CHANGE OPTIMIZATIONGetting HR and Sales to Work Together in a Collaborative Way

April 2013

PresenterJoseph DiMisa, CSCPSenior Vice President, Sales Effectiveness Practice Leader—Sibson Consulting, a Division of Segal

Joseph DiMisa runs the sales effectiveness practice for Sibson Consulting, where his areas of expertise include working with companies to develop and implement direct and indirect compensation plans, sales strategies, and sales effectiveness programs. He has more than 20 years of experience working with telecommunications service providers, computer and communications equipment providers, software, and manufacturing companies.· Author of Best Selling business book

The Fisherman’s Guide to Selling · Author of Sales Compensation Made Simple· Certified WorldatWork C5—Elements of Sales Compensation

and C7 Strategic Sales Market Pricing

Part of The Segal Group

One of the 10 largest benefits consulting firms in the US

Five practices dedicated to improving human capital effectiveness: Sales Effectiveness

Performance and Rewards

Organization and Talent

Retirement

Health

Introductions: About Sibson Consulting

Extensive Experience. Sibson Consulting has 50 years of experience successfully serving clients and has worked with most of the Fortune 500 and many small and mid-sized companies. We have experience with a range of company types and industries.

Some of Sibson’s Experience

3Com Corporation Adelphia Adobe Systems Inc. Apple Ariba Inc. AT&T, Inc. Autodesk Avaya Inc. Bank of America Broadcom Corporation CA Technologies Cable One Canon U.S.A., Inc. Centive (acquired by Xactly

Corporation)

Cigna Cisco Systems, Inc. Citigroup Inc.

· Comcast· Cox Enterprises, Inc.· Danka Office Imaging Co. (acquired by

Konica Minolta Business Solutions U.S.A., Inc.)

· Dell Inc.· Hyperion Solutions Corp. (acquired

by Oracle)· IBM· Insight· Iron Mountain Incorporated· iSoft Corporation· Knology· Knowlagent, Inc.· Memorial Hermann HNP· Mentor Graphics Corp· Microsoft· Motorola Mobility Inc.· NFL· Nortel Networks

· Oracle Corp.· PricewaterhouseCoopers LLP· Questlink· Qwest Communications (acquired by

CenturyLink)

· Rogers Communications· Scientific Atlanta· Siemens USA· Sprint Nextel Corp.· Sun Microsystems (acquired by Oracle)

· Symantec Corporation· Symbol Technologies (acquired by

Motorola)

· Time Warner Cable· Unisys· Verizon Communications Inc.· Xerox Corporation· XO Communications, LLC

Why Change? – Organizations Need to be Better/Smarter/Bolder

“Innovate or be left behind”

“Embrace bold thinking”

“Redefine what is meant by selling

before someone else does it for you”

Human Resources and Sales Working Together – Sales Can’t Do It Alone

They know they cannot do it alone…

Increasing growth goals

- 15 to 30% year over year

Turnover high in sales organizations

- 20 to 25% considered good turnover

New product launches

- 3 to 4 a year

How HR Plays a Role with Sales?Human Resources executives and their staff confront change continually…

This experience makes them sensitive to the many tangential issues that attach themselves to any effort and gives them an objective view of what works and what does not when making change happen!

In this respect, HR executives can be exactly what their sales counterparts are seeking – Namely, confidantes and partners in the organization change process

Human Resources and Sales Working Together

Perfect Fit, Right?

But what happens?…

Human Resources and Sales Working Together

Good intentions but bad execution…

In extreme examples, the success rate drops by another 40%... HR comes with good

intentions Data, Energy, Process

Sales has specific goals Get It Done

Instead: Two Separate Organizations…

HR falls short on business acumen and aren’t conversant in the language of sales.Sales does not understand how their requests affect other areas of rewards,

organizational structures, equality, or consistency. LETS TAKE A LOOK…

Numerous (30-40 in last 3 years) organizations initiate large scale change to become more efficient, profitable and well positioned, without coordination…

…less than 30% of these changes are successful in achieving the desired results

Whether the change is a technology implementation, an internal reorganization, a job role change or sales compensation change or an acquisition integration, organizations spend millions of dollars and significant time researching, evaluating, selecting and implementing the right approach…

But little effort is spent getting HR and Sales to work together!

