The Great Business Challenges of the New Millennium -
Part 1 of 6

In 1992, Chally inaugurated a groundbreaking project to identify the critical sales challenges of the future, in particular, the steps necessary to create a "world class" sales force. That research focused on interviewing over 60 top sales executives from many of the largest and best known sales forces in the country.

In late 2002 and early 2003, just over ten years after the original research, Chally returned to leading sales executives to get their perspective on the future of sales in the new millennium. We broadened our scope this time, interviewing over 90 executives from around the world, including The Americas, the UK, Europe, Scandinavia, the Middle East, South Africa, the Far East, and the Pac Rim.

We documented their collective insight about the greatest business (and sales) challenges of the new millennium -- and what it would take to thrive and grow in the future.

Their responses to six core questions produced over 900 pages of transcripts. From those transcripts, we've calculated their concerns and recommendations quantitatively and qualitatively and reported, through their own words, their insights into:

• The greatest business challenges of the new millennium
• The building blocks of the great companies and corporations of the future (needed to overcome those challenges); including a "minority" report
• The new role of sales: the driving force
• Why sales will need to evolve beyond a career into a true profession, (and the obstacles salespeople and sales managers will have to overcome in order to gain a seat at the boardroom)
• How the Information Age will drive the global economy
• How the Internet will become the "sales kit" of the future, including the necessary technical requirements winning companies will require
• The new and still emerging vocabulary of sales

In this issue of The Chally Focus, we present Part 1 (of 6) of this report, including:

• A Brief History
• The HR Chally Group Research Team
• Introduction and Methodology
• Participant List
• Responses to Question 1: What will be the three most important challenges companies will face moving into the future?

Part 2 will appear in the next issue of The Chally Focus. The complete report is available now, as well.

Matching People to Jobs

"For decades, managers have wrestled with the increasingly important challenge of organizing the workforce in the most effective way possible. Value is now created by the productivity gains that come from workforce innovation and more sophisticated people management. In the United States, the service sector's share of employment has grown from less than half of the economy in the 1950's to more than 70 percent today. Labor costs are the single largest component of US business expenses: in 2000 they represented 44 percent of GDP. And as the proportion of information workers in the overall workforce has risen, from one-third of all workers in the 1930's to over two-thirds today, so too have the interaction costs required to conduct business. The cost per interaction might have fallen sharply thanks to technology. Even in traditional manufacturing environments, most people no longer perform simple, isolated tasks but are part of complex production chains. That creates a need for sophisticated tools to coordinate and manage interactions among workers."

According to a recent report from the McKinsey Quarterly,¹ every executive faces a similar people problem: sorting out how best to deploy the managers and employees driving the organization.

Faced with so many possibilities, most larger companies don't attempt to make rational choices and end up intuitively guessing how best to assign employees. By treating people with diverse skills as all the same, companies lose the opportunity for significant gains in productivity and profitability. An effective method to fit the right person to the right job at the right time has long been the Holy Grail. As a result, human capital -- the skills and knowledge of employees -- usually stays an untapped performance lever.

McKinsey believes this is about to change. A new generation of tools has made it increasingly possible to fashion a more sophisticated approach to the management of your workforce. Succession-planning tools can reach across the entire company to find unnoticed talent. Much as supply-chain-management software changed the rules of inventory management, the coming-of-age of human-capital management will revolutionize workforce management.

Before a company can exploit the new technology, it must identify its pivotal workers, know how to improve their productivity, and understand the connection between these resources and financial performance.

McKinsey suggests three steps:

1. Identify your key employee positions
2. Identify the key factors that drive productivity
3. Identify the skills (and training) needed to grow productivity

Key Employees

The first step is to identify key positions. All positions and all employees are not equally key. McKinsey identifies six employee groups: top executives, knowledge workers, middle management, skilled workers, less-skilled workers, and bureaucrats. Depending on the industry, any of these groups can emerge as the most pivotal.

To identify the key groups, you need only evaluate your business model. If innovation and intangible assets are your competitive advantage, top management and knowledge workers are key. For example, a pharmaceutical company depends on its research scientists to develop new drugs. However, a restaurant chain, where costs and services differentiate competitors, skilled and semiskilled workers might play the key role.

Productivity

McKinsey suggests you map the biggest productivity challenges that occur as workers move through the stages of their life cycle at the company (exhibit below), which few businesses do. They interviewed 50 senior managers from different industries and found that while some challenges are common to all employees, others are specific to their own business model.

Skills

Identifying which employees have the key skills and significant potential, and how best to train and deploy them is the next step. In addition, workers should be offered varied incentives and continual development opportunities.

McKinsey also suggests ways to link human resource management to financial results and reports examples of significant savings in production costs, 25-40% in an IT firm as just one example.

McKinsey predicts, "A new era in human-capital management is approaching. Value increasingly comes from boosting the productivity of individual workers and from greater workforce innovation. Meanwhile, the technological infrastructure needed to map out human capital is rapidly falling into place. By achieving the most productive possible combination of workers and work, companies can find a lasting source of competitive advantage."

Chally is proud to be one of the leading developers of the new human resource tools. The Chally Talent Audit provides an efficient, easy to implement system to identify the strengths (and developmental needs) of all employees with predictively valid accuracy across all key positions.

¹ Vivek Agrawal, James M. Manyika, and John E. Richards. "Matching People to Jobs. (Achieving the most productive combination of workers and work is about to become a great deal easier.)" The McKinsey Quarterly, 2003 Number 2 Organization

Who Says Elephants Can't Dance?

E-Mail Prevails As The Preferred Business Medium

Meta Group surveyed employees at 387 companies around the world and reported in April, 2003 that 80% prefer to use e-mail for business communication. Meta reported that just 20% of employees worldwide prefer using the phone.

AOL and RoperASW recently determined that US business Internet users prefer to communicate at work via e-mail over using the phone or using postal mail -- 43% cited e-mail as their communication method of choice, compared to 33% who chose the telephone and 17% who chose snail mail.

Why is e-mail so much more popular for business communication? A vast majority of respondents to the Meta survey cite:

• The ability to communicate with multiple parties (83%)
• The automatic paper trail created by e-mail (78%)
• "Response flexibility" -- e-mail is easier to delay or avoid than someone on the telephone -- (over 80%)

How To Benchmark Sales Excellence

Customers now rank salesperson effectiveness above product quality and features. In this article, based on The HR Chally Group's latest benchmarking research, CEO Howard Stevens looks at how sales organizations are responding to these changing needs and the future challenges in resourcing and managing this critical role.

Most parents would encourage a child who wanted to be a doctor, dentist, lawyer, politician, or business executive, but I suspect few would feel as enthusiastic about them pursuing a sales career.

Traditionally, sales has a negative image. Yet, in certain respects, it has more to recommend it than many of the professional roles mentioned. Take the average return on investment in education, for example. Salespeople typically get back 20 times what they invest in the first 10 years of activity, compared with three or four times for a lawyer. They also experience lower rates of heart disease, suicide, and marriage breakdown. More importantly, for the majority of organizations, the salesperson now represents a key competitive advantage.

