Sales reps, sales management and business ownership

If you want to start a business from scratch, you must master selling and marketing skills -- whether or not your heart and passions are in these fields. In really good economies, of course, if you are good at your trade or profession, clients come knocking at your door because of your reputation (personal brand) you acquired while working elsewhere, but you still need to find business and keep it, especially in an economic downturn.

These skills are no less important as your business grows. But things change. Now division of labour enters into the picture. You begin hiring or contracting for services and skills which you cannot do yourself effectively. You need to learn how to select the right people for the work, and how to manage and co-ordinate their responsibilities, especially as they relate to the overall business objectives.

As the business grows, things can go well, or be really messy. If they go well, you achieve the really wonderful place where the sum or the parts is greater than the individual elements -- where the team, working in synergy, produces far more than individual members could achieve on their own. This is a healthy business. Your employees are happy because they enjoy work satisfaction and can earn better incomes (with higher quality of life) than they would on their own or working elsewhere. And of course you are living the good life as the primary shareholder.

But things don't always go so well (I know from hard personal experience). Pick the wrong employees, or manage them incorrectly, and things fall apart really quickly. Worse, your finely oiled machine may break perhaps because of your management failures or because of economic changes. Then problems you never thought you would have rear their heads.

Are there solutions to these challenges?

Yes, but first you need to realize you must have really good but simple systems to handle the different responsibilities of your business, and while these systems can change, you must understand why and how to make exceptions to your rules.

Great sales reps do not necessarily make great sales managers; and great sales reps/managers often fail at business leadership -- though many businesses are started by people with a gift for selling.

Here are the simple rules/systems we apply to manage things.

• Everyone here must prove competence before they are offered employment; the screening is thorough, fair, and comprehensive, through a questionnaire and work test hiring model (we have different rules for sales, administrative and editorial employees but the basic guidelines are the same.)

• Regular co-ordination meetings are a cornerstone of the business; these bring everyone together and everyone participates in the building and updating of the written business plan.

If you are a 'natural' salesperson and built your business from scratch, you need to realize that your selling skills need to be subsumed to overall management and business ownership responsibilities, and these skills are not necessarily the same. I've seen some really sad flame-out stories of competitive businesses started by salespeople who thought they could do it better but didn't realize that the selling process is only part of the picture. You can solve this problem by combining your subjective abilities and awareness (good) with some objective rules of the game for hiring and working with people. That is sales management -- and you need to have this under control if you are to grow and thrive.

This contractortalk.com thread, salesmanduties, inspired this posting.

Sales compensation: Some observations

In email exchanges yesterday, consultant Tim Nagle offered some additional observations on the sales model he found worked best for him when he built the Richmond VA Champion Windows and Doors branch to nation-leading levels.

He said his salespeople worked for 100 per cent commission, but these were not slouchers.

In home improvement sales it is widely known that only the top 10% make $100,000 or more. I had a sales office that 80% made $100,000 and the other 20% made over 200,000. Two of my reps were top 5 nationally. There is plenty to discuss in this situation.

Absolutely: You might wonder how you can attract -- and retain -- this type of high producing sales force.

How do I attract people to hire?
It all starts first by building that "culture" in the office/business. I focus on one successful model (person) and move to the next. I build it one at a time and use that to my advantage. One attracts the next.
If you aren't hiring someone " you are not looking hard enough!"

How do I attract them and how do they want to come aboard?
MY passion and willingness to make them successful and being a great leader. They feel my passion and know that I will work to make them successful.

How do I deal with the "primadonna's?"
Leadership skills, firmness and keep them motivated & in check by constantly raising the bar. They are too busy and fear losing that position, because I am never satisfied. (understand what I mean?) It is a mental challenge I put them through!

The model for direct-to-consumer sales of simple products probably doesn't apply for you if you are selling higher-end technical or AEC services, where expertise and accomplishment (and often professional credentials) are essential. You don't generally choose a lawyer by talking to a commissioned sales rep; nor would you hire an architect. As well, you should consider Nagle's important point: the business culture really counts.

Education levels may be important -- If your sales opportunity requires more the natural sales/persuasive ability than real professional/technical knowledge; if your clients are middle class and lower-middle class consumers rather than postgraduate degree holders, your sales team may have just a basic high school or technical education with limited earning/income opportunities in non-sales careers. Then, you can manage/motivate them with high paying work on commission. The sales cycle length is also important

You may wish to review this earlier posting: Sales: What are you paying for?

I obtained this image from istockphoto.com; a great resource for inexpensive royalty-free (but copyright valid) graphics.

This intriguing and important blog posting by Bruce Lynch at the PSMJ Resources Blog, Solid Hiring Advice in Any Industry, raises some important yet complex questions. I'll stretch copyright here and repeat the post for clarity:

For the past 20 years, my wife has worked for a firm that provides financial software products to the structured finance industry. It’s a great story – a couple of MIT guys working out of modest digs in 1985 are in 2008 the undisputed leaders in the cashflow modeling industry – managing a firm of over 100 people on three continents.