Let’s Look at What Happens – Our Experience

Most Frequent Executive QuotesDoes this sound familiar to you? Who Said It?“We need to make our leaders understand that HR deals with real business issues.”

“The need to have qualified people has greatly increased.”

“We are hungry for information on how to have better metrics.”

“Everything HR does must directly impact/support revenue, productivity and building the company’s desired culture.”

“HR should get out of the way of what the business needs to do.”

“If HR wants to be a business partner they need to be measured on business results and put their pay at risk.”

“HR needs to understand the business but focus on the people stuff.”

“Sometimes HR jams things down our throat and then makes us pay for it.”

“HR needs to be more like Sales, listen to what we need, then hook what they have to what we need.”

The Sales Organization’s RoleLet’s Clarify for a Minute….

Sales typically has the pulse of the customer base, the products and operations

Sales And Marketing Goals· Achieve and surpass their growth and profitability

objectives· Drive the productivity of the sales force· Improve the cost effectiveness of their selling efforts· Customer segmentation and targeting · Channel selection and management · Sales and service role definition· Sales and service organization structure· Sales compensation and performance management

Role of Sales…

Opportunity for Help!

Role of Sales…

Human Resource Goals

The HR Organization’s Role

Building a Talent Portfolio

Demonstrating and Measuring Value

Developing New Functional Capabilities

Leveraging TOTAL Rewards Offerings

We are dedicated to providing the institution with value-adding services in the following core areas:

Staffing and recruiting

Employee relations

Learning and development

Human Resource information systems

Compensation

Benefits

Communications

Payroll

Risk management

Strategic and organizational development

Role of Human ResourcesTen Key Functions

SAMPLE

Purpose and Value of HR Service

And HR faces a related set of challenges…

How do we leverage HR to help our

colleagues become better people managers?

How do we leverage HR to help our

colleagues become better people managers?

How can we respond to the increased diversity

and mobility of our workforce through our

compensation and reward structures?

How can we respond to the increased diversity

and mobility of our workforce through our

compensation and reward structures?

How can we work proactively to address the

potential loss of key management and staff as

they approach eligibility for retirement?

How can we work proactively to address the

potential loss of key management and staff as

they approach eligibility for retirement?

Can we balance the need to increase productivity and

manage costs while retaining talented

management and staff?

Can we balance the need to increase productivity and

manage costs while retaining talented

management and staff?How can we control rising

compensation, health and

retirement costs?

How can we control rising

compensation, health and

retirement costs?How can HR use

technology/ outsourcing to help us work smarter, faster,

and more cost-efficiently?

How can HR use technology/

outsourcing to help us work smarter, faster,

and more cost-efficiently?

How can we assess the impact of HR within the

context of an institutional

assessment?

How can we assess the impact of HR within the

context of an institutional

assessment?

How can we design a compelling HR value

proposition that meets the increasingly demanding needs of a wide range of

internal customers?

How can we design a compelling HR value

proposition that meets the increasingly demanding needs of a wide range of

internal customers?

OUR PERSPECTIVE

As does Sales…

What is our current growth capability?

What is our current growth capability?

How well to do we know our customers?

How well to do we know our customers?

Are we consistently targeting the right

opportunities?

Are we consistently targeting the right

opportunities? Do we have as much clarity into the

customers we don’t have as we do with current customers?

Do we have as much clarity into the

customers we don’t have as we do with current customers?

What are some quick hits for

revenue improvement?

What are some quick hits for

revenue improvement?

Are we using the most effective

channel mix and deploying optimally?

Are we using the most effective

channel mix and deploying optimally?

Are we aiming and executing in the right

directions?

Are we aiming and executing in the right

directions?

What is the appropriate mix of channels to reach our overall growth

objectives?

What is the appropriate mix of channels to reach our overall growth

objectives?

OUR PERSPECTIVE

What alternative channels do we

need to reach our growth objectives?

What alternative channels do we

need to reach our growth objectives?

Are we aligning our organization with the market?

Are we aligning our organization with the market?

Are we flexible for the customer, or do we want

the customer to be flexible for us?

Are we flexible for the customer, or do we want

the customer to be flexible for us?

Are our management jobs contaminated with selling responsibilities?