For the last 30 years, The HR Chally Group has been compiling data on sales forces around the world to benchmark sales excellence. During this time, we have interviewed over 100,000 business decision-makers at all levels across all sectors and carried out both quantitative and qualitative evaluations of over 200,000 salespeople and their performance in terms of revenue generation. By tracking this information over time, we test out assumptions, see what is real, and compare different market sectors, to help our clients increase their sales and management productivity and profitability.

Over the last eight years, we have also gathered information on more than 7,000 sales forces, rating salespeople against 15 different criteria that are shown to have a statistical correlation with vendor selection. The results are published in our current World Class Sales Benchmarking study. Since the previous reports in 1994, 1997, 2000, and 2002, customers have witnessed major upheavals in the marketplace, driven by rapidly advancing technology, global competition, shifting demographics, and the consequences of mature markets.

As customers address these changes, they are seeking support from suppliers in three critical areas:

• Ability to focus on their core competencies and outsource the balance of their business needs
• Sufficient understanding of their business needs to provide solutions in addition to products and services
• Hard proof of having added value in excess of price

Several other issues have emerged that are worthy of attention. Because problems need to be resolved rapidly, customers will contact sales management directly if salespeople are not authorized to make decisions. Significantly, since 1998, customers have considered the effectiveness of salespeople as more important than product quality or features. However, the salesperson's failure to understand the customer's business continues to be a major criticism. It follows, therefore, that companies can make more progress by focusing on training in this area than on any other factor.

A Changing Role

The salesperson's role is evolving partly in response to technological advances. Many aspects of customer service -- order taking, service delivery, and technical support -- are now directly fulfilled via the Internet or by other personnel using electronic processes. Liberated from managing day-to-day transactions and administration, salespeople are being deployed closer to the customer and have more time to focus on providing total solutions. They are being required to become consultants who understand the customer's business, supported by additional technical, logistics, and project management specialists. Rather than acting as order takers, they have to elevate their point of contact to the economic decision-maker and, perhaps most importantly, add value to their customer's business.

Selling on price continues to diminish as a competitive advantage unless, of course, cost-reduction is an added value in itself. With the uptake of Total Quality Management (TQM) in manufacturing, engineering, marketing, and IT over the last four decades, any competitor can quickly match your product, service, price, feature, option, delivery service, and cost of manufacturing, etc. However, what is more difficult to duplicate is the personal added value provided by your salesperson beyond delivering your product or service. As underlined by the research, the key point of difference is now the effectiveness of your salespeople.

Critical Sales Skills

To evaluate a vendor's potential to meet these needs, we asked customers to judge sales forces on specific characteristics, which have been ranked in descending order of importance. The first three outweigh all others, and roughly speaking, the first two account for around two thirds of everything a good salesperson has to do.

• Personally managing customer satisfaction. Essentially, this means being a single point of contact that the customer can hold to account for getting things done. They do not particularly mind if the individual is not an expert themselves, just that they take responsibility for the results.
• Understanding our business.
• Acting as a customer advocate. It's a surprising statistic that around 25% of the time, your company's systems or processes are the cause of problems for some customers, which salespeople spend almost 50% of their time resolving.
• Is knowledgeable about applications as well as products.
• Is locally or easily accessible. This mainly relates to the use of voice mail and the increased stress on a customer with a problem if they don't know whether their message got through and when someone is going to respond.
• Solves problems and is innovative in responding to our needs. A classic case is being willing to independently purchase and supply your competitor's product or service rather than letting the customer down. What matters is how well they are being taken care of.

Interestingly, sales effectiveness is not particularly related to the compensation level or "prestige" of the industry. Of the markets we monitor, sales organizations in Fine Paper and Business Forms far outranked Computers and Software. Effectiveness tends to be higher where people sell a commodity product or service (service matters more when the vendor admits there is no competitive advantage) and is lower in sectors like Delivery/Freight and Telecommunications that are dominated by a single major competitor.

Future Trends

Although our survey data shows that many sales organizations are well on the way to meeting or exceeding customer expectations, crucial challenges still remain. We have identified five clear trends that, in our opinion, will be critical to their continued progress.

• The core competitive battle will be Sales and Customer Relationship Management (CRM).
• Databases will drive success and sales.
• Sales will become more professional.
• Personal sales relationships will increase in importance.
• The key myths about salespeople will hamper the competitive loser.

Here we explore the first two issues relating primarily to greater systemization of the sales function. The remaining trends surrounding professionalism, recruitment, and management will be the subject of a future article.

Sales and CRM Will Drive Competition

Customer Relationship Management -- by which I mean actually tracking and holding on to customers rather than a software program -- will be the key battleground. You only have to look at the hard facts about customer loyalty to understand why.

For years, we have known that raising customer retention rates by only 5% increases sales by a minimum of 25% (HBR Oct '90). In some industries it is much higher -- software (35%), industrial distribution (45%), credit cards (75%), and advertising (95%). Yet, how many sales organizations are addressing the issue?

Signing up new customers drives the sales culture. The champagne corks pop when we close a new piece of business, but it is customer retention that we should be celebrating. That's what really adds to the bottom line -- profitability per customer is shown to climb by 5% a year for almost 16 years.

Another sobering thought is that being "good" in the eyes of your customer is no longer enough. Eighty percent of all companies deserting their previous vendors described them as "good" to "very good", although customers who rated their vendors as "very good" or "excellent" were 42% more likely to remain loyal (HBR Nov/Dec '95).

In practice, 95% of sales forces are unaware of their turnover in customer activity. Those that do track customer churn are likely to base it on anecdotal evidence from salespeople whereas a more objective measure is to actively rate customer satisfaction. The only true indication that this is happening is if customers are actually sharing details of their business plans with you.

Databases Equalize Competitors

Suppliers have already seen the positive impact of Total Quality Management on their manufacturing, quality control, logistics, and other critical processes. When the Japanese car maker Toyota was preparing to enter the US market, for example, they benchmarked a food store, based on the simple premise that they were shipping a damageable commodity with a short shelf-life (bananas) 3,000 miles and still making a profit.

In virtually every industry, use of TQM and ISO methods has essentially created close to parity amongst competitive offerings. Sales is the one exception and the reason why salesperson effectiveness now accounts for 39% of a business-to-business customer's choice of vendor, compared with price (18%), quality (21%), and offering a total solution (22%). However, the benefits of TQM validate extending it to the sales operation to bring about improvements between their companies and their customers.

Within every organization, a wealth of data exists on competitors, customers, and salespeople, but less than one in ten sales forces collects it in any meaningful way. Nor is it competitive to rely on intuition and common sense. If it was, we wouldn't have the situation across almost all sales forces where 75% of defections of a major customer come as a surprise. Instead, it will require investment in sophisticated systems and databases to manage, communicate, and track sales, delivery, and service processes.

Greater objectivity will be needed in hiring people for what is now regarded as a critical role. US research by the International Personnel Management Association shows that current approaches like a typical interview, a personality test, or a scorable interview are actually little better than tossing a coin. Recruiters can expect to achieve a mere 1% improvement over chance at worst, and 7% at best. A good interviewer using these techniques may be able to describe how someone sounds, acts, looks etc., but what they can't do is predict success in the job.

The next goals for world class organizations will be to improve the recruitment, development, and management of salespeople and, who knows, create a profession we would be proud for our children to work in.

Benchmark Practices for World Class Sales

All top-ranked companies in the survey have addressed at least six of these eight critical benchmark processes.