So what’s their secret? I’ll let a long-time employee tell it:

When we hire people, we try to bring in candidates that have some connection to the company – a friend, former co-worker, colleague in a client firm, etc. – and see if they are what we are looking for. A few years ago, I had a friend-of-a-friend who was an assistant to a fixed income money manager before he was laid off so I had him come in for an interview. Our hiring manager told me that he totally bombed on the problem solving questions so they didn't bring him back for a second round. The candidate called me a couple weeks later for a postmortem but was completely baffled about why the fact that he couldn't answer a question about how to efficiently weight 9 pennies had anything to do with whether he was a good bond analyst or not. I tried to explain that our philosophy in hiring is that we're looking for good generic problem solvers and finance knowledge coming in the door isn't important. I knew that he still didn't get it when we hung up and the next couple times I talked to our mutual friend, she pressed me on it and couldn't get her to understand that one of the keys to our long-term success over the years has been our hiring process. We haven't hired that much dead wood and while we've probably passed on a lot of people who ultimately would have turned into great employees, we've minimized the number of people on board who are useless. She didn't get it and still doesn't.

Makes sense to me, what do you think?

Intriguing, indeed, because this hiring policy seems to have two apparently contradictory elements: You need to know someone in the organization to 'get in' -- but your pass or fail will depend less on your technical knowledge than on your ability to answer a seemingly irrelevant (to the job) question (and I would expect they have more than one of that sort of problem-solving question to get around the problem of interview prepping.

Nevertheless, I can see the approach working well here for businesses with a critical mass and size of employees -- if you have a hundred or so people, the network is large enough that good employees will know others who are potentially suitable; and the base of candidates worthy of consideration is large enough that enough people will present themselves ready to work for the business (knowing it is viable, profitable and a good place to work). And a person working at a healthy organization will generally only recommend people who would seem good at first sight, because you wouldn't want to bring in deadwood or irritating people to work with you just because they are friends or family.

I've spent much of my mental energy in the past couple of years developing and 'tweaking' our own hiring system because effective and successful hiring is, I believe, your most effective marketing resource. With the right people, the business will operate in harmony, and current clients will be served well -- creating the ambiance and spirit that attracts new business and high quality relationships.

We'll certainly invite current employees to suggest people for opportunities and will give referred candidates a plus on the evaluation matrix. For other considerations, we rely on a combination of evaluation tests, the most important being the short-term working assignment, perhaps more accurately described as the working interview. We want to see how well people handle the work -- and the relationships within the organization -- before we rush to hire anyone.

For salespeople, we've relied on salestestonline.com for our preliminary screening. A poor score on this test meant you were 'out' even if other indicators suggested you should be given a chance. Last week, I changed the policy (actually in line with the test organizer's own recommendations) and decided that while the test is important, it should be seen in context of other variables. For example, if a person has an exceptional track record of experience, or specific qualifications relevant to our business, or a highly qualified recommendation from someone within the company, we can proceed to the (paid) working evaluation regardless of the test results. But if the person lacks experience, or we aren't sure of the relevance of the individual's experience, a good score on the test is essential. But we won't hire anyone, no matter how well they score on the test, or how eager they are to work with us, unless they complete the working assignment satisfactorily.

I continue to believe that a systematic, fair, and disciplined hiring policy is essential for any business which wishes to grow to greatness. But we must constantly review, revise, and adapt the policy -- it is a working process, not a static structure.

The 'tipping point' in choosing employees

Malcolm Gladwell, author of The Tipping Point and Wink, has a new book in the works where he debunks many of the assumptions of hiring and recruiting key employees. The speech cited here provides some useful insights and clues that may change your thoughts about your employee selection process.

Guru Malcolm Gladwell, in a rather fascinating speech, outlines an observation that the practices used for selecting key employees in most organizations are badly flawed. His best example, the NHL Hockey "Combine" -- the workout session just before the entry draft, where potential NHL players are put through a series of tests and evaluations, to allow scouts some 'objectivity' in determining who plays where. Trouble is, says Gladwell, that success in the tests at this pre-draft event have no correlation to success as a player.

Worse, he says, a similar process used for the National Football League in the U.S. includes an intelligence test. You might think, he said, that you would need to be at least moderately intelligent to play well at the NFL level -- after all, the game at this level requires strategizing, complex player move analysis, and the like. Guess what, he says, the people who scored "dumbest" on the intelligence test actually are the true stars on the field. (This leaves me with some intriguing thoughts about whether certain stereotypes about football players are indeed true.)

Ok, does this translate to the professions and the like? Well, he says, conventional 'metrics' used to assess teachers' performance seem to lack correlation with real ability; ditto for lawyers and police officers. The problem is that the testing criteria try to ascertain certainty to something that isn't so easy to measure -- the best meaningful measure is, indeed, performance on the job.

