the productivity puzzle - pareto law recruitment

WHITE PAPER

The Productivity Puzzle

CHALLENGE 2015: INCREASE YOUR OUTCOMES, NOT YOUR OUTGOINGS.

It’s the dawn of another year into the post-recession recovery, but forecasts by the Office for Budget Responsibility show the UK still faces considerable risk. Experts point to one major factor: productivity. Business may be expanding, but the level of output per unit of input remains at a stubborn 4% below its pre-crisis level, with productivity failing to rise in tandem with improvements in output. 6 years since the recession hit, and Britain’s people still haven’t recovered to match demand.

How can business organisations defeat productivity stagnation to increase outcomes, while protecting outgoings? The productivity puzzle has economists and financial forecasters scratching their heads and regardless of company objective – whether profit or revenue growth, expansion or market penetration, boosting sales or increasing turnover – every organisation has an invested interest in resolving the challenge. With the UK falling behind other developed countries, the productivity gap is continuing to widen. However, with a strategic 360-degree approach, 2015 will be the year business turns fortune around.

This whitepaper explores the role of productivity within the sales function and its greater impact upon business results, identifying cause for the decline and strategies for driving activity: keeping your people motivated and focused on a day-to-day basis.

WHAT DOES “PRODUCTIVITY” LOOK LIKE?

Productivity/prɒdʌkˈtɪvɪti/noun1. The state or quality of being productive.2. The effectiveness of productive effort, especially in industry, as measured in terms of the rate of output per unit of input.

At a “bigger picture” perspective, productivity is defined as the quantity of goods and services produced per worker, per hour. At a grass-roots level, productivity is measured across a spectrum of different activities; most typically within the sales environment, these will include:

- Call volume / volume of leads generated- No. of orders or sales- Meetings made and/or attended- Conversion rates- Average order value- Revenue or sales targets and many more.

The Productivity Puzzle: Strategic Hiring, Training and Incentivising to close the Productivity Gap

HEAD OFFICE ADDRESSPareto House, Church Street, Wilmslow SK9 1AXT 08436 367 669 W www.pareto.co.uk E [email protected]

WHAT DOES “PRODUCTIVITY” LOOK LIKE? (cont.)

Obtainment of targets, whether at individual, team or business level, is the definition of that organisations’ achievement and production of outputs. However, very few organisations are fully capitalising upon all available resource or capacity: no business organisation can claim to be 100% productive, no matter how good those outcomes may look on paper.

The marginal gains principle is valuable in understanding the power of productivity. Consider a scenario whereby you could increase an individual’s level of productivity by just 5%. If that individual makes an average of 300 calls per week, that’s an additional 15 calls, per person, per week. In a sales team of 6, that’s 90 calls per week – 360 calls a month.

Let’s say that converts into 6 additional meetings; 2 of which convert into business for the organisation. Consider the average order value for your organisation, times 24 over the course of the year: that is the numerical, financial value of just 5% additional productivity.

PRODUCTIVITY HURDLES: WHAT’S IMPACTING OUR OUTCOMES?

Economic trends and an abundance of research point to a multitude of factors impacting productivity. Historical data shows a decline in productivity in line with economic crisis: it will come as no surprise, therefore, that business productivity took a significant hit when the UK crashed into recession in

2008. What creates the puzzle for economists this time around is that productivity recovery is failing to match expectations.

Research suggests that average employee motivation and levels of morale currently stand at an all-time low, triggered by economic factors including the stagnant state of real-wages, changes to retirement age and the continuing credit ‘squeeze’ impacting upon the cost of living. In addition, the squeeze of the recession felt by UK organisations has had a ripple effect on budget availability for research and development, staff training or up-skilling, innovation and recruitment.

“Hoarding” of staff also became characteristic in the midst of the recession, with members of staff reluctant to risk their financial security by moving jobs; companies were likewise faced with the financial impact of losing or replacing staff. Without an influx of fresh talent or the pressure to perform, many organisations will have suffered the impact of staff going unchallenged, or even falling standards of practice.

A shift in priority for business in the recovery period may also be a contributor. With pressure to increase market share or grow as part of the recovery, focus has shifted to winning new business: whether by on-

boarding staff with a new-business focus or investing resource and budget to acquire new customers. This is traditionally less cost-effective than a retention focus for existing accounts, requiring higher levels of activity for lower results; impacting on overall productivity levels.