1. Establishing a customer-driven culture. One indicator is whether you have a customer advisory board that sits in on your strategic meetings while you discuss future products and services and organizational plans.
2. Market segmentation. Only by specializing can salespeople acquire the understanding of the customer's business that is necessary to add value.
3. Managing adaptability. Your systems are the probable cause of customer problems 20% to 25% of the time. How quickly you get the system fixed is down to total quality control.
4. Information technology.
5. Customer feedback and measuring customer satisfaction. The only effective way to get intimate information is by phone. Customers will be much more honest and candid than they will be face-to-face.
6. Sales service and technical support systems.
7. Recruiting and selecting salespeople.
8. Training and development.

The HR Chally Group is an internationally recognized technology leader in assessing and predicting future performance for sales, service, and management positions, evaluating developmental needs and sales force benchmarking. It is partnered in the UK by sales consulting company, Miller Heiman. For more information please contact Lynda Marston at 01908 211212 or visit www.millerheiman.com

AUTHOR BIOGRAPHY

Howard P. Stevens is Chairman and CEO of The HR Chally Group, a sales performance-consulting corporation providing personnel assessment and research services to over 2500 clients. Clients include such major international corporations as Corporate Express, General Motors Corporation, Reynolds & Reynolds, ACDelco, and Unisource, as well as many mid- and small-sized market companies. The HR Chally Group is also strategically partnered with major centers of excellence including The Miller Heiman Organization, Right Management Consultants, and the Alexander Group. Mr. Stevens specializes in sales Benchmarking, the evaluation of requirements for sales and executive positions, and in Market and Customer Analyses. A licensed psychologist, he is known for his research and programs in management systems and motivation, and as the creator of the product market life cycle for sales. With diversified interests, he is the author of several books on sales and management, has written many articles, and is a frequent speaker and radio and television guest. He has been a guest on CNNfn; Bloomberg, USA, National Public Radio, Radio Free America and other business based programs. Mr. Stevens also teaches "World Class Sales" benchmarks at the Columbia University Graduate School of Business, and has presented sales programs for over 100 public and private institutions. Besides The HR Chally Group, he also founded the Ohio Institute of Photography and is listed in Who's Who and many professional references. He has been professionally associated with several Washington-based groups where he has consulted for the US Department of Justice developing police selection techniques, the Intergovernmental Personal Act developing performance appraisal systems, the Department of Defense, and the Atomic Energy Commission. He is married with two sons and lives in Dayton, Ohio. 

- Autumn 2003 - 

Executive Breakfast Briefings: England, Finland, Italy, Ireland

PROGRAM OVERVIEW:

Since September 2002, Miller Heiman has been hosting an invitation-based Executive Breakfast series in various U.S. and European cities. Entitled "Benchmarking Sales Excellence," the event reveals benchmarking research and methodologies used by leading companies to measure the effectiveness of their sales organizations against world class standards.

The keynote speaker is Howard Stevens, Chairman and CEO of The HR Chally Group, a leading provider of organizational development services. Interviewed by CNNfn, Bloomberg, and USA Today, Stevens is co-author of Selling The Wheel and instructs students at Columbia University Graduate School of Business on world class benchmarking strategies.

The 90-minute briefings focus on what's considered the most comprehensive, objective, and statistically valid sales research ever reported:

• Reflecting 8 years of research (1994 - 2002), "Benchmarking Sales Excellence" reveals major trends in sales, not just year-to-year fads.
  
  
• The research is data-driven, including in-depth quantitative and qualitative interviews, which provide 23,000 sets of ratings used to measure the performance of individual sales professionals and sales organizations against 15 different criteria.
  
  
• Based on 70,000 customer-based performance interviews statistically correlated against assessment results for over 300,000 sales professionals.
  
  
• The research is objective. It's based on the most valuable source of sales effectiveness data: customer decision-makers themselves.

WHAT THE ATTENDEES LEARN:

• The 5 most important sales trends that will dramatically impact how your organization sells. These trends will clearly determine winners and losers in the coming years.
  
  
• The 8 Benchmark Practice Areas that differentiate the world's most effective sales organizations.
  
  
• Out of 7,200 sales forces assessed, why only a few are rated as "world class." 

The Graduate School of Sales and Marketing Management
(GSSMM) - Oct. 5-10, 2003

Chally CEO Howard Stevens will present "Achieving World Class Sales Excellence" at the annual GSSMM program, to be held in Syracuse, NY, October 5-10, 2003. This week-long program of leading-edge sales management training has been held each year since 1953.

This year's GSSMM focus includes:

Meet Diane, Anthony, and Steve

HR Chally Would Like You to Meet...

Diane Rice is a member of Chally's outstanding Customer Support Department. Hers is one of the voices you'll hear if you call into Chally with a question, problem, or request. She has been with Chally for 13 years and serves in many valuable roles. Diane processes assessment reports, administers assessments to local candidates at our Dayton, Ohio office, and serves as the "social director" -- taking charge of remembering birthdays, anniversaries, and special events. Diane is married with two grown children and one grandson. She also enjoys keeping up with the antics of her Australian Cattle Dog, Blue.

Anthony Kendall is Chally's Network Administrator (i.e., IT "Wizard") and he makes everyone's jobs easier by taking care of all network and computer hardware installations, configurations, upgrades, maintenance, and security for the company. He started with Chally back in March, 1995 as a temp and quickly became a "keeper" in July that same year. He attended Ohio State University. When Anthony is not saving the technological universe at Chally, he spends his time with his wife Lori and their three dogs, Tramp, Lady, and Sabrina.

Steve Krieg is Chally's Webmaster and graphics/multimedia specialist. A native of Pennsylvania, he received a B.S. in Forest Science from Penn State. He worked as a professional forester in Oregon, Washington, Colorado, Montana, and Maine. Steve has also worked on a charter fishing boat and produced two short nature television programs. Among Steve's many talents and interests, he enjoys landscape and nature photography, and performs volunteer work for several natural resources organizations. He also seems to have accidentally deleted every single photo of himself that could possibly be inserted into a Web page like this. If you can imagine. It's great being the Webmaster!

Corporate Winners - Herman Miller, Hibernia National Bank, Reynolds and Reynolds

If your company has received an award or has newsworthy information, please feel free to notify us by using the form below. This will allow us to share the good news with others in future issues.

To send us your story, click here.

View this article in PDF format

The Eight Critical Success Factors of a High Performance Sales and Marketing Organization

In a major two-year research project, Lincoln Consulting reviewed over 50 business development processes in more than 300 businesses. An in-depth analysis determined that only eight very specific processes drove success. Committing to operational excellence made businesses successful and provided the valuable lessons to apply going forward.

These Eight Critical Sales Success Factors summarize the most important processes to succeed in today's marketplace. They are guidelines to assess strengths and weaknesses against the business development processes that ensure profitable growth.

It took twenty successful years in sales and sales management to learn that lesson. My good friend and mentor, Howard Stevens, Chairman and CEO of HR Chally, taught me to focus on the vital few versus the trivial many. Assuming you have the talent it takes and the drive to be at the top of your profession in sales or sales management, this research provides a benchmark to drive exceptional Business-to-Business (B2B) ¹ sales and marketing performance.