In other words, I would speculate, if you want to find great teachers, set up situations where anyone can 'teach' and then evaluate their performance at the work, and if they are good, give them some teacher training.

This gives me reassurance that our model for employee selection is indeed on track. We ask prospective employees to do stuff -- initially, answer a questionnaire, then, if they make it through the screen, to actually work with us on a brief trial, before hiring them. Resumes, interviews, and tests have places in the hiring system, of course, but they are not the key issues. "Can you really do the job?" we ask, and seek to learn before hiring anyone.

The video is quite lengthy but worthy viewing.

Resumes, tests, interviews, references, and hiring

Increasingly, I'm a firm believer in the importance of systematic and rational approaches to hiring. Brad Smart's approach to Topgrading holds real resonance here -- by focusing our efforts to hire people within the top 10 per cent of ability and commitment, we are much more likely to be a successful business than if we just hire 'okay' people to fill vacant positions.

In one of his papers, Smart reiterates his opinion that "Most Personality Tests are Shams" and answers the objections of his recommendation for lengthy, tandem, interviews, that "Topgrading Interviews Take Too Much Time".

Smart and I agree that the quick and conventional interview provide far too much opportunity for 'faking' and dressing up your personality/competence for the work. I am not sure about whether tests are absolutely useless, however. Since the test we use for sales employees is relatively inexpensive, (http://www.salestestonline.com/) I wanted to see how much results would change if a candidate retook the test shortly after the original testing.

In the first case, the prospective candidate scored modestly well, but below our arbitrary thresholds. Without my consent or permission -- but without knowing the test costs about $35 to administer -- he went ahead and retook the test himself, and passed. In the second situation, a candidate for a writers' job phoned me this week to see if we were going to give her application further consideration. As we are in the final stages of evaluating candidates for this work, I said that we wouldn't take it further, but then engaged with her the idea of testing for the sales job. (Our sales positions are highly compatible with writing skills, and anyone who is looking for a writing job willing to 'sell' herself on it, might be an ideal candidate for our business.

In any case, she quickly took the test, but the test's validity algorithms kicked in, and the test results came out inconclusive, with the observation that she might be undergoing exceptional stress.

I invited her to explain; and said she could take the test again; but this time, answer as she really is, not as she wants to appear. This time around, her results scored truly low. (But she emailed me later in the day to say she had just been awarded a satisfying career and she had noticed she was receiving several offers out of the blue-- suggesting to me that her job-finding radar in fact was in high gear.)

These results might scare a validity expert -- how can one obtain very different results from the same test within days? Does this degrade the test's utility in the hiring process? To use a very bad pun, I think Smart (or anyone else) would be dumb to use this type of test as a key or final determining resource about who to hire. We simply put it in the middle of our screening process for public candidates, and as a first stage 'review' for people we have some interest in, but wish to evaluate quickly before going further. (These can include referred candidates, call-ins, and the like.)

In one case, for example, a very long-standing employee from our major competitor called us with tales of woe at his organization. He wanted to work with us. The conventional "do you understand the job" screening process is obviously unnecessary here (the competitor uses many of the same business models and practices as us -- in fact, the competitor's company founder is one of my former employees). My phone interview with this person took some interesting turns, as I gathered competitive intelligence, validated observations, and tried to figure out what to do if we hired the person -- who would come from a totally different culture. Not sure about what to do, we administered the test, and he scored less than the hiring threshold. I now had a third-party justification to not hire him.

In the second instance, the marketing representative at one of our major clients referred a relative. You really can't brush off someone like this -- so, after we followed the preliminary steps, we offered the online test. The candidate fared poorly. We could extricate ourselves from the awkwardness of not hiring the relative of a major client by sending our good client the test results.

Finally, the test is really useful and powerful in motivating potential candidates who do well to move forward to the final stages -- the working evaluation.

But what about interviews? Short and sweet phone interviews have value, I agree, in narrowing things down, but I wouldn't ever want to make a final hiring decision based primarily on an interview. You can miscue and misunderstand potential far too easily. But I agree with Smart's critics that complex and lengthy interviews are a pain for everyone -- both for the managers and colleagues doing the interviewing, and the job-seekers themselves.

Our solution, one that I think is practiced by just a few businesses, is to forget the full-scale interview cycle, and invite candidates to do some paid work for us.

We're going through that process with candidates for the editor right now. Our normal approach is to offer a freelance assignment to people who send in interesting writing samples and hire the best of the lot -- but this time around I took things a step further. I divided our editorial salary budget up, and offered one month freelance contracts to the two finalists. We can really see who works best, both in objective talent, and in ability to work with the team. And everyone is treated fairly -- the 'loser' still gets a decent cheque for the writing work.