Employee motivation and levels of morale currently stand at an all-time low... how can business organisations defeat productivity stagnation?

A PRODUCTIVE SALES TEAM

There is no singular quick-fix to drive sales team productivity; for every individual organisation, there is a unique recipe calling for a strategic mix of factors that will promote high activity levels and results. Essentially, it lies with management to ensure the business has:

- Hired the right people;- Placed them in the right places;- Provided them with the right tools, training and knowledge to perform their roles to the best of their ability;- Promoted or hired powerful managers who will monitor performance and drive results, and- Created and implemented sufficient reward and recognition systems to promote best practice and enhance productivity levels.

PEOPLE Technological developments may be penetrating all areas of industry, but the core driver for productivity remains in the hands of those providing the inputs: the people behind the business.

Following the “hoarding” years of the recession, employment is on the rise. Last week’s “Massive Monday” in the recruitment sector saw one of the busiest days for those seeking out new opportunities, with research from the Institute of Leadership and Management suggesting more than a third of UK workers, 37%, are planning to leave their current position in 2015. Organisations seeking to build new teams or add to existing headcount will benefit from the lucrative state of the recruitment market and the domino impact upon productivity levels, both amongst existing and new staff.

When recruiting new talent, finding the right fit is paramount. However, when lining up would-be superstars, many managers rush to the home straight of interviews without clarifying fully what it is they’re looking for. Research in 2014 identified a number of business leaders who admitted to hiring new staff on the basis of personality or cultural fit: hiring, in essence, “mini-me” versions of themselves. Others admitted to recycling job specifications for one role when interviewing for another; a selection reported not using any form of specification at all.

Each role requires a select cocktail of skills or personality attributes, leaving considerable margin for error during the hiring process. A Sales Manager with experience from an account-management background may not necessarily be best-placed to interview for an entry-level new business

position: particularly without the aid of a job specification.

Recruitment and placement calls for a ‘wipe the slate clean’ approach. Rather than replacing like-for-like, managers should look to perform a top-down needs analysis that filters out the specific requirements of the individual needed (see

left).

ARMED FOR PRODUCTION No electrician would set his newest recruits out to fix an electrical circuit without arming those individuals with the correct tools, safety gear and knowledge to perform the task. Regardless of industry, the principle remains the same: arm your individuals with what they need in order to optimise

production and performance.

This may be as simple as ensuring you have a CRM that stands up to the test of demand and that you can deliver a reliable internet connection across the business. In the modern-day business environment, the ripple impact of just 10 minutes without internet can have surprising consequences; not only on immediate productivity, but on staff morale if frustrations arise or attentions waver. It takes up to 20 minutes to re-engage fully with a task once interrupted; that figure, multiplied across all staff within an organisation even just once a month, can prove cumulatively damaging.

Product training is considered a cornerstone for those entering a new business of industry; however productivity within sales is closely aligned with skills ability, rather than in-depth knowledge of the

product portfolio alone. For some, skills training may only feature during the on-boarding process; however, refreshment and on-going up-skilling is proven to drive motivation, increase staff morale and promote retention.

One tool successfully used within a sales environment to aid productivity is the personal activity planner. A “bitesize” tool, this agrees on a weekly basis the activities, aims and goals to be achieved between a manager and employee: ensuring that individual is planning their time effectively and focusing on relevant activities to maximise productivity. Benefits are threefold;

1. The individual will be able to see at a glance what days were the most successful and draw conclusions as to what approaches are working for them;

2. The manager will be able to identify key training areas for the future (e.g., the salesperson puts in large call numbers but speaks to less decision makers than expected; training around getting past the gatekeeper may be required!)

3. If the individual experiences demotivation after a poor day in the office – we’ve all had one of those! – this can be alleviated by looking at what was planned and putting performance into perspective.

Investment into on-going training, evaluation and assessment can identify causes for any lapse in productivity and ensure staff remain challenged, focused and equipped to perform to the very best of their ability. Supplementing this with skilled, efficient and engaged managers who bring together all those individual elements will provide those small yet significant changes that will have a true impact on business productivity.