B2B SALES BASICS ARE SIMPLE ENOUGH:

1. Success is measured by profit. Profit is revenue minus costs. You manage revenue and costs through productivity; the more productive you are in selling and in managing your costs, the higher your profit.
   
   
2. Low cost scalability or "leverage" impacts profit. The greater the leverage in the selling process and in managing costs, the higher the profits. The eight critical success factors address both productivity and leverage.
   
   
3. Finally, these critical success factors affect each other. For example, we start with the selection of sales talent because, by definition, you can't have a high performance organization without talent. These effects aren't always obvious. The problem occurs when there is a delay between cause and effect, and in the sales and sales management process there are often many delays. Consider prospecting: a call made today may generate revenue in six, nine, or even twelve months. The longer the delay between cause and effect, the easier it is to ignore the real critical success factor that drove that result. Beware of this trap!

As Rod Stewart says, "Every Picture Tells a Story." And, where complex relationships are a key to success, the process flow of the eight critical success factors helps to detail the causal relationships and define several of the sub-processes that comprise a critical success factor.

THE 8 CRITICAL SUCCESS FACTORS

1. Sales Selection. Organizational sales success is not unlike the world of team sports -- it starts with high quality sales talent. Understanding the critical sales skills required is the first step in talent selection. For example, a large consulting firm analyzed its top performers and found that qualifying, answering objections, perseverance, customer service, negotiation skills, personal responsibility, and a profit mentality were the critical sales skills that differentiated its top performers from its weakest performers. Understanding these critical skills led the firm to devise a critical skills test and tailor its interviewing process to test for those critical skills.
   
   Validated selection processes based on critical sales skills will dramatically increase the odds of hiring the right person the first time.
   
   
2. Sales Performance Management. Even your strongest sales performers need sales management. The three areas that need attention are:
   a. Pipeline management
   b. Forecast accuracy
   c. Ongoing skills training
   
   A management process that monitors these three areas leads to consistently high performance and predictability.
   
   
3. Sales Skills Assessment. Since selling is a practicing profession that requires certain skills, it is important that your sales staff's skills are assessed often. Just as the top professionals in any industry continually practice the fundamentals, sales professionals must do the same.
   
   A sales assessment tool gives the sales professional and management an unambiguous view of the salesperson's strengths and weaknesses.
   
   
4. Defined Solution Offerings. An often-overlooked area is defining your core offerings. Well-defined offerings combined with equally well thought out customer value propositions enable your sales force to:
   
   a. Select,
   b. Propose, and
   c. Close the best opportunities.
   
   Defined offerings keep your focus on those opportunities that create the greatest value.
   
   
5. Demand Creation. Good qualifying starts with having a large number of good opportunities to evaluate. Opportunity generation is an ongoing systematic program. Its major components include:
   
   a. Seminars
   b. Mailings
   c. Telesales
   d. Associated networking
   e. Publishing
   f.  Search engine placement
   g. Channel partners
   
   The mindset for lead generation must be a "24 hour by 7-day a week" activity. How can that be? Published articles, search engine placement, and targeted mailers are just a few examples of lead generation not bound by the 8:00 a.m. to 5:00 p.m. workday.
   
   Lead generating is the first step to building a profitable sales funnel.
   
   
6. Qualifying. The acronym BCMAN will serve your sales professional and sales management well.
   
   a. The "BC" stands for buying criteria. It goes without saying that the buying criteria needs to be well understood, but our research shows that in a great majority of the pursuits, buying criteria is at best fuzzy and at worst unknown.
   b. The "M" stands for money, meaning the procurement funded.
   c. The "A" stands for authority, i.e., does the person have the authority to buy?
   d. The "N" stands for need. Does this prospect have a compelling need to buy? We want to emphasize that the need must be compelling enough to motivate the prospect to action. We all have needs, but it is the compelling ones that cause action.
   
   Expert qualification throughout the whole sales cycle, but especially up front, will increase sales and considerably reduce your costs because your organization is not chasing deals that won't happen.
   
   
7. Proposal Clarity. Clear definition of your prospects' needs, three win themes or less, and no boilerplate will increase win rate. In doing hundreds of win/loss reviews, the two recurring buyer themes were:
   
   a. They didn't understand my need
   b. I didn't understand their proposal
   
   People don't buy benefits they can't understand.
   
   
8. Existing Client Expansion. Existing satisfied clients are fertile ground for new sales. They're easier to approach and we usually understand them better. Our research has shown that a satisfied client will increase its business with you an average of 20% per year. Applying the "rule of the 72" from compound interest, a 20% expansion factor means that your businesses with a given client will double every 3.6 years.
   
   The critical success factors for client expansion are: good delivery and a written client expansion plan that is monitored by management.

CONCLUSIONS

Lincoln Consulting has demonstrated that these eight critical success factors can help organizations evaluate and assess current organizational sales performance. Careful attention to the eight critical success factors will result in a high performance sales engine that achieves quotas, profitability, and predictability.

COMING UP ACES

Our firm uses a methodology called ACES^TM that starts with an

• Analysis of your sales processes. From the analysis we
• Create a business plan that your organization can
• Execute resulting in attainment of the Eight Critical Success Factors and
• Sustainable profit.

If you want to discuss this article or want more information please call Jerry Marterella, CEO, Lincoln Consulting LLC at 1.703.623.3440 or e-mail jerry@lincoln-consulting.com.

¹It's important to note that this article addresses organizations that sell business-to-business. We believe that business-to-consumer selling has a different set of critical success factors. 

Breaking the Great Sales Myths

Rigorous quantitative and scientific research can often debunk long-held "traditional wisdom." Modern "business-to-business" research measuring customer purchase choices, as well as sales force and individual salesperson effectiveness, has provided many of the biggest surprises. The following eight sales "myth-breakers" are a case in point:

1. Business buyers select a vendor more on the skills of the salesperson than price, quality, or service features. It's 39% for the salesperson and only 18% for price.
   
   
2. Customers rate sales forces that sell commodities as the strongest and most consistent "world class" sales performers.
   
   
3. As a talent-based vs. a learned skill, exceptional sales effectiveness is usually inversely correlated with "academic" interest.
   
   
4. Psychological theory can't predict sales success.
   
   
5. Sales excellence can be coached but not trained.
   
   
6. The most commonly trained sales skills seldom influence customers to buy.
   
   
7. The more salespeople achieve success in one market; the more likely they are to fail in a different market.
   
   
8. Compensation levels of salespeople in different markets are not necessarily related to the level of talent needed to succeed.
   
   

THE 39 PERCENT IMPACT

Annual "World Class" sales force benchmarking projects conducted by the Dayton, Ohio-based HR Chally Group have collected data from over 100,000 business decision-makers. Correlating the quantitative ratings against actual purchase decisions makes it possible to measure the impact of a variety of factors on the customer's decision to buy.

According to more than 23,000 business customers, overall customer satisfaction is determined by four major factors, which depend largely on the salesperson:

• Salesperson's competence (39 percent)
  
  
• A total customer solution (22 percent)
  
  
• Quality of product or service (21 percent)
  
  
• Competitive price (18 percent)
  
  

COMMODITY SALES REPS AS STARS

When the customer knows your offering has the same features, quality standards, and even price as that of your competition, the added value the salesperson brings to the table is the only differentiation. There is no "better mousetrap," "new and improved," or even "special offer" that the competition can't or won't match -- almost instantly. Since 1994, almost all of the customers' top-rated or "world class" sales forces sell products that would be described as commodities, and only three companies (selling commodity materials, supplies, or paper) have been named more than once. (See chart below.)