In our system, frankly, up to now, the weak spot has been the reference checking process. Candidates who have fared well through all the tests and evaluations are truly tempting to hire without 'bothering' with the reference evaluations, but I now can see that I could have avoided virtually all of our mis-hires with proper reference checking. (Notably the mishires weren't that bad, objectively; while they worked with us they worked quite effectively -- and left without too much of a fuss when their problems became apparent.) We do our best to get around reference problems now by really focusing in the pre-screening that reference checking will happen at the final stages; this helps to cut some of the candidates who dress things up, but we need to have more discipline in the reference evaluations.

Why is this stuff so important to your business and marketing? Consider the cost to your company of bad employees; ones who don't get along with each other and the clients on an interpersonal level or who are simply incompetent or lazy at work. If you are a client, either current or potential, do you really like doing business with organizations full of second-rate people? If you are building a truly effective marketing plan, you really need to focus on finding really good employees.

In conclusion:

Hire carefully. Use a pre-screening questionnaire before even really looking at resumes;

• Use personality/sales tests carefully -- these should never be your final tool but I believe they can be effective in screening or evaluating 'special' candidates, or as part of a systematic hiring process.


• If possible, create a realistic (paid) working assignment in place of multiple interviews. You won't be frustrated with lengthy and tedious interviews, and your employee candidate will be happy to go through the process.


• Don't skimp or avoid reference checking. Even organizations that have a policy for legal reasons not to provide references will always give a positive reference to a truly good former employee. You need to ask, or have the employee set up the call for you, however.

The choices we make

Some not-for-profit organizations, especially those serving disabled candidates, such as the Endeavour Foundation in Australia, pay the costs of trial employment to see if the disabled candidates can handle the job. This makes sense, but I am intrigued that we are the only business I know that believes, instead of a battery of interviews, finalist candidate(s) should be paid to work for a few days, at least. This seems to me a much fairer, more meaningful, and ultimately more cost-effective evaluation system.

Approximately 200 people have sent us resumes in response to our invitation seeking a new Ontario-based sales representative. The numbers are matching our expectations -- about 10 to 15 per cent follow through by completing the introductory employment questionnaire, we invite a few to take the online sales test, and then even fewer move towards the paid working test -- the final stage (before thorough reference checking) before we make our decision.

We can predict the overall results, but not the details -- and here is where things get interesting. On Friday, two of the Candidates passed the sales test, but both approached the situation in intriguing and unusual ways.

I became aware of the first candidate when he commented on a blog entry I had posted, with his own suggestions. Then we exchanged emails, and only then I realized he had applied for work with us. Good approach. This is a selling career, and we obviously are more likely to be interested in working with someone who stands out from the crowd and thinks for himself -- and yet shows respectful creativity with the potential client (employer).

The second candidate also communicated with me -- our questionnaire letter invites advance communication, and provides both my phone number and email address. (We only do this for sales work; generally someone 'selling' services as a writer, designer, or administrative assistant won't get the job.) I liked the communication, and felt encouraged by the initial phone conversation with the candidate. So we sent him the online sales test -- and he failed; not miserably, but his scores were below our threshold for further consideration.

Here is where things get interesting. On his own initiative, and without requesting my permission, the prospective employee went ahead and took the sales test again -- and passed with flying colours. On one point, I should be unhappy, both because this employee spent about $40 of our company's money on the second test, and because it suggests indeed the test results can be 'managed' by thinking about the questions carefully!

But I looked at it another way -- if someone is creative, intelligent, and resourceful -- and goes ahead and works to solve the barrier -- then he might indeed be the person we are looking for to join our organization. In any case, the test, questionnaire, and phone interview don't decide the issue -- the working test/evaluation is the most important stage in our hiring process.

What about the others who completed the questionnaire? I will review these responses tomorrow and Monday, but some are, well, really bad. Like they didn't even 'get' the questionnaire -- and didn't bother calling or emailing to clarify its intent. We don't eliminate from consideration anyone who completes the questionnaire but doesn't communicate in advance, but it counts as a minus. At least we only have to read 10 to 20 questionnaire responses -- not the remaining 180 to190 resumes where the candidates didn't do anything when invited to follow up to their initial application.

Meanwhile, two candidates for editor are in the midst of their working evaluation. I won't post publicly on our observations of their relative performance, but the process of really giving prospective employees working assignments rather than hiring them right after interviewing makes so much sense to us, I wonder why it isn't standard practice for most businesses. Interviews can be manipulated, gamed, and wishful thinking sometimes overrides reason and true working effectiveness -- and the approaches to overcome these weaknesses, including multiple interviews in different circumstances, consume so much management (and prospective employee) time and energy, why not pay them for the time and have them do some real productive work! If they are any good, they will produce enough value during the working time to enhance the business -- and if they can't produce any value, I can assure you that the small cheque you write in saying 'goodbye' is worth every cent.

Great businesses, to me, have solid systems and processes -- they also are ready to think differently, creatively, and be ready for surprises. And the employees we wish to hire hopefully share these values.

Topgrading for Sales

I received Topgrading For Sales(Bradford D. Smart and Greg Alexander) today and like much of what this book advocates. The writers make the case that you should be selective and systematic in your hiring to ensure you have only "A" players on your sales team -- and suggest a process to achieve these objectives.

