’s internal network and the internet.