How Customers Rank Selling Effectiveness
in Different Industry Segments

SALES SUPERSTARS USUALLY DON'T SHINE IN SCHOOL

Unfortunately, many companies recruiting for sales positions set minimum academic grade requirements. The evidence indicates, however, that school grades tend to be inversely correlated to later success in many sales positions, especially "hunters" or other natural talent-based positions. The explanation is straightforward; school is a written media, reading is the critical study skill, and writing drives the main testing and grading process. Selling, however, is primarily an oral skill, dependent on listening and communicating.

A facetious example may make the point. Suppose there were two candidates for a sales job. One was a summa cum laude graduate of MIT with a major in physical chemistry, 4.0 GPA, finished in 3-1/2 years. The second candidate barely squeaked through a local community college, 1.999 (rounded to a 2.0) GPA, worked part-time, and took almost five years to graduate while changing majors three times.

Even before we meet these two candidates we could guess about a couple of major points. The first candidate is obviously studious; so much so we can guess he probably only knows a couple of people well: One would be a roommate and the other a lab partner. We know he hasn't had time to spend socializing. He has spent little time with the more "personal" problems that occupy most students. He may not even pay much attention to world affairs or current events.

Our second candidate, however, will have a very different bio. He is likely to know everybody on campus; more importantly, everybody knows him. A large amount of time was spent at part-time jobs, sorority and fraternity functions, and other social events. The student union is a home away from home, where all of the popular issues of the day are debated. Most importantly, he has learned to "answer objections" and "close" through repeated attempts to convince professors to upgrade a "D" to a "C" or even an occasional "F" to a "D." These challenges can prepare the bright and "sales talented" individuals quite well.

PSYCHOLOGICAL THEORY DOESN'T PREDICT SALES SUCCESS

Chally was created as a result of a U.S. Justice Department grant to develop a legally defensible selection test in response to Supreme Court rulings about employee selection. Psychologists were hired to identify or develop the selection instruments or psychological tests best suited to predict future on-the-job performance. Unfortunately, none worked well in predicting on-the-job success. Today, "pop" psychology is still driving the sales of popular books. Theories such as "Maslow's hierarchy of needs" are still taught in many places, even though they were discounted years ago. We should have recognized that many theories are really part of a local culture. For example, the WWII Kamikazes [suicide bombers] did not believe that personal survival was the most basic drive.

One effective approach to predict future performance is based not on psychological theory but actuarial science. The same predictive statistics the insurance industry uses turn out to be very effective.

SALES TALENT CAN BE SHARPENED, BUT NOT CREATED

"You can't train a person for a job they can't do!" This old "saw" is typically forgotten in the rush to fill open territories or cover critical positions. The key is distinguishing between "talent-based" skills and those that can be learned. The most frequently identified talent positions include: sports, military leadership, political electability, entrepreneurism, certain creative writing, computer programming, design, mathematical, artistic, and most sales skills. This doesn't imply you can't teach anybody how to write programs, run for office, or play golf, but all the training in the world won't make most of us into the next Jack Nicklaus or Tiger Woods.

SALES TRAINING IS NOT ENOUGH

We are all familiar with typical sales training. Some focus on the basics and some on more advanced skills. They are necessary but not sufficient. Research in two categories sheds critical light on the sales skills that make a difference in the customer's decision to buy. The first comes from correlating customers: rating of salespeople against the volume, margin, and repeat purchases they made. Only three sales skills made a difference:

• Competence at "personally" managing the total customer relationship
  
  
• Understanding the customer's business
  
  
• Acting as a customer advocate to correct any and all problems

The second source of research analysis focuses on why customers defect. The No. 1 complaint? "The sales rep didn't understand my business."

The most powerful training focuses on learning the customer's business and being able to manipulate your own systems efficiently to serve the customer's business priorities.

TOP-PERFORMING SALESPEOPLE CANNOT SELL IN ALL MARKETS

It would be convenient to believe a simple philosophy, such as "just learn the skills and apply yourself, and you can sell to anybody."

Unfortunately, customers are too different for a one-size-fits-all approach. Some customers need a "high-tech" solution, while others need "high touch." Some want neither and some want both. Just like professionals in other talent-based careers, the jack-of-all-trades is master of none. The most unique or specialized skills include new business development (hunters or rainmakers), strategic account managers, and outbound telesales personnel. Job descriptions that equally emphasize a number of criteria -- such as "penetrate existing accounts," "develop new business," and "expand to multiple contact levels within certain key accounts" -- cannot be filled by 99 percent of even the best salespeople. Even if such a rare superstar were found, the compensation level would be way out of range.

WEAKER PERFORMERS IN SOME MARKETS MAY EARN MORE THAN STARS IN OTHER MARKETS

The message is critical to understand when considering hiring experienced personnel from other business segments. In general, compensation increases as the margin for a product or service increases. When the cost to produce a product or service is a small percentage of the selling price, variable compensation can be extreme. Likewise, when the product or service being sold is a discretionary or infrequent purchase, billing margins and the accompanying compensation can also be high. This proves to be most frustrating for companies hiring high-tech salespeople from a glamorous former position with expectations based on their previous earnings. They usually end up as an expensive mis-hire. 

 Chally Answers Sales Questions - Vol. 4

Q. I'm trying to benchmark what percent of revenues top, average, and low performers (sales reps) typically represent. For example, top performers -- the top 20% of your sales force -- account for 80% of revenue. Do you have such data, and how could I obtain it?

A. We have not aggregated data generically across all industries. It would be interesting but the "moderator" variables within industries are too extensive, in our view, to make it meaningful. If you've tracked our sales benchmark research you'll know the effectiveness of sales forces varies dramatically by industry. Paper, Forms, MRO, and other commodity selling sales forces set a much higher standard of performance. In these organizations, the curve is much flatter and performance for the top would be fairly consistent for the top 35-40 percent. And the weakest performers would be only the bottom 8-12%. The exact opposite is true for most "high-tech" products such as Software or Pharma.

In addition, the type of compensation and the percent of compensation at risk is a strong moderator. The 80/20 ratio would go up to 90/10 or worse when there is little compensation at risk ... and like the effect of higher standards (for the commodity sellers above) where "at risk" commissions are much higher, the performance standard is also tougher and the curve again begins to flatten out. A third moderator comes into play for Strategic Accounts or other "team selling" situations. Where teams can affect each other's compensation plans, the curve levels out again.

Once again good question ... hope this gives you some help.

Q. Have you ever done any research to learn how much of selling success is mental versus skill based? I hear things like 75 percent of selling is mental, etc. Any data or opinions on this? Can you help me answer this question?

A. There have been several studies reported in the Journal of Personal Selling and Sales Management (the only academic and research based journal) over the years that have tried to measure the effect of environmental factors and other "motivational factors" that could influence a salesperson's "mental attitude"... while some impact has been found, the correlations have never been more than r. = 0.2-0.3, which would equate to 4%-9% impact on sales success. Skills (which are usually based on innate talent, not just learned) have been shown to have an impact up to 70%. You never will get higher because economic factors, product reputation (quality/price), and strength of competition will always have a more significant effect than the mental attitude of the salesperson ... unless there is a significant negative morale factor happening such as bad manager relations or broken compensation structures.