To me, this is a book of incremental rather than 'wow' learning, in part because we've developed our own reasonably effective sales hiring system (in fact, a hiring process for all of our positions) which effectively achieves what Smart and Alexander are advocating to avoid time wasting and the problems of resume and interview faking.

For example, the writers recommend that initial applicants be asked to complete a Career History Form which asks plenty of screening questions and thus narrows down the pile of resumes. I find the form they use somewhat cumbersome for our business -- we ask four simple questions to see if the potential salespeople 'get' the job and have enough initiative to figure out what is needed.

The writers advocate a phone screening interview (we do that), and then suggest a number of options regarding formal pre-job interviews. We've dispensed with the conventional structured face-to-face interview and replaced it with a paid working assignment. My view is the time you spend on repeated interviews to get it right costs just about as much as putting the potential employee to work for a few days, with full pay, and seeing how they handle themselves on the job. (This probably wouldn't work for businesses where every sale/action requires a long working cycle, I realize).

The authors suggest that personality tests are not valid and should not be used. Here, I disagree, with some recognition of their point of view that "Most personality tests are shams". The test we use, http://www.salestestonline.com/, is relatively inexpensive, quick, and has a real advantage in the hiring process we use because it fits very effectively between the phone screening interview and the paid working assignment. A great sales test score indicates a clear 'go' for the working evaluation (and high results on the test actually motivate the candidate to want to work for us). A low score allows us to say goodbye without any hard feelings. We may screen out some good candidates who score poorly on the test -- but in my validity checking so far, I've found the time and energy spent on these 'failures' is not worth the effort in further evaluation -- since even among those who pass, only one in two 'pass' the working evaluation.

One area the writers really have emphasised -- and I will even more -- is reference checking -- and their suggestion that the candidate be invited to call and pre-clear the references is excellent; since obviously they won't want to do that for a bad reference; and generally no one has problems sharing an excellent reference.

The biggest challenge, of course, is to have enough qualified candidates in the pipeline -- and while the writers advocate setting up some 'bench strength' the actual effective way to achieve this is still not clear to me. I'll ask.

You may find some truly useful resources at Bradford Smart's online site, http://www.smarttopgrading.com/index.cfm.

Here is a link to an earlier blog posting that explains our sales hiring/recruiting system.

Meaningful evaluation -- fast results are important (2)

Searching for an image to go with this posting, I came across the Amazon reference to this book Topgrading For Sales. Haven't read it yet, but will order it. For some insights into our current sales recruitment/hiring system, however, you can see this relevant earlier Construction Marketing Ideas blog posting.

Last week, one morning, I had an early lunch following my son Eric's school awards recognition. He is the best at athletic sportsmanship among his Grade 5 peers. But now I had an awkward situation. At 10:30 a.m., it was too early for lunch, but I didn't want to rush back to the office to meet the salesperson who we were evaluating. I wanted to give him a little longer to work without me breathing down his back. So I stopped and had a truly early lunch.

My cellphone rang, and Chase -- himself returning from his son's school awards ceremony -- briefed me about his doubts about the new candidate. This is in line with our evaluation system for prospective employees. Instead of the conventional interviews, we put individuals who pass early screening and testing to work -- and then invite feedback from current employees about whether they are right for the organization.

I suppose the poor job candidate had two strikes out when I met him at 11 a.m., but I quickly realized the new person just didn't get it. He had handwritten the 'correct' rates over a rate sheet for another publication (instead of simply asking Amanda in the next room for a print out of the correct document). But the thing that really troubled me is that he didn't understand the nature of effective selling and calling. He said was used to working in organizations with training programs and with some time he would learn. I told him we don't have training programs. We use common sense.

I asked him if he had thought about why he was calling the names on the list he had and whether he had sought to build a relationship with the company which had originated the list. He said he hadn't. He, it seems, didn't get the basic concept that if you work with a referred group of potential clients, it is vitally important to really connect and relate to the person who provides the referrals. (We provided the necessary information to allow for the completion of the single phone call that would have provided this information.)

"Nope, this isn't going to work," I thought, as I found my voice -- and frustration -- rising. So I made it clear to him that I didn't think he would work out, but I would give him a choice. If he thought he could figure out what to do, and wanted another chance, I would not mind giving him another day and a half -- fulfilling my original commitment for a three day assessment. If not, he should leave now. I told him to think about it for a few minutes and to get back to me with his decision.

He left the room; and five minutes later returned saying he would leave now. I breathed a sigh of relief. In addition to saving about $200 on the evaluation (we pay for the candidates time for this stage of the process), his desk space would not be wasted, potential clients would not be irritated by his nuisance sales calls, and I could get on with the business of finding someone right for the company.