Are our management jobs contaminated with selling responsibilities?

How can we leverage current

staff?

How can we leverage current

staff?

These points of view can sometimes become misaligned.

Misalignments are common among Sales and Human Resource organizations. Best-in-class organizations realize this and work to

ensure both sides have a view into their peers’ world.

Anticipating the financial, market and organizational dynamics that may have an impact on the organization’s future performance is not easy

Getting Human Resources and Sales working together to anticipate financial, market and organizational dynamics is the key!

Fostering a Better Relationship Between Sales and HR

Misalignments are common among Sales and Human Resource organizations. Best-in-class organizations realize this and work to

ensure both sides have a view into their peers’ world.

First Step: Change your Thinking Around Change…

We talked about the differences, but now add change. Address it first! LETS TAKE A LOOK…

With Human Resources and Sales there are typically four key human factors that are commonly overlooked:

Alignment of Project Teams (HR HEAD/Sales Head)

Alignment around change objectives, decision making authority, interfaces and roles

Involvement of Incumbents (Everyone Has a Role)

More Involvement and integration of divisions, functional groups, subsidiaries or aquirees

Communication to Stakeholders (Once a Week At a Minimum)

More Communication to ensure people are aware, understand and buy in to the changes

Organizational Design Impacts (Almost like Role Play)

Give Organizational Considerations around how the change would impact the work and roles of functions and people

Change the Way You Attack…

The majority of change issues arise because priority is placed on the change itself rather than the organization and the people the change

is impacting

Second Step: HR needs to understand the Sales business function and what is important

Acquire fluency

Understand what a “first level-line manger” is struggling with

Create a dialogue that is helpful and useful

How to Sync-Up Sales and HR?

PAR, CCOS, VCOS, FCOS, SPA, Time in Motion Studies, Funnel Management, Pipeline Yield, ETC

HR with the sales organization’s assistance, needs to create, use and employ throughout the organization a broad set of financial and organizational indicators as a system to help and forewarn the executive teams of future organizational challenges and analyze what’s going on from both sides’ perspective.

HR Adding Value to Sales - Get Tactical

Creating an “Early Warning System”

A Broad set of Indicators that helps judge the strength of an organization.

Three major asset categories:

1. Solidarity of the customer base

2. Operational Efficiency

3. Human Capital Efficiency

“Sync-Up” HR and Sales to Work More Effectively

Knowing these things can enable HR and the executive team to scan the relative strengths of the sales force in each of the critical asset categories

What is EWS, you ask?

Asset Category Possible Indicators

Solidarity of the Customer Base— What is happening in the market?

· Is last year’s net new customers higher or lower than customers lost? (What are expectations for this year?)

· What percent of sales volume comes from the top 20% of our customer base? (Is this what it should look like?)

· Are sales per sale channel/distributor increasing or decreasing?

· What percent of total revenues come from sales of new products? (Is this what it should look like?)

· Has there been a significant market change in the industry?· How do we rank in market share versus our nearest

competitor? (Is this acceptable?)· Is our average margin increasing or decreasing relative to

competitors? (What does the future hold?)· Is our revenue growth versus competitors increasing or

decreasing? (What does the future hold?)

What does it mean?

Areas of Interest for Both Sales and HR

Select a few of the most relevant to your organization.

Areas of Interest for Both Sales and HR

Asset Category Possible Indicators

Operational Proficiency—What is happening in the organization?

· Is our cost of sales and G&A (general and administrative expenses) as a percent of sales decreasing or increasing?

· Are profit margins increasing or decreasing? (Is this what it should look like?)

· Is the sales force turnover rate decreasing, stable, or high?· What causes turnover in the organization?· Are sales and HR aligned in the hiring practices?

What does it mean?

Select a few of the most relevant to your organization.

Areas of Interest for Both Sales and HR

Asset Category Possible Indicators

Human Capital Efficiency— What is happening with sales?

· How many management levels does the sales organization have? (Is this too few or too many?)

· What are the spans of control in the sales force? (Is this the right level?)

· Are overall company labor costs as a percent of sales increasing or decreasing? (What is causing this trend?)

· Is actual net income over the last two years above, below, or at budget? (Where is it headed?)