So, except for motivational speakers and people selling incentive programs, nobody with an objective review of sales success would rely too much on mental attitude except to remove any negatives.

Q. I am confused about how exactly a company can "own the customer." Does this have to do with creating a relationship with your customer and adding value beyond delivery of the product/service?

A. "Owning" the customer refers to maintaining, knowing, serving personally, and continuing contact with that customer. Thus, if you sell directly to a customer on a regular basis, you "own" that relationship. Someone who sells a product through a distributor allows the distributor to own the relationship. Additionally, if you a make a product but sell it to someone else to put their brand on it, then they own the customer.

Q. In performance profiling, where key result areas and key actions are identified, how does the 80/20 rule apply? I just need to be clear on this to make sure I get it right.

A. The 80/20 rule applies to the rough or intuitive assessment that the world of sales makes about its overall success rates. For example, a typical usage would be that "20% of our customers provide 80% of our sales," or "20% of our sales force delivers 80% of our results." The inverse is also commonly cited, i.e., "the worst 20% of our customers take up 80% of our service time," or "the weakest 20% of our sales force consume 80% of sales management's efforts."

In reality, what most people don't immediately realize is that the 80/20 rule actually describes a normal curve, or the result you would get if everything happened by pure chance. The sad news here is that in selecting salespeople, for example, the 80/20 rule would be the result if you just flipped a coin to decide whether to hire every candidate or not. The same would be said for targeting prospects; 80/20 would mean you're spending as much time to sell to poor prospects as you are good ones ... and so on.

By the way, the scientific research indicates that the typical interview only improves the accuracy of selecting candidates by 1% over that flip of a coin ... that is why Chally, with an accuracy rate up to 25% better than an interview, has been so successful and has been kept by the majority of our clients for as long as 30 years.

General Motors' Recent Success In Going e-HR

General Motors, internationally known as the world's largest manufacturer of automobiles, today likes to tout itself as an e-commerce company that just happens to build cars. From consumer web sites to business-to-business portals linking the company with its vast universe of suppliers, GM has taken to the Internet with a vengeance, even creating a special e-GM unit to lead the charge.

Internally, some of the company's efforts have focused on e-HR -- HR programs that seek to push as many HR-related activities as possible into an online environment. The company's four-year-old intranet site -- where employees once linked to 85 different GM-related sites providing information on everything from retirement accounts to flexible benefit enrollment -- has been transformed into an HR portal.

To the average GM employee, the real difference between the old intranet, dubbed "Socrates," and the portal, "MySocrates," is personalization. Employees now can receive news and information tailored to their position in the company when they log on to MySocrates.

As with every major corporate technology initiative, GM's portal project will be an ongoing endeavor. The launch represents the beginning stages for the portal, which now delivers customized content to two classes of employees but will, in the future, provide it to several levels. In pursuit of this goal, GM's information technology (IT) staff has been working hard to "portalize" data so it can be directed to the appropriate pool of employees.

THE GM PORTAL

The idea behind e-HR and what GM calls the "Employee Service Center" part of the portal is "part of an overall transition that will help focus HR on more strategic, consultative, and operational issues, and less on transactional issues," according to Katy Barclay, Vice President of Global Human Resources at GM in Detroit, Michigan, USA. "The portal will further our goal of a web-savvy workforce and enhance our ability to communicate and collaborate with one another." The Employee Service Center does this by cutting out HR as the middleman, and allowing employees to directly modify their HR-related information.

Beyond the grand strategy of transforming GM into a wired company lies a more fundamental business case: A portal saves a significant amount of money and time. A customer service representative administering HR-related issues costs GM US $1.50 to US $2 a minute, while the web equivalent costs less than a nickel a minute. The portal also allows GM to move to interactive voice response systems and a smaller call center staff. GM believes that doing transactions over the web should reduce cycle times, improve quality, and provide more accurate, personalized information to the employee.

In devising a portal to help employees navigate GM's digital mountain of information, GM decided to create a role-based environment in which an hourly employee will see different information on the screen than a salaried one. A role-based portal allows GM to deliver customized information to different audiences, a salient advantage in a company with an employee population larger than many U.S. cities. As the portal evolves, more roles will be added, but it made sense to start first with the two major compensation groups at GM.

Already a large user of outsourcing services, GM figured the portal project would become a reality more quickly by handing it off to another company. GM discovered that no single company could provide every aspect of the project. So they cobbled together a deal in which an outside consultant would produce the portal with the help of the company's HR IT staff.

E-INFORMATION IN GM

MySocrates offers tailored messages to different GM audiences on the front page and gives users a large menu of information options -- such as reading e-mail, viewing a message from the company's chief executive office, learning about a new program, changing their addresses, creating a personal profile, and seeing their pay stubs. On the HR side, much of what once required paperwork and perhaps a visit with a supervisor or HR now takes place on MySocrates.

Another major advantage that the new portal offers (and that the previous intranet site did not) is that employees can access the site through the Internet, via user names and passwords. Previously, salaried employees generally used the intranet only at work because access from home required special access telephone numbers. Hourly employees worked in plants that lacked large numbers of computers for accessing the company's intranet. These employees did not bother attempting to log in from home, even though they could.

With security concerns largely solved, employees now can use MySocrates from anywhere through the Internet. The company continues to investigate the use of kiosks and other options for allowing access at manufacturing plants.

The portal's goal has always been about freeing employees to do their jobs more effectively. According to GM's IT Head, the bottom-line focus -- the key -- is about the productivity of the employee, not the productivity of HR. GM's philosophy in designing the portal was not just to get productivity improvement for HR, but the underlying tenet was productivity of employees, i.e., how to make the work and life of employees more productive. The portal becomes a framework for work-related job information that one can tailor and customize in a big organization.

THE GM PRE-PORTAL SITE

For every portal, there once was a simple intranet site. The Employee Service Center began as a skunk works project in 1997 involving some IT staff that had trouble even getting people in HR to attend their meetings. IT created a site with static documents, such as employee handbooks, various HR-related enrollment forms, benefits transaction forms, flexible benefit enrollment forms and requests for direct deposits.

During this process, GM decided to put General Motors University classes online, which turned out to be a major undertaking that required IT to program a middleware package just to transfer the data from the university's system to GM's intranet site. IT convinced management to reduce the amount of paperwork involved in registering for a class by putting the process online.

It amounted to the biggest stab at creating an interactive environment in the pre-portal stage. The system allowed an employee to enroll in classes online, to look at his training history, and to build a personal development plan he and his supervisor can review and maintain. That immediately started getting high volume use, especially with the policy that no approvals were required for employees. They just needed to enroll. GM wiped out middle bureaucracy after they learned it was acceptable to the organization.

Early on in the intranet's development, GM's IT department enlisted the communications staff to assist in the content architecture; the interface and user experience, especially the look and feel.

After a little more than a year in operation, GM saw as many as 15 million to 20 million hits a month on its pre-portal intranet site, with many users heading directly to the Employee Service Center part of the site for HR-related information and to use the handful of interactive tools available. The popularity led the company to move the center from IT to HR to sponsor further development.