Effective selling, I tried to explain to the person who won't work for us, is not about pounding the phone, calling people you don't know, cold, without any relationship or connection. Effective selling is often seemingly inefficient. You get involved, you connect in the community, and you put aside your "where is the next order" mentality to support causes and associations that are relevant to the business. (And this is NOT plastic 'networking' where you size up everyone as potential clients or 'waste of time' people -- you simply do your best to contribute, share and support the worthy associations and causes.) Effective selling, I tried to explain, is building your brand -- and representing that of your company. That reference really went over his head.

I then phoned Leslie Greenwood in Sault Ste. Marie, who provided the list of names to the candidate under evaluation. She had kept half the list for her own evaluation, and had sold some ads already. Leslie knew the secret of the connection -- she respected the relationship with the company that provided her the list, and that just one conversation at the start of the process, with the company that provided the list, would be more valuable than anything the sales candidate could do. We'll salvage the list, and the sales. And we went back to the drawing board -- and inexpensive/free Internet recruiting sites -- to look again for the right person for the work.

Hiring from the competition

Is it good practice to recruit/hire your competitors' best sales reps? On the surface the answer may seem to be a no-brainer: You can collect intelligence and weaken your competition all in one shot. Sounds like a good deal, eh.
But the real world is never so simple, and the risks here are substantial.
Is the sales rep leaving the competition because h/she has weakened, done something wrong, or simply is not working out well? In essence, is the competition going to be happy with the departure?
If the sales representative is indeed talented, is the departure likely to motivate your competitor to more drastic actions: Will your own top sales reps be recruited, for example?
How can you properly check/verify references? Obviously it is rather hard to get a truthful reference by asking your competitor for insights.
How will the hiring affect your current employees? Will they be demoralized, angry, or will there be disputes about leads and territories?
Are you (and your new employee) walking into legal messes? Many companies -- ours included -- build non-compete and non-solicitation components into our employment contracts. While non-compete contracts are often difficult to enforce, judges would probably take more seriously the matter if you actively recruited or hired someone who works at the competition.
Is the prospective employee really leaving the competition, or a 'plant' to gather intelligence about your own business. The candidate can get insights, ideas, and inside information about your company -- and take them back 'home'.
Phew. Looks, indeed, like there are many risks here. So what should you do?
I think it is generally unwise to actively recruit reps from the competition -- you are better off finding your own candidates, training them in your methods, and minding your own business.
But what happens if you receive an unsolicited call from a competitor's employee? There's nothing wrong, in my opinion, in listening to the prospective employee, gathering intelligence, and communicating with your current employees about the developments. You can then apply your standard hiring protocol -- modified to respect business confidentialities and your knowledge of the potential employee. Then, maybe, hire the person. But proceed with caution.

The online sales test

This image is from the website of salestestonline.com. Yeah, this posting is an absolute, free, endorsement of their service.

Some years ago, I posted a question on the now-defunct Google Answers service, inviting researchers to help me find an inexpensive test to evaluate potential sales candidates. Other services were charging $100 or more per test -- and the tests were cumbersome things. Clearly, if the test is too expensive, we won't be able to afford to administer it widely, and thus would have to screen out candiates who might otherwise qualify.

I ended up using salestestonline.com. This Toronto-based service has delivered the goods. The electronic test is so simple it almost appears dumb (and hardly worth the actual cost per test of about $35.00; purchased in blocks). But the report and rating system the test uses is crystal clear -- and the results are instant. We send the test results to all candidates who complete it. It is the perfect 'brush off' to people we don't want to hire (its the test, not us!), and is a great motivator for those we want. And, while the test has not been 100 per cent foolproof, we've found virtually total success if the score is 8 out of 10 or higher on "prospecting" and "closing" and low on "need for direction.

Rewards and innovation

Alfie Kohn

I wrote about 18 months ago about Alfie Kohn's provocative book, Punished by Rewards -- The Trouble with Gold Stars, Incentive Plan$, A's, Praise, and Other Bribes. This article in The Business Innovation Insider provides an important quote from Kohn:

Q:. What type of environment is most conducive to building a culture of innovation?
Alfie Kohn: The absence of rewards is necessary, but not sufficient, to create a culture of innovation. What we also need is what I like to call the "3 C's": choice, collaboration, and content. Choice means that employees should be able to participate in making decisions about what they do every day. Collaboration concerns the need to structure effective teams to facilitate both an exchange of ideas and a climate of support. Content refers to what people are asked to do. (As Frederick Herzberg put it many years ago, "If you want people motivated to do a good job, give them a good job to do.") A workplace characterized by these three features is one where the focus is on working *with* employees to solve problems and devise solutions -- as opposed to doing things *to* employees by treating them like pets.

My perception is that the closer you get to workplace business perfection, the less important 'rewards' in the most visible sense become. (Of course there is compensation -- I don't know of any successful business that will be around for long if it doesn't fairly compensate its employees!) When things aren't quite right, rewards can act like golden handcuffs -- holding things together, sort of. In the end, of course, the business crumbles under the weight of its negative environment.