· Is customer satisfaction increasing or decreasing? (Why?)· Is quality (as measured by returns, write-offs, callbacks, back

orders) improving or on the decline?

What does it mean?

Select a few of the most relevant to your organization.

Dashboard as an Early Warning System

By Leading cross functional teams to analyze the potential upcoming speed bumps the sales force will be facing,

management can Forecast What Challenges lie ahead and prepare to meet them.

Create a set of questions for each area that is specific to your business (some should be subjective, others should be quantitatively based)

Work to answer questions from both an HR point of view and a Sales point of view

Answer questions not only based upon current data but expectations for the future

Compare answers and scores from both organizations Identify areas of concern on either side Address these concerns and put programs, approaches, teams,

etc. together to help align perspectives or create solutions You can also answer questions from each side’s perspective and

do a cross evaluation to compare views

How Does It Work?

Having both sides agree on assumptions and then consistently calibrating the points of view creates an ongoing dialogue regarding organizational dynamics

and perceptions from a Sales and Human Resources perspective.

How to Get Started

To create and employ the early warning system, HR and Sales should collaborate on four actions:

Refine: Select 4-5 indicators in each asset category that are the most relevant.

Calibrate: Calibrate overall performance for each indicator. Consider performance over the last 3 years.

Level of Importance: Weight the scores based on the relative importance and accuracy of each indicator.

Rate: Compile the ratings for each asset category into an overall score for each of the last 3 years and then evaluate the sales organization’s performance in light of the score.

Step 1: Refine the initial framework. The high tech firm chose 4 indicators to assess the Solidarity of its Customer Base:

Net new customers last year

Percent of sales volume from the top 20% of the customer base

Sales through average distributor, and

Revenue growth versus competitors

Creating An Early Warning System to Track Issues or Change

Step 2: Calibrate overall performance for each indicator. The firm then assembled a team of controllers, sales administration representatives and HR managers to assess performance on each of the four indicators for different performance periods. As indicated the 2011 assessment found that:

Net new customers in 2011 was greater than customers lost, meriting a rating of 4 on the gauge

Percent of sales volume from the top 20% of customers in 2011 was 65%, so that indicator got a rating of 5

Average sales through distributors were increasing somewhat, so the team assigned a rating of 4

Finally, revenue growth versus competitors was on the upswing, producing a rating of 5

Creating An Early Warning System to Track Issues or Change

Step 3: Weigh the relative importance and accuracy of each indicator. The team weighted each indicator from 1 to 4 with 4 indicating the most important indicator of customer solidarity.

That weighting multiplied by the performance rating determined the overall rating for each indicator. The ratings were totaled to yield an overall rating for the category. The customer solidarity score for 2011 was 4.6

Creating An Early Warning System to Track Issues or Change

Indicators of Solidarity of Customer Base

Step 4: Establish an overall score and then evaluate the sales organization’s performance. The high tech firm completed the exercise for the other two asset categories—Operational Proficiency and Human Capital Efficiency. When those assessments were completed, they compiled the ratings into an overall score for each asset category.

Next, they evaluated the sales organization’s performance in light of the score.

For example, if the trend is positive, is it positive enough? If the indicators show stable performance, is top management comfortable with that trend or should the sales organization be reaching for more? If trends are negative, what can be done to turn things around?

Creating An Early Warning System to Track Issues or Change

Summary of all Indicators

Creating An Early Warning System to Track Issues or Change

Compare this score quarter over quarter, year over year, division to division to establish trends

With both Sales and HR working together, the Kotter Method, an 8 Step approach to managing change, becomes easier. “A piece of cake” The 8 Steps are as follows:

Create Urgency Form a Powerful Coalition Create Vision for Change Communicate the Vision Remove Obstacles Create Short-term Wins Build on the Change Anchor the Changes in Corporate Culture

Recommended Implementation Plan

Conclusion Once the performance indicators and the relative

weightings of an “Early Warning System” have been developed, it is helpful to analyze the trends over 6 months and keep score over several years.

Trends over time provide a good indication of the sales organizations overall health as well as the effectiveness of the actions taken to reverse any downward trends.

Thank You

2018 Powers Ferry Road, Suite 850 Atlanta, GA 30339-5003T 770.403.8006 www.sibson.com

Joe DiMisajdimisa@sibson.com

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