Accounting for the high acceptance among employees was the success of the Internet and of e-commerce sites such as Amazon.com. If employees could perform transactions on the Internet, why couldn't they also perform them inside GM?

Fortunately, GM's service center had the makings of a mini-Internet on the company's intranet, and the employees noticed that the Company started displaying content and capability the same way the market was displaying content. This provided a lot of excitement.

With HR and management enthusiasm running high, the GM IT team moved forward to add more functions, among them job postings. They never stopped to make a business case for adding a function, knowing the bureaucracy would ensnare them in a web of strategy sessions and endless approval processes. GM's executive staff gave the IT Head and his team partial carte blanche to get the job done.

The strategy worked. The success of the web site and the service center proved so great, HR showed a tremendous appetite for moving even more HR content onto the pre-portal site. Much, but not all, of that content was static rather than transactional, yet employees used those parts of the service center site as much as any of the interactive areas.

If that may come as bad news to web designers who prefer concentrating on creating spinning globes and greater interactivity on the site, it represents what most employees want and need.

THE FUTURE HR PORTAL AT GM

Although GM plans to study how employees use the initial phase of the portal before launching new services, the Company has a few ideas in mind concerning future developments. For example, GM plans to make the MySocrates portal template available to international divisions and expects them to work toward their own versions soon.

In addition, more roles will be added to the North American portal, among them personalized information directed at managers, for example, or for retirees. As it stands, managers see the same portal information today as do other salaried employees. In the future, they will see content directed at them that will not necessarily be available to other salaried employees. The Company also has plans to match the roles with individual corporate messages focused on each target group.

MySocrates is never going to be a done deal. The GM IT team plans a new release every six months, with more functions, features, and services being added all the time. The portal's interface may not change every six months, but the continued personalization of information will make the project forever changing and growing.

Moving custom information up the ladder also will become a focus in the project. The Company foresees a day when leader or manager self-service allows supervisors to see, in one place, everything they need to know about employees, from performance reviews to compensation and benefit packages, and from the courses they have taken to their history with the company.

The Company also wants event-based options built into the portal. For instance, a birth would trigger appropriate information and forms to change health insurance coverage, an employee relocation would generate pages offering moving assistance, and so on.

Of course, employee self-service through the web brings a time of transformation for HR -- which arguably will spend less time filing and maintaining employee records and more time in business units solving problems. The portal is transforming the function of HR within the organization and it will free HR up from mundane activities and allow them to participate in more value-added strategies, activities, and services.

So while GM's e-HR strategy is on a high level, there is no reason why smaller companies can't enter the game and begin providing their employees with customized information.

Chally Answers HR Questions - Vol. 4

Q. How did you define "employee productivity" or "human productivity"? 1) What are the sources of definition of Q1 based on your experiences or theories? 2) How did you define "employee productivity" in consulting firms? 3) What are the methods of measurement on productivity? 4) What are the factors influencing employees' productivity in consulting firms? 5) What are the methods of improvement of employee productivity in consulting firms?

A. We define productivity in a service firm such as a consulting organization in one of three ways:

1. Billable (or cost assigned) time vs. unbillable time. Cost assigned time could be, for example, in developing a new system that can increase the actual asset value of the organization.
   
   
2. Performance against stated objectives. The planned result occurred as scheduled, and was satisfactory. Thus the investment in "compensation," "G & A overhead," etc., were according to plan and within budget.
   
   
3. Contribution to future increases in business (marketing efforts, mergers and acquisitions, etc.).
   

Productivity can almost always be measured or estimated.

The factors affecting productivity are no different in a consulting firm, and are most significantly affected in descending order of significance by:

a. Quality of employees (competency, correct fit to job, ambition, etc.)
b. The quality of supervision and management
c. The work environment (supportive vs. unsupportive in both resources and "culture")

You improve productivity in any service firm by identifying problems in the three factors above and improving them. There are no magic tricks or incentives that do well over time.

Q. As some employees have accrued so much time off, they find themselves in a "use or lose" status. For these employees, is there a standing or precedent that would allow one employee to transfer their excess (or even their non-excess-but-earned) to those who are in a shortage status (having used more than they have earned)?

A. First, there are a large number of potentially governing laws at both the state and federal level. These are relevant if employees are exempt vs. non-exempt, affected by age or seniority or minority status regarding EEOC, Fair Employment Practice, etc.

That aside, you may be opening up a deep hole when you're talking about vacation. There has been some precedence in the sick leave category for an exceptional or tragic situation where co-workers have "conceded" to someone with exceptional circumstances. It's hard to see how you could manage donated vacation time without tremendous political pressure on those who have extra ... that might even be actionable.

An alternative is evolving to lump all paid time (vacation, holiday, sick) into a category called PTO (paid time off) which can be used with certain restrictions at the employee's choice. Sometimes a percentage is bankable (reducing your use or lose category) or convertible to cash. These have had mixed reviews both at the company and employee level.

Q. Assessment centers intend to measure competencies over a 2 or 3 day schedule from a series of In-basket exercises. How far do the dynamic changes in the marketplace capture new competencies for measuring? Even when this is done, how fair is it to use the finding to decide on career growth of an employee who has otherwise rated very high on real job performance? Do these centers reflect the real competencies or just a fad?

A. No assessment process should be the sole determinant of any promotional decision.

Assessment centers still stimulate some controversy based on three points:

• They are very expensive for no more (and often less) predictive accuracy than other techniques that cost only 1/10th as much.
• Some research has indicated that the real predictor of success in a major corporation was having been selected to participate in an assessment center, not how well a person performed in an assessment center.
• The training and skills of the "raters" are critical ... and some believe the training of raters is the most valuable aspect of the process.

So, if you have an employee doing well in a particular job, an assessment center would only "suggest" potential success in another position, but only if it were to assess competence in a different job that could not be judged by performance in the present job. Even so, there are more effective ways to evaluate that are less expensive, time consuming, and dependent on subjective judgment.

Q. I find your articles thought provoking. Are you able to let me have an article/s on the value chain model and how it has been used in real life situations to either verify, or identify the strong link between the "marketing & sales" and "service activity" in a company which makes use of its orders received (sales) to support its service operation. In my case, I'm in the process of completing an MBA assignment on this link in the Lift industry.

A. Thank you for your interest in Chally. Unfortunately, "value chain" relationships are not a major area of research for us. You would likely find more information from organizations that deal with Marketing Strategies. You might also contact Chally partner, The Alexander Group. They specialize in sales process improvement.

Q. Having read Selling the Wheel and looked up this web site, how do you convince potential employers that you can succeed in sales when you have little direct sales experience? ... But you truly believe in what you can do!

A. You have a classic question and there are two good answers, at least.

First, do your homework on the potential employer. Present a brief "elevator story," which is presenting the benefits of a particular product or service in two minutes or less (like during an elevator ride). To do this well you'll have to identify the key benefits, show proof that it really works, and provide a compelling "risk" to the prospect if they don't do it. Here is one of Chally's elevator stories:

Second, you might have yourself assessed (by Chally of course). We could run you against a variety of sales profiles, find your strongest area, and write the report on that profile for you to offer to any prospective employer.

