When Change Became My Brand.
When your business is underperforming, any change is better than none.
Trust Your Leadership, They Have a?Plan.
We had just closed the Louisville facility and folded it into the St. Louis and Cincinnati Regions.?
Through the transition, I became the new Region Manager in St. Louis.
I was seeing a trend in my career. A lot was changing around me, and I needed to begin to own it.
My new boss, Mark Butler, was the youngest Area VP in the country. He had an MBA from Clemson, was structured, and gave me marching orders during our first meeting. His favorite saying was:
“If You Don’t Know Where You’re Going, Any Road Will Get You?There.”
Analytical, serious, and not flashy, Mark was a high-potential leader whose career was moving fast.
Having documented goals as a new manager removes ambiguity and points you toward where you should be going from day one.
My Most Important Numbers.
Having these two goals as the most important would mean big changes were needed. Why??
First, to get Operating Income to grow faster than Sales meant Expense reduction and a Gross Margin increase.
Second, Sales and Operating Income weren’t currently growing at these rates.
The 80/20 (Pareto) Rule Still?Applies.
My team and I had to move quickly.?
Analysis showed that in the largest of our accounts, sales were not increasing fast enough. Worse, some were declining.?
And the two largest accounts with growth potential were in this 20%.?
Two of the sales reps had very disappointing results. Dan had the largest account in the Midwest in his territory; Barnes General Hospital, a 1,000-bed facility. Vic, who covered St. Mary’s Hospital, with 600 beds was having a tough year.?
A newcomer to the St. Louis Sales team.
Jon had transferred in from another division and was a very competitive salesperson. He had a strong personality and outstanding results.
Take Risks.
Dan was struggling with the size and complexity of an account like Barnes. Thus, a change in representation would be necessary.?
The difficult part of this is that these reps were on straight commission. This meant a pay cut for Dan.
The logic was that a fresh, more aggressive sales rep with Barnes as one of their accounts, would increase sales growth rates. So, Jon was assigned to the account.?
Dan was not happy with this change. I did not think Dan was a flight risk, but I would stay close to him in the near term.
Organic Growth
Our sales at St. Mary’s Hospital were miserable. Vic’s relationships with the decision-makers in the hospital were weak.
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So, if Jon was the answer for Barnes, then I would double down on St. Mary’s.
I announced that Jon would now cover St. Mary’s Hospital also.?
Frankly, Vic didn’t react to this decision, as I think he saw it coming.?
Making changes of this magnitude signaled the other sales reps in the Region that sales needed to grow and that now they were being held accountable.
The unspoken words were: “Grow your sales or lose your accounts to those who?could.”
Profitability Improvement.?
I ran an idea by Mark around a self-funding bonus plan focused on gross margin improvement. Managing the product/profit mix in their basket of goods.?
He said, “It’s risky, yet I like it.”
Each sales rep has a basket of products they sell. Some are more profitable, and some are less profitable for the company.?
So, I put in place an incentive plan that paid the sales reps to grow their higher-profit products faster. If reps did not grow their high-profit products faster than their low-profit products, their commissions were deducted.?
It became a self-funding gross margin improvement “scheme”.
Cost Reduction is not a Strategy. But it is a solid?tactic.
The goals that Mark had given me, gave us as a team, I shared before empowering my department leaders to assess their cost structures and work processes.
Leaders get busy, they even get lazy, if there is not the oversight that comes with accountability. And there?wasn’t.
They recognized that given the sales strategy and structure changes that had been implemented, without expense reduction we would fail to make our financial plan.?
And that meant we would not be paid a year-end bonus.
I learned that “there is always ~5% of operating expenses which can be eliminated.”
Typically cost reduction activities are tiresome, painful, and fearful work.?
Being new to the Region, I wanted to work collaboratively with the department leaders so they could explain why the structure was the way it was.?
Then, we could better align the structure with the strategy and the processes in their departments to make them more efficient and effective.?
The intent was that cost reductions would naturally flow from this exercise.
Change is easy to plan, hard to execute, and slow to show results. Yet when momentum shifts, one sees a waterfall effect.
Pulling these three?levers,?
Delivered the results we?wanted.
Could Change be a powerful brand?
Retired and Loving the Experience, but currently serving on two advisory boards and open to a little more for the right company.
3 个月Yes it can! Clear and simple direction is also easier to lead, and much easier to follow. Not change for change sake, but we are changing because it is necessary.