Unfortunately recruiting can call for brutal decisions. If a top-class individual walks through the door and leaves interviewers with stars in their eyes, it can be all-too-easy to put an offer on the table: in spite of the fact that they don’t match the end position. In this instance, it helps to have an impartial outsider make the call; individuals who can collaborate with internal members and remain objective, helping to map out a team that has been placed according to need, rather than ‘nice-to-have’.

PEOPLE (cont.)

REWARD AND RECOGNITION

It’s a theme that continues to circulate the sales sphere, particularly following periods of hardship: how do we incentivise, motivate and reward our people, without suffering an impact on our bottom line?

Financial incentives are commonplace across the industry, with on-target earnings now an expectation of most sales positions. The numbers-orientated nature of sales ensures this tactic attracts and retains the right talent; however, James Caan argues that if you rely on financial incentives alone, you promote an environment in which a group of individuals all strive to be the best individual performer, as opposed to working together as a team to achieve the same goals and targets.

This is counterproductive within a “production-line” environment, in which true productivity can only be achieved through the combined contributions of multiple individuals or departments, working together to deliver value to the end-consumer.

Financial incentives also pose considerable risk; in many instances, cash can become an expectation and will be regarded as a “top-up salary”, at which point, it ceases to have value as an incentive to drive productivity. For those who fail to meet targets, it can also breed inter-team resentment or reduced morale. There are instances in which companies respond with multi-tiered incentive frameworks or sets of rules and exceptions, which can quickly escalate into a highly complex system many individuals won’t understand.

A successful incentive programme embraces variety as part of a comprehensive reward strategy, recognising not

only achievement of targets but also effort. Rewards may represent monetary value or be a benefit for the individual, including:

- Flexi-time / time earned back;- Autonomy over decisions or independence and control over their role- Enhanced or additional responsibilities;- Team incentives: adjusting boundaries;- Holidays, trips or days out;- Internal events including socials, meals, networking opportunities or regular ‘recognition’ or award days;- Internal recognition such as one-off or regular company-wide communications, awards or competitions, e.g. ‘salesperson of the month’;- External recognition: e.g. putting staff forward for awards or opportunities to present at conferences and events;- Gifts with financial value such as vouchers or bought goods.


PICK ‘N’ MIX: MAKING THE RIGHT RESOLUTION

We could all be more productive in our day-to-day roles; however as the annual New Years Resolution craze tells us, it’s not a single objective that can be made in isolation. Individuals simply stating their resolution is to ‘get fit’ already set themselves up for failure: like any objective, a resolution needs to be SMART (Specific, Measurable, Achievable, Realistic and Timely) in order to be realised. For the individual stating they will lose 1 stone by May through sticking to WeightWatchers and running twice a week, the goal is far more within reach.

Productivity is your business “get fit” resolution. In order to implement change, it must be broken down and considered as a sum of all its parts; factors hindering productivity will vary according to industry sector and individual business, so what works for one won’t necessarily work for another.

By identifying the weak points in the productivity chain – whether that is the people employed by the business, their current skill level or the way they’re rewarded – management can pick and mix the small, individual elements most likely to boost productivity. Even changing one, single element could be the key to overcoming the productivity stagnation: so consider what value an increase of just 5% in productivity could mean for the success of your business in 2015, and make a change.


Call Pareto today for more information on 08436 367 669 or email [email protected]

How do we incentivise, motivate and reward our people, without suffering an impact on our bottom line?... A successful incentive programme embraces variety as part of a comprehensive reward strategy, recognising not only achievement of targets but also effort.

REWARD AND RECOGNITION (cont.)

Productivity is known to increase in those employees who feel they have a stake in their organisation, alongside autonomy, responsibility and flexibility to perform roles to the best of their ability. In a recent survey reported by the Guardian, employee feedback showed that freedom, rather than pay, was regarded as the key motivator: benefits such as flexible working and an understanding of the value of work-life balance promoted increased loyalty and buy-in to the organisation, alongside increased morale and ability to perform to a high standard. By contrast, one of the greatest triggers for leaving a position is a lack of recognition or appreciation from the employer: making non-financial rewards an essential piece of the incentive package.