Q. Why do so many selection tests not make a recommendation?

A. The basis for reluctance to make a selection recommendation as a result of any selection step is usually a fear of Employment law (EEOC, ADA, etc.), which requires two steps or "hurdles" to pass in any selection process if that process is to "pass" their guidelines.

The first is that the selection step (recruiting and application processes, interviewing, background check, testing, etc.) does not result in a discriminatory impact. Discriminatory impact is decreed to be that minority groups must "pass" that step at a rate equal to at least 80% of non-minority candidates. This is called the four/fifths rule. For example, if 50% of white males passed, then at least 40% of all other categories must pass. Through careful validation of all our profiles, Chally always delivers a profile that meets those criteria as documented by sample sizes in the 10-50,000 candidate range for each principle minority category. Chally was created by a grant from the US Justice Department to develop legally defensible selection tests. It is an extremely expensive process. To maintain that level of integrity, Chally has completed literally hundreds of validity studies and maintained our database for over 30 years. As a result, we have never lost a selection action in court, or even reached the court stage except to file an "amicus brief" on behalf of the court. In addition, we have never settled out of court as so frequently happens if your proof isn't rock solid.

The second criteria is that if a selection step does have a discriminatory impact, it must be validated to actually predict future success on the job. Accurately describing an individual in the present ("validating" descriptive accuracy) does not meet that criteria. In addition, even if you have a valid "predictive" selection step but there is another alternative that does not have a discriminatory impact (the first criteria), the law requires the non-impacting option be used.

So, if you have a test that has discriminatory impact (or you have insufficient data to prove otherwise) or if the test you have is descriptively accurate but you can't prove that it is "predictively" valid, you have only one alternative ... to refuse to make a selection recommendation or base a selection decision on the results. If the test isn't used to select people then selection law doesn't apply.

What this essentially does is take the test vendor off the hook, but not the company using the selection tool ... unless it could prove that minorities who scored lower than majority candidates were hired anyway while at the same time majority candidates who scored higher than minorities were NOT hired anyway ... of course, if that is what you're doing, the test (or any other selection process) is not adding much, if any, value. But you'll still go to court and probably have to "settle."

Q. It is not really the problem, but I just felt that it would be better if I could take this questionnaire in my own native language (Japanese) as it took hours to complete it, sometimes referring even to dictionary to understand the meaning of questions.

A. Thank you for your note. We also believe strongly in your idea of making the experience more user friendly by providing the assessment in other languages. To date, we have the assessment available in French, Spanish, Swedish, Finnish, Indonesian Bahasa ... and are working on German. We are prioritizing translations as quickly as we can, but the process to do it really well is very elaborate.

1. We have a bilingual translator translate the English version to the other language.
2. We then have an independent bilingual translator translate the new language version back to English, and then negotiate the differences between both translators.
3. Next we have half of a "sample" group of 20-40 bilingual people take the English version first, then two weeks later, take the second language version. The other half of the sample takes the assessment in the reverse order.
4. Subsequently, we review the assessments of each to identify items where many of the sample answered differently on the two languages ... and rewrite the translation of those items to resolve the misunderstanding of the meaning of the item.
5. Finally, we build a database of many people taking the assessment in the new language to see where there are any cultural differences in the basic norms.

To date, we find that the profile scales that measure work skill are consistent across all cultures, but the motivational scales can be different in different cultures.

We hope this helps your understanding of our efforts, and again, thank you for taking the time to contact us. 

 Passionate Leadership is Crucial in Spreading Lean Culture

According to a survey by Stiles Associates conducted at the EASTEC Advanced Productivity Exposition, 83% of respondents are familiar with "lean manufacturing," with more than half in some stage of developing a lean culture (15% have fully integrated lean and another 41% have begun the process).

Top reasons cited for implementing lean are:

1. Cost savings (28%)
2. Productivity improvements (23%)
3. Competitive pressures (12%)

The greatest benefits among those using lean are:

1. Customer responsiveness (16%)
2. Increased speed to market (10%)
3. Reduced product development cycles (9%)
   

The greatest obstacles to developing a lean practice included:

1. Resistance to change (27%)
2. Ineffective leadership/lack of lean leaders (21%)

When asked to identify the most important personal characteristics of lean leaders, respondents cited:

1. "Passionate" (33%)
2. "Enthusiastic" (17%)
3. "Hands on" (12%)

Employee empowerment is the backbone of the lean movement and depends on the right leadership. A unique breed of executives is required to create change and develop a bottom-up culture of waste elimination, continuous improvement, and customer responsiveness.

Respondents also identified other industries/sectors that could benefit from lean principles, including:

1. High technology (62%)
2. Health care (59%)
3. Automotive (58%)
4. Consumer products (57%)
5. Telecommunications (49%)
6. Management consulting (45%)
7. Insurance (44%)
8. Banking (44%)
   

The survey was conducted among nearly 100 manufacturing executives at the EASTEC Advanced Productivity Exposition in West Springfield, MA on May 20 - 22, 2003.

Losing Through Intimidation

Every selling opportunity involves an Economic Buyer, the person who has the final say on whether your proposal is a go or a no. Salespeople are more likely to run into a high-level executive than the middle manager that used to be in this role of Economic Buyer. The higher the title, the more likely that a salesperson will feel uncomfortable, even intimidated. In preparing yourself to meet an Economic Buyer, your psychological readiness is just as important as your knowledge of your product or your observance of the common amenities such as making an appointment.

There's only one sure way we've found to overcome feelings of intimidation when you confront a high-level executive. That's to remember that, although the Economic Buyer for your sale might have a three-inch-thick carpet and a four-car garage, he's still a human being and it's to that human being that you're selling.

We don't mean he's "just an ordinary Joe." He's not. In corporate America, people who play the role of Economic Buyer are different, if only because they make more money than the rest of the population. But if you focus on the differences, social or economic, between you and your Economic Buying Influences, you'll only intensify your feelings of discomfort.¹ You want to minimize those feelings. One way to do that is to remember the man or woman behind the glamorous role.

You might think of John Smith in simply functional terms, as the person who puts you in fear and trembling for your career because he has the power to release the funds for your sale. But maybe he's also a doting father, a lousy tennis player, a guy who danced in his socks at his high school reunion, a homeowner who waters his lawn on Saturdays and watches football and orders in Kung Pao Chicken, just like you. Just like you, too, he's got regrets about the past and hopes for the future and needs, both business and personal, that have to be attended to right now.

Here's the most important thing of all to remember: Since you're offering him a proposal, you are in a position to fulfill some of those needs. In order to do that, though, you have to learn whatever you can about him as an individual.

Again, as is so often the case when you're clearing away difficulties that stand in the way of your sales objectives, a reliable Coach (someone in or outside the buying organization who can give you information about the Buying Influence) can be a valuable asset. A good Coach can help you turn those difficulties into opportunities by providing answers to questions about the Economic Buyer's business needs, and about his or her personal interests as well.

Answers to the first type of question will help you identify which corporate Results your product or service can provide to the buying company. Answers to the second type of question will help you determine the Economic Buying Influence's personal Wins. Having your Coach brief you, before you make that first call, on what your Economic Buyer is like as a person is an excellent way of zeroing in on likely Win-Results -- and thus reducing your uneasiness in this key individual's presence.

BETTER INFORMATION WILL LEAD TO BETTER ACCOUNT MANAGEMENT

Good account s