Business people must tread carefully in moving to a 'reward-free' environment. Unless the other aspects are all in place, things will collapse -- and (significantly) if your business diverges from the ideal model to the, sadly, more conventional approach, you may find, if you have built a reward-free model, your now-disgruntled employees will leave you sooner than later.

I never contracted with the commission-only publishers described in my article, and now believe that all sales employees should be offered a fair salary to start. However, I haven't quite made the jump to 100 per cent salary just yet. I will however pull up an article explaining how one very successful business person has done this, and achieved great results.

Try before you hire

Our hiring system has a key and crucial component -- the working test. No one is offered an employment contract with us until they spend a few days with us, either handling a freelance assignment or a task for some hourly pay. This working test replaces the formal (and stilted) interview. Job interviews are artificial exercises, after all.
The working test really tells us if the candidate can do the work, and belong comfortably within the organization.

Recruiting tales

Image from hireability.com, a California company providing recruiting and resume processing services

We're recruiting two new employees, a full-time writer-editor, and a new sales representative for our planned Northern Ontario publication. In recruiting I've found one of the best sources of referrals is often newly hired employees -- who themselves have made it through our rigorous selection process. Their network often leads to really talented people with different skills. The referral value, of course, is less if a departing employee suggests a replacement. That person does not have a stake in the future of the company. I still remember well a departing editor who 'recommended' someone totally incompetent (who lasted for about three weeks before we hired the right person.)

The referral process through the Carleton University School of Journalism is leading some solid candidates to us. We'll give the finalists a simple two-part assignment. They need to suggest worthy stories -- and then write them (for modest freelance compensation). If they can think, write, and innovate, they have a shot at the job permanently.

The Northern Ontario sales representative is presenting a greater challenge. We've posted online ads in several Northern Ontario communities on the federal government's job bank (in Canada the federal government provides services in the U.S. commonly provided by State employment or labor departments.)

Most of the applications are, well, less than inspired. We don't really read the initial applications -- almost all candidates receive our standard employment questionnaire. For the sales position, we invite candidates to call if they have questions about the questionnaire. Usually this is a sign of intelligence.

But today, I took a call and spent 10 minutes on the phone with someone who clearly didn't get it. And when Amanda, our administrative assistant, read this person's questionnaire responses, she broke out in laughter. I can't say we behaved with total maturity as we reviewed the incongruous and less-than-inspired email. I suppose the document would make a great 'viral posting' but I'm showing enough disrespect for this person without making things worse.

It may be bad form to share around the office a 'hoot' resume/response, but there is serious business underneath the surface here. I believe a business is defined by the calibre and competence of the people it employs -- if employees are talented, motivated, enthusiastic, and work well together, the business will succeed. If not, it will fail.

As a business, we truly are open to anyone -- and our selection system is fair and complies both with the legality and intent of human rights and anti discrimination rules. But we won't reduce our standards. Hiring someone just because they are 'okay' or 'not the worst of the lot' is almost inevitably a mistake.

When the two new employees join us, we'll settle down for a while -- perhaps hiring some back-up administrative and sales support to handle the increased business volume. Next week, we'll have our annual planning and budget meeting and review our progress and success. And in that plan, we'll review the criteria and guidelines for further growth. I'm not going to repeat the mistakes from last time around of expanding wildly without thought or planning.

Here is our general website for recruiting and employment.

Your first impressions, then second and third

Have you ever encountered a situation when someone seems great at first impression, then lets you down? Or (presumably more rarely), you encounter someone who just doesn't seem right, but turns out to be wonderful and effective?

Is there a way around the problems of false assumptions and stereotypes -- so you hire the right people and, equally important, seek the correct prospects to work with and become your clients?

I believe first impressions are, indeed, important -- but you need to set the stage so you see the right, spontaneous first impression that measures the right thing. And then you need to validate your impressions, quickly.

Take, for example, your decision to hire an employee. Assuming the candidate is not someone you already know (perhaps from a freelance assignment or previous arrangement), do resumes and formal face-to-face interviews provide much useful information? Yes, but you know they are filtered -- both by the stereotyping of the function, and the fact they can be faked to some extent. (Resumes certainly can be dressed up.)

You still want a 'first impression' but is the resume what really matters? Our solution: A pre-employment questionnaire; designed to test certain job related skills, ask one or two screening interview/type questions, and describe the job. Obviously, the candidate's decision not to complete the questionnaire solves the 'first impression' question. And the actual responses, and the way they are presented (and whether they a re consistent with the design and writing style of the resume) provide us with plenty of additional information.

Then, there is the interview. A structured sit-down interview invites stilted questions and responses. A 'surprise' prequalification phone interview provides much better first impression validity. (Of course we are respectful that the call may not actually be convenient to the other person and will reschedule if appropriate -- again, the fact of the inconvenience, however, may be another first impression 'signal' -- is the person at another job, or trying to juggle some hidden problem around?)

These first impressions are vital to us -- without good results on the early going, there is no reason to take it further. But this still doesn't help with the people who know how (either deliberately or intuitively) to 'connect' right away.

We then seek to use objective measuring tools. This can be an online sales test (for salespeople), or (for most candidates) some brief work assignment, either hourly or freelance, that at least partly reflects the actual work. We want to see if the person actually can do the work.

Finally, there is the 'last impression' -- the reference checks and validity; usually at this stage, we've weeded out most problems, but it never hurts to have a final verification (and a clear employment contract).

In other words, sure, first impressions are important -- just be sure the first impressions you are 'counting' really are relevant to the work at hand -- and, whatever you do, validate your impressions before making any commitments.

See also this article by Michelle Sterling.

What skills are you seeking in your employees?
Seth Godin's blog posting "What are you hiring for?" resonates with me. Great cover letters, interviewing skills, resumes, and all that stuff are absolutely useless when it comes down to the skills and traits we are looking for in employees. What really matters is, can the prospective employee do the work required excellently, with good integrity, and in a manner that supports rather than destroys the overall enterprise.
Of course, it is never easy to find truly great employees. We've been advertising for some time now, and have received hundreds of initial applications, but even now we haven't committed to hiring anyone (though there are a few serious candidates). Our hiring system is challenging but fair.

1. We don't read nor screen resumes at the initial stage. Virtually everyone who applies is sent a questionnaire. It describes the work, and asks a few questions that give us an idea of whether the candidate is suitable for the work.
2. We only review resumes for people who answer the questionnaire. At that point, we compare the resume with the answers; and look for understanding and comprehension, and (if appropriate) relevant experience and proof of qualifications. We also review our "are there any skeletons in your closet" question -- we aren't checking references at this stage, but invite candidates to tell us if there will be any problems when we do.
3. Then we have a phone interview. This is brief, allows us to probe a bit deeper, and then determine whether the matter should be reviewed further.
4. For sales candidates we administer an online sales aptitude test. This tells us a lot; failure on the test is a yellow flag -- we won't say 'no' necessarily, but certainly will not pay any money for the candidate to prove him or herself.
5. Next stage is the working assignment. Usually a couple of days or maybe a freelance task, this is compensated, and is our way of sizing up the prospective employee -- and allows the candidate to size us up as well.
6. Finally, we check references, thoroughly, before preparing the written job offer/employment contract.

So, what counts is whether the prospective employee can prove he or she can do the job, not whether the candidate can write a nice resume and cover letter; or 'interview well'. In fact, we don't even bother with interviews -- we'll meet local candidates for the work assignment, and out-of-town candidates, if they pass all the tests and are ready for a contract offer, we might have a visit or informal meeting. But why bother with the phony show-and-tell exercises. They don't help us find the people we are really seeking.

Profitable Sales -- A Contractor's Guide

I am reading consultant Michael Stone's new book, geared primarily for the residential contractor. It certainly is one of the most thorough books I've seen and will provide some worthwhile guidance for the renovation contractor, small company selling siding, and smaller new home builder.

I'm not so sure how scalable the bulk of his ideas are to the ICI market, or, for that matter, to the point where you are ready to move from a "do it yourself" business model to one where you hire third-party salespeople; and ultimately a sales manager. The reason: Stone advocates 100 per cent commission sales and, after some years of experience with this, my perspective on the commission vs salary approach have changed.

Beneath the material is a tone (though he denies it) of the old high pressure style of pushing people for decisions. Of course Stone is right about ethics -- it is always wise to get it right with the client before starting the job -- and he is especially correct in insisting that you know your numbers, and ensure you are making a proper 'markup' and return on your work. Finally, you will find his closing ratios/lead tracking guidelines useful, especially if you are trying to see how well you are doing.

But I wouldn't follow his model on recruiting, hiring and compensating salespeople, with a paradoxical twist -- the quality of salespeople we should aim to high should be just as good as he advocates.

I've detailed earlier my system for finding sales reps. It works in Canada but may not apply so well in the U.S. We start off with a decent but not overwhelming salary offer, and then screen heavily using a systematized process minimizing the need for direct contact with bozos or people 'just looking for a job." At the very end of the process, after using third-party sales aptitude/orientation tests and a phone interview, we give our new sales representatives between a day and a week's paid work to see how they do in real life. They need to pass all the tests -- and a reference check -- before we hire them.

While sales are on a salary base, we pay commissions if they go beyond their salary; and the representatives know that consistently falling below their 'salary' is not a good thing. (I am learning a sustainable employee review/evaluation system and will introduce this once I've proven it in practice.)

Finally, since Stone is writing a sales book, he focuses on the sales process with lesser emphasis on the main issue -- developing and maintaining current client relationships. This of course, in my opinion is where most future sales originate, and should be the centrepiece of your selling and marketing strategy.

Would I buy Stone's book? Absolutely, certainly, if are a residential contractor with sales to the general public; we might not agree on everything, but you'll still find many useful ideas in its pages.